CENTENNIAL GOVERNMENT TRUST

497 1 sai.htm SAI AND FINANCIALS CENTENNIAL GOVERNMENT TRUST

---------------------------------------------------------------------------------
Centennial Government Trust
---------------------------------------------------------------------------------

6803 South Tucson Way, Centennial, Colorado 80112
1.800.525.9310

Statement of Additional Information dated August 22, 2003, revised November 20,
2003

This Statement of Additional Information is not a prospectus. This
document contains additional information about the Trust and supplements
information in the Prospectus dated August 22, 2003. It should be read
together with the Prospectus, which may be obtained by writing to the Trust's
Transfer Agent, Shareholder Services, Inc., at P.O. Box 5143, Denver, Colorado
80217, or by calling the Transfer Agent at the toll-free number shown above.

Contents
Page
About the Trust

Additional Information about the Trust's Investment Policies and Risks.......2
The Trust's Investment Policies.........................................2
Other Investment Strategies.............................................6
Other Investment Restrictions...........................................8

How the Trust is Managed....................................................10
Organization and History...............................................10
Board of Trustees and Oversight Committees.............................11
Trustees and Officers of the Trust.....................................12
The Manager............................................................23
Service Plan................................................................27
Performance of the Trust....................................................28

About Your Account
How To Buy Shares...........................................................31
How To Sell Shares..........................................................32
How To Exchange Shares......................................................34
Dividends and Taxes.........................................................36
Additional Information About the Trust......................................40

Financial Information About the Trust
Independent Auditors' Report................................................41
Financial Statements........................................................42

Appendix A: Description of Securities Ratings..............................A-1
Appendix B: Industry Classifications.......................................B-1

------------------------------------------------------------------------------
ABOUT THE TRUST
------------------------------------------------------------------------------

Additional Information About the Trust's Investment Policies and Risks

The investment objective and the principal investment policies of the Trust are
described in the Prospectus. This Statement of Additional Information contains
supplemental information about those policies and the types of securities that
the Trust's investment manager, Centennial Asset Management Corporation,
(referred to as, the "Manager") will select for the Trust. Additional
explanations are also provided about the strategies the Trust may use to try to
achieve its objective.

The Trust's Investment Policies. The composition of the Trust's portfolio and
the techniques and strategies that the Trust's Manager uses in selecting
portfolio securities will vary over time. The Trust is not required to use all
of the investment techniques and strategies described below at all times in
seeking its goal. It may use some of the special investment techniques and
strategies at some times or not at all.

The Trust's objective is to seek a high level of current income
consistent with preservation of capital and the maintenance of liquidity. The
Trust will not make investments with the objective of seeking capital growth.
However, the value of the securities held by the Trust may be affected by
changes in general interest rates. Because the current value of debt
securities varies inversely with changes in prevailing interest rates, if
interest rates increase after a security is purchased, that security would
normally decline in value. Conversely, if interest rates decrease after a
security is purchased, its value would rise. However, those fluctuations in
value will not generally result in realized gains or losses to the Trust since
the Trust does not usually intend to dispose of securities prior to their
maturity. A debt security held to maturity is redeemable by its issuer at full
principal value plus accrued interest.

The Trust may sell securities prior to their maturity, to attempt to take
advantage of short-term market variations, or because of a revised credit
evaluation of the issuer or other considerations. The Trust may also do so to
generate cash to satisfy redemptions of Trust shares. In such cases, the Trust
may realize a capital gain or loss on the security.

Ratings of Securities - Portfolio Quality, Maturity and Diversification. Under
Rule 2a-7 of the Investment Company Act of 1940 ("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."

|X| 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 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.

|X| Diversification. The Trust cannot invest more than 5% of its total
assets in securities issued by one issuer other than securities issued or
guaranteed by the U.S. government. 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. 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.

|X| 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.

|X| Demand Features and Guarantees. Demand features and guarantees and some
of their uses are described in the Prospectus. The Trust also uses demand
features and guarantees to satisfy the maturity, quality and diversification
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.

|X| U.S. Government Securities. U.S. government securities are
obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities. They include Treasury Bills (which mature within one year
of the date they are issued) and Treasury Notes and Bonds (which are issued
with longer maturities). All Treasury securities are backed by the full faith
and credit of the United States.

U.S. government agencies and instrumentalities that issue or guarantee
securities include, but are not limited to, the Federal Housing Administration,
Farmers Home Administration, Export-Import Bank of the United States, Small
Business Administration, Government National Mortgage Association, General
Services Administration, Bank for Cooperatives, Federal Home Loan Banks,
Federal Home Loan Mortgage Corporation, Federal Intermediate Credit Banks,
Federal Land Banks, Maritime Administration, the Tennessee Valley Authority and
the District of Columbia Armory Board.

Securities issued or guaranteed by U.S. government agencies and
instrumentalities are not always backed by the full faith and credit of the
United States. Some, such as securities issued by the Federal National
Mortgage Association ("Fannie Mae"), are backed by the right of the agency or
instrumentality to borrow from the Treasury. Others, such as securities issued
by the Federal Home Loan Mortgage Corporation ("Freddie Mac"), are supported
only by the credit of the instrumentality and not by the Treasury. If the
securities are not backed by the full faith and credit of the United States,
the purchaser must look principally to the agency issuing the obligation for
repayment and may not be able to assert a claim against the United States if
the issuing agency or instrumentality does not meet its commitment. The Trust
will invest in U.S. government securities of such agencies and
instrumentalities only when the Manager is satisfied that the credit risk with
respect to such instrumentality is minimal and that the security is an Eligible
Security.

|X| Repurchase Agreements. In a repurchase transaction, the Trust
acquires a security from, and simultaneously resells it to, an approved vendor
for delivery on an agreed-upon future date. The resale price exceeds the
purchase price by an amount that reflects an agreed-upon interest rate
effective for the period during which the repurchase agreement is in effect.
An "approved vendor" may be a U.S. commercial bank or the U.S. branch of a
foreign bank having total domestic assets of at least $1 billion, or a
broker-dealer with a net capital of $50 million which has been designated a
primary dealer in government securities. . They must meet credit requirements
set by the Manager from time to time.

The majority of these transactions run from day to day, and delivery
pursuant to the resale typically will occur within one to five days of the
purchase. The Trust will not enter into a repurchase agreement that will cause
more than 10% of its net assets to be subject to repurchase agreements maturing
in more than seven days.

Repurchase agreements are considered "loans" under the Investment Company
Act, collateralized by the underlying security. The Trust's repurchase
agreements require that at all times while the repurchase agreement is in
effect, the collateral's value must equal or exceed the repurchase price to
fully collateralize the repayment obligation. Additionally, the Manager will
monitor the vendor's creditworthiness to confirm that the vendor is financially
sound and will continuously monitor the collateral's value. However, if the
vendor fails to pay the resale price on the delivery date, the Trust may incur
costs in disposing of the collateral and may experience losses if there is any
delay in its ability to do so.

Pursuant to an Exemptive Order issued by the Securities and Exchange
Commission, the Trust, along with other affiliated entities managed by the
Manager, may transfer uninvested cash balances into one or more joint
repurchase accounts. These balances are invested in one or more repurchase
agreements, secured by U.S. government securities. Securities that are pledged
as collateral for repurchase agreements are held by a custodian bank until the
agreements mature. Each joint repurchase arrangement requires that the market
value of the collateral be sufficient to cover payments of interest and
principal; however, in the event of default by the other party to the
agreement, retention or sale of the collateral may be subject to legal
proceedings.

Other Investment Strategies

|X| 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.

|X| Loans of Portfolio Securities. To attempt to increase its income, the
Trust may lend its portfolio securities to brokers, dealers and other financial
institutions. These loans are limited to not more than 25% of the value of the
Trust's total assets and are subject to other conditions described below. The
Trust will not enter into any securities lending agreements having a maturity
of greater than the maximum time permitted under Rule 2a-7. The Trust presently
does not intend to lend its portfolio securities, but if it does the value of
securities loaned will not exceed 5% of the value of the Trust's total assets
in the coming year. There are some risks in lending securities. The Trust
could experience a delay in receiving additional collateral to secure a loan,
or a delay in recovering the loaned securities.

The Trust may receive collateral for a loan. Any securities received as
collateral for a loan must mature in twelve months or less. Under current
applicable regulatory requirements (which are subject to change), on each
business day the loan collateral must be at least equal to the market value of
the loaned securities. The collateral must consist of cash, bank letters of
credit, U.S. government securities or other cash equivalents in which the Trust
is permitted to invest. To be acceptable as collateral, letters of credit must
obligate a bank to pay amounts demanded by the Trust if the demand meets the
terms of the letter. Such terms and the issuing bank must be satisfactory to
the Trust.

When it lends securities, the Trust receives from the borrower an amount
equal to the interest paid or the dividends declared on the loaned securities
during the term of the loan. It may also receive negotiated loan fees and the
interest on the collateral securities, less any finders', custodian,
administrative or other fees the Trust pays in connection with the loan. The
Trust may share the interest it receives on the collateral securities with the
borrower as long as it realizes at least a minimum amount of interest required
by the lending guidelines established by its Board of Trustees.

The Trust will not lend its portfolio securities to any officer, Trustee,
employee or affiliate of the Trust or its Manager. The terms of the Trust's
loans must meet certain tests under the Internal Revenue Code and permit the
Trust to reacquire loaned securities on five business days notice or in time to
vote on any important matter.

|X| 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 Trust
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 Trust may experience a reduction
in income.

Other 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:
o 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
o 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.

o The Trust cannot enter into repurchase agreements maturing in more than
seven days or purchase securities which are restricted as to resale
or for which market quotations are not readily available, if any
such investment would cause more than 10% of the Trust's assets to
be invested in such securities.

o The Trust cannot borrow money in excess of 10% of the value of its total
assets, and then only as a temporary measure for extraordinary or
emergency purposes; provided that the Trust will not make any
investment at a time during which such borrowing exceeds 5% of the
value of its assets; no assets of the Trust may be pledged,
mortgaged or assigned to secure a debt.

o The Trust cannot make loans, except through (i) the purchase of debt
securities listed in the Prospectus under "Investment Objective and
Policies," (ii) the purchase of such debt securities subject to
repurchase agreements, or (iii) loans of securities as described
under "Other Investment Strategies - Loans of Portfolio
Securities," in this Statement of Additional Information.

o The Trust cannot invest in commodities or commodity contracts or invest
in interests in oil, gas or other mineral exploration or
development programs.

o The Trust cannot invest in real estate.

o The Trust cannot purchase securities on margin or make short sales of
securities.

o The Trust cannot invest in or hold securities of any issuer if those
officers and Trustees of the Trust or its advisor who beneficially
own individually more than 0.5% of the securities of such issuer
together own more than 5% of the securities of such issuer.

o The Trust cannot underwrite securities of other companies.

o The Trust cannot invest in securities of other investment companies,
except as they may be acquired as part of a merger, consolidation
or acquisition of assets.

o 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.

o The Trust cannot invest in any debt instrument having a remaining
maturity in excess of the maturity limitation in Rule 2a-7 of the
Investment Company Act, as it may be amended from time to time, or
any other applicable rule, unless it is a debt instrument that is
(1) subject to a repurchase agreement, (2) called for redemption,
or (3) purchased subject to a demand feature such that the security
is due and payable within the remaining maturity limitation in Rule
2a-7.

o The Trust cannot concentrate investments in any
particular industry. Therefore the Trust will not purchase the
securities of issuers in any one industry if as a result of that
purchase 25% or more of the value of the Trust's total assets would
consist of securities of issuers in that industry. The Trust's
investments in U.S. government securities and bank obligations
located in the United States (other than obligations of foreign
branches of domestic banks and obligations issued or guaranteed by
foreign banks) are not subject to this limitation.

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 1981, with an
unlimited number of authorized shares of beneficial interest.

|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 its
outstanding shares. 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
Trust's shareholder list 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 Trust's outstanding shares, whichever is less.
The Trustees may also take other action as permitted by the Investment Company
Act.

|X| 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 its Declaration
of Trust to look solely to the assets of the Trust for satisfaction of any
claim or demand that may arise out of any dealings with the Trust.
Additionally, the Trustees shall have no personal liability to any such person,
to the extent permitted by law.

Board of Trustees and Oversight Committees. 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, and shareholders 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
Audit Committee is comprised solely of Independent Trustees. The members of the
Audit Committee are Edward L. Cameron (Chairman), William L. Armstrong, George
C. Bowen and Robert J. Malone. The Audit Committee held seven meetings during
the fiscal year ended June 30, 2003. The Audit Committee furnishes the Board
with recommendations regarding the selection of the Trust's independent
auditors. Other main functions of the Audit Committee include, but are not
limited to: (i) reviewing the scope and results of financial statement audits
and the audit fees charged; (ii) reviewing reports from the Trust's independent
auditors regarding the Trust's internal accounting procedures and controls;
(iii) review reports from the Manager's Internal Audit Department; (iv)
maintaining a separate line of communication between the Trust's independent
auditors and its Independent Trustees; and (v) exercise all other functions
outlined in the Audit Committee Charter, including but not limited to reviewing
the independence of the Trust's independent auditors and the pre-approval of
the performance by the Trust's independent auditors of any non-audit service,
including tax service, for the Trust that is not prohibited by the
Sarbanes-Oxley Act.

The Audit Committee's functions include selecting and nominating, to the
full Board, nominees for election as Trustees, and selecting and nominating
Independent Trustees for election. The Audit Committee may, but need not,
consider the advice and recommendation of the Manager and its affiliates in
selecting nominees. The full Board elects new trustees except for those
instances when a shareholder vote is required.

To date, the Committee has been able to identify from its own resources
an ample number of qualified candidates. Nonetheless, shareholders may submit
names of individuals, accompanied by complete and properly supported resumes,
for the Audit Committee's consideration by mailing such information to the
Committee in care of the Trust. The Committee may consider such persons at
such time as it meets to consider possible nominees. The Committee, however,
reserves sole discretion to determine the candidates to present to the Board
and/or shareholders when it meets for the purpose of considering potential
nominees.

The members of the Review Committee are Jon S. Fossel (Chairman), Robert
G. Avis, Richard F. Grabish, Sam Freedman, Beverly Hamilton and F. William
Marshall, Jr. The Review Committee held six meetings during the fiscal year
ended June 30, 2003. Among other functions, 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 the Trust's investment performance
and policies and procedures adopted by the Trust to comply with Investment
Company Act and other applicable law.

Trustees and Officers of the Trust. Except for Messrs. Murphy and Grabish, each
of the Trustees are "Independent Trustees," as under the Investment Company
Act. Mr. Murphy is an "Interested Trustee," because he is affiliated with
OppenheimerFunds, Inc. by virtue of his positions as an officer and director of
OppenheimerFunds, Inc., and as a shareholder of its parent company. Mr. Murphy
was elected as a Trustee of the Trust with the understanding that in the event
he ceases to be the chief executive officer of OppenheimerFunds, Inc., he will
resign as a trustee of the Trust and the other Board II Funds (defined below)
for which he is a trustee or director. Mr. Grabish is an "Interested Trustee"
because he is affiliated with the Manager by virtue of his positions with A.G.
Edwards & Sons, Inc. and its affiliates (as described in his biography below),
which is a partial owner of the Manager's parent company.

The Trust's Trustees and officers and their positions held with the Trust
and length of service in such position(s) and their principal occupations and
business affiliations during the past five years are listed in the chart below.
The information for the Trustees also includes the dollar range of shares of
the Trust as well as the aggregate dollar range of shares of the
Oppenheimer/Centennial funds beneficially owned by the Trustees. All of the
Trustees are also trustees or directors of the following Oppenheimer/Centennial
funds (except for Mrs. Hamilton and Messrs. Grabish and Malone, who are not
Trustees of Oppenheimer Senior Floating Rate Fund) (referred to as "Board II
Funds"):

Oppenheimer Cash Reserves Oppenheimer Principal Protected
Trust II
Oppenheimer Champion Income Fund Oppenheimer Real Asset Fund
Oppenheimer Senior Floating Rate

Oppenheimer Capital Income Fund Fund

Oppenheimer Equity Fund, Inc. Oppenheimer Strategic Income Fund
Oppenheimer High Yield Fund Oppenheimer Variable Account Funds
Oppenheimer International Bond Fund Panorama Series Fund, Inc.
Oppenheimer Integrity Funds
Oppenheimer Limited-Term Government Fund Centennial America Fund, L. P.

Centennial California Tax Exempt
Oppenheimer Main Street Funds, Inc. Trust
Oppenheimer Main Street Opportunity Fund Centennial Government Trust
Oppenheimer Main Street Small Cap Fund Centennial Money Market Trust
Centennial New York Tax Exempt
Oppenheimer Municipal Fund Trust
Oppenheimer Principal Protected Trust Centennial Tax Exempt Trust
-----

Present or former officers,
directors, trustees and employees (and
their immediate family members) of the
Trust, the Manager and its affiliates,
and retirement plans established by them
for their employees are permitted to
purchase Class A shares of the Trust and
the other Oppenheimer funds at net asset
value without sales charge. The sales
charges on Class A shares is waived for
that group because of the economies of
sales efforts realized by the
Distributor.

Messrs. Murphy, Molleur, Vottiero,
Weiss, Wixted and Zack, and Mses. Feld,
Bechtolt, Ives and Wolf, who are
officers of the Trust, respectively hold
the same offices with one or more of the
other Board II Funds as with the Trust.
As of August 13, 2003, the Trustees and
officers of the Trust, as a group, owned
of record or beneficially less than 1%
of the shares of the Trust. The
foregoing statement does not reflect
ownership of shares held of record by an
employee benefit plan for employees of
the Manager, other than the shares
beneficially owned under that plan by
the officers of the Trust listed above.
In addition, each Independent Trustee,
and his family members, do not own
securities of either the Manager,
Distributor or Sub-Distributor of the
Board II Funds or any person directly or
indirectly controlling, controlled by or
under common control with the Manager,
Distributor or Sub-Distributor.

|X| Affiliated Transactions and
Material Business Relationships. In
2001, Mr. Swain surrendered for
cancellation 60,000 options of
Oppenheimer Acquisition Company ("OAC")
(OppenheimerFunds, Inc.'s parent holding
company), to MassMutual for a cash
payment of $2,700,600.

Mr. Swain has reported that he
sold a residential property to Mr.
Freedman on October 23, 2001 for $1.2
million. An independent appraisal of
the property supported the sale price.

The address of each Trustee in the
charts below is 6803 S. Tucson Way,
Centennial, CO 80112-3924. Each Trustee
serves for an indefinite term, until his
or her resignation, retirement, death or
removal.
Independent Trustees
-----
-------------------------------------------------------------------------------------
Name, Principal Occupation(s) During Past 5 Dollar Aggregate
Dollar
Range of
y Shares
Beneficially
Owned in
Range of any of the
Position(s) Held Shares Oppenheimer/Centennial
with the Trust, Years / Other Trusteeships/Directorships Beneficiall Funds
Length of Service, Held by Trustee / Number of Portfolios in Owned in Overseen
Age Fund Complex Currently Overseen by Trustee the Trust by Trustee
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
As of December 31,
2002
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

James C. Swain, Formerly, Chief Executive Officer (until None Over

Chairman and August 27, 2002) of the Board II Funds,
Trustee since 1981 President and a director (until 1997) of

Age: 70 Centennial Asset Management Corporation

(the "Manager") and Vice Chairman (until
January 2, 2002) of OppenheimerFunds,
Inc. (of which the Manager is a
wholly-owned investment advisory $100,000

subsidiary). Oversees 38 portfolios in
the OppenheimerFunds complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

William L. Chairman of the following private None $50,001-

Armstrong, mortgage banking companies: Cherry Creek
Vice-Chairman and Mortgage Company (since 1991), Centennial
Trustee since 2001 State Mortgage Company (since 1994), The
Age: 66 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),
Ambassador Media Corporation and Broadway
Ventures (since 1984); a director of the
following public companies: Helmerich &
Payne, Inc. (oil and gas
drilling/production company) (since 1992)
and UNUMProvident (insurance company)
(since 1991). Mr. Armstrong is also a
Director/Trustee of Campus Crusade for
Christ and the Bradley Foundation.
Formerly a director of the following:
Storage Technology Corporation (a
publicly-held computer equipment company)
(1991-February 2003), Frontier Real

Estate, Inc. (residential real estate $100,000
brokerage) (1994-1999), and Frontier
Title (title insurance agency) (1995-June
1999); a U.S. Senator (January
1979-January 1991). Oversees 38
portfolios in the OppenheimerFunds
complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Robert G. Avis, Formerly, Director and President of A.G.
Trustee since 1990 Edwards Capital, Inc. (General Partner of
Age: 72 private equity funds) (until February
2001); Chairman, President and Chief
Executive Officer of A.G. Edwards
Capital, Inc. (until March 2000); Vice
Chairman and Director of A.G. Edwards,
Inc. and Vice Chairman of A.G. Edwards &

Sons, Inc. (its brokerage company None Over
subsidiary) (until March 1999); Chairman $100,000
of A.G. Edwards Trust Company and A.G.E.
Asset Management (investment advisor)
(until March 1999); and a Director (until
March 2000) of A.G. Edwards & Sons and
A.G. Edwards Trust Company. Oversees 38
portfolios in the OppenheimerFunds
complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
George C. Bowen, Formerly (until April 1999) Mr. Bowen
Trustee since held the following positions: Senior Vice
1997 President (since February 1992),
Age: 66 Treasurer (since July 1991) Assistant
Secretary and a director (since December
1991) of the Manager; 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., of which the
Manager is an investment advisory
subsidiary); Vice President (since
October 1989) and Treasurer (since April
1986) of HarbourView Asset Management
Corporation (an investment advisory
subsidiary of OppenheimerFunds, Inc.);
President, Treasurer and a director (June
1989-January 1990) of Centennial Capital
Corporation (a prior investment advisory
subsidiary of OppenheimerFunds, Inc.);
Vice President and Treasurer (since
August 1978) and Secretary (since April
1981) of Shareholder Services, Inc., and
Vice President, Treasurer and Secretary Over Over
(since November 1989) of Shareholder $100,000 $100,000
Financial Services, Inc. (both are
transfer agent subsidiaries of
OppenheimerFunds, Inc.); Assistant
Treasurer (since March 1998) of
Oppenheimer Acquisition Corp.

(OppenheimerFunds, Inc.'s parent holding
company); Treasurer (since November 1989)
of Oppenheimer Partnership Holdings, Inc.
(a holding company subsidiary of
OppenheimerFunds, Inc.); Vice President
and Treasurer (since July 1996) of
Oppenheimer Real Asset Management, Inc.
(an investment advisory subsidiary of
OppenheimerFunds, Inc.); Chief Executive
Officer and director (since March 1996)
of MultiSource Services, Inc. (a
broker-dealer subsidiary of
OppenheimerFunds, Inc.); Treasurer (since
October 1997) of OppenheimerFunds
International Ltd. and Oppenheimer
Millennium Funds plc (offshore fund
management subsidiaries of
OppenheimerFunds, Inc.). Oversees 38
portfolios in the OppenheimerFunds
complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Edward L. A member of The Life Guard of Mount None $50,001-
Cameron, Trustee Vernon, George Washington's home (since
since 2001 June 2000). Formerly (March 2001 - May
Age: 65 2002) Director of Genetic ID, Inc. and

its subsidiaries (a privately held
biotech company); a partner with
PricewaterhouseCoopers LLP (from
1974-1999) (an accounting firm) and
Chairman (from 1994-1998), Price
Waterhouse LLP Global Investment
Management Industry Services Group. $100,000

Oversees 38 portfolios in the
OppenheimerFunds complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Jon S. Fossel, Chairman and Director (since 1998) of None $50,001-
Trustee since 1990 Rocky Mountain Elk Foundation (a
Age: 61 not-for-profit foundation); and a

director (since October 1999) of P.R.
Pharmaceuticals (a privately held
company) and UNUMProvident (an insurance
company) (since June 1, 2002). Formerly
Chairman and a director (until October
1996) and President and Chief Executive
Officer (until October 1995) of
OppenheimerFunds, Inc.; President, Chief
Executive Officer and a director of
Oppenheimer Acquisition Corp.,
Shareholder Services Inc. and Shareholder $100,000
Financial Services, Inc. (until October

1995). Oversees 38 portfolios in the
OppenheimerFunds complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Sam Freedman, Director of Colorado Uplift (a non-profit None Over
Trustee since 1996 charity) (since September 1984). A
Age: 63 trustee or director of other Oppenheimer
funds. Formerly (until October 1994) Mr.
Freedman held several positions in
subsidiary or affiliated companies of
OppenheimerFunds, Inc. Oversees 38

portfolios in the OppenheimerFunds $100,000
complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Beverly L. Trustee (since 1996) of MassMutual None $10,001-$50,000
Hamilton, Trustee Institutional Funds and of MML Series
since 2002 Investment Fund (open-end investment
Age: 57 companies); Director of MML Services
(since April 1987) and America Funds
Emerging Markets Growth Fund (since
October 1991) (both are investment
companies), The California Endowment (a
philanthropy organization) (since April
2002), and Community Hospital of Monterey
Peninsula, (since February 2002); a
trustee (since February 2000) of Monterey
International Studies (an educational
organization), and an advisor to Unilever
(Holland)'s pension fund and to Credit
Suisse First Boston's Sprout venture
capital unit. Mrs. Hamilton also is a
member of the investment committees of
the Rockefeller Foundation, the
University of Michigan and Hartford
Hospital. Formerly, President (February
1991-April 2000) ARCO Investment
Management Company. Oversees 39
portfolios in the OppenheimerFunds
complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Robert J. Malone, Director (since 2001) of Jones Knowledge, None Over

Trustee since 2002 Inc. (a privately held company), U.S.

Age: 59 Exploration, Inc., (since 1997), Colorado
UpLIFT (a non-profit organization) (since
1986) and a trustee of the Gallagher
Family Foundation (non-profit
organization) (since 2000). Formerly,
Chairman of U.S. Bank (a subsidiary of
U.S. Bancorp and formerly Colorado
National Bank,) (July 1996-April 1, 1999)

and a director of Commercial Assets, Inc. $100,000

(a REIT) (1993-2000). Oversees 37
portfolios in the OppenheimerFunds
complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
F. William Trustee (since 1996) of MassMutual
Marshall, Jr., Institutional Funds and of MML Series
Trustee since 2001 Investment Fund (open-end investment
Age: 61 companies); Chairman of the Board (since
2003), Trustee and Chairman of the
investment committee (since May 1987) for
the Worcester Polytech Institute;
President and Treasurer (since January
1999) of the SIS Fund (a private not for
profit charitable fund); Trustee (since
1995) of the Springfield Library and
Museum Association; Trustee (since 1996)
of the Community Music School of

Springfield. Formerly, member of the None Over
investment committee of the Community $100,000
Foundation of Western Massachusetts (1998
- 2003); Chairman (January 1999-July
1999) of SIS & Family Bank, F.S.B.
(formerly SIS Bank); President, Chief
Executive Officer and Director (May
1993-December 1998) of SIS Bankcorp, Inc.
and SIS Bank (formerly Springfield
Institution for Savings) and Executive
Vice President (January 1999-July 1999)
of Peoples Heritage Financial Group, Inc.
Oversees 40 portfolios in the
OppenheimerFunds complex.

-------------------------------------------------------------------------------------

The address of Mr. Grabish in the chart below is 6803 S. Tucson Way,
Centennial, CO 80112-3924. Mr. Grabish serves for an indefinite term, until his
resignation, retirement, death or removal.

Interested Trustee

---------------------------------------------------------------------------------
Name, Principal Occupation(s) During Past 5 Dollar Aggregate
Dollar
Range of
lyShares
Beneficially
Position(s) Owned in
Held with the Range of any of the
Trust, Shares Oppenheimer/Centennial
Length of Years / Other Trusteeships/Directorships Beneficial Funds
Service, Held by Trustee / Number of Portfolios in Owned in Overseen
Age Fund Complex Currently Overseen by Trustee the Trust by Trustee
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
As of December 31,
2002
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Richard F. Senior Vice President, Assistant Director None Over
Grabish, of Sales and Marketing (since March $100,000
Trustee since 1997), and Manager of Private Client
2001 Services (since June 1985) for A.G.
Age: 55 Edwards & Sons, Inc. (broker/dealer and
investment firm). Chairman and Chief
Executive Officer (since March 2001) of
A.G. Edwards Trust Company; Director
(since March 1988) of A.G. Edwards &
Sons, Inc. Formerly (until March 1987)
President and Vice Chairman of A.G.
Edwards Trust Company. Oversees 37
portfolios in the OppenheimerFunds
complex.

---------------------------------------------------------------------------------

The address of Mr. Murphy in the chart below is Two World Financial
Center, New York, NY 10281-1008. Mr. Murphy serves for an indefinite term, until
his resignation, death or removal.

-------------------------------------------------------------------------------------

Interested Trustee and Officer

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Name, Principal Occupation(s) During Past 5 Dollar Aggregate
Dollar
Range Of
Shares
Years; Range of Beneficially
Position(s) Held Other Trusteeships/Directorships Held by Shares Owned in
with Trust, Trustee; BeneficiallAny of the
Length of Service, Number of Portfolios in Fund Complex Owned in Oppenheimer
Age Currently Overseen by Trustee the Trust Funds

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

As of December 31,
2002

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

John V. Murphy, Director (since November 2001) of the None Over
President Manager; Chairman, Chief Executive $100,000
Since 2001and Officer and director (since June 2001)
Trustee since 2003 and President (since September 2000) of
Age: 54 OppenheimerFunds, Inc.; President and a
trustee or director of other Oppenheimer
funds; President and a director (since
July 2001) of Oppenheimer Acquisition
Corp. and of Oppenheimer Partnership
Holdings, Inc.; a director (since
November 2001) of OppenheimerFunds
Distributor, Inc.; Chairman and a
director (since July 2001) of Shareholder
Services, Inc. and of Shareholder
Financial Services, Inc.; President and a
director (since July 2001) of
OppenheimerFunds Legacy Program (a
charitable trust program established by
OppenheimerFunds, Inc.); a director of
the following investment advisory
subsidiaries of OppenheimerFunds, Inc.:
OFI Institutional Asset Management, Inc.
(since November 2001), HarbourView Asset
Management Corporation and OFI Private
Investments, Inc. (since July 2002);
President (since November 1, 2001) and a
director (since July 2001) of Oppenheimer
Real Asset Management, Inc.; a director
(since November 2001) of Trinity
Investment Management Corp. and Tremont
Advisers, Inc. (investment advisory
affiliates of OppenheimerFunds, Inc.);
Executive Vice President (since February
1997) of Massachusetts Mutual Life
Insurance Company (OppenheimerFunds,
Inc.'s parent company); a director (since
June 1995) of DLB Acquisition Corporation
(a holding company that owns shares of
David L. Babson & Company, Inc.);
formerly Chief Operating Officer
(September 2000-June 2001) of
OppenheimerFunds, Inc.; President and
trustee (November 1999-November 2001) of
MML Series Investment Fund and MassMutual
Institutional Funds (open-end investment
companies); a director (September
1999-August 2000) of C.M. Life Insurance
Company; President, Chief Executive
Officer and director (September
1999-August 2000) of MML Bay State Life
Insurance Company; a director (June
1989-June 1998) of Emerald Isle Bancorp
and Hibernia Savings Bank (wholly-owned
subsidiary of Emerald Isle Bancorp).
Oversees 72 portfolios in the
OppenheimerFunds complex.

-------------------------------------------------------------------------------------

The address of the officers in the chart below is as follows: Messrs.
Molleur and Zack and Ms. Feld, Two World Financial Center, New York, NY
10281-1008, for Messrs. Vottiero, Weiss and Wixted and Mses. Bechtolt, Ives and
Wolf, 6803 S. Tucson Way, Centennial, CO 80112-3924. Each officer serves for an
annual term or until his or her earlier resignation, death or removal.

-------------------------------------------------------------------------------------
Officers of the Trust
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Name, Principal Occupation(s) During Past 5 Years
Position(s) Held with the Trust,
Length of Time Served,
Age
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

John V. Murphy, Senior Vice President (since June 2000) of
President since 1990 OppenheimerFunds, Inc.; an officer of 9 portfolios
Age: 54 in the OppenheimerFunds complex; formerly Vice
President of OppenheimerFunds, Inc. (June 1990 -
June 2000).

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Barry D. Weiss, Vice President of OppenheimerFunds, Inc. (since
Vice President and Portfolio July 2001); an officer of 6 portfolios in the
Manager since 2001 OppenheimerFunds complex; formerly Assistant Vice
Age: 39 President and Senior Credit Analyst of
OppenheimerFunds, Inc. (February 2000-June 2001).
Prior to joining the OppenheimerFunds, Inc. in
February 2000, he was Associate Director,
Structured Finance, Fitch IBCA Inc. (April 1998 -
February 2000).
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Brian W. Wixted, Senior Vice President and Treasurer (since March
Treasurer since April 1999 1999) of OppenheimerFunds, Inc.; Treasurer (since
Age: 44 March 1999) of HarbourView Asset Management
Corporation, Shareholder Services, Inc.,
Oppenheimer Real Asset Management Corporation,
Shareholder Financial Services, Inc., Oppenheimer
Partnership Holdings, Inc., OFI Private
Investments, Inc. (since March 2000),
OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (since May 2000),
offshore fund management subsidiaries of
OppenheimerFunds, Inc., and OFI Institutional
Asset Management, Inc. (since November 2000), an
investment advisory subsidiary of
OppenheimerFunds, Inc.; Treasurer and Chief
Financial Officer (since May 2000) of Oppenheimer
Trust Company, a trust company subsidiary of
OppenheimerFunds, Inc.; Assistant Treasurer (since
March 1999) of Oppenheimer Acquisition Corp. and
OppenheimerFunds Legacy Program (since April
2000); formerly Principal and Chief Operating
Officer (March 1995-March 1999), Bankers Trust
Company-Mutual Fund Services Division. An officer
of 82 portfolios in the OppenheimerFunds complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Robert G. Zack, General Counsel (since November 2001) of the
Vice President & Secretary Manager; Senior Vice President (since May 1985)
since November 1, 2001 and General Counsel (since February 2002) of
Age: 55 OppenheimerFunds, Inc.; General Counsel and a

director (since November 2001) of OppenheimerFunds
Distributor, Inc.; Senior Vice President and
General Counsel (since November 2001) of
HarbourView Asset Management Corporation; Vice
President and a director (since November 2000) of
Oppenheimer Partnership Holdings, Inc.; Senior
Vice President, General Counsel and a director
(since November 2001) of Shareholder Services,
Inc., Shareholder Financial Services, Inc., OFI
Private Investments, Inc., Oppenheimer Trust
Company and OFI Institutional Asset Management,
Inc.; a director (since November 2001) of
Oppenheimer Real Asset Management, Inc.; Assistant
Secretary and a director (since November 2001) of
OppenheimerFunds International Ltd.; Vice
President (since November 2001) of
OppenheimerFunds Legacy Program; Secretary (since
November 2001) of Oppenheimer Acquisition Corp.;
formerly Acting General Counsel (November
2001-February 2002) and Associate General Counsel
(May 1981-October 2001) of OppenheimerFunds, Inc.;
Assistant Secretary of Shareholder Services, Inc.
(May 1985-November 2001), Shareholder Financial
Services, Inc. (November 1989-November 2001);
OppenheimerFunds International Ltd. and
Oppenheimer Millennium Funds plc (October
1997-November 2001). An officer of 82 portfolios
in the OppenheimerFunds complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Philip Vottiero, Vice President/Fund Accounting of
Assistant Treasurer OppenheimerFunds, Inc. (since March 2002);
since August 27, 2002 formerly Vice President/Corporate Accounting of
Age: 40 OppenheimerFunds, Inc. (July 1999-March 2002)

prior to which he was Chief Financial Officer at
Sovlink Corporation (April 1996-June 1999). An
officer of 82 portfolios in the OppenheimerFunds
complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Connie Bechtolt, Assistant Vice President of OppenheimerFunds, Inc.
Assistant Treasurer (since September 1998); formerly Manager/Fund
since October 22, 2002 Accounting (September 1994-September 1998) of
Age: 40 OppenheimerFunds, Inc. An officer of 82 portfolios

in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Denis R. Molleur, Vice President and Senior Counsel of
Assistant Secretary OppenheimerFunds, Inc.; (since July 1999);
since August 27, 2002 formerly a Vice President and Associate Counsel of
Age: 46 OppenheimerFunds, Inc. (September 1995-July 1999).
An officer of 73 portfolios in the
OppenheimerFunds complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Denis R. Molleur, Vice President and Senior Counsel of the Manager;
Assistant Secretary Vice President and Associate Counsel of
since November 1, 2001 OppenheimerFunds, Inc. (June 1990-July 1999). An
Age: 45 officer of 82 portfolios in the OppenheimerFunds

complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Kathleen T. Ives, Vice President (since June 1998) and Senior
Assistant Secretary Counsel (since October 2003) of the Manager; Vice
since November 1, 2001 President (since 1999) of OppenheimerFunds
Age: 38 Distributor, Inc.; Vice President and Assistant
Secretary (since 1999) of Shareholder Services,
Inc.; Assistant Secretary (since December 2001) of
OppenheimerFunds Legacy Program and Shareholder
Financial Services, Inc.; formerly an Assistant
Counsel (August 1994-October 2003) and Assistant
Vice President of the Manager (August 1997-June
1998). An officer of 82 portfolios in the
OppenheimerFunds complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------

|X| Remuneration of Trustees. The officers of the Trust and Mr. Murphy (who
is an officer and Trustee of the Trust) are affiliated with the Manager and
receive no salary or fee from the Trust. The Trustees of the Trust received the
compensation shown below from the Trust with respect to the Trust's fiscal year
ended June 30, 2003. The compensation from all of the Board II Funds (including
the Trust) represents compensation received for serving as a managing general
partner, director or trustee and member of a committee (if applicable) of the
boards of those funds during the calendar year 2002 (there were 41 funds at
the end of 2002).

------------------------------------------------------------------------------
Trustee Name and Other Aggregate Total Compensation
From Trust and Fund
Position(s) (as applicable) Compensation Complex Paid to
from Trust1 Trustee/Director*
-
------------------------------------------------------------------------------
------------------------------------------------------------------------------
James C. Swain $1,843 $177,996
Chairman of the Board of
Trustees
------------------------------------------------------------------------------
------------------------------------------------------------------------------
William L. Armstrong $999 $92,076
Vice Chairman of the Board of
Trustees and
Audit Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Robert G. Avis $999 $92,199
Review Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
George Bowen $999 $91,124
Audit Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Edward L. Cameron $1,128 $99,743
Audit Committee Chairman
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Jon. S. Fossel $1,128 $94,590
Review Committee Chairman
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Sam Freedman $999 $92,199
Review Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------

Richard F. Grabish $2,611 $9,0132

Review Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------

Beverly Hamilton3 $9994 $113,6595

Review Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------

Robert J. Malone3 $9996 $58,326

Audit Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------

F. William Marshall, Jr. $999 $138,1247

Review Committee Member
------------------------------------------------------------------------------
Effective July 1, 2002, C. Howard. Kast and Robert M. Kirchner retired as
Trustees from the Board II Funds. For the calendar year ended December 31,
2002, Mr. Kast received $41,451 and Mr. Kirchner received $38,001 total
compensation from all of the Oppenheimer funds for which they served as Trustee.
1. Aggregate Compensation from Trust includes fees and deferred
compensation, if any, for a Trustee.

1. Effective October 27, 2003, Mr. Grabish was elected as Trustee on all
Board II Funds (with the exception of Oppenheimer Senior Floating Rate
Fund). Prior to that date, "Total Compensation From Trust and Fund Complex"
paid to Mr. Grabish for service as a Trustee, as well as service on the
Review Committee was paid only by Centennial Government Trust, Centennial
California Tax Exempt Trust, Centennial Money Market Trust, Centennial New
York Tax Exempt Trust, Centennial Tax Exempt Trust and Centennial America
Fund, L.P. (total of six funds for which he previously served as Trustee on
the Board II Funds). Mr. Grabish was appointed to the Review Committee
beginning February 24, 2003. Had he served on the Review Committee for the
2002 calendar year, his "Total Compensation From Trust and Fund Complex"
would have been higher.

3. Mrs. Hamilton and Mr. Malone were elected as Trustees, Directors or
Managing General Partners of the Board II Funds with the exception of
Oppenheimer Senior Floating Rate Fund for which they currently do not serve
as Trustees effective June 1, 2002. Compensation for Mrs. Hamilton and Mr.
Malone was paid by all the Board II Funds, with the exception of Oppenheimer
Senior Floating Rate (total of 40 Oppenheimer funds as of 12/31/02).
4. Includes $999 deferred under Deferred Compensation Plan described below.
5. Includes $55,333 compensation (of which 100% was deferred under a
deferred compensation plan) paid to Mrs. Hamilton for serving as a trustee
by two open-end investment companies (MassMutual Institutional Funds and MML
Series Investment Fund) the investment adviser for which is the indirect
parent company of OppenheimerFunds, Inc. OppenheimerFunds, Inc. also serves
as the Sub-Advisor to the MassMutual International Equity Fund, a series of
MassMutual Institutional Funds.
6. Includes $999 deferred under Deferred Compensation Plan described below.
7. Includes $47,000 compensation paid to Mr. Marshall for serving as a
trustee by two open-end investment companies (MassMutual Institutional Funds
and MML Series Investment Fund) the investment adviser for which is the
indirect parent company of OppenheimerFunds, Inc. OppenheimerFunds, Inc.
also serves as the Sub-Advisor to the MassMutual International Equity Fund,
a series of MassMutual Institutional Funds.
*For purposes of this section only, "Fund Complex" includes the Oppenheimer
funds, MassMutual Institutional Funds and MML Series Investment Fund in
accordance with the instructions for Form N-1A. The Manager does not consider
MassMutual Institutional Funds and MML Series Investment Fund to be part of the
OppenheimerFunds "Fund Complex" as that term may be otherwise interpreted.

|X| 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 August 13, 2003 the only
person who owned of record or was known by the Trust to own beneficially 5% or
more of the Trust's outstanding retail shares was A.G. Edwards & Sons, Inc., 1
North Jefferson Avenue, St. Louis, Missouri 63103, which owned
1,626,371,769.690 shares of the Trust which was 93.72% 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, a global, diversified insurance and financial
services organization.

The portfolio managers of the Trust are principally responsible for the
day-to-day management of the Trust's investment portfolio. Other members of
the Manager's fixed-income portfolio department, particularly security
analysts, traders and other portfolio managers, have broad experience with
fixed-income securities. They provide the Trust's portfolio managers with
research and support in managing the Trust's investments.

|X| Code of Ethics. The Manager and the Distributor have a Code of Ethics.
It is designed to detect and prevent improper personal trading by certain
employees, including portfolio managers, that would compete with or take
advantage of the Trust's portfolio transactions. Covered persons include
persons with knowledge of the investments and investment intentions of the
Trust and other funds advised by the Manager. The Code of Ethics does permit
personnel subject to the Code to invest in securities, including securities
that may be purchased or held by the Trust, subject to a number of restrictions
and controls. Compliance with the Code of Ethics is carefully monitored and
enforced by the Manager. The Trust does not have a Code of Ethics since it is
a money market fund.

|X| The Investment Advisory Agreement. The Manager
provides investment advisory and management services to the Trust under an
investment advisory agreement between the Manager and the Trust. The Manager
selects securities for the Trust's portfolio and handles its day-to-day
business. The agreement requires the Manager, at its expense, to provide the
Trust with adequate office space, facilities and equipment. It also requires
the Manager to provide and supervise the activities of all administrative and
clerical personnel required to provide effective administration for the Trust.
Those responsibilities include the compilation and maintenance of records with
respect to its operations, the preparation and filing of specified reports, and
composition of proxy materials and registration statements for continuous
public sale of shares of the Trust.

Expenses not expressly assumed by the Manager under the investment
advisory agreement are paid by the Trust. The investment advisory agreement
lists examples of expenses paid by the Trust. The major categories relate to
interest, taxes, fees to unaffiliated Trustees, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs, certain printing
and registration costs and non-recurring expenses, including litigation costs.
The management fees paid by the Trust to the Manager are calculated at the
rates described in the Prospectus.

---------------------------------------------------------------------------------
Fiscal Year Management Fee Paid to Centennial Asset Management Corporation
ending 6/30
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
2001 $6,049,419
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
2002 $6,859,986
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
2003 $7,414,061
---------------------------------------------------------------------------------

Under the investment advisory agreement, the Manager has agreed to
reimburse the Trust to the extent that the Trust's total expenses (including
the management fee but excluding interest, taxes, brokerage commissions, and
extraordinary expenses such as litigation costs) exceed in any fiscal year the
lesser of: (i) 1.5% of average annual net assets of the Trust up to $30 million
plus 1% of the average annual net assets in excess of $30 million or; (ii) 25%
of the total annual investment income of the Trust. For fiscal years ended June
30, 2001 there were no reimbursements by the Manager to the Trust. For fiscal
year ended June 30, 2002 and June 30, 2003, the Manager reimbursed $1,247,225
and $5,495,103 to the Trust, respectively. A proxy statement has been sent to
Trust shareholders requesting their approval of the elimination of that expense
limitation at a meeting which is currently scheduled for August 28, 2003. If
shareholders do not approve the elimination of that expense limitation at that
meeting, or any adjournments thereto, this Statement of Additional Information
will be supplemented to reflect that such expense waiver has not been removed
and remains in effect.

The investment advisory agreement provides that the Manager shall not be
liable for any loss sustained by reason of the adoption of an investment policy
or the purchase, sale or retention of any security on its recommendation,
whether or not such recommendation shall have been based upon its own
investigation and research or upon investigation and research made by any other
individual, firm or corporation, if such recommendation shall have been made
and such other individual, firm or corporation shall have been selected with
due care and in good faith, provided that nothing in the agreement shall be
construed to protect the Manager against any liability to the Trust or its
shareholders by reason of willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of its reckless disregard of its
obligations and duties under the agreement.

|X| Annual Approval of Investment Advisory Agreement. Each year,
the Board of Trustees, including a majority of the Independent Trustees, is
required to approve the renewal of the investment advisory agreement. The
Investment Company Act requires that the Board request and evaluate and the
Manager provide such information as may be reasonably necessary to evaluate the
terms of the investment advisory agreement. The Board employs an independent
consultant to prepare a report that provides such information as the Board
requests for this purpose.

The Board also receives information about the 12b-1 distribution fees the
Trust pays. These distribution fees are reviewed and approved at a different
time of the year.

The Board reviewed the foregoing information in arriving at its decision
to renew the investment advisory agreement. Among other factors, the Board
considered:
o The nature, cost, and quality of the services provided to the Trust and
its shareholders;
o The profitability of the Trust to the Manager;
o The investment performance of the Trust in comparison to regular market
indices
o Economies of scale that may be available to the Trust from the Manager;
o Fees paid by other mutual funds for similar services;
o The value and quality of any other benefits or services received by the

Trust from its relationship with the Manager; and
o The direct and indirect benefits the Manager received from its

relationship with the Trust. These included services provided by the
Distributor and the Transfer Agent, and brokerage and soft dollar
arrangements permissible under Section 28(e) of the Securities
Exchange Act.

The Board considered that the Manager must be able to pay and retain high
quality personnel at competitive rates to provide services to the Trust. The
Board also considered that maintaining the financial viability of the Manager
is important so that the Manager will be able to continue to provide quality
services to the Trust and its shareholders in adverse times. The Board also
considered the investment performance of other mutual funds advised by the
Manager. The Board is aware that there are alternatives to the use of the
Manager.

These matters were also considered by the Independent Trustees, meeting
separately from the full Board with experienced Counsel to the Independent
Trustees who assisted them in their deliberations. The Independent Trustees'
Counsel is independent of the Manager within the meaning and intent of the SEC
Rules regarding the independence of counsel.

After careful deliberation, the Board, including the Independent
Trustees, concluded that it was in the best interest of shareholders to continue
the investment advisory agreement for another year. In arriving at a decision,
the Board did not single out any one factor or group of factors as being more
important than other factors, but considered all factors together. The Board
judged the terms and conditions of the investment advisory agreement, including
the investment advisory fee, in light of all of the surrounding circumstances.

|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 Trustees1, cast in person at a meeting called for the purpose of
voting on that plan.

Under the plan, the Manager and the Distributor may make payments to
affiliates and in their sole discretion, from time to time, may use their own
resources (at no direct cost to the Trust) to make payments to brokers, dealers
or other financial institutions for distribution and administrative services
they perform. The Manager may use its profits from the advisory fee it
receives from the Trust. In their sole discretion, the Distributor and the
Manager may increase or decrease the amount of payments they make from their
own resources to plan recipients.

Unless a plan is terminated as described below, the plan continues in
effect from year to year but only if the Trust's Board of Trustees and its
Independent Trustees specifically vote annually to approve its continuance.
Approval must be by a vote cast in person at a meeting called for the purpose
of voting on continuing the plan. A plan may be terminated at any time by the
vote of a majority of the Independent Trustees or by the vote of the holders of
a "majority" (as defined in the Investment Company Act) of the outstanding
shares of the Trust.

The Board of Trustees and the Independent Trustees must approve all
material amendments to a plan. An amendment to increase materially the amount
of payments to be made under a plan must be approved by shareholders of the
class affected by the amendment. The approval must be by a "majority" (as
defined in the Investment Company Act) of the shares.

While the plan is in effect, the Treasurer of the Trust shall provide
separate written reports on the plan to the Board of Trustees at least
quarterly for its review. The Reports shall detail the amount of all payments
made under the plan and the purpose for which the payments were made. Those
reports are subject to the review and approval of the Independent Trustees.

The plan states that while it is in effect, the selection and nomination
of those Trustees of the Trust who are not "interested persons" of the Trust is
committed to the discretion of the Independent Trustees. This does not prevent
the involvement of others in the selection and nomination process as long as
the final decision as to selection or nomination is approved by a majority of
the Independent Trustees.

Under the plan, no payment will be made to any recipient in any quarter
in which the aggregate net asset value of all Trust shares held by the
recipient for itself and its customers does not exceed a minimum amount, if
any, that may be set from time to time by a majority of the Independent
Trustees. The Board of Trustees has set no minimum amount of assets to qualify
for payments under the plan.

|X| Service Plan Fees. Under the service plan, the Distributor
currently uses the fees it receives from the Trust to pay brokers, dealers and
other financial institutions (they are referred to as "recipients") for
personal services and account maintenance services they provide for their
customers who hold shares. The services include, among others, answering
customer inquiries about the Trust, assisting in establishing and maintaining
accounts in the Trust, making the Trust's investment plans available and
providing other services at the request of the Trust or the Distributor. The
service plan permits reimbursements to the Distributor at a rate of up to 0.20%
of average annual net assets of the shares. The Distributor makes payments to
plan recipients quarterly or monthly depending on asset size 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, 2003 payments under the plan totaled
$3,486,749, all of which was paid by the Distributor to recipients. That
included $177,752 paid to an affiliate of the Sub-Distributor's parent company.
For the fiscal year ended June 30, 2003, the Manager paid, in the aggregate,
$1,282,357 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" 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.

|X| 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.

|X| 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.

o 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:

---------------------------------------------------------------------------------
[OBJECT OMITTED]
---------------------------------------------------------------------------------

o 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 6/30/03)
(7 days ended Effective Yield
6/30/03) (7 days ended
6/30/03)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

1-Year 5 Years 10 Years
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

0.85% 0.86% 1.15% 3.57% 4.02%
---------------------------------------------------------------------------------

|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.

ABOUT YOUR ACCOUNT

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 ("the
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 "Eastern 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, President's Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. It may
also close on other days.

The Trust's Board of Trustees 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. The Fund will provide you with notice
whenever it is required to do so by applicable law.

In choosing to take advantage of the checkwriting privilege, by signing
the account application or by completing a checkwriting card, each individual
who signs:
(1) for individual accounts, represents that they are the registered owner(s)
of the shares of the Trust in that account;
(2) for accounts for corporations, partnerships, trusts and other entities,
represents that they are an officer, general partner, trustee or other
fiduciary or agent, as applicable, duly authorized to act on behalf of
the registered owner(s);
(3) authorizes the Trust, its Transfer Agent and any bank through which the
Trust's drafts (checks) are payable to pay all checks drawn on the
Trust account of such person(s) and to redeem a sufficient amount of
shares from that account to cover payment of each check;
(4) specifically acknowledges that if they choose to permit
checks to be honored if there is a single signature on checks drawn
against joint accounts, or accounts for corporations, partnerships,
trusts or other entities, the signature of any one signatory on a
check will be sufficient to authorize payment of that check and
redemption from the account, even if that account is registered in the
names of more than one person or more than one authorized signature
appears on the checkwriting card or the application, as applicable;
(5) understands that the checkwriting privilege may be terminated or amended
at any time by the Trust and/or the Trust's bank; and
(6) acknowledges and agrees that neither the Trust nor its bank shall incur
any liability for that amendment or termination of checkwriting
privileges or for redeeming shares to pay checks reasonably believed
by them to be genuine, or for returning or not paying checks that have
not been accepted for any reason.

Sending Redemption Proceeds by Federal Funds Wire. The Federal Funds wire of
redemptions proceeds may be delayed if the Trust's custodian bank is not open
for business on a day when the Trust would normally authorize the wire to be
made, which is usually the Trust's next regular business day following the
redemption. In those circumstances, the wire will not be transmitted until the
next bank business day on which the Trust is open for business. No
distributions will be paid on the proceeds of redeemed shares awaiting transfer
by Federal Funds wire

Distributions From Retirement Plans Requests for distributions from
OppenheimerFunds-sponsored IRAs, SEP-IRAs, SIMPLE IRAs, 403(b)(7) custodial
plans, 401(k) plans or pension or profit-sharing plans should be addressed to
"Trustee, OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its
address listed in "How To Sell Shares" in the Prospectus or on the back cover
of this Statement of Additional Information. The request must

(1) state the reason for the distribution;
(2) state the owner's awareness of tax penalties if the distribution is
premature; and
(3) conform to the requirements of the plan and the Trust's other redemption
requirements.

Participants (other than self-employed persons) in
OppenheimerFunds-sponsored pension or profit-sharing plans with shares of the
Trust held in the name of the plan or its fiduciary may not directly request
redemption of their accounts. The plan administrator or fiduciary must sign
the request.

Distributions from pension and profit sharing plans are subject to
special requirements under the Internal Revenue Code and certain documents
(available from the Transfer Agent) must be completed and submitted to the
Transfer Agent before the distribution may be made. Distributions from
retirement plans are subject to withholding requirements under the Internal
Revenue Code, and IRS Form W-4P (available from the Transfer Agent) must be
submitted to the Transfer Agent with the distribution request, or the
distribution may be delayed. Unless the shareholder has provided the Transfer
Agent with a certified tax identification number, the Internal Revenue Code
requires that tax be withheld from any distribution even if the shareholder
elects not to have tax withheld. The Trust, the Manager, the Distributor the
Sub-Distributor, and the Transfer Agent assume no responsibility to determine
whether a distribution satisfies the conditions of applicable tax laws and will
not be responsible for any tax penalties assessed in connection with a
distribution.

How to Exchange Shares

As stated in the Prospectus, direct shareholders can exchange shares of the
Trust for Class A shares of any of the following eligible funds:

Oppenheimer AMT-Free Municipals Oppenheimer Limited Term Municipal Fund
Oppenheimer AMT-Free New York Municipals Oppenheimer Main Street Fund
Oppenheimer Bond Fund Oppenheimer Main Street Opportunity Fund
Oppenheimer California Municipal Fund Oppenheimer Main Street Small Cap Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Multiple Strategies Fund
Oppenheimer Capital Preservation Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Capital Income Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Principal Protected Main
Oppenheimer Champion Income Fund Street Fund
Oppenheimer Principal Protected Main
Oppenheimer Convertible Securities Fund Street Fund II
Oppenheimer Developing Markets Fund Oppenheimer Quest Balanced Value Fund
Oppenheimer Quest Capital Value Fund,
Oppenheimer Disciplined Allocation Fund Inc.
Oppenheimer Quest International Value
Oppenheimer Discovery Fund Fund, Inc.
Oppenheimer Emerging Growth Fund Oppenheimer Quest Opportunity Value Fund
Oppenheimer Emerging Technologies Fund Oppenheimer Quest Value Fund, Inc.
Oppenheimer Enterprise Fund Oppenheimer Real Asset Fund
Oppenheimer Equity Fund, Inc. Oppenheimer Real Estate Fund
Oppenheimer Rochester National
Oppenheimer Global Fund Municipals
Oppenheimer Global Opportunities Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Small Cap Value Fund
Oppenheimer Growth Fund Oppenheimer Strategic Income Fund
Oppenheimer High Yield Fund Oppenheimer Total Return Bond Fund
Oppenheimer International Bond Fund Oppenheimer U.S. Government Trust
Oppenheimer International Growth Fund Oppenheimer Value Fund
Oppenheimer International Small Company
Fund Limited-Term New York Municipal Fund
Oppenheimer Limited-Term Government Fund Rochester Fund Municipals
Oppenheimer MidCap Fund

And the following money market funds:

Oppenheimer Cash Reserves Centennial Government Trust
Oppenheimer Money Market Fund, Inc. Centennial Money Market Trust
Centennial America Fund, L. P. Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust Centennial Tax Exempt Trust

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.

|X| 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.

|X| 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.

|X| 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, the Trust may refuse the request.

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, Distributions and Redemptions of Shares.
The federal tax treatment of the Trust's dividends and capital gains
distributions is briefly highlighted in the Prospectus. The following is only a
summary of certain additional tax considerations generally affecting the Trust
and its shareholders.

The tax discussion in the Prospectus and this Statement of Additional
Information is based on tax law in effect on the date of the Prospectus and
this Statement of Additional Information. Those laws and regulations may be
changed by legislative, judicial, or administrative action, sometimes with
retroactive effect. State and local tax treatment of ordinary income dividends
and capital gain dividends from regulated investment companies may differ from
the treatment under the Internal Revenue Code described below. Potential
purchasers of shares of the Trust are urged to consult their tax advisers with
specific reference to their own tax circumstances as well as the consequences
of federal, state and local tax rules affecting an investment in the Trust.

|X| Qualification as a Regulated Investment Company. The Trust has elected
to be taxed as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended. As a regulated investment company,
the Trust is not subject to federal income tax on the portion of its net
investment income (that is, taxable interest, dividends, and other taxable
ordinary income, net of expenses) and capital gain net income (that is, the
excess of net long-term capital gains over net short-term capital losses) that
it distributes to shareholders. That qualification enables the Trust to "pass
through" its income and realized capital gains to shareholders without having
to pay tax on them. This avoids a "double tax" on that income and capital
gains, since shareholders normally will be taxed on the dividends and capital
gains they receive from the Trust (unless their Trust shares are held in a
retirement account or the shareholder is otherwise exempt from tax).

The Internal Revenue Code contains a number of complex tests relating to
qualification that the Trust might not meet in a particular year. If it did not
qualify as a regulated investment company, the Trust would be treated for tax
purposes as an ordinary corporation and would receive no tax deduction for
payments made to shareholders.

To qualify as a regulated investment company, the Trust must distribute
at least 90% of its investment company taxable income (in brief, net investment
income and the excess of net short-term capital gain over net long-term capital
loss) for the taxable year. The Trust must also satisfy certain other
requirements of the Internal Revenue Code, some of which are described below.
Distributions by the Trust made during the taxable year or, under specified
circumstances, within 12 months after the close of the taxable year, will be
considered distributions of income and gains for the taxable year and will
therefore count toward satisfaction of the above-mentioned requirement.

To qualify as a regulated investment company, the Trust must derive at
least 90% of its gross income from dividends, interest, certain payments with
respect to securities loans, gains from the sale or other disposition of stock
or securities or foreign currencies (to the extent such currency gains are
directly related to the regulated investment company's principal business of
investing in stock or securities) and certain other income.

In addition to satisfying the requirements described above, the Trust
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under that test, at the close of each quarter of the
Trust's taxable year, at least 50% of the value of the Trust's assets must
consist of cash and cash items (including receivables), U.S. government
securities, securities of other regulated investment companies, and securities
of other issuers. As to each of those issuers, the Trust must not have invested
more than 5% of the value of the Trust's total assets in securities of each
such issuer and the Trust must not hold more than 10% of the outstanding voting
securities of each such issuer. No more than 25% of the value of its total
assets may be invested in the securities of any one issuer (other than U.S.
government securities and securities of other regulated investment companies),
or in two or more issuers which the Trust controls and which are engaged in the
same or similar trades or businesses. For purposes of this test, obligations
issued or guaranteed by certain agencies or instrumentalities of the U.S.
government are treated as U.S. government securities.

|X| Excise Tax on Regulated Investment Companies. 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. To meet this requirement, in certain
circumstances the Trust might be required to liquidate portfolio investments to
make sufficient distributions to avoid excise tax liability. However, the Board
of Trustees and the Manager might determine in a particular year that it would
be in the best interests of shareholders for the Trust not to make such
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.

|X| Taxation of Trust Distributions. The Trust anticipates distributing
substantially all of its investment company taxable income for each taxable
year. Those distributions will be taxable to shareholders as ordinary income
and treated as dividends for federal income tax purposes.

Special provisions of the Internal Revenue Code govern the eligibility of
the Trust's dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not eligible for the
deduction. The amount of dividends paid by the Trust that may qualify for the
deduction is limited to the aggregate amount of qualifying dividends that the
Trust derives from portfolio investments that the Trust has held for a minimum
period, usually 46 days. A corporate shareholder will not be eligible for the
deduction on dividends paid on Trust shares held for 45 days or less. To the
extent the Trust's dividends are derived from gross income from option
premiums, interest income or short-term gains from the sale of securities or
dividends from foreign corporations, those dividends will not qualify for the
deduction. Since it is anticipated that most of the Trust's income will be
derived from interest it receives on its investments, the Trust does not
anticipate that its distributions will qualify for this deduction.

The Trust may either retain or distribute to shareholders its net capital
gain for each taxable year. The Trust currently intends to distribute any such
amounts. If net long term capital gains are distributed and designated as a
capital gain distribution, it will be taxable to shareholders as a long-term
capital gain and will be properly identified in reports sent to shareholders in
January of each year. Such treatment will apply no matter how long the
shareholder has held his or her shares or whether that gain was recognized by
the Trust before the shareholder acquired his or her shares.

If the Trust elects to retain its net capital gain, the Trust will be
subject to tax on it at the 35% corporate tax rate. If the Trust elects to
retain its net capital gain, it is expected that the Trust also will elect to
have shareholders of record on the last day of its taxable year treated as if
each received a distribution of their pro rata share of such gain. As a result,
each shareholder will be required to report his or her pro rata share of such
gain on their tax return as long-term capital gain, will receive a refundable
tax credit for his/her pro rata share of tax paid by the Trust on the gain, and
will increase the tax basis for his/her shares by an amount equal to the deemed
distribution less the tax credit.

Investment income that may be received by the Trust from sources within
foreign countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Trust to a reduced rate of, or exemption from, taxes on such
income.

Distributions by the Trust that do not constitute ordinary income
dividends or capital gain distributions will be treated as a return of capital
to the extent of the shareholder's tax basis in their shares. Any excess will
be treated as gain from the sale of those shares, as discussed below.
Shareholders will be advised annually as to the U.S. federal income tax
consequences of distributions made (or deemed made) during the year. If prior
distributions made by the Trust must be re-characterized as a non-taxable
return of capital at the end of the fiscal year as a result of the effect of
the Trust's investment policies, they will be identified as such in notices
sent to shareholders.

Distributions by the Trust will be treated in the manner described above
regardless of whether the distributions are paid in cash or reinvested in
additional shares of the Trust (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares
received, determined as of the reinvestment date.

The Trust will be required in certain cases to withhold 28% of ordinary
income dividends, capital gains distributions and the proceeds of the
redemption of shares, paid to any shareholder (1) who has failed to provide a
correct taxpayer identification number or to properly certify that number when
-------
required, (2) who is subject to backup withholding for failure to report the
receipt of interest or dividend income properly, or (3) who has failed to
certify to the Trust that the shareholder is not subject to backup withholding
or is an "exempt recipient" (such as a corporation). All income and any tax
withheld by the Trust is remitted by the Trust to the U.S. Treasury and is
identified in reports mailed to shareholders in January of each year.

|X| Tax Effects of Redemptions of Shares. If a shareholder redeems all or a
portion of his/her shares, the shareholder will recognize a gain or loss on the
-
redeemed shares in an amount equal to the difference between the proceeds of
the redeemed shares and the shareholder's adjusted tax basis in the shares.
All or a portion of any loss recognized in that manner may be disallowed if the
shareholder purchases other shares of the Trust within 30 days before or after
the redemption.

In general, any gain or loss arising from the redemption of shares of the
Trust will be considered capital gain or loss, if the shares were held as a
capital asset. It will be long-term capital gain or loss if the shares were
held for more than one year. However, any capital loss arising from the
redemption of shares held for six months or less will be treated as a long-term
capital loss to the extent of the amount of capital gain dividends received on
those shares. Special holding period rules under the Internal Revenue Code
apply in this case to determine the holding period of shares and there are
limits on the deductibility of capital losses in any year.

|X| Foreign Shareholders. Under U.S. tax law, taxation of a shareholder who
is a foreign person (including, but not limited to, a nonresident alien
individual, a foreign trust, a foreign estate, a foreign corporation, or a
foreign partnership) primarily depends on whether the foreign person's income
from the Trust is effectively connected with the conduct of a U.S. trade or
business. Typically, ordinary income dividends paid from a mutual fund are not
considered "effectively connected" income.

Ordinary income dividends that are paid by the Trust (and are deemed not
"effectively connected income") to foreign persons will be subject to a U.S. tax
withheld by the Trust at a rate of 30%, provided the Trust obtains a properly
completed and signed Certificate of Foreign Status. The tax rate may be reduced
if the foreign person's country of residence has a tax treaty with the U.S.
allowing for a reduced tax rate on ordinary income dividends paid by the Trust.
All income and any tax withheld by the Trust is remitted by the Trust to the
U.S. Treasury and is identified in reports mailed to shareholders in March of
each year.

If the ordinary income dividends from the Trust are effectively connected
---
with the conduct of a U.S. trade or business, then the foreign person may claim
an exemption from the U.S. tax described above provided the Trust obtains a
properly completed and signed Certificate of Foreign Status.

If the foreign person fails to provide a certification of his/her foreign
status, the Trust will be required to withhold U.S. tax at a rate of 28% on
ordinary income dividends, capital gains distributions and the proceeds of the
redemption of shares, paid to any foreign person. All income and any tax
withheld (in this situation) by the Trust is remitted by the Trust to the U.S.
Treasury and is identified in reports mailed to shareholders in January of each
year.

The tax consequences to foreign persons entitled to claim the benefits of
an applicable tax treaty may be different from those described herein. Foreign
shareholders are urged to consult their own tax advisors or the U.S. Internal
Revenue Service with respect to the particular tax consequences to them of an
investment in the Trust, including the applicability of the U.S. withholding
taxes described above.

Dividend Reinvestment in Another Trust. Direct shareholders of the Trust may
elect to reinvest all dividends and/or capital gains distributions in Class A
shares of any eligible fund listed above. To elect this option, the shareholder
must notify the Transfer Agent in writing and must have an existing account in
the fund selected for reinvestment. Otherwise, the shareholder first must
obtain a prospectus for that fund and an application from the Distributor to
establish an account. The investment will be made at the close of business on
the payable date of the dividend or distribution.

Additional Information About the Trust

The Distributor. The Trust's shares are sold through dealers, brokers and
other financial institutions that have a sales agreement with the
Sub-Distributor. The Distributor and the Sub-Distributor also distribute
shares of the other funds managed by the Manager or an affiliate.

The Transfer Agent. Shareholder Services, Inc., the Trust's Transfer Agent, is
responsible for maintaining the Trust's shareholder registry and shareholder
accounting records, and for paying dividends and distributions to shareholders
of the Trust. It also handles shareholder servicing and administrative
functions. It serves as the Transfer Agent for an annual per account fee.

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 is the practice of the Trust to deal with the custodian in a
manner uninfluenced by any banking relationship the custodian may have with the
Manager and its affiliates. The Trust's cash balances with the custodian in
excess of $100,000 are not protected by federal deposit insurance. Those
uninsured balances at times may be substantial.

Independent Auditors. Deloitte & Touche LLP are the independent auditors of
the Trust. They audit the Trust's financial statements and perform other
related audit services. They also act as auditors for the Manager and
OppenheimerFunds, Inc. and for certain other funds advised by the Manager and
its affiliates. Audit and non-audit services provided to the Trust must be
pre-approved by the Audit Committee. Non-audit services provided by Deloitte &
Touche LLP to the Manager, OppenheimerFunds, Inc. and certain related companies
must also be pre-approved by the Audit Committee.

INDEPENDENT AUDITORS' REPORT --------------------------------------------------------------------------------

To the Board of Trustees and Shareholders of Centennial Government Trust: We have audited the accompanying statement of assets and liabilities of Centennial Government Trust, including the statement of investments, as of June 30, 2003, 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 Trusts management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of June 30, 2003, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Centennial Government Trust as of June 30, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

Deloitte & Touche LLP Denver, Colorado July 22, 2003 STATEMENT OF INVESTMENTS June 30, 2003 Principal Value Amount See Note 1 -------------------------------------------------------------------------------- U.S. Government Agencies--78.3% FNMA Master Credit Facility: 0.95%, 1/2/04 1 $ 25,000,000 $ 24,877,951 1.19%, 9/2/03 40,000,000 39,916,700 1.20%, 7/1/03 10,000,000 10,000,000 1.23%, 7/1/03 50,000,000 50,000,000 1.24%, 7/1/03-8/1/03 50,000,000 49,973,306 -------------------------------------------------------------------------------- Federal Home Loan Bank: 0.95%, 9/10/03 25,000,000 24,953,160 1.105%, 11/13/03 10,500,000 10,456,491 1.125%, 8/18/03 7,100,000 7,089,350 1.15%, 8/8/03-10/16/03 60,000,000 59,863,119 1.154%, 10/30/03 35,000,000 34,864,245 1.16%, 8/13/03-8/15/03 50,000,000 49,929,756 1.18%, 10/31/03 5,620,000 5,597,526 1.23%, 7/14/03-7/6/04 50,000,000 49,988,896 1.233%, 7/9/03 25,000,000 24,993,150 4.125%, 8/15/03 11,150,000 11,189,218 5.125%, 9/15/03 9,455,000 9,532,021 6.375%, 11/14/03 22,000,000 22,435,012 -------------------------------------------------------------------------------- Federal Home Loan Mortgage Corp.: 0.915%, 10/20/03 30,000,000 29,915,362 0.97%, 9/25/03 25,000,000 24,942,069 1.01%, 12/31/03 15,000,000 14,922,987 1.05%, 12/1/03-12/4/03 45,200,000 44,996,107 1.06%, 11/21/03 25,000,000 24,894,736 1.07%, 11/18/03 25,000,000 24,895,972 1.09%, 8/18/03-9/22/03 75,000,000 74,845,841 1.11%, 11/6/03 11,610,000 11,564,179 1.14%, 9/30/03 15,000,000 14,956,965 1.165%, 8/7/03-10/9/03 82,850,000 82,681,889 1.19%, 7/25/03 15,362,000 15,349,813 1.21%, 10/27/03 20,000,000 19,920,678 1.22%, 8/21/03 8,000,000 7,986,173 1.225%, 8/14/03 31,282,000 31,235,202 5.75%, 7/15/03 14,260,000 14,284,428 6.375%, 11/15/03 22,500,000 22,932,243 Principal Value Amount See Note 1 -------------------------------------------------------------------------------- U.S. Government Agencies Continued Federal National Mortgage Assn.: 1.035%, 12/29/03 $ 17,779,000 $ 17,687,823 1.08%, 11/19/03 35,000,000 34,849,600 1.085%, 9/3/03 41,841,000 41,758,644 1.14%, 8/29/03-11/26/03 65,000,000 64,771,375 1.145%, 8/6/03 25,000,000 24,971,375 1.155%, 10/1/03 25,000,000 24,926,208 1.16%, 8/13/03-10/8/03 45,000,000 44,901,561 1.185%, 9/17/03-9/19/03 40,000,000 39,908,500 1.20%, 7/16/03 32,000,000 31,984,200 1.215%, 7/23/03 25,000,000 24,981,437 1.225%, 7/30/03 28,201,000 28,173,171 1.235%, 8/20/03 25,000,000 24,957,118 1.26%, 7/2/03 25,000,000 24,999,125 4.75%, 11/14/03 10,626,000 10,765,760 -------------------------------------------------------------------------------- Overseas Private Investment Corp.: 1.469%, 7/21/03 2,3 2,642,407 2,663,161 1.494%, 7/21/03 2,3 2,167,711 2,172,344 ---------------- Total U.S. Government Agencies (Cost $1,390,455,947) 1,390,455,947 -------------------------------------------------------------------------------- Letters of Credit--3.4% Student Loan Marketing Assn., guaranteeing commercial paper of New Hampshire Higher Education Loan Corp., Series 1995A: 1%, 7/31/03 8,636,000 8,628,803 1.02%, 7/28/03 18,145,000 18,131,119 1.20%, 7/17/03 16,167,000 16,158,378 1.22%, 7/11/03 18,243,000 18,236,818 ---------------- Total Letters of Credit (Cost $61,155,118) 61,155,118 --------------------------------------------------------------------------------

Repurchase Agreements--18.4% 4 Undivided interest of 97.68% in joint repurchase agreement (Principal Amount/ Market Value $333,680,000, with a maturity value of $333,690,103) with PaineWebber, Inc., 1.09%, dated 6/30/03, to be repurchased at $325,959,869 on 7/1/03, collateralized by Federal Home Loan Mortgage Corp., 4.50%--7%, 5/1/18--11/1/32, with a value of

$340,827,924 (Cost $325,950,000) 325,950,000 325,950,000 4 | CENTENNIAL GOVERNMENT TRUST Value See Note 1 -------------------------------------------------------------------------------- Total Investments, at Value (Cost $1,777,561,065) 100.1% $1,777,561,065 -------------------------------------------------------------------------------- Liabilities in Excess of Other Assets (0.1) (1,747,222) --------------------------- Net Assets 100.0% $1,775,813,843 =========================== Footnotes to Statement of Investments 1. When-issued security to be delivered and settled after June 30, 2003. See Note 1 of Notes to Financial Statements. 2. Identifies issues considered to be illiquid or restricted--See Note 4 of Notes to Financial Statements. 3. Represents the current interest rate for a variable or increasing rate security. 4. The Trust may have elements of risk due to concentrated investments. Such concentrations may subject the Trust to additional risks. See accompanying Notes to Financial Statements. 5 | CENTENNIAL GOVERNMENT TRUST STATEMENT OF ASSETS AND LIABILITIES June 30, 2003


-------------------------------------------------------------------------------------------------------

 Assets

 Investments, at value (including cost and market value of $325,950,000 in
 repurchase agreements)(cost $1,777,561,065)--see accompanying statement               $1,777,561,065
-------------------------------------------------------------------------------------------------------
 Cash                                                                                       1,866,970
-------------------------------------------------------------------------------------------------------
 Receivables and other assets:
 Shares of beneficial interest sold                                                        35,173,421
 Interest                                                                                   1,178,545
 Other                                                                                         85,558
                                                                                       ----------------
 Total assets                                                                           1,815,865,559

-------------------------------------------------------------------------------------------------------
 Liabilities

 Payables and other liabilities:
 Investments purchased on a when-issued basis                                              24,877,951
 Shares of beneficial interest redeemed                                                    14,409,495
 Dividends                                                                                    456,889
 Service plan fees                                                                            144,195
 Transfer and shareholder servicing agent fees                                                 79,268
 Shareholder reports                                                                           47,414
 Trustees' compensation                                                                         1,740
 Other                                                                                         34,764
                                                                                       ----------------
 Total liabilities                                                                         40,051,716

-------------------------------------------------------------------------------------------------------
 Net Assets                                                                            $1,775,813,843
                                                                                       ----------------

-------------------------------------------------------------------------------------------------------
 Composition of Net Assets

 Paid-in capital                                                                       $1,775,814,444
-------------------------------------------------------------------------------------------------------
 Accumulated net realized loss on investment transactions                                        (601)
                                                                                       ----------------
 Net Assets--applicable to 1,775,797,070 shares of beneficial interest outstanding     $1,775,813,843
                                                                                       ----------------

-------------------------------------------------------------------------------------------------------
 Net Asset Value, Redemption Price Per Share and Offering Price Per Share                       $1.00

See accompanying Notes to Financial Statements. 6 | CENTENNIAL GOVERNMENT TRUST STATEMENT OF OPERATIONS For the Year Ended June 30, 2003 ----------------------------------------------------------------------------- Investment Income Interest $26,527,143 ----------------------------------------------------------------------------- Expenses Management fees 7,414,061 ----------------------------------------------------------------------------- Service plan fees 3,486,749 ----------------------------------------------------------------------------- Transfer and shareholder servicing agent fees 935,957 ----------------------------------------------------------------------------- Shareholder reports 93,740 ----------------------------------------------------------------------------- Custodian fees and expenses 33,422 ----------------------------------------------------------------------------- Trustees' compensation 13,703 ----------------------------------------------------------------------------- Other 145,459 ------------- Total expenses 12,123,091 Less reduction to custodian expenses (2,299) Less reimbursement of expenses (5,495,103) ------------- Net expenses 6,625,689 ----------------------------------------------------------------------------- Net Investment Income 19,901,454 ----------------------------------------------------------------------------- Net Realized Gain on Investments 11,525 ----------------------------------------------------------------------------- Net Increase in Net Assets Resulting from Operations $19,912,979 ------------- See accompanying Notes to Financial Statements. 7 | CENTENNIAL GOVERNMENT TRUST STATEMENTS OF CHANGES IN NET ASSETS


 Year Ended June 30,                                                                    2003              2002
----------------------------------------------------------------------------------------------------------------

 Operations

  Net investment income                                                       $   19,901,454    $   30,084,851
----------------------------------------------------------------------------------------------------------------
  Net realized gain                                                                   11,525           224,295
                                                                              ----------------------------------
  Net increase in net assets resulting from operations                            19,912,979        30,309,146

----------------------------------------------------------------------------------------------------------------
  Dividends and/or Distributions to Shareholders

  Dividends from net investment income                                           (19,901,454)      (30,073,399)
----------------------------------------------------------------------------------------------------------------
  Distributions from net realized gain                                                    --           (11,452)

----------------------------------------------------------------------------------------------------------------
  Beneficial Interest Transactions

  Net increase in net assets resulting from beneficial interest transactions     228,169,387        89,903,816

----------------------------------------------------------------------------------------------------------------
  Net Assets

  Total increase                                                                 228,180,912        90,128,111
----------------------------------------------------------------------------------------------------------------
  Beginning of period                                                          1,547,632,931     1,457,504,820
                                                                              ----------------------------------
  End of period                                                               $1,775,813,843    $1,547,632,931
                                                                              ----------------------------------

See accompanying Notes to Financial Statements. 8 | CENTENNIAL GOVERNMENT TRUST FINANCIAL HIGHLIGHTS


  Year Ended June 30                              2003         2002         2001       2000       1999
---------------------------------------------------------------------------------------------------------

 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           .01          .02          .05        .05        .04
---------------------------------------------------------------------------------------------------------
 Dividends and/or distributions to shareholders:
 Dividends from net investment income             (.01)        (.02)        (.05)      (.05)      (.04)
 Distributions from net realized gain               --           -- 1         --         --         --
                                                ---------------------------------------------------------
 Total dividends and/or distributions
 to shareholders                                  (.01)        (.02)        (.05)      (.05)      (.04)
---------------------------------------------------------------------------------------------------------
 Net asset value, end of period                 $ 1.00       $ 1.00       $ 1.00     $ 1.00     $ 1.00
                                                ---------------------------------------------------------

---------------------------------------------------------------------------------------------------------
 Total Return 2                                   1.15%        1.92%        5.29%      5.07%      4.47%

---------------------------------------------------------------------------------------------------------
 Ratios/Supplemental Data

 Net assets, end of period (in millions)        $1,776       $1,548       $1,458     $1,192     $1,213
---------------------------------------------------------------------------------------------------------
 Average net assets (in millions)               $1,744       $1,585       $1,367     $1,244     $1,245
---------------------------------------------------------------------------------------------------------
 Ratios to average net assets: 3
 Net investment income                            1.14%        1.90%        5.13%      4.92%      4.37%
 Expenses, gross                                  0.70%        0.71%        0.73%      0.74%      0.74%
 Expenses, net                                    0.38% 4,5    0.63% 4,5    0.73% 5    0.74% 5    0.74% 5

1. Less than $0.005 per share. 2. Assumes an investment on the business day before the first day of the fiscal period, with all dividends reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns reflect changes in net investment income only. Total returns are not annualized for periods less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on Trust distributions or the redemption of Trust shares. 3. Annualized for periods of less than one full year. 4. Net of reimbursement of expenses. 5. Reduction to custodian expenses less than 0.01%. See accompanying Notes to Financial Statements. 9 | CENTENNIAL GOVERNMENT TRUST NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- 1. Significant Accounting Policies

Centennial Government Trust (the Trust) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trusts investment objective is to seek a high level of current income that is consistent with the preservation of capital and the maintenance of liquidity. The 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. --------------------------------------------------------------------------------

Securities on a When-Issued Basis. Delivery and payment for securities that have been purchased by the Trust on a when-issued basis can take place a month or more after the trade date. Normally the settlement date occurs within six months after the trade date; however, the Trust may, from time to time, purchase securities whose settlement date extends six months or more beyond trade date. During this period, such securities do not earn interest, are subject to market fluctuation and may increase or decrease in value prior to their delivery. The Trust maintains segregated assets with a market value equal to or greater than the amount of its purchase commitments. The purchase of securities on a when-issued basis may increase the volatility of the Trusts net asset value to the extent the Trust makes such purchases while remaining substantially fully invested. As of June 30, 2003, the Trust had entered into when-issued purchase commitments of $24,877,951.

--------------------------------------------------------------------------------

Joint Repurchase Agreements. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Trust, along with other affiliated funds advised by the Manager, may transfer uninvested cash balances into joint trading accounts on a daily basis. Secured by U.S. government securities, these balances are invested in one or more repurchase agreements. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. In the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings.

--------------------------------------------------------------------------------

Federal Taxes. The Trust intends to comply with provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its investment company taxable income to shareholders, therefore, no federal income or excise tax provision is required.

The tax components of capital shown in the table below represent distribution requirements the Trust must satisfy under the income tax regulations, losses the Trust may be able to offset against income and gains realized in future years for federal income tax purposes.

10 | CENTENNIAL GOVERNMENT TRUST Undistributed Net Undistributed Accumulated Investment Income Long-Term Gains Loss Carryforward 1 -------------------------------------------------------- $470,820 $-- $600 1. As of June 30, 2003, the Trust had $600 of post-October losses available to offset future capital gains, if any. Such losses, if unutilized, will expire in 2012.

Net investment income (loss) and net realized gain (loss) may differ for financial statement and tax purposes. The character of dividends and distributions made during the fiscal year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. Also, due to timing of dividends and distributions, the fiscal year in which amounts are distributed may differ from the fiscal year in which the income or net realized gain was recorded by the Trust.

From To (From) Long-Term Net Ordinary Capital Gain Tax Return Investment Income (Loss) (Loss) 2 of Capital Loss ------------------------------------------------------- $-- $11,377 $-- $-- 2. $11,377 was distributed in connection with Trust share redemptions.

The tax character of distributions paid during the years ended June 30, 2003 and June 30, 2002 were as follows:

Year Ended Year Ended June 30, 2003 June 30, 2002 ------------------------------------------------------ Distributions paid from: Ordinary income $19,901,454 $ 30,073,399 Long-term capital gain -- 11,452 ------------------------------ Total $19,901,454 $30,084,851 ------------------------------ --------------------------------------------------------------------------------

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. Income distributions, if any, are declared daily and paid monthly. Capital gain distributions, if any, are declared and paid annually.

-------------------------------------------------------------------------------- Expense Offset Arrangement. The reduction of custodian fees represents earnings on cash balances maintained by the Trust. -------------------------------------------------------------------------------- Security Transactions. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. -------------------------------------------------------------------------------- Other. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. 11 | CENTENNIAL GOVERNMENT TRUST NOTES TO FINANCIAL STATEMENTS Continued -------------------------------------------------------------------------------- 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, 2003      Year Ended June 30, 2002
                                Shares        Amount         Shares         Amount
-----------------------------------------------------------------------------------------------------

 Sold                        4,283,051,983    $ 4,283,051,983      3,791,076,839    $ 3,791,076,839
 Dividends and/or
 distributions reinvested       19,700,770         19,700,770         30,259,554         30,259,554
 Redeemed                   (4,074,583,366)    (4,074,583,366)    (3,731,432,577)    (3,731,432,577)
                            -------------------------------------------------------------------------
 Net increase                  228,169,387    $   228,169,387         89,903,816    $    89,903,816
                            -------------------------------------------------------------------------

-------------------------------------------------------------------------------- 3. Fees and Other Transactions with Affiliates

Management Fees. Management fees paid to the Manager were in accordance with the investment advisory agreement with the Trust which provides for a fee at an annual rate of 0.50% of the first $250 million of the Trusts net assets, 0.475% of the next $250 million, 0.45% of the next $250 million, 0.425% of the next $250 million, 0.40% of the next $250 million, 0.375% of the next $250 million, 0.35% of net assets in excess of $1.5 billion. In the agreement, the Manager guarantees that the Trusts total expenses in any fiscal year, exclusive of taxes, interest and brokerage concessions, and extraordinary expenses such as litigation costs, shall not exceed the lesser of 1.50% of the average annual net assets of the Trust up to $30 million and 1% of its average annual net assets in excess of $30 million; or 25% of the total annual investment income of the Trust. As a result of this agreement, the Trust was reimbursed $5,495,103 for the year ended June 30, 2003.

On April 28, 2003, the Board of Trustees approved a new investment advisory agreement that would eliminate the expense limitation and resulting reimbursement from the Manager. This new investment advisory agreement has been submitted to shareholders for approval and will be effective only if affirmed by shareholder vote.

-------------------------------------------------------------------------------- Transfer Agent Fees. Shareholder Services, Inc. (SSI) acts as the transfer and shareholder servicing agent for the Trust and for other registered investment companies. The Trust pays SSI a $14.75 per account fee.

SSI has voluntarily agreed to limit transfer and shareholder servicing agent fees up to an annual rate of 0.35% of average net assets of the Trust. This undertaking may be amended or withdrawn at any time.

--------------------------------------------------------------------------------

Service Plan (12b-1) Fees. The Trust has adopted a service plan. It reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold shares of the Trust. Reimbursement is made quarterly at an annual rate up to 0.20% of the average annual net assets of the Trust. During the year ended June 30, 2003, the Trust paid $177,752 to a broker/dealer affiliated with the Manager as reimbursement for distribution-related expenses.

12 | CENTENNIAL GOVERNMENT TRUST -------------------------------------------------------------------------------- 4. Illiquid Securities

As of June 30, 2003, investments in securities included issues that are illiquid. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Trust intends to invest no more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. The aggregate value of illiquid securities subject to this limitation as of June 30, 2003 was $4,835,505, which represents 0.27% of the Trusts net assets.

13 | CENTENNIAL GOVERNMENT TRUST


                                   Appendix A

                        Description of Securities Ratings

Below is a description of the two highest rating categories for Short Term Debt
and Long Term Debt by the "Nationally-Recognized Statistical Rating
Organizations" which the Manager evaluates in purchasing securities on behalf
of the Trust.  The ratings descriptions are based on information supplied by
the ratings organizations to subscribers.

SHORT TERM DEBT RATINGS.

Moody's Investors Service, Inc.  ("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.

---------------------------------------------------------------------------------
Dominion Bond Rating Service Limited ("DBRS")

R-1:  Short term debt rated "R-1 (high)" is of the highest  credit  quality,  and
indicates  an  entity  which  possesses  unquestioned  ability  to repay  current
liabilities as they fall due.  Entities rated in this category  normally maintain
strong liquidity  positions,  conservative debt levels and profitability which is
both stable and above  average.  Companies  achieving an "R-1 (high)"  rating are
normally  leaders in  structurally  sound  industry  segments  with proven  track
records,  sustainable  positive  future  results  and no  substantial  qualifying
negative   factors.   Given  the  extremely  tough   definition  which  DBRS  has
established  for an "R-1 (high)",  few entities are strong enough to achieve this
rating.  Short term debt rated "R-1 (middle)" is of superior  credit quality and,
in most  cases,  ratings in this  category  differ from "R-1  (high)"  credits to
only a small degree.  Given the  extremely  tough  definition  which DBRS has for
the "R-1 (high)"  category  (which few companies  are able to achieve),  entities
rated  "R-1  (middle)"  are  also  considered   strong  credits  which  typically
exemplify  above  average  strength  in  key  areas  of  consideration  for  debt
protection.  Short  term  debt  rated  "R-1  (low)"  is  of  satisfactory  credit
quality.   The  overall  strength  and  outlook  for  key  liquidity,   debt  and
profitability  ratios  is  not  normally  as  favorable  as  with  higher  rating
categories,  but these  considerations  are  still  respectable.  Any  qualifying
negative  factors  which  exist  are  considered  manageable,  and the  entity is
normally of sufficient size to have some influence in its industry.

R-2:  Short term debt rated  "R-2" is of adequate  credit  quality and within the
three subset grades  (high,  middle,  low),  debt  protection  ranges from having
reasonable  ability  for timely  repayment  to a level which is  considered  only
just  adequate.   The  liquidity  and  debt  ratios  of  entities  in  the  "R-2"
classification  are not as strong as those in the  "R-1"  category,  and the past
and  future  trend may  suggest  some risk of  maintaining  the  strength  of key
ratios in these areas.  Alternative  sources of liquidity  support are considered
satisfactory;  however,  even the  strongest  liquidity  support will not improve
the  commercial  paper rating of the issuer.  The size of the entity may restrict
its  flexibility,  and its relative  position in the industry is not typically as
strong as the "R-1 credit".  Profitability  trends,  past and future, may be less
favorable,  earnings  not as  stable,  and there are  often  negative  qualifying
factors  present  which  could also make the entity  more  vulnerable  to adverse
changes in financial and economic conditions.

LONG TERM DEBT RATINGS.

These ratings are relevant for securities purchased by the Trust with a
remaining maturity of 397 days or less, or for rating issuers of short-term
obligations.


Moody's
-------

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-1

                                   Appendix B

---------------------------------------------------------------------------------
                            Industry Classifications
---------------------------------------------------------------------------------

Aerospace & Defense               Industrial Conglomerates
Air Freight & Couriers            Insurance
Airlines                          Internet & Catalog Retail
Asset Backed Securities           Internet Software & Services
Auto Components                   IT Services
Automobiles                       Leasing & Factoring
Beverages                         Leisure Equipment & Products
Biotechnology                     Machinery
Broker-Dealer                     Marine
Building Products                 Media
Capital Markets                   Metals & Mining
Chemicals                         Multiline Retail
Commercial Banks                  Multi-Utilities
Commercial Finance                Municipal
Commercial Services & Supplies    Office Electronics
Communications Equipment          Oil & Gas
Computers & Peripherals           Paper & Forest Products
Construction & Engineering        Personal Products
Construction Materials            Pharmaceuticals
Consulting & Services             Real Estate
Consumer Finance                  Repurchase Agreements
Containers & Packaging            Road & Rail
Distributors                      Semiconductor and Semiconductor Equipment
Diversified Financial Services    Software
Diversified Telecommunication     Special Purpose Financial
Services
Electric Utilities                Specialty Retail
Electrical Equipment              Textiles, Apparel & Luxury Goods
Electronic Equipment &            Thrifts & Mortgage Finance
Instruments
Energy Equipment & Services       Tobacco
Food & Staples Retailing          Trading Companies & Distributors
Food Products                     Transportation Infrastructure
Foreign Government                U.S. Government Agencies-Full Faith and Credit
                                  Agencies
Gas Utilities                     U.S. Government Agencies-Government Sponsored
                                  Enterprises
Health Care Equipment & Supplies  U.S. Government Instrumentalities
Health Care Providers & Services  U.S. Government Obligations
Hotels Restaurants & Leisure      Water Utilities
Household Durables                Wireless Telecommunication Services












---------------------------------------------------------------------------------
Centennial Government Trust
---------------------------------------------------------------------------------

Investment Advisor and Distributor
Centennial Asset Management Corporation
6803 South Tucson Way
Centennial, Colorado 80112

Sub-Distributor
OppenheimerFunds Distributor, Inc.
P.O. Box 5254
Denver, Colorado 80217-5254

Transfer Agent
Shareholder Services, Inc.
P.O. Box 5143
Denver, Colorado 80217-5143
1.800.525.9310

Custodian of Portfolio Securities
Citibank, N.A.
111 Wall Street
New York, New York 10005

Independent Auditors
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202

Counsel to the Trust
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway
Denver, Colorado 80202

Counsel to the Independent Trustees
Mayer, Brown, Rowe & Maw, LLP
1675 Broadway
New York, New York 10019


PX0170.001.0803.rev.1103


--------
1. 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  Trust and who do not
have any direct or indirect  financial  interest in the  operation of the plan or
any agreement under the plan.