UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-03391
Centennial Government Trust
(Exact name of registrant as specified in charter)
6803 South Tucson Way, Centennial, Colorado 80112-3924
(Address of principal executive offices) (Zip code)
Robert G. Zack, Esq.
OppenheimerFunds, Inc.
Two World Financial Center, New York, New York 10281-1008
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(Name and address of agent for service)
Registrant's telephone number, including area code: (303) 768-3200
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Date of fiscal year end: June 30
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Date of reporting period: July 1, 2003 - June 30, 2004
ITEM 1. REPORTS TO STOCKHOLDERS
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STATEMENT OF INVESTMENTS June 30, 2004
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PRINCIPAL VALUE
AMOUNT SEE NOTE 1
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U.S. GOVERNMENT AGENCIES--94.1%
FNMA Master
Credit Facility:
1.03%, 7/1/04 $ 50,711,000 $ 50,711,000
1.05%, 7/8/04 32,732,000 32,725,317
1.10%, 8/2/04 50,000,000 49,951,111
1.26%, 9/1/04 50,000,000 49,891,496
1.61%, 10/1/04 50,711,000 50,502,353
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Federal Home
Loan Bank:
0.96%, 7/7/04 25,000,000 24,995,625
1.015%, 7/9/04 71,000,000 70,982,912
1.04%, 1/5/05 1 50,000,000 49,998,708
1.25%, 7/14/04 21,000,000 20,991,355
1.25%, 7/28/04 1 50,000,000 49,988,678
1.272%, 8/4/04 35,000,000 34,999,524
1.28%, 8/20/04 35,000,000 34,937,778
1.30%, 8/25/04 25,000,000 24,950,347
1.32%, 7/2/04 35,000,000 34,999,018
1.35%, 8/27/04 35,000,000 34,925,188
1.40%, 4/1/05 15,000,000 14,994,676
1.415%, 9/20/04 1 14,275,000 14,272,929
1.50%, 3/1/05 33,000,000 33,000,000
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Federal Home Loan
Mortgage Corp.:
1.04%, 7/20/04 50,000,000 49,972,556
1.065%,
8/3/04-8/10/04 50,000,000 49,946,011
1.22%, 8/12/04 7,339,000 7,327,869
1.23%, 8/23/04 30,000,000 29,945,675
1.25%, 7/6/04 56,588,000 56,579,669
1.28%, 8/26/04 39,748,000 39,667,971
1.35%,
8/17/04-8/20/04 35,700,000 35,635,787
3%, 7/15/04 25,742,000 25,760,537
6.25%, 7/15/04 21,400,000 21,442,239
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Federal National
Mortgage Assn.:
1.01%, 7/14/04 27,630,000 27,619,783
1.03%, 7/21/04 40,000,000 39,977,111
1.05%, 7/8/04 15,000,000 14,996,938
1.055%, 7/28/04 25,000,000 24,980,219
1.06%, 7/23/04 50,500,000 50,466,820
1.07%, 8/18/04 35,000,000 34,947,400
1.09%, 7/7/04 20,000,000 19,996,367
PRINCIPAL VALUE
AMOUNT SEE NOTE 1
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Federal National
Mortgage Assn.:
Continued
1.235%, 1/28/05 1 $ 50,000,000 $ 49,997,093
1.28%, 8/11/04 17,500,000 17,474,489
1.35%, 8/25/04 2,400,000 2,395,050
1.375%, 2/18/05 30,000,000 30,000,000
1.40%, 2/25/05 25,000,000 25,000,000
1.60%, 5/13/05 7,500,000 7,500,000
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Overseas Private
Investment Corp.:
1.275%, 7/20/04 1,2 2,392,407 2,409,808
1.305%, 7/20/04 1,2 1,917,711 1,920,655
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Total U.S. Government Agencies
(Cost $1,343,778,062) 1,343,778,062
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JOINT REPURCHASE AGREEMENTS--9.8%
Undivided interest of 97.42% in
joint repurchase agreement (Principal
Amount/Value $143,400,000, with
a maturity value of $143,405,537)
with UBS Warburg LLC, 1.39%, dated
6/30/04, to be repurchased at
$139,705,394 on 7/1/04, collateralized
by Federal Home Loan Mortgage
Corp., 4.50%, 6/1/19, with a value
of $146,625,899 (Cost
$139,700,000) 139,700,000 139,700,000
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TOTAL INVESTMENTS,
AT VALUE
(COST
$1,483,478,062) 103.9% 1,483,478,062
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LIABILITIES
IN EXCESS OF
OTHER ASSETS (3.9) (55,353,477)
------------------------------
NET ASSETS 100.0% $ 1,428,124,585
==============================
FOOTNOTES TO STATEMENT OF INVESTMENTS
1. Represents the current interest rate for a variable or increasing rate
security.
2. Identifies issues considered to be illiquid. See Note 4 of Notes to Financial
Statements.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
5 | CENTENNIAL GOVERNMENT TRUST
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STATEMENT OF ASSETS AND LIABILITIES June 30, 2004
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ASSETS
Investments, at value (cost $1,483,478,062)--see accompanying statement of investments $ 1,483,478,062
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Cash 3,040,252
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Receivables and other assets:
Interest 2,128,696
Shares of beneficial interest sold 1,399,244
Other 112,657
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Total assets 1,490,158,911
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LIABILITIES
Payables and other liabilities:
Investments purchased 50,502,352
Shares of beneficial interest redeemed 11,016,275
Dividends 211,780
Distribution and service plan fees 140,649
Transfer and shareholder servicing agent fees 72,578
Shareholder communications 54,338
Trustees' compensation 7,097
Other 29,257
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Total liabilities 62,034,326
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NET ASSETS $ 1,428,124,585
=================
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COMPOSITION OF NET ASSETS
Paid-in capital $ 1,428,127,592
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Accumulated net realized loss on investments (3,007)
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NET ASSETS--applicable to 1,428,110,218 shares of beneficial interest outstanding $ 1,428,124,585
=================
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NET ASSET VALUE, REDEMPTION PRICE PER SHARE AND OFFERING PRICE PER SHARE $1.00
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
6 | CENTENNIAL GOVERNMENT TRUST
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STATEMENT OF OPERATIONS For the Year Ended June 30, 2004
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INVESTMENT INCOME
Interest $17,766,532
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EXPENSES
Management fees 7,022,839
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Service plan fees 3,261,959
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Transfer and shareholder servicing agent fees 930,460
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Shareholder communications 61,483
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Custodian fees and expenses 20,022
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Trustees' compensation 13,033
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Other 176,922
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Total expenses 11,486,718
Less reduction to custodian expenses (2,482)
Less payments and waivers of expenses (1,689,577)
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Net expenses 9,794,659
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NET INVESTMENT INCOME 7,971,873
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NET REALIZED LOSS ON INVESTMENTS (2,406)
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 7,969,467
=============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
7 | CENTENNIAL GOVERNMENT TRUST
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STATEMENTS OF CHANGES IN NET ASSETS
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YEAR ENDED JUNE 30, 2004 2003
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OPERATIONS
Net investment income $ 7,971,873 $ 19,901,454
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Net realized gain (loss) (2,406) 11,525
--------------------------------
Net increase in net assets resulting from operations 7,969,467 19,912,979
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DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (7,971,873) (19,901,454)
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BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets resulting from
beneficial interest transactions (347,686,852) 228,169,387
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NET ASSETS
Total increase (decrease) (347,689,258) 228,180,912
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Beginning of period 1,775,813,843 1,547,632,931
--------------------------------
End of period $ 1,428,124,585 $1,775,813,843
================================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8 | CENTENNIAL GOVERNMENT TRUST
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FINANCIAL HIGHLIGHTS
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YEAR ENDED JUNE 30, 2004 2003 2002 2001 2000
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PER SHARE OPERATING DATA
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
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Income from investment operations--net
investment income and net realized gain -- 1 .01 .02 .05 .05
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Dividends and/or distributions to shareholders:
Dividends from net investment income -- 1 (.01) (.02) (.05) (.05)
Distributions from net realized gain -- -- -- 1 -- --
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Total dividends and/or distributions
to shareholders -- 1 (.01) (.02) (.05) (.05)
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Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
==================================================================
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TOTAL RETURN 2 0.48% 1.15% 1.92% 5.29% 5.07%
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RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in millions) $1,428 $1,776 $1,548 $1,458 $1,192
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Average net assets (in millions) $1,628 $1,744 $1,585 $1,367 $1,244
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Ratios to average net assets: 3
Net investment income 0.49% 1.14% 1.90% 5.13% 4.92%
Total expenses 0.71% 0.70% 0.71% 0.73% 0.74%
Expenses after payments and waivers
and reduction to custodian expenses 0.60% 0.38% 0.63% N/A 4 N/A 4
<FN>
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 and distributions 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 are not annualized for
periods less than one 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. Reduction to custodian expenses less than 0.01%.
</FN>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9 | CENTENNIAL GOVERNMENT TRUST
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NOTES TO FINANCIAL STATEMENTS
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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 Trust's 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 Trust's investment advisor is Centennial Asset Management
Corporation (the Manager), a subsidiary of OppenheimerFunds, Inc. (OFI).
The following is a summary of significant accounting policies consistently
followed by the Trust.
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SECURITIES VALUATION. The net asset value of shares of the Trust is normally
determined twice each day, at 12:00 Noon Eastern time and at 4:00 P.M. Eastern
time on each day The New York Stock Exchange (the Exchange) is open for
trading. Portfolio securities are valued on the basis of amortized cost, which
approximates market value.
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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. 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.
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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.
UNDISTRIBUTED NET UNDISTRIBUTED ACCUMULATED LOSS
INVESTMENT INCOME LONG-TERM GAINS CARRYFORWARD 1,2,3,4
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$230,030 $-- $ 3,007
1. As of June 30, 2004, the Trust had $2,557 of net capital loss carryforwards
available to offset future realized capital gains, if any, and thereby reduce
future taxable gain distributions. As of June 30, 2004, details of the capital
loss carryforward was as follows:
EXPIRING
-----------------------
2012 $2,557
2. As of June 30, 2004, the Trust had $450 of post-October losses available to
offset future realized capital gains, if any. Such losses, if unutilized, will
expire in 2013.
3. During the fiscal year ended June 30, 2004, the Trust did not utilize any
capital loss carryforwards.
4. During the fiscal year ended June 30, 2003, the Trust did not utilize any
capital loss carryforwards.
10 | CENTENNIAL GOVERNMENT TRUST
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.
The tax character of distributions paid during the years ended June 30, 2004
and June 30, 2003 were as follows:
YEAR ENDED YEAR ENDED
JUNE 30, 2004 JUNE 30, 2003
------------------------------------------------------
Distributions paid from:
Ordinary income $7,971,873 $19,901,454
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TRUSTEES' COMPENSATION. The Board of Trustees has adopted a deferred
compensation plan for independent trustees that enables trustees to elect to
defer receipt of all or a portion of the annual compensation they are entitled
to receive from the Trust. For purposes of determining the amount owed to the
Trustee under the plan, deferred amounts are treated as though equal dollar
amounts had been invested in shares of the Trust or in other Oppenheimer funds
selected by the Trustee. The Trust does purchase shares of the funds selected
for deferral by the Trustee in amounts equal to his or her deemed investment,
resulting in a Trust asset equal to the deferred compensation liability. Such
assets are included as a component of "Other" within the asset section of the
Statement of Assets and Liabilities. Deferral of trustees' fees under the plan
will not affect the net assets of the Trust, and will not materially affect the
Trust's assets, liabilities or net investment income per share. Amounts will be
deferred until distributed in accordance to the Plan.
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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.
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EXPENSE OFFSET ARRANGEMENT. The reduction of custodian fees, if applicable,
represents earnings on cash balances
maintained by the Trust.
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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.
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OTHER. The preparation of financial statements in conformity with U.S.
generally accepted accounting principles 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
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NOTES TO FINANCIAL STATEMENTS Continued
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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, 2004 YEAR ENDED JUNE 30, 2003
SHARES AMOUNT SHARES AMOUNT
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Sold 3,777,626,578 $ 3,777,626,578 4,283,051,983 $ 4,283,051,983
Dividends and/or
distributions reinvested 8,068,973 8,068,973 19,700,770 19,700,770
Redeemed (4,133,382,403) (4,133,382,403) (4,074,583,366) (4,074,583,366)
------------------------------------------------------------------------
Net increase (decrease) (347,686,852) $ (347,686,852) 228,169,387 $ 228,169,387
========================================================================
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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 Trust's net assets,
0.475% of the next $250 million, 0.45% of the next $250 million, 0.425% of the
next $250 million, 0.40% of the next $250 million, 0.375% of the next $250
million and 0.35% of net assets in excess of $1.5 billion.
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ADMINISTRATION SERVICES. The Trust pays the Manager a fee of $1,500 per year
for preparing and filing the Trust's tax returns.
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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 per account fee. For the year ended June 30,
2004, the Trust paid $937,150 to SSI for services to the Trust.
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SERVICE PLAN (12B-1) FEES. The Trust has adopted a service plan. It reimburses
Centennial Asset Management Corporation, the Distributor, for a portion of its
costs incurred for services provided to accounts that hold shares of the Trust.
Reimbursement is made quarterly, or monthly depending on asset size, at an
annual rate of up to 0.20% of the average annual net assets of the Trust. The
Distributor currently uses all of those fees to pay dealers, brokers, banks and
other financial institutions quarterly for providing personal services and
maintenance of accounts of their customers that hold shares of the Trust. Fees
incurred by the Trust under the Plan are detailed in the Statement of
Operations.
12 | CENTENNIAL GOVERNMENT TRUST
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PAYMENTS AND WAIVERS OF EXPENSES. In the investment advisory agreement, the
Manager guarantees that the Trust's 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 $1,689,577 for the year ended June 30, 2004. Effective September 22,
2003, the expense limitation was terminated.
SSI has voluntarily agreed to limit transfer and shareholder servicing agent
fees to 0.35% of average annual net assets of the Trust. This undertaking may
be amended or withdrawn at any time.
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4. ILLIQUID SECURITIES
As of June 30, 2004, 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, 2004 was $4,330,463, which represents 0.30% of the Trust's net assets.
13 | CENTENNIAL GOVERNMENT TRUST
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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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, 2004, 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 the periods indicated. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). 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, 2004, 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, 2004, 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 the periods
indicated, in conformity with accounting principles generally accepted in the
United States of America.
DELOITTE & TOUCHE LLP
Denver, Colorado
August 13, 2004
14 | CENTENNIAL GOVERNMENT TRUST
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FEDERAL INCOME TAX INFORMATION Unaudited
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In early 2005, if applicable, shareholders of record will receive information
regarding all dividends and distributions paid to them by the Trust during
calendar year 2004. Regulations of the U.S. Treasury Department require the
Trust to report this information to the Internal Revenue Service.
None of the dividends paid by the Trust during the year ended June 30, 2004
are qualified dividend income or eligible for the corporate dividend-received
deduction.
The foregoing information is presented to assist shareholders in reporting
distributions received from the Trust to the Internal Revenue Service. Because
of the complexity of the federal regulations which may affect your individual
tax return and the many variations in state and local tax regulations, we
recommend that you consult your tax advisor for specific guidance.
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PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES Unaudited
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- --------------------------------------------------------------------------------
The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which
the Fund votes proxies relating to securities ("portfolio proxies") held by the
Fund. A description of the Fund's Portfolio Proxy Voting Policies and
Procedures is available (i) without charge, upon request, by calling the Fund
toll-free at 1.800.525.7048, (ii) on the Fund's website at
www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In
addition, the Fund is required to file new Form N-PX, with its complete proxy
voting record for the 12 months ended June 30th, no later than August 31st of
each year. The Fund's Form N-PX filing is available (i) without charge, upon
request, by calling the Fund toll-free at 1.800.525.7048, and (ii) on the SEC's
website at www.sec.gov.
15 | CENTENNIAL GOVERNMENT TRUST
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TRUSTEES AND OFFICERS Unaudited
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- ------------------------------------------------------------------------------------------------------------------------------------
NAME, POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS; OTHER TRUSTEESHIPS/DIRECTORSHIPS
TRUST, LENGTH OF SERVICE, AGE HELD BY TRUSTEE; NUMBER OF PORTFOLIOS IN FUND COMPLEX CURRENTLY OVERSEEN BY TRUSTEE
INDEPENDENT THE ADDRESS OF EACH TRUSTEE IN THE CHART BELOW IS 6803 S. TUCSON WAY,
TRUSTEES CENTENNIAL, CO 80112-3924. EACH TRUSTEE SERVES FOR AN INDEFINITE TERM, UNTIL HIS
OR HER RESIGNATION, RETIREMENT, DEATH OR REMOVAL.
WILLIAM L. ARMSTRONG, Chairman of the following private mortgage banking companies: Cherry Creek
Vice Chairman (since 2003) Mortgage Company (since 1991), Centennial State Mortgage Company (since 1994),
and Trustee (since 2000) The El Paso Mortgage Company (since 1993), Transland Financial Services, Inc.
Age: 67 (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), and
International Family Entertainment (television channel) (1992-1997), Frontier
Real Estate, Inc. (residential real estate 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. Edwards Capital, Inc. (General Partner
Trustee (since 1990) of private equity funds) (until February 2001); Chairman, President and Chief
Age: 73 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 subsidiary) (until March 1999); Chairman 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 Assistant Secretary and a director (December 1991-April 1999) of
Trustee (since 1998) Centennial Asset Management Corporation; President, Treasurer and a director
Age: 67 (June 1989-April 1999) of Centennial Capital Corporation; Chief Executive
Officer and a director of MultiSource Services, Inc. (March 1996-April 1999).
Until April 1999 Mr. Bowen held several positions in subsidiary or affiliated
companies of the Manager. Oversees 38 portfolios in the OppenheimerFunds
complex.
EDWARD L. CAMERON, A member of The Life Guard of Mount Vernon, George Washington's home (since June
Trustee (since 2000) 2000). Formerly Director (March 2001-May 2002) of Genetic ID, Inc. and its
Age: 65 subsidiaries (a privately held biotech company); a partner (July 1974- June
1999) with PricewaterhouseCoopers LLP (an accounting firm); and Chairman (July
1994-June 1998) of Price Waterhouse LLP Global Investment Management Industry
Services Group. Oversees 38 portfolios in the OppenheimerFunds complex.
JON S. FOSSEL, Director (since February 1998) of Rocky Mountain Elk Foundation (a
Trustee (since 1990) not-for-profit foundation); a director (since 1997) of Putnam Lovell Finance
Age: 62 (finance company); a director (since June 2002) of UNUMProvident (an insurance
company). Formerly a director (October 1999-October 2003) of P.R.
Pharmaceuticals (a privately held company); Chairman and a director (until
October 1996) and President and Chief Executive Officer (until October 1995) of
the Manager; President, Chief Executive Officer and a director (until October
1995) of
16 | CENTENNIAL GOVERNMENT TRUST
JON S. FOSSEL, Oppenheimer Acquisition Corp., Shareholders Services Inc. and Shareholder
Continued Financial Services, Inc. Oversees 38 portfolios in the OppenheimerFunds complex.
SAM FREEDMAN, Director of Colorado Uplift (a non-profit charity) (since September 1984).
Trustee (since 1996) Formerly (until October 1994) Mr. Freedman held several positions in subsidiary
Age: 63 or affiliated companies of the Manager. Oversees 38 portfolios in the
OppenheimerFunds complex.
BEVERLY L. HAMILTON, Trustee of Monterey International Studies (an educational organization) (since
Trustee (since 2002) February 2000); a director of The California Endowment (a philanthropic
Age: 57 organization) (since April 2002) and of Community Hospital of Monterey Peninsula
(educational organization) (since February 2002); a director of America Funds
Emerging Markets Growth Fund (since October 1991) (an investment company); an
advisor to Credit Suisse First Boston's Sprout venture capital unit. Mrs.
Hamilton also is a member of the investment committees of the Rockefeller
Foundation and of the University of Michigan. Formerly, Trustee of MassMutual
Institutional Funds (open-end investment company) (1996-May 2004); a director of
MML Series Investment Fund (April 1989-May 2004) and MML Services (April
1987-May 2004) (investment companies); member of the investment committee
(2000-2003) of Hartford Hospital; an advisor (2000-2003) to Unilever (Holland)'s
pension fund; and President (February 1991-April 2000) of ARCO Investment
Management Company. Oversees 37 portfolios in the OppenheimerFunds complex.
ROBERT J. MALONE, Chairman, Chief Executive Officer and director of Steele Street State Bank (a
Trustee (since 2002) commercial banking entity) (since August 2003), Colorado UpLIFT (a non-profit
Age: 59 organization) (since 1986); a trustee (since 2000) of the Gallagher Family
Foundation (non-profit organization). Formerly a director of Jones Knowledge,
Inc. (a privately held company) (2001-July 2004), and U.S. Exploration, Inc.
(oil and gas exploration) (1997-February 2004), Chairman of U.S. Bank-Colorado
(a subsidiary of U.S. Bancorp and formerly Colorado National Bank,) (July
1996-April 1999) and a director of Commercial Assets, Inc. (a REIT) (1993-2000).
Oversees 37 portfolios in the OppenheimerFunds complex.
F. WILLIAM MARSHALL, JR., Trustee of MassMutual Institutional Funds (since 1996) and MML Series Investment
Trustee (since 2000) Fund (since 1987) (both open-end investment companies) and the Springfield
Age: 62 Library and Museum Association (since 1995) (museums) and the Community Music
School of Springfield (music school) (since 1996); Trustee (since 1987),
Chairman of the Board (since 2003) and Chairman of the investment committee
(since 1994) for the Worcester Polytech Institute (private university); and
President and Treasurer (since January 1999) of the SIS Fund (a private not for
profit charitable fund). Formerly, member of the investment committee of the
Community Foundation of Western Massachusetts (1998 - 2003); Chairman (January
1999-July 1999) of SIS & Family Bank, F.S.B. (formerly SIS Bank) (commercial
bank); and Executive Vice President (January 1999-July 1999) of Peoples Heritage
Financial Group, Inc. (commercial bank). Oversees 38 portfolios in the
OppenheimerFunds complex.
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INTERESTED TRUSTEE 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.
RICHARD GRABISH, Senior Vice President, Assistant Director of Sales and Marketing (since March
Trustee (since 2001) 1997), and Manager of Private Client Services (since June 1985) for A.G. Edwards
Age: 55 & Sons, Inc. (broker/dealer and investment firm); Chairman and Chief Executive
17 | CENTENNIAL GOVERNMENT TRUST
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TRUSTEES AND OFFICERS Unaudited / Continued
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RICHARD GRABISH, Officer (since March 2001) of A.G. Edwards Trust Company; Director (since March
Continued 1988) of A.G. Edwards & Sons, Inc. Formerly (until March 1987) President and
Vice Chairman of A.G. Edwards Trust Company. Oversees 6 portfolios in the
OppenheimerFunds complex.
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INTERESTED TRUSTEE THE ADDRESS OF MR. MURPHY IN THE CHART BELOW IS TWO WORLD FINANCIAL CENTER, 225
AND OFFICER LIBERTY STREET, NEW YORK, NY 10281-1008. MR. MURPHY SERVES FOR AN INDEFINITE
TERM, UNTIL HIS RESIGNATION, DEATH OR REMOVAL.
JOHN V. MURPHY,
President (since 2001) Chairman, Chief Executive Officer and director (since June 2001) and President
and Trustee (since 2003) (since September 2000) of the Manager; President and a director or trustee of
Age: 55 other Oppenheimer funds; President and a director (since July 2001) of
Oppenheimer Acquisition Corp. (the Manager's parent holding company) and of
Oppenheimer Partnership Holdings, Inc. (a holding company subsidiary of the
Manager); a director (since November 2001) of OppenheimerFunds Distributor, Inc.
(a subsidiary of the Manager); Chairman and a director (since July 2001) of
Shareholder Services, Inc. and of Shareholder Financial Services, Inc. (transfer
agent subsidiaries of the Manager); President and a director (since July 2001)
of OppenheimerFunds Legacy Program (a charitable trust program established by
the Manager); a director of the following investment advisory subsidiaries of
the Manager: OFI Institutional Asset Management, Inc., Centennial Asset
Management Corporation, Trinity Investment Management Corporation and Tremont
Capital Management, Inc. (since November 2001), HarbourView Asset Management
Corporation and OFI Private Investments, Inc. (since July 2001); President
(since November 1, 2001) and a director (since July 2001) of Oppenheimer Real
Asset Management, Inc.; Executive Vice President (since February 1997) of
Massachusetts Mutual Life Insurance Company (the Manager's parent company); a
director (since June 1995) of DLB Acquisition Corporation (a holding company
that owns the shares of Babson Capital Management LLC); a member of the
Investment Company Institute's Board of Governors (elected to serve from October
3, 2003 through September 30, 2006). Formerly, Chief Operating Officer
(September 2000-June 2001) of the Manager; 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 (a
wholly-owned subsidiary of Emerald Isle Bancorp). Oversees 73 portfolios as
Trustee/Director and 10 portfolios as Officer in the OppenheimerFunds complex.
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OFFICERS THE ADDRESS OF THE OFFICERS IN THE CHART BELOW IS AS FOLLOWS: FOR MR. ZACK, TWO
WORLD FINANCIAL CENTER, 225 LIBERTY STREET, 11TH FLOOR, NEW YORK, NY 10281-1008,
FOR MS. WOLF, MR. WIXTED, AND MR. VANDEHEY, 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.
CAROL E. WOLF, Senior Vice President of OppenheimerFunds, Inc. (since June 2000) and of
Vice President (since 1988) HarbourView Asset Management Corporation (since 6/39/03); an officer of 6
Age: 52 portfolios in the OppenheimerFunds complex. Formerly Vice President of
OppenheimerFunds, Inc. (June 1990 - June 2000).
18 | CENTENNIAL GOVERNMENT TRUST
BARRY D. WEISS, Vice President of OppenheimerFunds, Inc. (since July 2001) and of HarbourView
Vice President (since 2001) Asset Management Corporation (since June 2003); an officer of 6 portfolios in
Age: 40 the OppenheimerFunds complex. Formerly Assistant Vice President and Senior
Credit Analyst of the Manager (February 2000-June 2001). Prior to joining the
Manager 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 1999) of the Manager; Treasurer
Treasurer (since 1999) of HarbourView Asset Management Corporation, Shareholder Financial Services,
Age: 44 Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management Corporation,
and Oppenheimer Partnership Holdings, Inc. (since March 1999), of OFI Private
Investments, Inc. (since March 2000), of OppenheimerFunds International Ltd. and
OppenheimerFunds plc (since May 2000), of OFI Institutional Asset Management,
Inc. (since November 2000), and of OppenheimerFunds Legacy Program (a Colorado
non-profit corporation) (since June 2003); Treasurer and Chief Financial Officer
(since May 2000) of OFI Trust Company (a trust company subsidiary of the
Manager); Assistant Treasurer (since March 1999) of Oppenheimer Acquisition
Corp. Formerly Assistant Treasurer of Centennial Asset Management Corporation
(March 1999-October 2003) and OppenheimerFunds Legacy Program (April 2000-June
2003); Principal and Chief Operating Officer (March 1995-March 1999) at Bankers
Trust Company-Mutual Fund Services Division. An officer of 83 portfolios in the
OppenheimerFunds complex.
ROBERT G. ZACK, Executive Vice President (since January 2004) and General Counsel (since
Vice President and Secretary (since 2001) February 2002) of the Manager; General Counsel and a director (since November
Age: 56 2001) of the Distributor; General Counsel (since November 2001) of Centennial
Asset Management Corporation; Senior Vice President and General Counsel (since
November 2001) of HarbourView Asset Management Corporation; Secretary and
General Counsel (since November 2001) of Oppenheimer Acquisition Corp.;
Assistant Secretary and a director (since October 1997) of OppenheimerFunds
International Ltd. and OppenheimerFunds plc; Vice President and a director
(since November 2001) of Oppenheimer Partnership Holdings, Inc.; a director
(since November 2001) of Oppenheimer Real Asset Management, Inc.; Senior Vice
President, General Counsel and a director (since November 2001) of Shareholder
Financial Services, Inc., Shareholder Services, Inc., OFI Private Investments,
Inc. and OFI Trust Company; Vice President (since November 2001) of
OppenheimerFunds Legacy Program; Senior Vice President and General Counsel
(since November 2001) of OFI Institutional Asset Management, Inc.; a director
(since June 2003) of OppenheimerFunds (Asia) Limited. Formerly Senior Vice
President (May 1985-December 2003), Acting General Counsel (November
2001-February 2002) and Associate General Counsel (May 1981-October 2001) of the
Manager; Assistant Secretary of Shareholder Services, Inc. (May 1985-November
2001), Shareholder Financial Services, Inc. (November 1989-November 2001); and
OppenheimerFunds International Ltd. (October 1997-November 2001). An officer of
83 portfolios in the OppenheimerFunds complex.
MARK S. VANDEHEY, Senior Vice President and Chief Compliance Officer (since March 2004) of
Vice President (since 2004) the Manager; Vice President (since June 1983) of OppenheimerFunds
Age: 53 Distributor, Inc., Centennial Asset Management Corporation and Shareholder
Services, Inc. Formerly (until February 2004) Vice President and Director of
Internal Audit of OppenheimerFunds, Inc. An officer of 83 portfolios in the
OppenheimerFunds complex.
THE TRUST'S STATEMENT OF ADDITIONAL INFORMATION CONTAINS ADDITIONAL INFORMATION
ABOUT THE TRUST'S TRUSTEES AND IS AVAILABLE WITHOUT CHARGE UPON REQUEST.
19 | CENTENNIAL GOVERNMENT TRUST
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics that applies to the
registrant's principal executive officer, principal financial officer, principal
accounting officer or controller or persons performing similar functions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The Board of Trustees of the registrant has determined that Edward L.
Cameron, the Chairman of the Board's Audit Committee, and George C. Bowen, a
member of the Board's Audit Committee, possess the technical attributes
identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as "audit
committee financial experts," and has designated Messrs. Cameron and Bowen as
the Audit Committee's financial experts. Messrs. Cameron and Bowen are
"independent" Trustees pursuant to paragraph (a)(2) of Item 3 to Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) Audit Fees
The principal accountant for the audit of the registrant's annual
financial statements billed $22,500 in fiscal 2004 and $21,500 in
fiscal 2003.
(b) Audit-Related Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed $5,525 in fiscal 2004 and $45,744 in
fiscal 2003 to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant.
Such fees would include, among others: due diligence related to
mergers and acquisitions, accounting consultations and audits in
connection with acquisitions, internal control reviews and
consultation concerning financial accounting and reporting
standards.
(c) Tax Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed $0 in fiscal 2004 and $7,370 in fiscal
2003 to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant.
Such fees would include, among others: tax compliance, tax
planning and tax advice. Tax compliance generally involves
preparation of original and amended tax returns, claims for a
refund and tax payment-planning services. Tax planning and tax
advice includes assistance with tax audits and appeals, tax advice
related to mergers and acquisitions and requests for rulings or
technical advice from taxing authorities.
(d) All Other Fees
The principal accountant for the audit of the registrant's annual
financial statements billed no such fees to the registrant during
the last two fiscal years.
The principal accountant for the audit of the registrant's annual
financial statements billed $0 in fiscal 2004 and $3,500 in fiscal
2003 to the registrant's investment adviser or any entity
controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant.
Such fees would include services provided to the registrant's
Board of Trustees with respect to the annual renewal of the
registrant's investment advisory agreement.
(e) (1) During its regularly scheduled periodic meetings, the
registrant's audit committee will pre-approve all audit,
audit-related, tax and other services to be provided by the
principal accountants of the registrant.
The audit committee has delegated pre-approval authority to its
Chairman for any subsequent new engagements that arise between
regularly scheduled meeting dates provided that any fees such
pre-approved are presented to the audit committee at its next
regularly scheduled meeting.
Pre-approval of non-audit services is waived provided that: 1) the
aggregate amount of all such services provided constitutes no more
than five percent of the total amount of fees paid by the
registrant to it principal accountant during the fiscal year in
which services are provided 2) such services were not recognized
by the registrant at the time of engagement as non-audit services
and 3) such services are promptly brought to the attention of the
audit committee of the registrant and approved prior to the
completion of the audit.
(2) 100%
(f) Not applicable as less than 50%.
(g) The principal accountant for the audit of the registrant's annual
financial statements billed $5,525 in fiscal 2004 and $56,614 in
fiscal 2003 to the registrant and the registrant's investment
adviser or any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the
registrant related to non-audit fees. Those billings did not
include any prohibited non-audit services as defined by the
Securities Exchange Act of 1934.
(h) The registrant's audit committee of the board of trustees has
considered whether the provision of non-audit services that were
rendered to the registrant's investment adviser, and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with
maintaining the principal account's independence. No such services
were rendered.
ITEM 5. NOT APPLICABLE
ITEM 6. SCHEDULE OF INVESTMENTS
Not applicable
ITEM 7. NOT APPLICABLE
ITEM 8. NOT APPLICABLE
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Board is responsible for approving nominees for election as
trustees. To assist in this task, the Board has designated the Audit Committee
as the nominating committee for the Board. It reviews and recommends nominees to
the Board. The Committee is comprised entirely of disinterested trustees as
defined in Section 2(a)(19) of the Investment Company Act of 1940.
The Audit Committee charter describes the responsibilities of the Committee in
nominating candidates for election as independent Trustees of the Registrant.
The Registrant's Board has adopted a written charter for the Committee. A
current copy of the Audit Committee charter is available to shareholders on the
OppenheimerFunds website at www.oppenheimerfunds.com.
Under the current policy, if the Board determines that a vacancy exists or is
likely to exist on the Board, the Audit Committee of the Board will consider
candidates for Board membership including recommended by Registrant
shareholders. The Audit Committee will consider nominees recommended by
independent Board members or recommended by any other Board members including
Board members affiliated with the Registrant's investment advisors. The
Committee may, upon Board approval, retain an executive search firm to assist in
screening potential candidates. Upon Board approval, the Audit Committee may
also use the services of legal, financial, or other external counsel that it
deems necessary or desirable in the screening process. Shareholders wishing to
submit a nominee for election to the Board may do so by mailing their submission
to the offices of OppenheimerFunds, Inc., 6803 South Tucson Way, Centennial, CO
80112, to the attention of the Board of Trustees of the named Registrant, c/o
the Secretary of the Registrant.
The Committee's process for identifying and evaluating nominees for trustees
includes a number of factors. In screening candidates for board membership,
whether the candidate is suggested by Board members, shareholders or others, the
Committee considers the candidate's professional experience, soundness of
judgment, integrity, ability to make independent, analytical inquiries,
collegiality, willingness and ability to devote the time required to perform
Board activities adequately, ability to represent the interests of all
shareholders of the Registrant, and diversity relative to the board's
composition. Candidates are expected to provide a mix of attributes, experience,
perspective and skills necessary to effectively advance the interests of
shareholders.
ITEM 10. CONTROLS AND PROCEDURES
(a) Based on their evaluation of registrant's disclosure controls and
procedures (as defined in rule 30a-2(c) under the Investment
Company Act of 1940 (17 CFR 270.30a-2(c)) as of June 30, 2004,
registrant's principal executive officer and principal financial
officer found registrant's disclosure controls and procedures to
provide reasonable assurances that information required to be
disclosed by registrant in the reports that it files under the
Securities Exchange Act of 1934 (a) is accumulated and
communicated to registrant's management, including its principal
executive officer and principal financial officer, to allow timely
decisions regarding required disclosure, and (b) is recorded,
processed, summarized and reported, within the time periods
specified in the rules and forms adopted by the U.S. Securities
and Exchange Commission.
(b) There have been no significant changes in registrant's internal
controls over financial reporting that occurred during the
registrant's last fiscal half-year that has materially affected,
or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
ITEM 11. EXHIBITS.
(A) EXHIBIT ATTACHED HERETO. (ATTACH CODE OF ETHICS AS EXHIBIT)
(B) EXHIBITS ATTACHED HERETO. (ATTACH CERTIFICATIONS AS EXHIBITS)