CENTENNIAL NEW YORK TAX EXEMPT TRUST
Registration No. 33-23494
File No. 811-5584
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 [X]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. 19 [X]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
ACT OF 1940 [X]
Amendment No. 21 [X]
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CENTENNIAL NEW YORK TAX EXEMPT TRUST
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(Exact Name of Registrant as Specified in Charter)
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6803 South Tucson Way, Englewood, Colorado 80112
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(Address of Principal Executive Offices) (Zip Code)
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1-800-525-9310
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(Registrant's Telephone Number, including Area Code)
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Andrew J. Donohue, Esq.
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OppenheimerFunds, Inc.
6803 South Tucson Way, Englewood, Colorado 80112
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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)
[X] On October 26, 2001 pursuant to paragraph (b)
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[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] On _______________ 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.
Centennial New York Tax Exempt Trust
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Prospectus dated November 1, 2001 Centennial New York Tax Exempt Trust
is a money market mutual fund. It
seeks the maximum current income
exempt from federal, New York State
and New York City income taxes for
individual investors as is consistent
with preservation of capital. The
Trust invests in short-term,
high-quality "money market" securities.
This Prospectus contains important
information about the Trust's
objective, its investment policies,
strategies and risks. It also
contains important information about
As with all mutual funds, the how to buy and sell shares of the
Securities and Exchange Commission has Trust and other account features.
not approved or disapproved the Trust's Please read this Prospectus carefully
securities nor has it determined that before you invest and keep it for
this Prospectus is accurate or future reference about your account.
complete. It is a criminal offense to
represent otherwise.
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2
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
Automatic Purchase and Redemption Programs
Direct Shareholders
How to Sell Shares
Automatic Purchase and Redemption Programs
Direct Shareholders
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends and Tax Information
Financial Highlights
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A B O U T T H E T R U S T
The Trust's Investment Objective and Strategies
WHAT IS THE TRUST'S INVESTMENT OBJECTIVE? The Trust seeks the maximum
current income exempt from federal, New York State and New York City income
taxes for individual investors as is consistent with the preservation of
capital.
WHAT DOES THE TRUST MAINLY INVEST IN? The Trust is a money market fund. It
invests in a variety of high-quality money market instruments to seek
income. Money market instruments are short-term, U.S. dollar denominated
debt instruments issued by the U.S. and State governments, domestic and
foreign corporations and financial institutions and other entities. They
include, for example, municipal securities, bank obligations, repurchase
agreements, commercial paper, other corporate debt obligations and government
debt obligations. To be considered "high-quality," generally they must be
rated in one of the two highest credit-quality categories for short-term
securities by nationally recognized rating services. If unrated, a security
must be determined by the Trust's investment manager to be of comparable
quality to rated securities.
The Trust normally attempts to invest 100% of its assets and at least
65% of its total assets in obligations of the State of New York and its
political subdivisions, agencies and instrumentalities or obligations of
commonwealths or territories of the United States or their agencies,
instrumentalities or authorities, the interest from which is not subject to
New York State and New York City personal income tax in the opinion of bond
counsel to the respective issuer. As a fundamental policy, the Trust will
not make any investment that will reduce the portion of its total assets that
are invested in municipal securities to less than 80%.
WHO IS THE TRUST DESIGNED FOR? The Trust is designed for investors who are
seeking to earn income exempt from federal and New York income taxes at
current money market rates, while preserving the value of their investment,
because the Trust tries to keep its share price stable at $1.00. Income on
money market instruments tends to be lower than income on longer term debt
securities, so the Trust's yield will likely be lower than the yield on
longer-term fixed income funds. The Trust does not invest for the purpose of
seeking capital appreciation or gains and is not a complete investment
program.
Main Risks of Investing in the Trust
All investments carry risks to some degree. Funds that invest in debt
obligations for income may be subject to credit risks and interest rate
risks. 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. As a result, there is a risk that the Trust's shares could
fall below $1.00 per share. If there is a high redemption demand for the
Trust's shares that was not anticipated, portfolio securities might have to
be sold prior to their maturity at a loss. Also, there is the risk that the
value of your investment could be eroded over time by the effects of
inflation, and that poor security selection could cause the Trust to
underperform other funds with similar objectives.
Risks of Focusing on Investments in New York Municipal Securities. The Trust
generally invests a significant portion of its assets in New York
municipal securities. Because the Trust invests primarily in the
securities of New York issuers, its performance will be significantly
affected by local, state and regional factors. These may include state
or local legislation or policy changes, erosion of the tax base of the
state or one or more particular localities, the effects of possible
terrorist acts or natural disasters, or other economic or credit
problems affecting the state generally or any individual locality
(which may directly or indirectly affect the state as a whole). Having
a higher percentage of its assets invested in the securities of fewer
issuers, particularly obligations of government issuers of a single
state, could result in greater credit risk exposure to a smaller number
of issuers due to economic, regulatory or political problems in New
York. The Trust is a "non-diversified" fund; however, it is currently
subject to certain diversification requirements under rules for money
market funds under federal law.
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An investment in the Trust is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Trust seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Trust.
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The Trust's Past Performance
The bar chart and table below show how the Trust's returns may vary over
time, by showing changes in the Trust's performance from year to year for the
last ten calendar years and average annual total returns for the 1-, 5- and
10- year periods. Variability of returns is one measure of the risks of
investing in a money market fund. The Trust's past investment performance
does not predict how the Trust will perform in the future.
Annual Total Returns (as of 12/31 each year)
[See appendix to prospectus for annual total return data for bar chart.]
For the period from 1/1/01 through 9/30/01 the cumulative total return (not
annualized) was 1.76%.
During the period shown in the bar chart, the highest return (not annualized)
for a calendar quarter was 1.03% (1st Q '91) and the lowest return (not
annualized) for a calendar quarter was 0.36% (1st Q 93).
Average Annual Total Returns
for the periods ended December 31, 2000 1 Year 5 Years 10 Years
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Centennial New York Tax Exempt Trust 3.29% 2.80% 2.68%
(inception 01/04/89)
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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.
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The total returns are not the Trust's current yield. The Trust's yield more
closely reflects the Trust's current earnings. 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. The following tables
are meant to help you understand the fees and expenses you may pay if you buy
and hold shares of the Trust. The numbers below are based upon the Trust's
expenses during the fiscal year ended June 30, 2001.
SHAREHOLDER FEES. The Trust does not charge any initial sales charge to buy
shares or to reinvest dividends. There are no exchange fees or redemption
fees and no contingent deferred sales charges (unless you buy Trust shares by
exchanging Class A shares of other eligible funds that were purchased subject
to a contingent deferred sales charge, as described in "How to Sell Shares").
Annual Trust Operating Expenses (deducted from Trust assets):
(% of average daily net assets)
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Management Fees 0.50%
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Distribution and/or Service (12b-1) Fees 0.20%
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Other Expenses 0.20%
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Total Annual Operating Expenses 0.90%
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"Other expenses" in the table include transfer agent fees, custodial fees,
and accounting and legal expenses the Trust pays. "Total Annual Operating
Expenses" were reduced by a voluntary expense assumption undertaken by the
Manager. With that expense assumption "Total Annual Operating Expenses" were
0.80%. The voluntary expense assumption is described below in "How the Trust
is Managed" and may be amended or withdrawn at any time.
EXAMPLE. The following example is intended to help you compare the cost of
investing in the Trust with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in shares of the Trust for the time
periods indicated and reinvest your dividends and distributions. The example
also assumes that your investment has a 5% return each year and that the
Trust's operating expenses remain the same. Your actual costs may be higher
or lower, because expenses will vary over time. Based on these assumptions
your expenses would be as follows, whether or not you redeem your investment
at the end of each period:
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1 year 3 years 5 years 10 years
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$92 $287 $498 $1,108
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About the Trust's Investments
The Trust's Principal Investment Policies. The Trust invests in money market
instruments meeting quality, maturity and diversification standards
established by its Board of Trustees as well as rules that apply to money
market funds under the Investment Company Act. The Statement of Additional
Information contains more detailed information about the Trust's investment
policies and risks.
The Trust's investment manager, Centennial Asset Management
Corporation, (referred to in this Prospectus as the Manager) tries to reduce
risks by diversifying investments and by carefully researching securities
before they are purchased. The rate of the Trust's income will vary from day
to day, generally reflecting changes in overall short-term interest rates.
There is no assurance that the Trust will achieve its investment objective.
What Does the Trust Invest In? Money market instruments are high-quality,
short-term debt instruments. They may have fixed, variable or floating
interest rates. All of the Trust's money market instruments must meet
the special diversification, quality and maturity requirements set
under the Investment Company Act and the special procedures set by the
Board described briefly below. The following is a brief description of
the types of money market instruments the Trust can invest in.
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 New York, other states and the District of
Columbia, their political subdivisions (such as cities, towns and
counties), or any commonwealth or territory of the United States, or 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.
o Other Money Market Instruments. Up to 20% of the Trust's assets can 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.
Additionally, the Trust can buy other money market instruments that the
Manager approves under procedures adopted by its Board of Trustees from time
to time. They must be U.S. dollar-denominated short-term investments that
the Manager must determine to have minimal credit risks.
What Standards Apply to the Trust's Investments? Money market instruments
are subject to credit risk, the risk that the issuer might not make
timely payments of interest on the security or repay principal when it
is due. The Trust can buy only those instruments that meet standards
set by the Investment Company Act for money market funds and procedures
adopted by the Board of Trustees. The Trust's Board of Trustees 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, the Trust buys only high-quality investments that the
Manager believes present minimal credit risk at the time of purchase.
"High-quality" investments are:
o rated in one of the two highest short-term rating categories of two
national rating organizations, or
o rated by one rating organization in one of its two highest rating
categories (if only one rating organization has rated the investment),
or
o unrated investments that the Manager determines are comparable in
quality to the two highest rating categories.
The 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. No security's maturity will exceed the maximum time
permitted under Rule 2a-7 (currently 397 days). Finally, the Trust
must maintain a dollar-weighted average portfolio maturity of not more
than 90 days, to reduce interest rate risks.
Can the Trust's Investment Objective and Policies Change? The Trust's Board
of 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. Some of the
investment restrictions that are fundamental policies are listed in the
Statement of Additional Information. An investment policy is not
fundamental unless this Prospectus or the Statement of Additional
Information says that it is.
OTHER INVESTMENT STRATEGIES. To seek its objective, the Trust can use the
investment techniques and strategies described below. The Trust might 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 the
overall risks.
Floating Rate/Variable Rate Notes. The Trust can purchase investments with
floating or variable interest rates. Variable rates are adjustable at
stated periodic intervals. Floating rates are adjusted automatically
according to a specified market rate or benchmark for such investments,
such as the prime rate of a bank. If the maturity of an investment is
greater than the maximum time permitted under Rule 2a-7 (currently 397
days), it can be purchased if it has a demand feature. That feature
must permit the Trust to recover the principal amount of the investment
on not more than 30 days' notice at any time, or at specified times not
exceeding the maximum time permitted under Rule 2a-7.
"When-Issued" and "Delayed-Delivery" Transactions. The Trust can purchase
municipal securities on a "when-issued" basis and can 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.
Some of these obligations might not have an active trading market
and would be subject to the fund's limits on "illiquid" securities
described below. From time to time the Trust can invest more than 5%
of its net assets in municipal lease obligations that the Manager has
determined to be liquid under guidelines set by the Trust's Board of
Trustees.
Illiquid and Restricted Securities. Investments may be illiquid because they
do not have an active trading market, making it difficult to value them
or dispose of them promptly at an acceptable price. A restricted
security is one that has a contractual limit on resale or which cannot
be sold publicly until it is registered under federal securities laws.
The Trust will not invest more than 10% of its net assets in illiquid
or restricted securities. That limit does not apply to certain
restricted securities that are eligible for resale to qualified
institutional purchasers 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 can 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 can enter into repurchase agreements. In a
repurchase transaction, the Trust buys a security and simultaneously
sells it to the vendor for delivery at a future date. Repurchase
agreements must be fully collateralized. However, if the vendor fails
to pay the resale price on the delivery date, the Trust may incur costs
in disposing of the collateral and may experience losses if there is
any delay in its ability to do so. The Trust will not enter into
repurchase transactions that will cause more than 10% of the Trust's
net assets to be subject to repurchase agreements having a maturity
beyond seven days. There is no limit on the amount of the Trust's net
assets that can be subject to repurchase agreements of seven days or
less. Income earned on repurchase transactions is not tax exempt and
accordingly, under normal market conditions, the Trust will limit its
investments in repurchase transactions to 20% of its total assets.
Temporary Defensive and Interim Investments. In times of unstable adverse
market or economic conditions, the Trust can invest up to 100% of its
assets in temporary defensive or interim investments that are
inconsistent with the Trust's principal investment strategies. These
temporary investments can include:
o obligations issued or guaranteed by the U.S. government or its agencies
or instrumentalities,
o bankers' acceptances; taxable commercial paper rated in the highest
category by a rating organization,
o short-term taxable debt obligations rated in one of the two highest
rating categories of a rating organization,
o certificates of deposit of domestic banks, and
o repurchase agreements.
To the extent the Trust assumes a temporary defensive position, a
significant portion of the Trust's distributions may be subject to federal
and New York State and local income taxes.
How the Trust is Managed
THE MANAGER. The investment advisor for the Trust is the Manager, Centennial
Asset Management Corporation, a wholly owned subsidiary of OppenheimerFunds,
Inc. The Manager 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 assets of more than $115 billion as of September 30,
2001, including more than 65 funds 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 June 1990. Mr. Carbuto is a Vice President of OppenheimerFunds,
Inc. and is an officer and portfolio manager of other funds for which
the Manager or an affiliate 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; and 0.400% of the of net assets in excess of $1 billion. The
Manager has voluntarily undertaken to assume certain expenses of the
Trust in any fiscal year that exceed 0.80% of the Trust's average
annual net assets. The Manager reserves the right to amend or
terminate that expense assumption at any time. The Trust's management
fee for the fiscal year ended June 30, 2001 was 0.50% of the Trust's
average annual net assets.
For further information about the investment advisory agreement,
including a description of expense assumption arrangements with the Manager,
see the Statement of Additional Information.
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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 or the Sub-Distributor (OppenheimerFunds Distributor, Inc.)
receives the purchase order at its offices in Colorado, or after any agent
appointed by the Sub-Distributor receives the order and sends it to the
Sub-Distributor as described below.
How is 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 eligible 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 eligible funds (a list of them appears
in the Statement of Additional Information, or you can ask your broker-dealer
or call the Transfer Agent) or reinvesting distributions from unit investment
trusts that have made arrangements with the Distributor.
HOW ARE SHARES PURCHASED? You can buy shares in one of several ways:
Buying Shares Through a Broker-Dealer's Automatic Purchase and Redemption
Program. You can buy shares of a Trust through a broker-dealer that
has a sales agreement with the Trust's Distributor or Sub-Distributor
that allows shares to be purchased through the broker-dealer's
Automatic Purchase and Redemption Program. Shares of the Trust are sold
mainly to customers of participating broker-dealers that offer the
Trust's shares under these special purchase programs. If you
participate in an Automatic Purchase and Redemption Program established
by your broker-dealer, your broker-dealer buys shares of the Trust for
your account with the broker-dealer. Program participants should also
read the description of the program provided by their broker-dealer.
Buying Shares Through Your Broker-Dealer. If you do not participate in an
Automatic Purchase and Redemption Program, you can buy shares of the
Trust through any broker-dealer that has a sales agreement with the
Distributor or Sub-Distributor. Your broker-dealer will place your
order with the Distributor on your behalf.
Buying Shares Directly Through the Sub-Distributor. You can also purchase
shares directly through the Trust's Sub-Distributor. Shareholders who
make purchases directly and hold shares in their own names are referred
to as "direct shareholders" in this Prospectus.
The Sub-Distributor may appoint certain servicing agents to accept
purchase (and redemption) orders, including broker-dealers that have
established Automatic Purchase and Redemption Programs. The Distributor or
Sub-Distributor, in their sole discretion, may reject any purchase order for
shares of a Trust.
AUTOMATIC PURCHASE AND REDEMPTION PROGRAM. If you buy shares of a Trust
through your broker-dealer's Automatic Purchase and Redemption Program, your
broker-dealer will buy your shares for your Program Account and will hold
your shares in your broker-dealer's name. These purchases will be made under
the procedures described in "Guaranteed Payment Procedures" below. Your
Automatic Purchase and Redemption Program Account may have minimum investment
requirements established by your broker-dealer. You should direct all
questions about your Automatic Purchase and Redemption Program to your
broker-dealer, because the Trust's 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.
o If the Distributor receives a purchase order before 12:00 Noon on a
regular business day with the broker-dealer's guarantee that the Trust's
custodian bank will receive payment for those shares in Federal Funds by
2:00 P.M. on that same day, the order will be effected at the net asset
value determined at 12:00 Noon that day. Distributions will begin to accrue
on the shares on that day if the Federal Funds are received by the required
time.
o If the Distributor receives a purchase order after 12:00 Noon on a
regular business day with the broker-dealer's guarantee that the Trust's
custodian bank will receive payment for those shares in Federal Funds by
2:00 P.M. on that same day, the order will be effected at the net asset
value determined at 4:00 P.M. that day. Distributions will begin to accrue
on the shares on that day if the Federal Funds are received by the required
time.
o If the Distributor receives a purchase order between 12:00 Noon and
4:00 P.M. on a regular business day with the broker-dealer's guarantee that
the Trust's custodian bank will receive payment for those shares in Federal
Funds by 4:00 P.M. the next regular business day, the order will be
effected at the net asset value determined at 4:00 P.M. on the day the
order is received and distributions will begin to accrue on the shares
purchased on the next regular business day if the Federal Funds are
received by the required time.
HOW CAN DIRECT SHAREHOLDERS BUY SHARES? Direct shareholders can buy shares
of the Trust by completing a Centennial Funds New Account Application and
sending it to the Sub-Distributor, OppenheimerFunds Distributor, Inc., P.O.
Box 5143, Denver, Colorado 80217. Payment must be made by check or by
Federal Funds wire as described below. If you don't list a broker-dealer on
the application, 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.
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 Sub-Distributor or its agent accepts your purchase
order, starting on the business day after the Trust receives Federal Funds
from the purchase payment.
Payment by Check. Direct shareholders may pay for purchases of shares of the
Trust by check. Send your check, payable to "OppenheimerFunds
Distributor, Inc.," along with your application and other documents to
the address listed above. For initial purchases, your check should be
payable in U.S. dollars and drawn on a U.S. bank so that distributions
will begin to accrue on the next regular business day after the
Sub-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 Sub-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 listed above. Before
sending a wire, call the Sub-Distributor's Wire Department at
1.800.525.9310 (toll-free from within the U.S.) or 303.768.3200 (from
outside the U.S.) to notify the Sub-Distributor of the wire, and to
receive further instructions.
Distributions will begin to accrue on the purchased shares on the
purchase date that is a regular business day if the Federal Funds from your
wire and the application are received by the Sub-Distributor and accepted by
12:00 Noon. If the Sub-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 (together with significant amounts from the Manager's own
resources) to pay dealers, brokers, banks and other financial
institutions quarterly for providing personal services and maintenance
of accounts of their customers that hold shares of the Trust.
How to Sell Shares
You can sell (redeem) some or all of your shares on any regular business
day. Your shares will be sold at the next net asset value calculated after
your order is received in proper form (which means that it must comply with
the procedures described below) and is accepted by the Transfer Agent.
HOW CAN PROGRAM PARTICIPANTS SELL SHARES? If you participate in an Automatic
Purchase and Redemption Program sponsored by your broker-dealer, you must
redeem shares held in your Program Account by contacting your broker-dealer
firm, or you can redeem shares by writing checks as described below. You
should not contact the Trust or its Transfer Agent directly to redeem shares
held in your Program Account. You may also arrange (but only through your
broker-dealer) to have the proceeds of redeemed Trust shares sent by Federal
Funds wire, as described below in "Sending Redemption Proceeds by Wire."
HOW CAN DIRECT SHAREHOLDERS REDEEM SHARES? Direct shareholders can redeem
their shares by writing a letter to the Transfer Agent, 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, please call the
Transfer Agent for assistance first, at 1.800.525.9310.
Certain Requests Require a Signature Guarantee. To protect you and the Trust
from fraud, the following redemption requests for accounts of direct
shareholders must be in writing and must include a signature guarantee
(although there may be other situations that also require a signature
guarantee):
o You wish to redeem $100,000 or more and receive a check
o The redemption check is not payable to all shareholders listed on the
account statement
o The redemption check is not sent to the address of record on your
account statement
o Shares are being transferred to an account with a different owner or
name
o Shares are being redeemed by someone (such as an Executor) other than
the owners listed in the account registration.
Where Can Direct Shareholders Have Their Signatures Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including:
o a U.S. bank, trust company, credit union or savings association,
o a foreign bank that has a U.S. correspondent bank,
o a U.S. registered dealer or broker in securities, municipal securities
or government securities, or
o a U.S. national securities exchange, a registered securities
association or a clearing agency.
If you are signing on behalf of a corporation, partnership or other
business or as a fiduciary, you must also include your title in the signature.
How Can Direct Shareholders Sell Shares by Mail? Write a letter to the
Transfer Agent that includes:
o Your name
o The Trust's name
o Your account number (from your account statement)
o The dollar amount or number of shares to be redeemed
o Any special payment instructions
o Any share certificates for the shares you are selling
o The signatures of all registered owners exactly as 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. (such
as Letters Testamentary of an Executor).
---------------------------------------------------------------------------------
---------------------------------------- ---------------------------------------
Use the following address for Send courier or express mail
---------------------------------------- requests to:
requests by mail: Shareholder Services, Inc.
Shareholder Services, Inc. 10200 E. Girard Avenue, Building D
P.O. Box 5143 Denver, Colorado 80231
Denver, Colorado 80217-5270
---------------------------------------------------------------------------------
How Can Direct Shareholders Sell Shares by Telephone? Direct shareholders
and their broker-dealer representative of record may also sell shares
by telephone. To receive the redemption price calculated on a
particular regular business day, the Transfer Agent, or its designated
agent, must receive the request by 4:00 P.M. on that day. You may not
redeem shares held under a share certificate 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. Telephone redemptions are not available within 30 days of
changing the address on an account.
Sending Redemption Proceeds By Wire. While the Transfer Agent normally sends
direct shareholders their money by check, you can arrange to have the
proceeds of the shares you sell sent by Federal Funds wire to a bank
account you designate. It must be a commercial bank that is a member
of the Federal Reserve wire system. The minimum redemption you can
have sent by wire is $2,500. There is a $10 fee for each wire. To find
out how to set up this feature on an account or to arrange a wire,
direct shareholders should call the Transfer Agent at 1.800.525.9310.
If you hold your shares through your broker-dealer's Automatic Purchase
and Redemption Program, you must contact your broker-dealer to arrange
a Federal Funds wire.
Can Direct Shareholders Submit Requests by Fax? Direct shareholders may send
requests for certain types of account transactions to the Transfer
Agent by fax (telecopier). Please call 1.800.525.9310 for information
about which transactions may be handled this way. Transaction requests
submitted by fax are subject to the same rules and restrictions as
written and telephone requests described in this Prospectus.
HOW DO I WRITE CHECKS AGAINST MY ACCOUNT? Automatic Purchase and Redemption
Program participants may write checks against the account held under their
Program, but must arrange for checkwriting privileges through their
broker-dealers. Direct shareholders may write checks against their account
by requesting that privilege on the account application or by contacting the
Transfer Agent for signature cards. They must be signed (with a signature
guarantee) by all owners of the account and returned to the Transfer Agent so
that checks can be sent to you to use. Shareholders with joint accounts can
elect in writing to have checks paid over the signature of one owner. If
checkwriting is established after November 1, 2000, only one signature is
required for shareholders with joint accounts, unless you elect otherwise.
o Checks can be written to the order of whomever you wish, but may not be
cashed at the bank the checks are payable through or the Trust's
custodian bank.
o Checkwriting privileges are not available for accounts holding shares
that are subject to a contingent deferred sales charge.
o Checks must be written for at least $250.
o Checks cannot be paid if they are written for more than your account
value.
o You may not write a check that would require the 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 eligible fund.
Generally, there is no fee to redeem shares of the Trust bought by exchange
of shares of another Centennial Trust or eligible fund. However,
o if you acquired shares of a Trust by exchanging Class A shares of
another eligible fund that you bought subject to the Class A contingent
deferred sales charge, ando
o those shares are still subject to the Class A contingent deferred sales
charge when you exchange them into the Trust, then
o you will pay the contingent deferred sales charge if you redeem those
shares from the Trust within 18 months of the purchase date of the shares
of the fund you exchanged.
How to Exchange Shares
Shares of the Trust can be exchanged for shares of certain other Centennial
or eligible funds, depending on whether you own your shares through your
broker-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 eligible funds
listed in the Statement of Additional Information. To exchange shares, you
must meet several conditions:
o Shares of the fund selected for exchange must be available for sale in
your state of residence.
o The prospectuses of the Trust and the fund whose shares you want to buy
must offer the exchange privilege.
o You must hold the shares you buy when you establish your account for at
least 7 days before you can exchange them. After the account is open 7
days, you can exchange shares every regular business day.
o You must meet the minimum purchase requirements for the fund whose
shares you purchase by exchange.
o Before exchanging into a fund, you must obtain and read its prospectus.
Shares of a particular class of an eligible fund may be exchanged only
for shares of the same class in other eligible funds. For example, you can
exchange shares of 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 eligible 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 eligible funds (except
Oppenheimer Cash Reserves), or when you exchange shares of the Trust
purchased by exchange of shares of an eligible fund on which you paid a sales
charge.
For tax purposes, exchanges of shares involve a sale of the shares of
the fund you own and a purchase of the shares of the other fund, which may
result in a capital gain or loss. Since shares of 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 eligible funds currently
available for exchanges in the Statement of Additional Information or you can
obtain one by calling a service representative at 1.800.525.9310. The list
of eligible funds can change from time to time.
How Do Direct Shareholders Submit Exchange Requests? Direct shareholders may
request exchanges in writing or by telephone:
o Written Exchange Requests. Complete an Exchange Authorization Form,
signed by all owners of the account. Send it to the Transfer Agent at
the address on the back cover.
o Telephone Exchange Requests. Telephone exchange requests may be made
by calling a service representative at 1.800.525.9310. Telephone
exchanges may be made only between accounts that are registered with
the same name(s) and address. Shares held under certificates may not
be exchanged by telephone.
ARE THERE LIMITATIONS ON EXCHANGES? There are certain exchange policies you
should be aware of:
o Shares are normally redeemed from one fund and purchased from the other
fund in the exchange transaction on the same regular business day on
which the Transfer Agent receives an exchange request that conforms to
the policies described above. Requests for exchanges to any of the
Centennial Trusts must be received by the Transfer Agent by 4:00 P.M.
on a regular business day to be effected that day. The Transfer Agent
must receive requests to exchange shares of 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 The interests of the Trust's long-term shareholders and its ability to
manage its investments may be adversely affected when its shares are
repeatedly bought and sold in response to short-term market
fluctuations--also known as "market timing." When large dollar amounts
are involved, the Trust may have difficulty implementing long-term
investment strategies, because it cannot predict how much cash it will
have to invest. Market timing also may force the Trust to sell
portfolio securities at disadvantageous times to raise the cash needed
to buy a market timer's Fund shares. These factors may hurt the Trust's
performance and its shareholders. When the Manager believes frequent
trading would have a disruptive effect on the Trust's ability to manage
its investments, the Manager and the Trust may reject purchase orders
and exchanges into the Trust by any person, group or account that the
Manager believes to be a market timer.
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 Trust reserves the right to refuse any exchange
request that may, in the opinion of the Trust, 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 broker-dealer representative of
record for the account unless the Transfer Agent receives cancellation
instructions from an owner of the account.
The Transfer Agent will record any telephone calls to verify data concerning
transactions. It has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data and by confirming such
transactions in writing. The Transfer Agent and the 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 redemption of recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much
as 10 days from the date the shares were purchased. That delay may be
avoided if you purchase shares by Federal Funds wire or certified
check, or arrange with your bank to provide telephone or written
assurance to the Transfer Agent that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the Trust if the
account value has fallen below $250 for reasons other than the fact
that the market value of shares has dropped. In some cases involuntary
redemptions may be made to repay the Distributor or Sub-Distributor for
losses from the cancellation of share purchase orders.
"Backup Withholding" of federal income tax may be applied against taxable
dividends, distributions and redemption proceeds (including exchanges)
if you fail to furnish the Trust your correct, certified Social
Security or Employer Identification Number when you sign your
application, or if you under-report your income to the Internal Revenue
Service.
To avoid sending duplicate copies of materials to households, the Trust will
mail only one copy of each prospectus, annual and semi-annual reports
and annual notice of the Trust's privacy policy to shareholders having
the same last name and address on the Trust's records. The
consolidation of these mailings, called householding, benefits the
Trust through reduced mailing expense. If you want to receive multiple
copies of these materials, you may call the Transfer Agent at
1.800.525.9310. You may also notify the Transfer Agent in writing.
Individual copies of prospectuses, reports and privacy notices will be
sent to you commencing 30 days after the Transfer Agent receives your
request to stop householding.
Dividends and Tax Information
DIVIDENDS. The Trust intends to declare dividends from net investment income
each regular business day and to pay those dividends to shareholders monthly
on a date selected by the Board of Trustees. To maintain a net asset value
of $1.00 per share, the Trust might withhold dividends or make distributions
from capital or capital gains. Daily dividends will not be declared or paid
on newly purchased shares until Federal Funds are available to the Trust from
the purchase payment for such shares.
CAPITAL GAINS. The Trust normally holds its securities to maturity and
therefore will not usually pay capital gains. Although the Trust does 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? For Automatic Purchase
and Redemption Programs, dividends and distributions are automatically
reinvested in additional shares of the selected Trust. 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 eligible fund
account you have established.
Under the terms of the Automatic Purchase and Redemption Program, your
broker-dealer can redeem shares to satisfy debit balances arising in your
Program Account. If that occurs, you will be entitled to dividends on those
shares as described in your Program Agreements.
TAXES. Exempt interest dividends paid from net investment income earned by
the Trust on municipal securities will be excludable from gross income for
federal income tax purposes. A portion of a dividend that is derived from
interest paid on certain "private activity bonds" may be an item of tax
preference if you are subject to the alternative minimum tax. If the Trust
earns interest on taxable investments, any dividends derived from those
earnings will be taxable as ordinary income to shareholders.
Dividends paid by the Trust from interest it receives from New York
municipal securities will be exempt from New York State and New York City
personal income taxes. Dividends paid from municipal securities of other
issuers normally will be treated as taxable ordinary income subject to New
York State and New York City personal income taxes.
Dividends and capital gains distributions may be subject to state or
local taxes. Long-term capital gains are taxable as long-term capital gains
when distributed to shareholders. It does not matter how long you have held
your shares. Dividends paid from short-term capital gains are taxable as
ordinary income. Whether you reinvest your distributions in additional shares
or take them in cash, the tax treatment is the same. Every year the Trust
will send you and the IRS a statement showing the amount of any taxable
distribution you received in the previous year as well as the amount of your
tax-exempt income.
Remember, There May be Taxes on Transactions. Because the Trust seeks to
maintain a stable $1.00 per share net asset value, it is unlikely that
you will have a capital gain or loss when you sell or exchange your
shares. A capital gain or loss is the difference between the price you
paid for the shares and the price you received when you sold them. Any
capital gain is subject to capital gains tax.
Returns of Capital Can Occur. In certain cases, distributions made by the
Trust may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders.
This information is only a summary of certain federal income tax
information about your investment. You should consult with your tax advisor
about the effect of an investment in the Trust on your particular tax
situation.
Financial Highlights
The Financial Highlights Table is presented to help you understand the
Trust's financial performance for the past five fiscal years. Certain
information reflects financial results for a single Trust share. The total
returns in the 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 five fiscal
years ended June 30, 2001 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.
Financial Highlights
Centennial New York Tax Exempt Trust
Year Ended June 30,
2001 2000 1999 1998 1997
------- ------- ------- ------- -------
PER SHARE OPERATING DATA
Net asset value,
beginning of period.... $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations--net
investment income and
net realized gain...... .03 .03 .02 .03 .03
Dividends and/or
distributions to
shareholders........... (.03) (.03) (.02) (.03) (.03)
------- ------- ------- ------- -------
Net asset value, end of
period................. $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
TOTAL RETURN(/1/)....... 3.09% 2.92% 2.42% 2.87% 2.76%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in thousands).. $72,370 $55,963 $61,792 $56,807 $48,896
Average net assets (in
thousands)............. $68,810 $61,033 $59,345 $53,923 $45,363
Ratios to average net
assets:(/2/)
Net investment income... 3.04% 2.84% 2.38% 2.85% 2.73%
Expenses................ 0.90% 0.92% 0.89% 0.89%(/3/) 0.88%(/3/)
Expenses, net of
reduction to custodian
expenses............... 0.88% 0.82%(/4/) 0.80%(/4/) 0.80%(/4/) 0.80%(/4/)
Expenses, net of
reduction to excess
expenses............... 0.82% N/A N/A N/A N/A
1. Assumes a $1,000 hypothetical initial investment on the business day
before the first day of the fiscal period, with all dividends reinvested in
additional shares on the reinvestment date, and redemption at the net asset
value calculated on the last business day of the fiscal period. Total returns
reflect changes in net investment income only. Total returns are not annualized
for periods of less than one full year.
2. Annualized for periods of less than one full year.
3. Expense ratio reflects the reduction to custodian expenses.
4. Prior to June 30, 2001, this ratio reflected the combined net effect of
reduction to excess and custodian expenses.
68
INFORMATION AND SERVICES
For More Information on Centennial New York Tax Exempt Trust:
The following additional information about the Trust is available without
charge upon request:
STATEMENT OF ADDITIONAL INFORMATION This document includes additional
information about the Trust's investment policies, risks, and operations. It
is incorporated by reference into this Prospectus (which means it is legally
part of this Prospectus).
ANNUAL AND SEMI-ANNUAL REPORTS Additional information about the Trust's
investments and performance is available in the Trust's Annual and
Semi-Annual Reports to shareholders. The Annual Report includes a discussion
of market conditions and investment strategies that significantly affected
the Trust's performance during its last fiscal year.
How to Get More Information:
You can request the Statement of Additional Information, the Annual and
Semi-Annual Reports, the notice explaining the Trust's privacy policy 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
---------------------------------------------------------------------------------
Information about the Trust including the Statement of Additional Information
can be reviewed and copied at the SEC's Public Reference Room in Washington,
D.C. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1.202.942.8090. Reports and other information
about the Trust are available on the EDGAR database on the SEC's Internet
website 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:
publicinfo@sec.gov 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:
The Fund's SEC File No. 811-5584 Centennial Asset Management
Corporation
PR0780.001.1101
Printed on recycled paper
APPENDIX TO THE PROSPECTUS OF
CENTENNIAL NEW YORK TAX EXEMPT TRUST
Graphic material included in Prospectus of Centennial New York Tax
Exempt Trust (the "Trust") under the heading: "Annual Total Returns (as of
12/31 each year)."
Bar chart will be included in the Prospectus of the Trust depicting the
annual total returns of a hypothetical investment in shares of the Trust for
the full calendar year since the Trust's inception as a money market fund.
Set forth below are the relevant data points that will appear on the bar
chart.
--------------------------------------------------------------------
Calendar Year Ended: Annual Total Returns
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/91 3.88%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/92 2.19%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/93 1.62%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/94 2.03%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/95 3.14%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/96 2.67%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/97 2.88%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/98 2.66%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/99 2.49%
--------------------------------------------------------------------
--------------------------------------------------------------------
12/31/00 3.29%
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Centennial New York Tax Exempt Trust
------------------------------------------------------------------------------
6803 South Tucson Way, Englewood, Colorado 80112
1.800.525.9310
Statement of Additional Information dated November 1, 2001
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, 2001. 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: Description of Securities Ratings..............................A-1
Appendix B: Municipal Bond Industry Classifications........................B-1
A B O U T T H E T R U S T
Additional Information About the Trust's Investment Policies and Risks
The investment objective and the principal investment policies of the Trust
are described in the Prospectus. This Statement of Additional Information
contains supplemental information about those policies and the types of
securities that the Trust's investment manager, Centennial Asset Management
Corporation (referred to as the "Manager"), will select for the Trust.
Additional explanations are also provided about the strategies the Trust may
use to try to achieve its objective.
The Trust's Investment Policies. The composition of the Trust's portfolio and
the techniques and strategies that the Trust's Manager uses in selecting
portfolio securities will vary over time. The Trust is not required to use
all of the investment techniques and strategies described below at all times
in seeking its goal. It may use some of the special investment techniques
and strategies at some times or not at all.
The Trust 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 one year or less 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, Maturity 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 or the Board of
Trustees may have to reassess the security's credit risk. If a security is
downgraded, the Manager or the Board of Trustees will promptly reassess
whether the security continues to present minimal credit risk, reassess the
status of the security as an "eligible security," and take such actions as is
appropriate. 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 the maximum permitted maturity under Rule 2a-7
(or any other applicable rule) which is currently 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.
|_| Demand Features and Guarantees. Demand features and gurantees
and some of their uses are described in the Prospectus. The Trust also uses
demand features and guarantees to satisfy the maturity, quality and
diversifications requirements described above. The Trust considers the
person which issues the demand feature as the person to whom the Trust will
look for payment. An unconditional demand feature is considered a guarantee
and the Trust looks to the person making the guarantee for payment of the
obligation of the underlying security.
When the Trust buys municipal securities, it may obtain a demand
feature 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. The Trust may invest in instruments
with floating or variable interest rates. The interest rate on a floating
rate obligation is based on a stated prevailing market rate, such as a bank's
prime rate, the 90-day U.S. Treasury Bill rate, the rate of return on
commercial paper or bank certificates of deposit, or some other standard.
The rate on the investment is adjusted automatically each time the market
rate is adjusted. The interest rate on a variable rate obligation is also
based on a stated prevailing market rate but is adjusted automatically at a
specified interval. Some variable rate or floating rate obligations in which
the Trust may invest have a demand feature entitling the holder to demand
payment of an amount approximately equal to the amortized cost of the
instrument or the principal amount of the instrument plus accrued interest at
any time, or at specified intervals not exceeding the maximum time permitted
under Rule 2a-7 (which is currently 397 days). These notes may or may not be
backed by bank letters of credit.
Variable rate demand notes may include master demand notes, which are
obligations that permit the Trust to invest fluctuating amounts in a note.
The amount may change daily without penalty, pursuant to direct arrangements
between the Trust, as the note purchaser, and the issuer of the note. The
interest rates on these notes fluctuate from time to time. The issuer of
this type of obligation normally has a corresponding right in its discretion,
after a given period, to prepay the outstanding principal amount of the
obligation plus accrued interest. The issuer must give a specified number of
days' notice to the holders of those obligations. Generally, the changes in
the interest rate on those securities reduce the fluctuation in their market
value. As interest rates decrease or increase, the potential for capital
appreciation or depreciation is less than that for fixed-rate obligations
having the same maturity.
Because these types of obligations are direct lending arrangements
between the note purchaser and issuer of the note, these instruments
generally will not be traded. Generally, there is no established secondary
market for these types of obligations, although they are redeemable from the
issuer at face value. Accordingly, where these obligations are not secured
by letters of credit or other credit support arrangements, the Trust's right
to redeem them is dependent on the ability of the note issuer to pay
principal and interest on demand. These types of obligations usually are not
rated by credit rating agencies. The Trust may invest in obligations that
are not rated only if the Manager determines at the time of investment that
they are Eligible Securities. The Manager, on behalf of the Trust, will
monitor the creditworthiness of the issuers of the floating and variable rate
obligations in the Trust's portfolio on an ongoing basis. There is no limit
on the amount of the Trust's assets that may be invested in floating rate and
variable rate obligations that meet the requirements of Rule 2a-7.
When-Issued and Delayed Delivery Transactions. As stated in the Prospectus,
the Trust may invest in municipal securities on a "when-issued" or "delayed
delivery" basis. Payment for and delivery of the securities shall not exceed
120 days from the date the offer is accepted. The purchase price and yield
are fixed at the time the buyer enters into the commitment. During the
period between the time of commitment and settlement, no payment is made by
the Trust to the issuer and no interest accrues to the Trust from the
investment. However, the Trust intends to be as fully invested as possible
and will not invest in when-issued securities if its income or net asset
value will be materially adversely affected. At the time the Trust makes the
commitment to purchase a municipal security on a when-issued basis, it will
record the transaction on its books and reflect the value of the security in
determining its net asset value. It will also identify on its books liquid
assets equal in value to the commitment for the when-issued securities.
While when-issued securities may be sold prior to settlement date, the Trust
intends to acquire the securities upon settlement unless a prior sale appears
desirable for investment reasons. There is a risk that the yield available
in the market when delivery occurs may be higher than the yield on the
security acquired.
Loans of Portfolio Securities. To attempt to increase its income, the Trust
may lend its portfolio securities to brokers, dealers and other financial
institutions. These loans are limited to not more than 10% of the value of
the Trust's total assets and are subject to other conditions described below.
The Trust will not enter into any securities lending agreements having a
maturity in excess the maximum time period provided for in Rule 2a-7. The
Trust presently does not intend to lend its securities, but if it does, the
value of securities loaned is not expected to exceed 5% of the value of the
Trust's total assets. There are some risks in lending securities. The Trust
could experience a delay in receiving additional collateral to secure a loan,
or a delay in recovering the loaned securities.
The Trust must receive collateral for a loan. Any securities received
as collateral for a loan must mature in twelve months or less. Under current
applicable regulatory requirements (which are subject to change), on each
business day the loan collateral must be at least equal to the market value
of the loaned securities. The collateral must consist of cash, bank letters
of credit, U.S. government securities or other cash equivalents in which the
Trust is permitted to invest. To be acceptable as collateral, letters of
credit must obligate a bank to pay amounts demanded by the Trust if the
demand meets the terms of the letter. Such terms and the issuing bank must
be satisfactory to the Trust.
When it lends securities, the Trust receives from the borrower an
amount equal to the interest paid or the dividends declared on the loaned
securities during the term of the loan. It may also receive negotiated loan
fees and the interest on the collateral securities, less any finders',
custodian, administrative or other fees the Trust pays in connection with the
loan. The Trust may share the interest it receives on the collateral
securities with the borrower as long as it realizes at least a minimum amount
of interest required by the lending guidelines established by its Board of
Trustees.
The Trust will not lend its portfolio securities to any officer,
Trustee, employee or affiliate of the Trust or its Manager. The terms of the
Trust's loans must meet certain tests under the Internal Revenue Code and
permit the Trust to reacquire loaned securities on five business days notice
or in time to vote on any important matter.
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.
Bank Loan Participation Agreements. The Fund may invest in bank loan
participation agreements, subject to the investment limitation set forth in
the Prospectus as to investments in illiquid securities. Participation
agreements provide an undivided interest in a loan made by the bank issuing
the participation interest in the proportion that the buyer's investment
bears to the total principal amount of the loan. Under this type of
arrangement, the issuing bank may have no obligation to the buyer other than
to pay principal and interest on the loan if and when received by the bank.
Thus, the Fund must look to the creditworthiness of the borrower, which is
obligated to make payments of principal and interest on the loan. If the
borrower fails to pay scheduled principal or interest payments, the Fund may
experience a reduction in income.
Special Investment Considerations - New York Municipal Securities. As
explained in the Prospectus, the Trust's investments are highly sensitive to
the fiscal stability of New York State (referred to in the section as the
"State") and its subdivisions, agencies, instrumentalities or authorities,
including New York City, which issue the municipal securities in which the
Trust invests. The following information on risk factors in concentrating in
New York municipal securities is only a summary, based on the State's Interim
Annual Information Statement dated July 27, 2001, and on publicly-available
official statements relating to offerings by issuers of New York municipal
securities on or prior to July 15, 2001 with respect to offerings of New York
State, and on or prior to March 22, 2001 with respect to offerings by New
York City. No representation is made as to the accuracy of this information.
During the mid-1970's the State, some of its agencies,
instrumentalities and public benefit corporations (the "Authorities"), and
certain of its municipalities faced serious financial difficulties. To
address many of these financial problems, the State developed various
programs, many of which were successful in reducing the financial crisis.
Any further financial problems experienced by these Authorities or
municipalities could have a direct adverse effect on the New York municipal
securities in which the Trust invests.
|X| Factors Affecting Investments in New York State Securities. The
State's published forecast of its economy showed continued growth in
employment, wages and personal income during the 2001 calendar year, although
growth was expected to moderate significantly from the rates achieved in
2000. Overall employment was expected to grow at a much more modest rate
than in 2000, reflecting the slowdown in the national economy. New York
personal income was estimated to have grown by 7.5% in 2000, fueled in part
by a large increase in finance sector bonus payments and strong growth in
total employment. State personal income was projected to grow 4.5% in 2001.
The slowdown in growth was attributable primarily to slower employment growth
and expected weakness in income payments, particularly bonuses, in the
financial sector.
The most significant risks to the State economic forecast revolve
around the financial markets. Weaker financial market activity than
currently projected could result in lower bonus payments and therefore lower
wages and personal income than indicated by the State's forecast.
Additionally, weaker State employment growth than currently projected could
produce lower wage and personal income growth than reflected in the forecast.
Many complex political, social and economic forces influence the
State's economy and finances, which may in turn affect the State's financial
plan for the 2001-02 fiscal year. These forces may affect the State
unpredictably from fiscal year to fiscal year and are influenced by
governments, institutions, and events that are not subject to the State's
control. The financial plan for 2001-02 is also necessarily based upon
forecasts of national and State economic activity. Economic forecasts have
frequently failed to predict accurately the timing and magnitude of changes
in the national and State economies. The projections assume no further
changes in federal tax law, which could substantially alter the current
receipts forecast.
The current projected budget gaps of $2.48 billion in 2002-03 and $2.93
billion in 2003-04 may change substantially as the budget process for 2001-02
continues. For example, the State Legislature may not enact the "Executive
Budget," the Governor's constitutionally mandated annual submission to the
Legislature which contains his recommended program for the forthcoming fiscal
year, as proposed by the Governor. Also, the State's actions during the
current fiscal year may be insufficient to preserve budgetary balance in
2001-02 or may add to the budget gaps projected for future fiscal years.
Actual results for the current fiscal year may also differ materially and
adversely from the State's projections. The Governor is required by law to
propose a balanced budget each year and is to propose steps necessary to
address any potential budget gaps in subsequent budgets. However, there can
be no assurance that the Legislature will enact the Executive Budget into
law, or that the State's adopted budget projections will not differ
materially and adversely from the projections set forth in the Interim Annual
Information Statement.
Over the long term, uncertainties with regard to the economy present
the largest potential risk to future budget balance in New York State. Many
uncertainties exist in any forecast of the national and State economies.
Given the recent volatility in financial markets, such uncertainties are more
pronounced at this time. For example, a sustained downturn in the financial
markets is possible. The securities industry is more important to the New
York economy than the national economy as a whole, potentially amplifying the
impact of such a downturn. A large change in stock market performance during
the forecast horizon could result in wage and unemployment levels that are
significantly different from those embodied in the current forecast.
Two variables which stand out as being particularly vulnerable to
financial market volatility, and which are closely associated with the recent
strength of State personal income tax receipts, are finance sector bonus
income and capital gains realizations. Historically, financial sector bonus
income has been closely tied to security firm profits. With many Wall Street
profit-making activities (such as initial public offerings and mergers and
acquisitions) now significantly below 2000 levels, the New York Division of
Budget ("DOB") has forecasted a significant decline in financial sector
profits for 2001. DOB also expected that the decline in equity values
observed since early 2000, combined with the recent decline in the average
holding period for equities, would produce a decline in capital gains
realizations for this year. However, both bonus income and capital gains
realizations have historically been subject to a large degree of variation
and could easily fall below (or rise above) expectations.
National economic growth slowed significantly during the second half of
2000 and first quarter of 2001, as the longest economic expansion on record
started its eleventh year. Real U.S. Gross Domestic Product (GDP) grew by
1.2 percent during the first quarter of 2001, following growth of 1.0 percent
in the last quarter of 2000. DOB expected this reduced pace of growth to
continue throughout 2001. Real U.S. GDP was expected to grow by 1.7 percent
for all of 2001, following a 5.0 percent increase in 2000.
The most significant risks to the national forecast relate to those
factors which may cause the economy to slow down substantially more than
projected. With increased layoff announcements, employment growth may come
in below expectations. This suggests lower income growth an hence lower
consumption growth than projected. Another potential risk to the national
economy lies in the uncertain future of the financial markets. Should the
stock market decline more significantly than DOB's projections, the resultant
reduction in the value of household wealth could reduce consumption growth
even further. Furthermore, as a result of the terrorist attacks on the World
Trade Center and the Pentagon on September 11, 2001, the U.S. securities
markets were closed for a four-day period. These terrorist attacks and
related events have led to increased short-term market volatility and may
have long-term effects on U.S. and world economies and markets. A similar
disruption of the financial markets could impact interest rates, auctions,
secondary trading, ratings, credit risk, inflation and other factors relating
to the securities in which the Trust invests. Alternatively, the Federal
Reserve's accelerated pace of interest rate reductions could lead to an
earlier and sharper-than-expected rebound in consumption and investment.
New York is the third most populous state in the nation and has a
relatively high level of personal wealth. The State's economy is diverse,
with a comparatively large share of the nation's finance, insurance,
transportation, communications and services employment, and a very small
share of the nation's farming and mining activity. The State's location and
its air transport facilities and natural harbors have made it an important
link in international commerce. Travel and tourism constitute an important
part of the economy. However, the terrorist attack on the World Trade Center
on September 11, 2001 is likely to have an adverse effect on travel and
tourism. Like the rest of the nation, New York has a declining proportion of
its workforce engaged in manufacturing, and an increasing proportion engaged
in service industries.
Relative to the nation, the State has a smaller share of manufacturing
and construction and a larger share of service-related industries. The
State's finance, insurance, and real estate share, as measured by wages, is
particularly large relative to the nation. The State projected that it is
likely to be less affected than the nation as a whole during an economic
recession that is concentrated in manufacturing and construction, but likely
to be more affected by any economic downturn that is concentrated in the
services sector.
The terrorist attack on the World Trade Center on September 11, 2001
has disrupted a number of businesses, caused extensive property damage, is
likely to reduce travel, tourism and leisure spending and have other adverse
impacts on the State. Additionally, many businesses located in and around
the World Trade Center may relocate to other cities and other states.
Therefore, the State is likely to suffer a decrease in revenue and an
increase in expenditures related to the attack, the economic effect of which
will be likely to have a significant adverse impact on the finances and
budget of the State. It is impossible at this time accurately to forecast
the scope and extent of such adverse effects.
|X| The 2001-02 Fiscal Year. As of the date of the State's Interim
Annual Information Statement, the State had not yet enacted a budget for the
2001-02 fiscal year, which began on April 1, 2001, but had enacted
appropriations for State-supported, contingent contractual, and certain other
debt service obligations for the entire 2001-02 fiscal year on March 29,
2001. The State had also passed legislation that extended certain
revenue-raising authority and made interim appropriations for State personal
service costs, various grants to local governments, and certain other items
through August 2, 2001. In prior years, the State had enacted similar
interim appropriations to permit the State to continue operations until final
action on the Governor's Executive Budget. Upon enactment of a budget for
the 2001-02 fiscal year, the State will produce a revised economic forecast
and a 2001-02 Financial Plan.
On February 13, 2001, the DOB issued a revised Financial Plan (the
"February Financial Plan") that incorporated the Governor's amendments to his
2001-02 Executive Budget. The State's General Fund (the major operating Fund
of the State) was projected in the February Financial Plan to be balanced on
a cash basis for the 2001-02 fiscal year. Total receipts and transfers from
other funds were projected to reach $42.66 billion, an increase of $200
million from the Governor's Executive Budget forecast, and disbursements and
transfers to other funds were projected to remain unchanged at $41.34 billion
compared to the Executive Budget. The Governor had proposed retaining the
additional receipts as a reserve, consistent with his recommendations in the
Executive Budget for the use of the 2000-01 cash surplus projected at that
time.
The State reported that at the end of the 2000-01 fiscal year, the
General Fund had a closing balance of $1.10 billion and $3.52 billion on
deposit in the tax refund reserve account, which account is used to adjust
personal income tax collections across fiscal years to pay for tax refunds,
as well as to accomplish other February Financial Plan objectives. At the
end of the first quarter of the 2001-02 fiscal year, General Fund receipts
and transfers from other funds totaled $15.32 billion, $387 million higher
than the same period the year before. General Fund disbursements and
transfers to other funds totaled $10.29 billion in the first quarter, $940
million above the same period the year before.
Since the submission by the Governor of amendments to the Executive
Budget, discussions between the Governor and the Legislature have focused on
the levels of resources available to finance changes to the February
Financial Plan within the constraints of a weakening economy and a balanced
financial plan. Revenues associated with the April 2001 settlement of
calendar year 2000 tax liabilities exceeded projections in the February
Financial Plan due primarily to strong activity in capital gains and
financial sector bonuses that are not expected by DOB to recur in calendar
2001. However, DOB believes that receipts for the entire 2001-02 fiscal year
may fall below the estimates contained in the February Financial Plan due to
weakness in the economy and a slowdown in withholding and sales tax receipts
growth.
|_| State Governmental Funds Group. Substantially all State
non-pension financial operations are accounted for in the State's
governmental funds group. Governmental funds include:
o the General Fund, which is the major operating fund of the State and
receives all receipts that are not required by law to be deposited
in another fund, including most State tax receipts and certain fees,
transfers from other funds and miscellaneous receipts from other
sources;
o Special Revenue Funds, which account for the proceeds of specific
revenues (other than expendable trusts or major capital projects),
such as federal grants, that are legally restricted to specified
purposes;
o Capital Projects Funds, which account for financial resources of the
State to be used for the acquisition or construction of major
capital facilities (other than those financed by Special Revenue
Funds, Proprietary Funds and Fiduciary Funds); and
o Debt Service Funds, which account for the accumulation of resources
(including receipts from certain taxes, transfers from other funds
and miscellaneous revenues, such as dormitory room rental fees,
which are dedicated by statute for payment of lease-purchase
rentals) for the payment of general long-term debt service and
related costs and payments under lease-purchase and
contractual-obligation financing arrangements.
|_| Local Government Assistance Corporation. In 1990, as part of a
State fiscal reform program, legislation was enacted creating Local
Government Assistance Corporation, a public benefit corporation empowered to
issue long-term obligations to fund payments to local governments that had
been traditionally funded through the State's annual seasonal borrowing. The
legislation authorized the corporation to issue its bonds and notes in an
amount not in excess of $4.7 billion (exclusive of certain refunding bonds).
Over a period of years, the issuance of these long-term obligations, which
are to be amortized over no more than 30 years, was expected to eliminate the
need for continued short-term seasonal borrowing.
The legislation also dedicated revenues equal to one percent of the
four percent State sales and use tax to pay debt service on these bonds. The
legislation also imposed a cap on the annual seasonal borrowing of the State
at $4.7 billion, less net proceeds of bonds issued by the corporation and
bonds issued to provide for capitalized interest. An exception is in cases
where the Governor and the legislative leaders have certified the need for
additional borrowing and have provided a schedule for reducing it to the
cap. If borrowing above the cap is thus permitted in any fiscal year, it is
required by law to be reduced to the cap by the fourth fiscal year after the
limit was first exceeded. This provision capping the seasonal borrowing was
included as a covenant with the corporation's bondholders in the resolution
authorizing such bonds.
As of June 1995, the corporation had issued bonds and notes to provide
net proceeds of $4.7 billion, completing the program. The impact of its
borrowing, as well as other changes in revenue and spending patterns, is that
the State has been able to meet its cash flow needs throughout the fiscal
year without relying on short-term seasonal borrowings.
|X| Authorities. The fiscal stability of the State is related in
part to the fiscal stability of its public Authorities. Authorities have
various responsibilities, including those which finance, construct and/or
operate revenue-producing public facilities. Authorities are not subject to
the constitutional restrictions on the incurrence of debt that apply to the
State itself, and may issue bonds and notes within the amounts and
restrictions set forth in their legislative authorization. As of December
31, 2000, there were 18 Authorities that had outstanding debt of $100 million
or more, and the aggregate outstanding debt, including refunding bonds, of
these Authorities was almost $98 billion, only a portion of which constitutes
State-supported or State-related debt.
Authorities are generally supported by revenues generated by the
projects financed or operated, such as tolls charged for the use of highways,
bridges or tunnels, charges for public power, electric and gas utility
services, rentals charged for housing units and charges for occupancy at
medical care facilities. In addition, State legislation authorizes several
financing techniques for Authorities. There are statutory arrangements
providing for State local assistance payments otherwise payable to localities
to be made under certain circumstances to Authorities. Although the State
has no obligation to provide additional assistance to localities whose local
assistance payments have been paid to Authorities under these arrangements,
if local assistance payments are diverted, the affected localities may seek
additional State assistance. Some Authorities also receive moneys from State
appropriations to pay for the operating costs of certain of their programs.
|X| Ratings of the State's Securities. As of October 1, 2001,
Standard & Poor's Ratings Services, a Division of The McGraw-Hill Companies
("Standard & Poor's"), has rated the State's general obligation bonds "AA,"
Moody's Investors Service, Inc. ("Moody's") has rated those bonds "A2" and
Fitch, Inc. ("Fitch") has rated those bonds "AA."
Ratings reflect only the respective views of the ratings organizations,
and an explanation of the significance of such ratings must be obtained from
the rating agency furnishing the rating. There is no assurance that a
particular rating will continue for any given period of time or that a rating
will not be revised downward or withdrawn entirely if, in the judgment of the
agency originally establishing the rating, circumstances so warrant. A
downward revision or withdrawal of a rating may have an effect on the market
price of the State and municipal securities in which the Trust invests.
|X| The State's General Obligation Debt. As of March 31, 2001, the
State had approximately $4.3 billion in general obligation bonds
outstanding. Principal and interest due on general obligation bonds and
interest due on bond anticipation notes were $677.5 million for the 2000-2001
fiscal year and are estimated to be $632.6 million for the State's 2001-02
fiscal year.
|X| Pending Litigation. The State is a defendant in numerous legal
proceedings pertaining to matters incidental to the performance of routine
governmental operations. That litigation includes, but is not limited to,
claims asserted against the State involving State finances and programs and
arising from alleged violations of civil rights, alleged torts, alleged
breaches of contracts, real property proceedings and other alleged violations
of State and federal laws. These proceedings could affect adversely the
financial condition of the State in the 2001-02 fiscal year or thereafter.
The State believes that the proposed February Financial Plan includes
sufficient reserves for the payment of judgments that may be required during
the 2001-02 fiscal year. There can be no assurance, however, that an adverse
decision in any of these proceedings would not exceed the amount the February
Financial Plan reserves for the payment of judgments and, therefore, could
affect the ability of the State to maintain a balanced 2001-02 Financial
Plan.
In addition, the State is party to other claims and litigation that
either its legal counsel has advised are not probable that the State will
suffer adverse court decisions or the State has determined are not material.
Although the amounts of potential losses, if any, are not presently
determinable, it is the State's opinion that its ultimate liability in these
cases is not expected to have a material adverse effect on the State's
financial position in the 2001-02 fiscal year or thereafter.
|X| Other Functions. Certain localities in addition to New York City
have experienced financial problems and have requested and received
additional State assistance during the last several State fiscal years. The
potential impact on the State of any future requests by localities for
additional oversight or financial assistance is not included in the
projections of the State's receipts and disbursements for the State's 2001-02
fiscal year.
|X| Factors Affecting Investments in New York City Municipal
Securities. New York City (the "City") has a highly diversified economic
base, with a substantial volume of business activity in the service,
wholesale and retail trade and manufacturing industries and is the location
of many securities, banking, law, accounting, news media and advertising
firms.
Economic activity in the City has experienced periods of growth and
recession and can be expected to experience periods of growth and recession
in the future. Changes in the economic activity in the City, particularly
employment, per capita personal income and retail sales may have an impact on
the City. From 1969 to 1977, the City experienced substantial declines in
employment, but from 1978 to 1987 the City experienced strong growth in jobs,
especially in the City's finance, insurance and real estate sectors due in
large part to lower inflation, lower interest rates and a strong securities
market. Beginning in 1988, employment growth in the City slowed, and in 1990
the City experienced job losses, although the U.S. economy expanded during
that period. During 1991 and 1992, employment levels in the City continued to
decline. In recent years, the City experienced increases in employment. Real
per capita personal income (i.e., per capita personal income adjusted for the
effects of inflation and the differential in living costs) has generally
experienced fewer fluctuations than employment in the City. Although the City
periodically experienced declines in real per capita personal income between
1969 and 1981, real per capita personal income in the City has generally
increased from the mid-1980's until the present. In nearly all of the years
between 1969 and 1990 the City experienced strong increases in retail sales.
However, from 1991 to 1993, the City experienced a weak period of retail
sales. Since 1994, the City has returned to a period of growth in retail
sales. Overall, the City's economic improvement accelerated significantly
between 1997 and 1999. Much of the increase can be traced to the performance
of the securities industry, but the City's economy also produced gains in the
retail trade sector, the hotel and tourism industry, and business services,
with private sector employment growing at a record pace. The City's current
financial plan assumes that, after strong growth in 2000, moderate economic
growth will exist through calendar year 2003, with moderating job growth and
wage increases.
For each of the 1981 through 2000 fiscal years, the City had an
operating surplus, before discretionary and other transfers, and achieved
balanced operating results as reported in accordance with generally accepted
accounting principles after discretionary and other transfers. The City has
been required to close substantial gaps between forecast revenues and
forecast expenditures in order to maintain balanced operating results. There
can be no assurance that the City will continue to maintain balanced
operating results as required by State law without tax or other revenue
increases or reductions in City services or entitlement programs, which could
adversely affect the City's economic base.
The Mayor is responsible for preparing the City's financial plan,
including the City's current financial plan for the 2001 through 2005 fiscal
years (referred to below as the "2001-2005 Financial Plan," or "Financial
Plan").
The City's projections set forth in the Financial Plan are based on
various assumptions and contingencies which are uncertain and which may not
materialize. Implementation of the Financial Plan is dependent upon the
City's ability to market its securities successfully. The City's program for
financing capital projects for fiscal years 2001 through 2005 contemplates
the issuance of approximately $11.4 billion of general obligation bonds and
approximately $5.54 billion of bonds to be issued by the New York City
Transitional Finance Authority (the "Finance Authority"). In addition, it is
currently expected that the City will have access to approximately $2.4
billion (including the $604 million of bond proceeds received by March 2001)
of proceeds from the sale of tobacco settlement bonds to be issued by TSASC,
Inc. ("TSASC"). Such bonds are secured by revenues derived from the
settlement of litigation with tobacco companies selling cigarettes in the
United States. The Finance Authority and TSASC were created to assist the
City in financing its capital program while keeping the City's indebtedness
within the forecast level of the constitutional restrictions on the amount of
debt the City is authorized to incur.
In addition, the City issues revenue and tax anticipation notes to
finance its seasonal working capital requirements. The success of projected
public sales of City, New York City Municipal Water Finance Authority ("Water
Authority"), Finance Authority, TSASC and other bonds and notes will be
subject to prevailing market conditions. The City's planned capital and
operating expenditures are dependent upon the sale of its general obligation
debt, as well as debt of the Water Authority, Finance Authority and TSASC.
Future developments concerning the City and public discussion of such
developments, as well as prevailing market conditions, may affect the market
for outstanding City general obligation bonds and notes.
The City Comptroller and other agencies and public officials issue
periodic reports and make public statements which, among other things, state
that projected revenues and expenditures may be different from those forecast
in the City's financial plans. It is reasonable to expect that such reports
and statements will continue to be issued and to engender public comment.
|X| The City's 2001-2005 Financial Plan. The Financial Plan for the
2001 through 2005 fiscal years, released on January 25, 2001, projects that
revenues and expenditures for the 2001 and 2002 fiscal years will be balanced
in accordance with generally accepted accounting principles, and projects
gaps of $2.4 billion, $2.5 billion and $2.3 billion for fiscal years 2003
through 2005, respectively, after implementation of a gap closing program.
The Financial Plan depends upon its projections of increased tax revenues in
fiscal years 2001 through 2004, reflecting primarily increases in projected
personal income, business and sales tax revenues; projections of increases in
revenues in fiscal years 2001 and 2002 due to reductions in proposed tax
cuts; projections of increased pension costs resulting primarily from a cost
of living adjustment in pension payments for the years 2001 through 2004; an
increase in labor costs in fiscal years 2001 through 2004 to reflect the
elimination of previously planned savings, partially offset by recently
negotiated fringe benefit cost savings; and other net spending increases,
including increased spending for Medicaid, police, energy, debt service and
other agency spending. The Financial Plan further includes a proposed
discretionary transfer in the 2001 fiscal year of $2.3 billion to pay debt
service due in fiscal year 2002 and a proposed discretionary transfer in
fiscal year 2002 to pay debt service due in fiscal year 2003 of $345 million.
The Financial Plan is based on numerous assumptions, including the
condition of the City's and the region's economies and the concomitant
receipt of economically sensitive tax revenues in the amounts projected. The
Financial Plan is subject to various other uncertainties and contingencies
relating to, among other factors, the extent, if any, to which wage increases
for City employees exceed the annual wage costs assumed for the 2001 through
2005 fiscal years; continuation of projected interest earnings assumptions
for pension fund assets and current assumptions with respect to wages for
City employees affecting the City's required pension fund contributions; the
willingness and ability of the State to provide the aid contemplated by the
Financial Plan and to take various other actions to assist the City; the
ability of the Health and Hospitals Corporation, the Board of Education and
other such agencies to maintain balanced budgets; the willingness of the
Federal government to provide the amount of Federal aid contemplated in the
Financial Plan; the impact on City revenues and expenditures of Federal and
State welfare reform and any future legislation affecting Medicare or other
entitlement programs; adoption of the City's budgets by the City Council in
substantially the forms submitted by the Mayor; the ability of the City to
implement cost reduction initiatives, and the success with which the City
controls expenditures; the impact of conditions in the real estate market on
real estate tax revenues; the City's ability to market its securities
successfully in the public credit markets; and unanticipated expenditures
that may be incurred as a result of the need to maintain the City's
infrastructure.
The Financial Plan contains a labor reserve for merit pay wage
increases for City employees for two (2) years after their collective
bargaining agreements expire, at a cost of $355 million, $750 million, $800
million and $800 million in fiscal years 2001 through 2004, respectively.
The Financial Plan does not make any provision for wage increases other than
the labor reserve for merit pay increases discussed above.
The Financial Plan also reflects a proposed tax reduction program
including the elimination of the commercial rent tax over four (4) years; the
extension of current tax reductions for owners of cooperative and condominium
apartments; an earned income tax credit; a credit against the personal income
tax for resident owners of Subchapter S corporations; a repeal of the $2
hotel tax; the elimination of the sales tax on clothing and footwear; and a
10% reduction in business taxes, each of which requires approval by the State
legislature and/or the City Council.
On March 1, 2001, the City Comptroller issued a report on the Financial
Plan, which projected a surplus for fiscal year which could exceed the
Financial Plan projections by between $29 million and $49 million. In
addition, the report projected a possible budget gap of $290 million, or a
possible surplus of $671 million, for fiscal year 2002, and budget gaps of
between $2.3 billion and $3.2 billion, $2.9 billion and $4.0 billion, and
$2.8 billion and $4.0 billion in fiscal years 2003 through 2005,
respectively, depending on, among other considerations, whether the State
legislature fails to approve proposed tax reductions in fiscal years 2002
through 2005; the City incurs labor costs exceeding those assumed in the
Financial Plan in fiscal years 2002 through 2005; the City is able to
complete proposed asset sales, including the sale of New York City Off-Track
Betting Corporation in fiscal year 2002; and the city receives $350 million
in assumed State and Federal aid in each of fiscal years 2002 through 2005,
which has been proposed in prior years without success.
Various actions proposed in the Financial Plan are uncertain. If these
measures cannot be implemented, the City will be required to take other
actions to decrease expenditures or increase revenues to maintain a balanced
financial plan. In addition, the economic and financial condition of the
City may be affected by various financial, social, economic and other factors
which could have a material effect on the City. For example, as previously
noted, the terrorist attack on the World Trade Center on September 11, 2001
has disrupted a number of businesses, caused extensive property damage, is
likely to reduce travel, tourism and leisure spending and have other adverse
impacts on the City. Additionally, many businesses located in and around the
World Trade Center may relocate to other cities and other states. Therefore,
the City is likely to suffer a decrease in revenue and an increase in
expenditures related to the attack, the economic effect of which will be
likely to have a significant adverse impact on the finances and budgets of
the City. It is impossible at this time accurately to forecast the scope and
extent of such adverse effects
The projections and assumptions contained in the Financial Plan are
subject to revision which may involve substantial change, and no assurance
can be given that these estimates and projections, which include actions
which the City expects will be taken but which are not within the City's
control, will be realized.
|X| Ratings of the City's Bonds. As of October 1, 2001, Moody's,
Standard & Poor's and Fitch rated the City's outstanding general obligation
bonds "A2," "A" and "A+," respectively. These ratings reflect only the views
of Moody's, Standard & Poor's and Fitch from which an explanation of the
significance of such ratings may be obtained. There is no assurance that
those ratings will continue for any given period of time or that they will
not be revised downward or withdrawn entirely. Any downward revision or
withdrawal could have an adverse effect on the market prices of the City's
bonds. On July 16, 1998, Standard & Poor's revised its rating of City bonds
to "A-" from "BBB+." On September 13, 2000, Standard & Poor's revised its
rating of City Bonds upward to "A." Moody's rating of City bonds was revised
in August 2000 to "A2" from "A3." On March 8, 1999, Fitch revised its rating
of City bonds upward to "A" from "A-" and on September 15, 2000, Fitch
revised its rating to "A+."
|X| The City's Outstanding Indebtedness. As of December 31, 2000,
the City and the Municipal Assistance Corporation for the City of New York
had, respectively, $26.231 billion and $2.455 billion of outstanding net
long-term debt.
The City depends on the State for State aid both to enable the City to
balance its budget and to meet its cash requirements. There can be no
assurance that there will not be reductions in State aid to the City from
amounts currently projected; that State budgets will be adopted by the April
1 statutory deadline, or interim appropriations will be enacted; or that any
such reductions or delays will not have adverse effects on the City's cash
flow or expenditures. In addition, the Federal budget negotiation process
could result in a reduction or delay in the receipt of Federal grants which
could have additional adverse effects on the City's cash flows or revenues.
|X| Pending Litigation. The City is a defendant in lawsuits
pertaining to material matters, including claims asserted that are incidental
to performing routine governmental and other functions. That litigation
includes, but is not limited to, actions commenced and claims asserted
against the City arising out of alleged constitutional violations, torts,
breaches of contract, and other violations of law and condemnation
proceedings. While the ultimate outcome and fiscal impact, if any, on the
City of such proceedings and claims are not currently predictable, adverse
determinations in certain of them might have material adverse effect upon the
City's ability to carry out the Financial Plan. For the fiscal year ended on
June 30, 2000, the City paid $490.7 million for judgments and claims. The
Financial Plan includes provision for the payment of judgments and claims of
$468.3 million, $463.5 million, $482.7 million, $507.7 million and $536.2
million for the 2001 through 2005 fiscal years, respectively. As of June 30,
2000, the City estimated its potential future liability for outstanding
claims against it to be approximately $3.5 billion.
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
repurchase agreements, and the Trust may lend its portfolio securities as
described in the Statement of Additional Information;
|_| The Trust cannot borrow money in excess of 10% of the value of
its total assets or make any investment when borrowings exceed 5% of the
value of its total assets; it may borrow only as a temporary measure for
extraordinary or emergency purposes; no assets of the Trust may be pledged,
mortgaged or assigned to secure a debt;
|_| The Trust cannot invest in commodities or commodity
contracts, or invest in interests in oil, gas, or other mineral exploration
or development programs;
|_| The Trust cannot invest in real estate; however, the Trust may
purchase debt securities issued by companies which invest in real estate or
interests therein;
|_| The Trust cannot purchase securities on margin or make short
sales of securities;
|_| The Trust cannot invest in or hold securities of any issuer if
those officers and trustees or directors of the Trust or its advisor who
beneficially own individually more than 0.5% of the securities of such issuer
together own more than 5% of the securities of such issuer;
|_| The Trust cannot underwrite securities of other companies except
insofar as the Trust may be deemed an underwriter under the Securities Act of
1933 in connection with the disposition of portfolio securities;
|_| The Trust cannot purchase securities of other investment
companies, except in connection with a merger, consolidation, acquisition or
reorganization.
|_| The Trust cannot issue "senior securities," but this does not prohibit
certain investment activities for which assets of the Trust are designated as
segregated, or margin, collateral or escrow arrangements are established, to
cover the related obligations.
|_| As a fundamental policy, The Trust cannot invest in any debt
instrument having a maturity in excess of the time period provided for in
Rule 2a-7 of the Investment Company Act of 1940, or any other applicable
rule, or in the case of a debt instrument subject to a repurchase agreement
or called for redemption, unless purchased subject to a demand feature which
may not exceed the time period provided for in Rule 2a-7, or any other
applicable rule.
|_| The Trust cannot invest 25% or more of its total assets in any one
industry; however, for the purposes of this restriction, municipal securities
and U.S. government obligations are not considered to be part of any single
industry.
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, diversified management
investment company organized as a Massachusetts business trust in 1979, 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.
The Board of Trustees has an Audit Committee and a Review
Committee. The members of the Audit Committee are Edward L. Cameron, C.
Howard Kast and F. William Marshall, Jr. The Audit Committee held six
meetings during the Trust's fiscal year ended June 30, 2001. The Audit
Committee provides the Board with recommendations regarding the selection of
the Trust's independent auditor. The Audit Committee also reviews the scope
and results of audits and the audit fees charged, reviews reports from the
Trust's independent audit concerning the Trust's internal accounting
procedures and controls and selects and nominates for approval by the Board
the independent Trustees, among other duties as set forth in the Committee's
charter.
The members of the Review Committee are Jon S. Fossel, Sam Freedman,
William L. Armstrong, Robert G. Avis and George C. Bowen. The Review
Committee held six meetings during the fiscal year ended June 30, 2001. The
Review Committee reviews reports and makes recommendations to the Board
concerning the fees paid to the Trust's Transfer Agent and the services
provided to the Trust by the Transfer Agent. The Review Committee also
reviews policies and procedures adopted by the Trust to comply with the
Investment Company Act of 1940 and other applicable law, among other duties
as set forth in the Committee's charter.
|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 and shareholders shall have no personal
liability to any such person, to the extent permitted by law.
Trustees and Officers of the Trust. The Trust's Trustees and officers and
their principal occupations and business affiliations during the past five
years are listed below. Trustees denoted with an asterisk (*) below are
deemed to be "interested persons" of the Trust under the Investment Company
Act. All of the Trustees are also trustees, directors or managing general
partners of the following Denver-based Oppenheimer funds1:
Oppenheimer Cash Reserves Oppenheimer Select Managers
Oppenheimer Champion Income Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Capital Income Fund Oppenheimer Strategic Income Fund
Oppenheimer High Yield Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer International Bond Fund Oppenheimer Variable Account Funds
Oppenheimer Integrity Funds Panorama Series Fund, Inc.
Oppenheimer Limited-Term Government
Fund Centennial America Fund, L. P.
Oppenheimer Main Street Funds, Inc. Centennial California Tax Exempt Trust
Oppenheimer Main Street Opportunity
Fund Centennial Government Trust
Oppenheimer Main Street Small Cap
Fund Centennial Money Market Trust
Oppenheimer Municipal Fund Centennial New York Tax Exempt Trust
Oppenheimer Real Asset Fund Centennial Tax Exempt Trust
Messrs. Swain, Murphy, Bishop, Wixted, Farrar and Zack, who are
officers of the Trust, respectively hold the same offices with the other
Denver-based Oppenheimer funds. As of October 9, 2001, the Trustees and
officers of the Trust as a group owned less than 1% of the outstanding shares
of the Fund. The foregoing statement does not reflect shares held of record
by an employee benefit plan for employees of OppenheimerFunds, Inc. other
than shares beneficially owned under that plan by the officers of the Fund
listed below. Mr. Murphy is the trustee of that plan.
James C. Swain*, Chairman, Chief Executive Officer and Trustee, Age: 68
6803 South Tucson Way, Englewood, Colorado 80112
Vice Chairman (since September 1988) of OppenheimerFunds, Inc.; of which the
Manager is a wholly-owned subsidiary; formerly President and a director of
the Manager and Chairman of the Board of Shareholder Services, Inc., a
transfer agent subsidiary of OppenheimerFunds, Inc.
John V. Murphy*, President, Age: 52
498 7th Avenue, New York, New York 10018
Chairman and Chief Executive Officer and director (since July 2001) and
President (since August 2000) of the OppenheimerFunds, Inc. (an investment
advisor); President and a trustee of other Oppenheimer funds; trustee MML
Series Investment Fund, an open-end investment company; President and a
director (since July 2001) of Oppenheimer Acquisition Corp., the Manager's
parent holding company; President, Chief Executive Officer and a director
(since July 2001) of OFI Private Investments, Inc., an investment adviser
subsidiary of the Manager; Chairman and a director (since July 2001) of
Shareholder Services, Inc. and of Shareholder Financial Services, Inc.,
transfer agent subsidiaries of the Manager; President and a director (since
July 2001) of Oppenheimer Partnership Holdings, Inc., a holding company
subsidiary of the Manager; a director of HarbourView Asset Management
Corporation and of Oppenheimer Real Asset Management, Inc. (since July 2001),
investment adviser subsidiaries of the Manager; President and a director
(since July 2001) of OppenheimerFunds Legacy Program, a charitable trust
program established by the Manager; formerly Chief Operating Officer (August
2000 - July 2001) of the Manager; Executive Vice President of MassMutual
Financial Group (from 1995 to 1997); Executive Vice President and Chief
Operating Officer of David L. Babson & Company (from 1995 to 1997), an
investment advisor; Chief Operating Officer of Concert Capital Management,
Inc. (from 1993 to 1996), and investment advisor.
William L. Armstrong, Trustee, Age: 64.
6803 South Tucson Way, Englewood, Colorado 80112
Chairman of the following private mortgage banking companies: Cherry Creek
Mortgage Company (since 1991), Centennial State Mortgage Company (since
1994), The El Paso Mortgage Company (since 1993), Transland Financial
Services, Inc. (since 1997); Chairman of the following private companies:
Great Frontier Insurance (insurance agency) (since 1995) and Ambassador Media
Corporation (since 1984); Director of the following public companies: Storage
Technology Corporation (computer equipment company) (since 1991), Helmerich &
Payne, Inc. (oil and gas drilling/production company) (since 1992),
UNUMProvident (insurance company) (since 1991); formerly Director of
International Family Entertainment (television channel) (1992 - 1997) and
Natec Resources, Inc. (air pollution control equipment and services company)
(1991-1995), Frontier Real Estate, Inc. (residential real estate brokerage)
(1994-1999), and Frontier Title (title insurance agency) (1995-June 1999);
formerly U.S. Senator (January 1979-January 1991).
Robert G. Avis, Trustee, Age: 70.
6803 South Tucson Way, Englewood, Colorado 80112
Formerly, (until February 2001) Director and President of A.G. Edwards
Capital, Inc. (General Partner of private equity funds), formerly, (until
March 2000) Chairman, President and Chief Executive Officer of A.G. Edwards
Capital, Inc.; formerly, (until March 1999) Vice Chairman and Director of
A.G. Edwards, Inc. and Vice Chairman of A.G. Edwards & Sons, Inc. (its
brokerage company subsidiary); (until March 1999) Chairman of A.G. Edwards
Trust Company and A.G.E. Asset Management (investment advisor); (until March
2000) a Director of A.G. Edwards & Sons and A.G. Edwards Trust Company.
George C. Bowen, Trustee, Age: 65.
6803 South Tucson Way, Englewood, Colorado 80112
Formerly (until April 1999) Mr. Bowen held the following positions: Senior
Vice President (from September 1987) and Treasurer (from March 1985) of
OppenheimerFunds, Inc; Vice President (from June 1983) and Treasurer (since
March 1985) of OppenheimerFunds, Distributor, Inc., a subsidiary of
OppenheimerFunds, Inc. and the Trust's Sub-Distributor; Senior Vice President
(since February 1992), Treasurer (since July 1991) Assistant Secretary and a
director (since December 1991) of the Manager; Vice President (since October
1989) and Treasurer (since April 1986) of HarbourView 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); Treasurer of OppenheimerFunds
International Ltd. and Oppenheimer Millennium Funds plc (since October 1997).
Edward L. Cameron, Trustee, Age: 63
6803 South Tucson Way, Englewood, Colorado 80112
Formerly (from 1974-1999) a partner with PricewaterhouseCoopers LLC (an
accounting firm) and Chairman, Price Waterhouse LLP Global Investment
Management Industry Services Group (from 1994-1998).
Jon S. Fossel, Trustee, Age: 59.
6803 South Tucson Way, Englewood, Colorado 80112
Formerly (until October 1996) Chairman and a director of OppenheimerFunds,
Inc.; President and a director of Oppenheimer Acquisition Corp., Shareholder
Services, Inc. and Shareholder Financial Services, Inc.
Sam Freedman, Trustee, Age: 61.
6803 South Tucson Way, Englewood, Colorado 80112
Formerly (until October 1994) Chairman and Chief Executive Officer of
OppenheimerFunds Services, Chairman, Chief Executive Officer and a director
of Shareholder Services, Inc., Chairman, Chief Executive Officer and director
of Shareholder Financial Services, Inc., Vice President and director of
Oppenheimer Acquisition Corp. and a director of OppenheimerFunds, Inc.
Richard F. Grabish*, Trustee, Age: 53.
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President, Assistant Director of Sales and Marketing since March
1997, and Manager of Private Client Services since June 1985 for A.G. Edwards
& Sons, Inc. (broker/dealer and investment firm). Chairman and Chief
Executive Officer of A.G. Edwards Trust Company since March 2001). Director
of A.G. Edwards & Sons, Inc. since March 1988); formerly (until March 1987)
President and Vice Chairman of A.G. Edwards Trust Company.
C. Howard Kast, Trustee, Age: 79.
6803 South Tucson Way, Englewood, Colorado 80112
Formerly Managing Partner of Deloitte, Haskins & Sells (an accounting firm).
Robert M. Kirchner, Trustee, Age: 80.
6803 South Tucson Way, Englewood, Colorado 80112
President of The Kirchner Company (management consultants).
F. William Marshall, Jr., Trustee, Age: 59.
6803 South Tucson Way, Englewood, Colorado 80112
Formerly (until 1999) Chairman of SIS & Family Bank, F.S.B. (formerly SIS
Bank); President, Chief Executive Officer and Director of SIS Bankcorp., Inc.
and SIS Bank (formerly Springfield Institution for Savings) (1993-1999);
Executive Vice President (until 1999) of Peoples Heritage Financial Group,
Inc.; Chairman and Chief Executive Office of Bank of Ireland First Holdings,
Inc. and First New Hampshire Banks (1990-1993); Trustee (since 1996) of
MassMutual Institutional Funds and of MML Series Investment Fund (open-end
investment companies).
Michael A. Carbuto, Vice President and Portfolio Manager, Age: 46.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President (since May 1988) of OppenheimerFunds, Inc.; an officer and
portfolio manager of other Oppenheimer funds; formerly Vice President of the
Distributor (May 1988 - September 1999).
Robert G. Zack, Vice President and Secretary, Age: 53.
498 7th Avenue, New York, New York 10018
Acting General Counsel (from November 1, 2001), Senior Vice President (since
May 1985), Associate General Counsel (from May 1981 until November 1, 2001)
of OppenheimerFunds, Inc.; Assistant Secretary of Shareholder Services, Inc.
(since May 1985), Shareholder Financial Services, Inc. (since November 1989);
OppenheimerFunds International Ltd. and Oppenheimer Millennium Funds plc
(since October 1997); an officer of other Oppenheimer funds.
Brian W. Wixted, Treasurer, Age: 42.
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer (since March 1999) of OppenheimerFunds,
Inc.; Treasurer (since March 1999) of HarbourView Asset Management
Corporation, Shareholder Services, Inc., Oppenheimer Real Asset Management
Corporation, Shareholder Financial Services, Inc. and Oppenheimer Partnership
Holdings, Inc., of OFI Private Investments, Inc. (since March 2000) and of
OppenheimerFunds International Ltd. and Oppenheimer Millennium Funds plc
(since May 2000); Treasurer and Chief Financial Officer (since May 2000) of
Oppenheimer Trust Company; Assistant Treasurer (since March 1999) of
Oppenheimer Acquisition Corp. and of the Manager; an officer of other
Oppenheimer funds; formerly Principal and Chief Operating Officer, Bankers
Trust Company - Mutual Fund Services Division (March 1995 - March 1999); Vice
President and Chief Financial Officer of CS First Boston Investment
Management Corp. (September 1991 - March 1995).
Robert J. Bishop, Assistant Treasurer, Age: 42.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of OppenheimerFunds, Inc. (since May 1996); an officer of
other Oppenheimer funds; formerly an Assistant Vice President (April 1994 -
May 1996) and a Fund Controller of OppenheimerFunds, Inc.
Scott T. Farrar, Assistant Treasurer, Age: 36.
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of OppenheimerFunds, Inc. (since May 1996); Assistant
Treasurer of Oppenheimer Millennium Funds plc (since October 1997); an
officer of other Oppenheimer funds; formerly an Assistant Vice President
(April 1994 - May 1996) and a Fund Controller of OppenheimerFunds, Inc.
o Remuneration of Trustees. The officers of the Trust and Mr. Swain are
affiliated with the Manager and 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,
2001. The compensation from all of the Denver-based Oppenheimer funds
includes the Trust and is compensation received as a director, trustee,
managing general partner or member of a committee of the Board during the
calendar year 2000.
-----------------------------------------------------------------------------
Aggregate Total Compensation
---------------------------- Compensation from all Denver-Based
Trustee's Name from Trust1 Oppenheimer Funds2
and Other Positions (41 Funds)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
William L. Armstrong $208 $49,270
Review Committee Member
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Robert G. Avis $242 $72,000
Review Committee Member
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
George C. Bowen $209 $55,948
Review Committee Member
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Edward L. Cameron $159 $26,709
Audit Committee Chairman
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Jon S. Fossel $263 $77,880
Review Committee Chairman
------------------------------------------------
-----------------------------------------------------------------------------
Sam Freedman $275 $80,100
Review Committee Member
------------------------------------------------
-----------------------------------------------------------------------------
Richard F. Grabish $8 $0
------------------------------------------------
-----------------------------------------------------------------------------
C. Howard Kast $291 $86,150
Audit Committee Member
-----------------------------------------------------------------------------
------------------------------------------------
Robert M. Kirchner $264 $76,950
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
F. William Marshall, Jr. $108 $3,768
Audit Committee Member
-----------------------------------------------------------------------------
* Effective July 1, 2000, William A. Baker and Ned M. Steel resigned as
Trustees of the Trust and subsequently became Trustees Emeritus of the
Trust. For the fiscal year ended June 30, 2001, Messrs. Baker and Steel
each received $191 aggregate compensation from the Trust and for the
calendar year ended December 31, 2000, they each received $63,999 total
compensation from all Denver-based Oppenheimer funds. Effective April 5,
2001, Raymond J. Kalinowski resigned as Trustee of the Trust. For the
fiscal year ended June 30, 2001, Mr. Kalinowski received $188 aggregate
compensation from the Trust and for the calendar year ended December 31,
2000, he received $73,500 total compensation from all Denver-based
Oppenheimer funds.
1. For the Trust's fiscal year end June 30, 2001.
2. For the 2000 calendar year.
o Deferred Compensation Plan for Trustees. The Trustees have adopted
a Deferred Compensation Plan for disinterested Trustees that enables them to
elect to defer receipt of all or a portion of the annual fees they are
entitled to receive from the Trust. Under the plan, the compensation
deferred by a Trustee is periodically adjusted as though an equivalent amount
had been invested in shares of one or more Oppenheimer funds selected by the
Trustee. The amount paid to the Trustee under this plan will be determined
based upon the performance of the selected funds.
Deferral of fees of the Trustees under this plan will not materially
affect the Trust's assets, liabilities or net income per share. This plan
will not obligate the Trust to retain the services of any Trustee or to pay
any particular level of compensation to any Trustee. Pursuant to an Order
issued by the Securities and Exchange Commission, the Trust may invest in the
funds selected by any Trustee under this plan without shareholder approval
for the limited purpose of determining the value of the Trustees' deferred
fee accounts.
|X| Major Shareholders. As of October 9, 2001 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 76,463,447.090 shares of the Trust which was 91.27% 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 manager with
research and support in managing the Trust's investments.
|X| The Investment Advisory Agreement. The Manager
provides investment advisory and management services to the Trust under an
investment advisory agreement between the Manager and the Trust. The Manager
selects securities for the Trust's portfolio and handles its day-to-day
business. The agreement requires the Manager, at its expense, to provide the
Trust with adequate office space, facilities and equipment. It also requires
the Manager to provide and supervise the activities of all administrative and
clerical personnel required to provide effective administration for the
Trust. Those responsibilities include the compilation and maintenance of
records with respect to its operations, the preparation and filing of
specified reports, and composition of proxy materials and registration
statements for continuous public sale of shares of the Trust.
Expenses not expressly assumed by the Manager under the investment
advisory agreement are paid by the Trust. The investment advisory agreement
lists examples of expenses paid by the Trust. The major categories relate to
interest, taxes, fees to unaffiliated Trustees, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs, certain printing
and registration costs and non-recurring expenses, including litigation
costs. The management fees paid by the Trust to the Manager are calculated
at the rates described in the Prospectus.
---------------------------------------------------------------------------------
Fiscal Year Management Fee Paid to Centennial Asset Management Corporation
ended 6/30
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
1999 $296,653
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
2000 $305,700
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
2001 $343,365
---------------------------------------------------------------------------------
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 terminate
or amend this undertaking at any time. For the fiscal years ended June 30,
1999, 2000 and 2001 the management fees payable by the Trust to the Manager
would have been $296,653, $305,700, and $343,365 respectively, without the
Manager's voluntary expense assumption. Those amounts do not reflect the
effect of the expense assumptions of $37,962, $48,269, and $55,546
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.
For other distribution expenses paid by the Trust, see the section entitled
"Service Plan" below. The Trust's Sub-Distributor is OppenheimerFunds
Distributor, Inc.
Portfolio Transactions. Portfolio decisions are based upon recommendations
and judgment of the Manager subject to the overall authority of the Board of
Trustees. Most purchases made by the Trust are principal transactions at net
prices, so the Trust incurs little or no brokerage costs. The Trust deals
directly with the selling or purchasing principal or market maker without
incurring charges for the services of a broker on its behalf unless the
Manager determines that a better price or execution may be obtained by using
the services of a broker. Purchases of portfolio securities from
underwriters include a commission or concession paid by the issuer to the
underwriter, and purchases from dealers include a spread between the bid and
asked prices.
The Trust seeks to obtain prompt execution of orders at the most
favorable net price. If broker/dealers are used for portfolio transactions,
transactions may be directed to broker/dealers for their execution and
research services. The research services provided by a particular broker may
be useful only to one or more of the advisory accounts of the Manager and its
affiliates. Investment research received for the commissions of those other
accounts may be useful both to the Trust and one or more of such other
accounts. Investment research services may be supplied to the Manager by a
third party at the instance of a broker through which trades are placed. It
may include information and analyses on particular companies and industries
as well as market or economic trends and portfolio strategy, receipt of
market quotations for portfolio evaluations, information systems, computer
hardware and similar products and services. If a research service also
assists the Manager in a non-research capacity (such as bookkeeping or other
administrative functions), then only the percentage or component that
provides assistance to the Manager in the investment decision-making process
may be paid in commission dollars.
The research services provided by brokers broaden the scope and
supplement the research activities of the Manager. That research provides
additional views and comparisons for consideration, and helps the Manager
obtain market information for the valuation of securities held in the Trust's
portfolio or being considered for purchase.
Subject to applicable rules covering the Manager's activities in this
area, sales of shares of the Trust and/or the other investment companies
managed by the Manager or distributed by the Distributor may also be
considered as a factor in the direction of transactions to dealers. That
must be done in conformity with the price, execution and other considerations
and practices discussed above. Those other investment companies may also
give similar consideration relating to the sale of the Trust's shares. No
portfolio transactions will be handled by any securities dealer affiliated
with the Manager.
The Trust may experience high portfolio turnover that may increase the
Trust's transaction costs. However, since brokerage commissions, if any, are
small, high turnover does not have an appreciable adverse effect upon the
income of the Trust.
Service Plan
The Trust has adopted a Service Plan for the shares. The plan has been
approved by a vote of the Board of Trustees, including a majority of the
Independent Trustees2, cast in person at a meeting called for the purpose of
voting on that plan.
Under the plan, the Manager and the Distributor may make payments to
affiliates and, in their sole discretion, from time to time, may use their
own resources (at no direct cost to the Trust) to make payments to brokers,
dealers or other financial institutions for distribution and administrative
services they perform. The Manager may use its profits from the advisory fee
it receives from the Trust. In their sole discretion, the Distributor and
the Manager may increase or decrease the amount of payments they make from
their own resources to plan recipients.
Unless a plan is terminated as described below, the plan continues in
effect from year to year but only if the Trust's Board of Trustees and its
Independent Trustees specifically vote annually to approve its continuance.
Approval must be by a vote cast in person at a meeting called for the purpose
of voting on continuing the plan. A plan may be terminated at any time by
the vote of a majority of the Independent Trustees or by the vote of the
holders of a "majority" (as defined in the Investment Company Act) of the
outstanding shares of the Trust.
The Board of Trustees and the Independent Trustees must approve all
material amendments to a plan. An amendment to increase materially the
amount of payments to be made under a plan must be approved by shareholders.
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. 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, 2001 payments under the plan totaled
$134,265, all of which was paid by the Distributor to recipients. That
included $564 paid to an affiliate of the Distributor's parent company. For
the fiscal year ended June 30, 2001, the Manager paid, in the aggregate,
$184,037 in fees out of its own resources for distribution assistance. Any
unreimbursed expenses the Distributor incurs with respect to the shares in
any fiscal quarter cannot be recovered in subsequent quarters. 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:
o 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.
o An investment in the Trust is not insured by the FDIC or any other
government agency.
o The Trust's yield is not fixed or guaranteed and will fluctuate.
o 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.
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, 2001 was 3.57%. Its tax-equivalent compounded
effective yield for the same period was 3.61% for an investor in the highest
federal tax bracket.
The tax-equivalent yield may be used to compare the tax effects of
income derived from the Trust with income from taxable investments at the tax
rates stated. Your tax bracket is determined by your federal and state
taxable income (the net amount subject to federal and state 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. For taxpayers
with income above certain levels, otherwise allowable itemized deductions are
limited. The Trust's tax equivalent yield for the highest tax bracket for the
seven-day period ended June 30, 2001 was 3.72%. Its tax-equivalent
compounded effective yield for the same period was 3.76% for an investor in
the highest tax bracket.
o Total Return Information. There are different types of "total
returns" to measure the Trust's performance. Total return is the change in
value of a hypothetical investment in the Trust over a given period, assuming
that all dividends and capital gains distributions are reinvested in
additional shares and that the investment is redeemed at the end of the
period. The cumulative total return measures the change in value over the
entire period (for example, ten years). An average annual total return shows
the average rate of return for each year in a period that would produce the
cumulative total return over the entire period. However, average annual
total returns do not show actual year-by-year performance. The Trust uses
standardized calculations for its total returns as prescribed by the SEC.
The methodology is discussed below.
|_| Average Annual Total Return. The "average annual total return"
of each class is an average annual compounded rate of return for each year in
a specified number of years. It is the rate of return based on the change in
value of a hypothetical initial investment of $1,000 ("P" in the formula
below) held for a number of years ("n") to achieve an Ending Redeemable Value
("ERV" in the formula) of that investment, according to the following formula:
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 6/30/01)
(7 days ended Effective Yield
6/30/01) (7 days ended
6/30/01)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
1-Year 5 Years 10 Years
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
2.01% 2.03% 3.09% 2.81% 2.62%
---------------------------------------------------------------------------------
|X| Other Performance Comparisons. Yield information may be
useful to investors in reviewing the Trust's performance. The Trust may make
comparisons between its yield and that of other investments, by citing
various indices such as The Bank Rate Monitor National Index (provided by
Bank Rate Monitor(TM)) which measures the average rate paid on bank money market
accounts, NOW accounts and certificates of deposits by the 100 largest banks
and thrifts in the top ten metro areas. When comparing the Trust's yield
with that of other investments, investors should understand that certain
other investment alternatives such as certificates of deposit, U.S.
government securities, money market instruments or bank accounts may provide
fixed yields and may be insured or guaranteed.
From time to time, the Trust may include in its advertisements and
sales literature performance information about the Trust cited in other
newspapers and periodicals, such as The New York Times, which may include
performance quotations from other sources.
From time to time the Trust may include in its advertisements and
sales literature the total return performance of a hypothetical investment
account that includes shares of the Trust and other Oppenheimer funds. The
combined account may be part of an illustration of an asset allocation model
or similar presentation. The account performance may combine total return
performance of the Trust and the total return performance of other
Oppenheimer funds included in the account. Additionally, from time to time,
the Trust's advertisements and sales literature may include, for illustrative
or comparative purposes, statistical data or other information about general
or specific market and economic conditions. That may include, for example,
o information about the performance of certain securities or commodities
markets or segments of those markets,
o information about the performance of the economies of particular
countries or regions,
o the earnings of companies included in segments of particular
industries, sectors, securities markets, countries or
regions,
o the availability of different types of securities or offerings of
securities,
o information relating to the gross national or gross domestic product of
the United States or other countries or regions,
o comparisons of various market sectors or indices to demonstrate
performance, risk, or other characteristics of the Trust.
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 Bond Fund Oppenheimer Main Street Growth & Income
Fund
Oppenheimer California Municipal Fund Oppenheimer Main Street Opportunity Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Main Street Small Cap Fund
Oppenheimer Capital Preservation Fund Oppenheimer MidCap Fund
Oppenheimer Capital Income Fund Oppenheimer Special Value Fund
Oppenheimer Champion Income Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Concentrated Growth Fund Oppenheimer Municipal Bond Fund
Oppenheimer Convertible Securities Fund OSM1 - Mercury Advisors S&P 500 Index
OSM1 - Mercury Advisors Focus Growth
Oppenheimer Developing Markets Fund Fund
Oppenheimer Disciplined Allocation Fund Oppenheimer New York Municipal Fund
Oppenheimer Value Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Discovery Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Emerging Growth Fund OSM1 - QM Active Balanced Fund
Oppenheimer Emerging Technologies Fund Oppenheimer Quest Balanced Value Fund
Oppenheimer Quest Capital Value Fund,
Oppenheimer Enterprise Fund Inc.
Oppenheimer Quest Global Value Fund,
Oppenheimer Europe Fund Inc.
Oppenheimer Rochester National
Municipals Oppenheimer Quest Opportunity Value Fund
OSM1- Gartmore Millennium Growth Fund II Oppenheimer Quest Value Fund, Inc.
Oppenheimer Global Fund Oppenheimer Real Asset Fund
Oppenheimer Global Growth & Income Fund OSM1 - Salomon Brothers Capital Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Growth Fund Oppenheimer Small Cap Value Fund
Oppenheimer High Yield Fund Oppenheimer Strategic Income Fund
Oppenheimer Intermediate Municipal Fund Oppenheimer Total Return Fund, Inc.
Oppenheimer International Bond Fund Oppenheimer Trinity Core Fund
Oppenheimer Trinity Large Cap Growth
Oppenheimer International Growth Fund Fund
Oppenheimer International Small Company
Fund Oppenheimer Trinity Value Fund
OSM1 -Jennison Growth Fund Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund Limited-Term New York Municipal Fund
Rochester Fund Municipals
and the following money market funds:
Centennial America Fund, L. P. Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust Centennial Tax Exempt Trust
Centennial Government Trust Oppenheimer Cash Reserves
Centennial Money Market Trust Oppenheimer Money Market Fund, Inc.
1 - "OSM" is Oppenheimer Select Managers
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
New York corporate income and franchise taxes. It will also be qualified
under New York law to pay exempt interest dividends that will be exempt from
New York State and New York City personal income tax. That exemption applies
to the extent that the Trust's distributions are attributable to interest on
New York municipal securities. Distributions from the Trust attributable to
income from sources other than New York municipal securities and U.S.
government obligations will generally be subject to New York income tax as
ordinary income.
Distributions by the Trust from investment income and long- and
short-term capital gains will generally not be excludable from taxable net
investment income in determining New York corporate franchise tax and New
York City general corporation tax for corporate shareholders of the Trust.
Additionally, certain distributions paid to corporate shareholders of the
Trust may be includable in income subject to the New York alternative minimum
tax.
Under the Internal Revenue Code, by December 31 each year the Trust
must distribute 98% of its taxable investment income earned from January 1
through December 31 of that year and 98% of its capital gains realized in the
period from November 1 of the prior year through October 31 of the current
year. If it does not, the Trust must pay an excise tax on the amounts not
distributed. It is presently anticipated that the Trust will meet those
requirements. However, the Trust's Board of Trustees and the Manager might
determine in a particular year that it would be in the best interest of
shareholders not to make distributions at the required levels and to pay the
excise tax on the undistributed amounts. That would reduce the amount of
income or capital gains available for distribution to shareholders.
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.
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.
Independent Auditors' Report
Centennial New York Tax Exempt Trust
To the Shareholders and Board of Trustees of Centennial New York Tax Exempt
Trust
We have audited the accompanying statement of assets and liabilities of Centen-
nial New York Tax Exempt Trust, including the statement of investments, as of
June 30, 2001, and the related statement of operations for the year then ended,
the statements of changes in net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the finan-
cial statements and financial highlights are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation
of securities owned as of June 30, 2001, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Cen-
tennial New York Tax Exempt Trust as of June 30, 2001, the results of its oper-
ations for the year then ended, the changes in its net assets for each of the
two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with accounting princi-
ples generally accepted in the United States of America.
Deloitte & Touche LLP
Denver, Colorado
July 23, 2001
Statement of Investments June 30, 2001
Centennial New York Tax Exempt Trust
Principal Value
Amount See Note 1
---------- ----------
Short-Term Tax-Exempt Obligations--99.0%
New York--99.0%
Babylon, NY IDA RB, J. D'Addario & Co. Project,
2.75%(/1/)............................................. $ 500,000 $ 500,000
Babylon, NY IDA RR RRB, Ogden Martin Project, FSA
Insured, 2.40%(/1/).................................... 3,500,000 3,500,000
Hempstead, NY IDA RRB, Trigen-Nassau Energy,
2.55%(/1/)............................................. 1,000,000 1,000,000
Jay Street Development Corp. NYC Facilities Lease RB,
Jay Street Project, Series A-3, 2.40%(/1/)............. 3,500,000 3,500,000
NY MTAU SPO RB, 3.05%, 7/26/01.......................... 3,500,000 3,500,000
NYC GOB, 7.25%, 8/15/01(/2/)............................ 3,500,000 3,517,473
NYC GOB, 8%, 8/1/01(/2/)................................ 3,000,000 3,057,209
NYC HDC MH RB, Monterey Project, Series A, 2.45%(/1/)... 3,400,000 3,400,000
NYC Health & Hospital Corp. RB, Health Systems, Series
E, 2.45%(/1/).......................................... 1,000,000 1,000,000
NYC IDA Civic Facility RB, Casa Project, 2.80%(/1/)..... 1,000,000 1,000,000
NYC IDA Civic Facility RB, YMCA Greater NY Project,
Prerefunded, 8%, 8/1/01(/2/)........................... 2,520,000 2,581,583
NYC MWFAU WSS RB, Series C, FGIC Insured, 3.15%(/1/).... 100,000 100,000
NYC Water FAU WSS RB, Series SGB 26, MBIA Insured,
2.58%(/1/)............................................. 2,500,000 2,500,000
NYS DA COP, Rockefeller University, 2.58%(/1/).......... 1,000,000 1,000,000
NYS DA RB, 2.58%(/1/)................................... 1,500,000 1,500,000
NYS DA RB, Columbia University, 2.55%, 8/1/01........... 1,350,000 1,350,000
NYS DA RB, Cornell University, Series A, 2.60%(/1/)..... 2,000,000 2,000,000
NYS DA RB, Cornell University, Series B, 3.10%(/1/)..... 400,000 400,000
NYS DA RB, MBIA/IBC Insured, 2.53%(/1/)................. 2,200,000 2,200,000
NYS DA RRB, Series CMC1B, 2.70%(/1/).................... 1,300,000 1,300,000
NYS Electric & Gas RB, 3.15%, 3/15/02(/2/).............. 1,750,000 1,750,000
NYS GOUN, Series A, 3.20%, 2/7/02(/2/).................. 1,000,000 1,000,000
NYS HFA RB, East 39 Street Housing, Series A,
2.50%(/1/)............................................. 2,500,000 2,500,000
NYS HFA RB, Victory Housing, Series A, 2.55%(/1/)....... 3,500,000 3,500,000
NYS LGAC RB, Series SG99, MBIA Insured, 2.51%,
10/1/01(/2/)........................................... 1,600,000 1,600,000
NYS MAG RB, Series 302, MBIA/IBC Insured, 2.63%(/1/).... 1,500,000 1,500,000
NYS MAG RB, Series CMC1, 2.80%(/1/)..................... 2,690,000 2,690,000
NYS PAU GP & RB, Series AA, 6.25%, 1/1/02(/2/).......... 1,200,000 1,242,777
NYS PAU GP & RB, Series W, 6.60%, 1/1/02................ 3,000,000 3,051,406
NYS TBTAU RB, Series SG-41, MBIA Insured, 2.51%(/1/).... 1,000,000 1,000,000
NYS TBTAU RB, Series T, 3.25%, 7/31/01(/2/)(/3/)........ 3,000,000 3,000,000
NYS Thruway Authority RB, Highway & Bridge Trust Fund,
Series 267, FSA Insured, 2.60%(/1/).................... 2,225,000 2,225,000
NYS Urban Empire Development Corp. RB, Series A,
2.58%(/1/)............................................. 2,600,000 2,600,000
PAUNYNJ SPO RRB, Versatile Structure-4, 3.20%, 7/10/01.. 2,560,000 2,560,000
4
Statement of Investments June 30, 2001 (Continued)
Centennial New York Tax Exempt Trust
Principal Value
Amount See Note 1
---------- -----------
Short-Term Tax-Exempt Obligations (Continued)
New York (Continued)
Westchester Cnty., NY, IDA RR RRB, Resco Co. Project,
Series A, AMBAC Insured, 4.95%, 7/1/01................ $2,500,000 $ 2,500,000
-----------
Total Investments, at Value (Cost $71,625,448).......... 99.0% 71,625,448
-----------
Other Assets Net of Liabilities......................... 1.0 744,797
---------- -----------
Net Assets.............................................. 100.0% $72,370,245
========== ===========
To simplify the listings of securities, abbreviations are used per the table
below:
COP--Certificates of Participation MTAU--Metropolitan Transportation
DA--Dormitory Authority Authority
MWFAU--Municipal Water Finance
FAU--Finance Authority Authority
NYC--New York City
GP--General Purpose NYS--New York State
GOB--General Obligation Bonds PAUNYNJ--Port Authority of New York &
GOUN--General Obligation Unlimited New Jersey
Nts. PAU--Power Authority
HDC--Housing Development Corp. RB--Revenue Bonds
HFA--Housing Finance Agency RR--Resource Recovery
IDA--Industrial Development Agency RRB--Revenue Refunding Bonds
LGAC--Local Government Assistance SPO--Special Obligations
Corp.
MAG--Mtg. Agency TBTAU--Triborough Bridge & Tunnel
MH--Multifamily Housing Authority
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 June 30, 2001. This instrument may
also have 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 face 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 $3,000,000 or 4.15% of the Trusts net assets as of June 30, 2001.
See accompanying Notes to Financial Statements.
5
Statement of Assets and Liabilities June 30, 2001
Centennial New York Tax Exempt Trust
ASSETS
Investments, at value (cost $71,625,448)--see accompanying
statement........................................................ $71,625,448
Cash.............................................................. 346,953
Receivables and other assets:
Interest......................................................... 845,236
Shares of beneficial interest sold............................... 98,581
Other............................................................ 7,438
-----------
Total assets.................................................... 72,923,656
-----------
LIABILITIES
Payables and other liabilities:
Shares of beneficial interest redeemed........................... 428,353
Dividends........................................................ 37,657
Service plan fees................................................ 35,249
Shareholder reports.............................................. 29,072
Trustees' compensation........................................... 10
Other............................................................ 23,070
-----------
Total liabilities............................................... 553,411
-----------
NET ASSETS........................................................ $72,370,245
===========
COMPOSITION OF NET ASSETS
Paid-in capital................................................... $72,363,928
Accumulated net realized gain (loss) on investment transactions... 6,317
-----------
NET ASSETS--applicable to 72,363,928 shares of beneficial interest
outstanding...................................................... $72,370,245
===========
NET ASSET VALUE, REDEMPTION PRICE AND OFFERING PRICE PER SHARE.... $1.00
See accompanying Notes to Financial Statements.
6
Statement of Operations For the Year Ended June 30, 2001
Centennial New York Tax Exempt Trust
INVESTMENT INCOME
Interest............................................................ $2,638,651
----------
EXPENSES
Management fees..................................................... 343,365
Service plan fees................................................... 134,265
Transfer and shareholder servicing agent fees....................... 47,698
Shareholder reports................................................. 28,958
Custodian fees and expenses......................................... 23,487
Legal, auditing and other professional fees......................... 9,909
Trustees' compensation.............................................. 2,598
Registration and filing fees........................................ 2,987
Other............................................................... 23,412
----------
Total expenses.................................................... 616,679
Less reduction to custodian expenses............................. (12,647)
Less reduction to excess expenses................................ (55,546)
----------
Net expenses...................................................... 548,486
----------
NET INVESTMENT INCOME............................................... 2,090,165
----------
NET REALIZED GAIN (LOSS) ON INVESTMENTS............................. (168)
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................ $2,089,997
==========
Statements of Changes in Net Assets
Year Ended June 30,
2001 2000
----------- -----------
OPERATIONS
Net investment income (loss)........................ $ 2,090,165 $ 1,730,572
Net realized gain (loss)............................ (168) 9,958
----------- -----------
Net increase (decrease) in net assets resulting from
operations......................................... 2,089,997 1,740,530
----------- -----------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS...... (2,090,165) (1,730,572)
----------- -----------
BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets resulting from
beneficial interest transactions................... 16,407,455 (5,838,875)
----------- -----------
NET ASSETS
Total increase (decrease)........................... 16,407,287 (5,828,917)
Beginning of period................................. 55,962,958 61,791,875
----------- -----------
End of period....................................... $72,370,245 $55,962,958
=========== ===========
See accompanying Notes to Financial Statements.
7
Financial Highlights
Centennial New York Tax Exempt Trust
Year Ended June 30,
2001 2000 1999 1998 1997
------- ------- ------- ------- -------
PER SHARE OPERATING DATA
Net asset value,
beginning of period.... $1.00 $1.00 $1.00 $1.00 $1.00
Income from investment
operations--net
investment income and
net realized gain...... .03 .03 .02 .03 .03
Dividends and/or
distributions to
shareholders........... (.03) (.03) (.02) (.03) (.03)
------- ------- ------- ------- -------
Net asset value, end of
period................. $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
TOTAL RETURN(/1/)....... 3.09% 2.92% 2.42% 2.87% 2.76%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of
period (in thousands).. $72,370 $55,963 $61,792 $56,807 $48,896
Average net assets (in
thousands)............. $68,810 $61,033 $59,345 $53,923 $45,363
Ratios to average net
assets:(/2/)
Net investment income... 3.04% 2.84% 2.38% 2.85% 2.73%
Expenses................ 0.90% 0.92% 0.89% 0.89%(/3/) 0.88%(/3/)
Expenses, net of
reduction to custodian
expenses............... 0.88% 0.82%(/4/) 0.80%(/4/) 0.80%(/4/) 0.80%(/4/)
Expenses, net of
reduction to excess
expenses............... 0.82% N/A N/A N/A N/A
1. Assumes a $1,000
hypothetical initial investment on the business day before the first day of the
fiscal period, with all dividends reinvested in additional shares on the
reinvestment date, and redemption at the net asset value calculated on the last
business day of the fiscal period. Total returns reflect changes in net
investment income only. Total returns are not annualized for periods of less
than one full year.
2. Annualized for periods of less than one full year.
3. Expense ratio reflects the reduction to custodian expenses.
4. Prior to June 30, 2001, this ratio reflected the combined net effect of
reduction to excess and custodian expenses.
See accompanying Notes to Financial Statements.
8
Notes to Financial Statements
Centennial New York Tax Exempt Trust
1. Significant Accounting Policies
Centennial New York Tax
Exempt Trust (the Trust) is registered under the Investment Company Act of 1940,
as amended, as a non-diversified open-end management investment company. The
Trusts investment objective is to seek the maximum current income exempt
from federal, New York State and New York City income taxes for individual
investors as is consistent with the preservation of capital. The Trusts
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 June 30, 2001, the
Trust had available for federal income tax purposes an unused capital loss
carryover as follows:
Expiring
--------
2009 $848
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.
Investment Income. There are certain risks arising from geographic
concentration in any state. Certain revenue or tax-related events in a state
may impair the ability of certain issuers of municipal securities to pay
principal and interest on their obligations.
Security Transactions. Security transactions are accounted for as of trade
date. 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.
9
Notes to Financial Statements (Continued)
Centennial New York 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:
Year Ended June 30, 2001 Year Ended June 30, 2000
--------------------------- ---------------------------
Shares Amount Shares Amount
------------ ------------- ------------ -------------
Sold.................... 222,614,516 $ 222,614,516 235,166,364 $ 235,166,364
Dividends and/or
distributions
reinvested............. 2,083,633 2,083,633 1,666,312 1,666,312
Redeemed................ (208,290,694) (208,290,694) (242,671,551) (242,671,551)
------------ ------------- ------------ -------------
Net increase
(decrease)............. 16,407,455 $ 16,407,455 (5,838,875) $ (5,838,875)
============ ============= ============ =============
3. Fees and Other Transactionswith 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 net assets; 0.475% of the next $250 million of net assets; 0.45% of
the next $250 million of net assets; 0.425% of the next $250 million of net
assets and 0.40% of net assets in excess of $1 billion. The Manager has
voluntarily undertaken to assume any expenses of the Trust in any fiscal year
they exceed 0.80% of the Trusts average annual net assets. The Manager
reserves the right to amend or terminate that expense assumption at any time.
The Trusts management fee for the year ended June 30, 2001, was an
annualized rate of 0.50%.
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 an annual maintenance fee for each Trust
shareholder account.
Service Plan Fees. Under an
approved service plan, the Trust may expend up to 0.20% of its average annual
net assets annually to reimburse the Manager, as distributor, for costs incurred
in connection with the personal service and maintenance of accounts that hold
shares of the Trust, including amounts paid to brokers, dealers, banks and other
financial institutions. During the year ended June 30, 2001, the Trust paid $564
to a broker-dealer affiliated with the Manager as reimbursement for
distribution-related expenses.
10
A-3
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 Fund. The ratings descriptions are based on information supplied by
the ratings organizations to subscribers.
SHORT TERM DEBT RATINGS.
Moody's Investors Service, Inc. ("Moody's")
The following rating designations for commercial paper (defined by Moody's as
promissory obligations not having original maturity in excess of nine
months), are judged by Moody's to be investment grade, and indicate the
relative repayment capacity of rated issuers:
Prime-1: Superior capacity for repayment. Capacity will normally be
evidenced by the following characteristics: (a) leading market positions in
well-established industries; (b) high rates of return on funds employed; (c)
conservative capitalization structure 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:
MIG 1/VMIG 1: Denotes superior credit quality. Excellent protection is
afforded by established cash flows, highly reliable liquidity support or
demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2: Denotes strong credit quality. Margins of protection are ample
although not as large as in the preceding group.
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc. ("Standard and Poor's")
The following ratings by Standard and Poor's for commercial paper (defined by
Standard and Poor's as debt having an original maturity of no more than 365
days) assess the likelihood of payment:
A-1: Obligation is rated in the highest category. The obligor's capacity to
meet its financial commitment on the obligation is strong. Within this
category, a plus (+) sign designation indicates the obligor's capacity to
meet its financial obligation is extremely strong.
A-2: Obligation is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.
Standard and Poor's ratings for Municipal Notes due in 3 years or less:
------------------------------------------------------------------------
SP-1: Strong capacity to pay principal and interest. An issue determined to
possess a very strong capacity to pay debt service is given a (+) designation.
SP-2: Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of the
notes.
Standard and Poor's 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, Standard and Poor's note rating symbols are used with
the commercial paper symbols (for example, "SP-1+/A-1+").
Fitch, Inc. ("Fitch")
Fitch assigns the following short-term ratings to debt obligations that are
payable on demand or have original maturities of generally up to three years,
including commercial paper, certificates of deposit, medium-term notes, and
municipal and investment notes:
F1: Highest credit quality. Strongest capacity for timely payment of
financial commitments. May have an added "+" to denote any exceptionally
strong credit feature.
F2: Good credit quality. A satisfactory capacity for timely payment of
financial commitments, but the margin of safety is not as great as in the
case of higher ratings.
LONG TERM DEBT RATINGS.
These ratings are relevant for securities purchased by the Fund with a
remaining maturity of 397 days or less, or for rating issuers of short-term
obligations.
Moody's
Bonds (including municipal bonds) are rated as follows:
Aaa: Judged to be the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt edged." Interest
payments are protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are likely to
change, the changes that can be expected are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Judged to be of high quality by all standards. Together with the "Aaa"
group, they comprise what are generally known as high-grade bonds. They are
rated lower than the best bonds because margins of protection may not be as
large as with "Aaa" securities or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which make the
long-term risk appear somewhat larger than that of "Aaa" securities.
Moody's applies numerical modifiers "1", "2" and "3" in its "Aa" rating
classification. The modifier "1" indicates that the obligation ranks in the
higher end of its generic rating category; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates a ranking in the lower end
of that generic rating category.
Standard and Poor's
Bonds (including municipal bonds maturing beyond 3 years) are rated as
follows:
AAA: Bonds rated "AAA" have the highest rating assigned by Standard & Poor's.
The obligor's capacity to meet its financial commitment on the obligation is
extremely strong.
AA: Bonds rated "AA" differ from the highest rated obligations only in small
degree. A strong capacity to meet its financial commitment on the obligation
is very strong.
Fitch
AAA: Highest Credit Quality. "AAA" ratings denote the lowest expectation of
credit risk. They are assigned only in the case of exceptionally strong
capacity for timely payment of financial commitments. This capacity is highly
unlikely to be adversely affected by foreseeable events.
AA: Very High Credit Quality. "AA" ratings denote a very low expectation of
credit risk. They indicate a very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable to
foreseeable events.
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+".
B-11
Appendix B
Municipal Bond Industry Classifications
Adult Living Facilities
Bond Anticipation Notes
Education
Electric Utilities
Gas Utilities
General Obligation
Higher Education
Highways/Railways
Hospital/Healthcare
Manufacturing, Durable Goods
Manufacturing, Non Durable Goods
Marine/Aviation Facilities
Multi-Family Housing
Municipal Leases
Non Profit Organization
Parking Fee Revenue
Pollution Control
Resource Recovery
Revenue Anticipation Notes
Sales Tax Revenue
Sewer Utilities
Single Family Housing
Special Assessment
Special Tax
Sports Facility Revenue
Student Loans
Tax Anticipation Notes
Tax & Revenue Anticipation Notes
Telephone Utilities
Water Utilities
------------------------------------------------------------------------------
Centennial New York Tax Exempt Trust
------------------------------------------------------------------------------
Investment Advisor and Distributor
Centennial Asset Management Corporation
6803 South Tucson Way
Englewood, Colorado 80112
Sub-Distributor
OppenheimerFunds Distributor, Inc.
P.O. Box 5254
Denver, Colorado 80217
Transfer Agent
Shareholder Services, Inc.
P.O. Box 5143
Denver, Colorado 80217
1.800.525.9310
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
PX0780.001.1101
CENTENNIAL NEW YORK TAX EXEMPT TRUST
FORM N-1A
PART C
OTHER INFORMATION
Item 23. Exhibits
(a) (i) Amended Declaration of Trust dated February 1, 1990: Previously
filed with Post-Effective Amendment No. 3 (1/30/90), and refiled with
Registrant's Post-Effective Amendment No. 9 (11/1/94), pursuant to Item 102
of Regulation S-T, and incorporated herein by reference.
(ii) Amendment to the Declaration of Trust dated February 23, 2001:
Filed herewith.
(b) By-Laws, as amended and restated through October 24, 2000: Filed
herewith.
(c) Specimen Share Certificate: Filed herewith.
(d) Investment Advisory Agreement dated October 22, 1990: Previously filed
with Registrant's Post-Effective Amendment No. 5 (10/29/90), refiled with
Registrant's Post-Effective Amendment No. 9 (11/1/94), pursuant to Item 102
of Regulation S-T and incorporated herein by reference.
(e) (i) General Distributor's Agreement Centennial Asset Management
Corporation dated October 13, 1992: Previously filed with Registrant's
Post-Effective Amendment No. 8 (10/28/93), and incorporated herein by
reference.
(ii) Sub-Distributor's Agreement between Centennial Asset Management
Corporation and OppenheimerFunds Distributor, Inc. dated May 28, 1993:
Previously filed with Registrant's Post-Effective Amendment No. 8 (10/28/93),
and incorporated herein by reference.
(iii) Form of Dealer Agreement of Centennial Asset Management
Corporation (formerly Centennial Capital Corporation): Previously filed with
Post-Effective Amendment No. 6 of Centennial Government Trust (Reg. No.
2-75912), (10/26/84), and incorporated herein by reference.
(f) Form of Deferred Compensation Agreement for Disinterested
Trustees/Directors: Filed with Post-Effective Amendment No. 40 to the
Registration Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076),
(10/27/98), and incorporated herein by reference.
(g) Global Custodial Services Agreement dated May 3, 2001 between
Registrant and Citibank, N.A.: Previously filed with Post-Effective
Amendment No. 33 to the Registration Statement of Centennial Money Market
Trust (Reg. No. 2-65245), October 25, 2001, and incorporated herein by
reference.
(h) Not applicable.
(i) Opinion and Consent of Counsel dated September 22, 1987: Previously
filed with Registrant's Pre-Effective Amendment No. 1 (11/28/88), refiled
with Registrant's Post-Effective Amendment No. 9 (11/1/94), pursuant to Item
102 of Regulation S-T and incorporated herein by reference.
(j) Independent Auditors' Consent: Filed herewith.
(k) Not applicable.
(l) Investment letter from Oppenheimer Management Corporation to Registrant
dated December 5, 1988: Previously filed with Registrant's Pre-Effective
Amendment No. 1 (11/28/88), and refiled with Registrant's Post-Effective
Amendment No. 9, (11/1/94) pursuant to Item 102 of Regulation S-T and
incorporated herein by reference.
(m) Service Plan and Agreement between Registrant and Centennial Asset
Management Corporation under Rule 12b-1 dated August 24, 1993: Previously
filed with Registrant's Post-Effective Amendment No. 8, (10/28/93), and
incorporated herein by reference.
(n) Oppenheimer Funds Multiple Class Plan under Rule 18f-3 March 18, 1996
and updated through 8/21/01: Previously filed with Post-Effective Amendment
No.20, to the registration statement of Oppenheimer Cash Reserves Fund (Reg.
No. 33-23223), (09/27/01), and incorporated herein by reference.
Powers of Attorney for all Trustees and Officers except for Mr.
Armstrong, Mr. Bowen, Mr. Cameron, Mr. Marshall and Mr. Grabish: Previously
filed with Pre-Effective Amendment No. 2 to the Registration Statement of
Oppenheimer Select Managers (Reg. No. 333-49774), (2/8/01), and incorporated
herein by reference.
Powers of Attorney for Mr. Armstrong, Mr. Bowen, Mr. Cameron, Mr. Marshall
and Mr. Grabish: Previously filed with Registrant's Post-Effective Amendment
No. 18 (08/24/01), and incorporated herein by reference.
Power of Attorney for Mr. Murphy: Filed herewith.
(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 Growth Fund (Reg. No. 333-44176), (8/21/00), 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 26(b) below.
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
---------------------- -------------------------
Robert Agan,
Vice President Vice President of Shareholder Services, Inc.
Katherine P. Feld,
Secretary and Director Vice President and Secretary of the Sub-Distributor
and of OppenheimerFunds, Inc.; Vice President and Secretary of Oppenheimer
Real Asset Management, Inc.; Secretary of HarbourView Asset Management
Corporation, Oppenheimer Partnership Holdings, Inc., Shareholder Financial
Services, Inc. and Shareholder Services, Inc.
Ray Olson,
Treasurer Assistant Vice President of OppenheimerFunds, Inc.
Brian W. Wixted,
Assistant Treasurer Senior Vice President and Treasurer (since March
1999) of OppenheimerFunds, Inc., HarbourView Asset Management Corporation,
Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation,
Shareholder Financial Services, Inc. and Oppenheimer Partnership Holdings,
Inc., of OFI Private Investments, Inc. (since March 2000) and of
OppenheimerFunds International Ltd. and Oppenheimer Millennium Funds plc
(since May 2000); Treasurer and Chief Financial Officer (since May 2000) of
PIMCO Trust Company; Assistant Treasurer (since March 1999) of Oppenheimer
Acquisition Corp.; an officer of other Oppenheimer funds; formerly Principal
and Chief Operating Officer, Bankers Trust Company - Mutual Fund Services
Division (March 1995 - March 1999).
Arthur J. Zimmer,
Vice President Senior Vice President (since April 1999) of HarbourView
Asset Management Corporation; an officer and/or portfolio manager of certain
Oppenheimer funds.
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 Growth 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 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 Special Value Fund
Oppenheimer Trinity Core Fund
Oppenheimer Trinity Large Cap 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 Opportunity Fund
Oppenheimer Main Street Small Cap Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Municipal Fund
Oppenheimer Real Asset Fund
Oppenheimer Select Managers
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., OppenheimerFunds Distributor, Inc.,
HarbourView Asset Management Corp., Oppenheimer Partnership Holdings, Inc.,
Oppenheimer Acquisition Corp. and OFI Private Investments, Inc. is 6803 South
Tucson Way, Englewood, Colorado 80112.
The address of the New York-based Oppenheimer Funds, the Quest Funds, the
Rochester-based funds, 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.
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 26(b) above.
(b) The directors and officers of the Registrant's principal underwriter
are:
Name & Principal Positions & Offices Positions and Offices
Business Address with Underwriter with Registrant
---------------- ---------------- ---------------
Robert Agan(1) Vice President None
Katherine P. Feld(1) Secretary and Director None
Ray Olson Treasurer None
Brian W. Wixted Assistant Treasurer Treasurer
Arthur Zimmer(2) Vice President None
(1)498 7th Avenue, New York, New York 10018
(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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant certifies that it meets all
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and 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 on the 25th day of October, 2001.
CENTENNIAL NEW YORK TAX EXEMPT TRUST
By: /s/ James C. Swain *
-------------------------------------------
James C. Swain, Chairman
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities on
the dates indicated:
Signatures Title Date
---------- ----- ----
/s/ James C. Swain* Chairman of the Board,
---------------------------------- Chief Executive Officer October 25, 2001
James C. Swain and Trustee
/s/ John V. Murphy* President
---------------------------------- October 25, 2001
John V. Murphy
/s/ Brian W. Wixted* Treasurer and Principal October 25, 2001
---------------------------------- Financial and
Brian W. Wixted Accounting Officer
/s/ William L. Armstrong * Trustee October 25, 2001
----------------------------------
William L. Armstrong
/s/ Robert G. Avis* Trustee October 25, 2001
----------------------------------
Robert G. Avis
/s/ George Bowen* Trustee October 25, 2001
----------------------------------
George Bowen
s/ Edward L. Cameron * Trustee October 25, 2001
----------------------------------
Edward L. Cameron
/s/ Jon S. Fossel* Trustee October 25, 2001
----------------------------------
Jon S. Fossel
/s/Richard F. Grabish* Trustee October 25, 2001
----------------------------------
Richard F. Grabish
/s/ Sam Freedman* Trustee October 25, 2001
----------------------------------
Sam Freedman
/s/ C. Howard Kast* Trustee October 25, 2001
----------------------------------
C. Howard Kast
/s/ Robert M. Kirchner* Trustee October 25, 2001
----------------------------------
Robert M. Kirchner
/s/ F. William Marshall Trustee October 25, 2001
----------------------------------
F. William Marshall
*By: /s/ Robert G. Zack
-----------------------------------------
Robert G. Zack, Attorney-in-Fact
CENTENNIAL NEW YORK TAX EXEMPT TRUST
Registration Statement No. 33-23494
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
23(a) Amendment to the Declaration
of Trust
23(b) Amended and Restated By-Laws
23(c) Specimen Share Certificate
23(j) Independent Auditors' Consent
23(o) Power of Attorney
prosai\Centennial/780/2001/780ptc_01(b).doc
--------
1Messrs. Bowen, Cameron and Marshall are not Directors of Panorama Series
Fund, Inc. Messrs. Armstrong, Bowen, Cameron, Fossel and Marshall are not
Managing General Partners of Centennial America Fund, L.P. Mr. Grabish is
only a Trustee of Centennial Money Market Trust, Centennial Tax Exempt Trust,
Centennial Government Trust, Centennial New York Tax Exempt Trust and
Centennial California Tax Exempt Trust.
2. In accordance with Rule 12b-1 of the Investment Company Act, the term
"Independent Trustees" in this Statement of Additional Information refers to
those Trustees who are not "interested persons" of the Fund and who do not
have any direct or indirect financial interest in the operation of any
agreement under the plan.