CENTENNIAL TAX EXEMPT TRUST

497 1 sai.htm REVISED SAI WITH FINANCIALS CENTENNIAL TAX EXEMPT TRUST

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Centennial Tax Exempt Trust
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6803 South Tucson Way, Centennial, Colorado 80112
1.800.525.9310

Statement of Additional Information dated August 27, 2004, revised March 10, 2005.

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 27, 2004. It should be read together with the Prospectus, which may be obtained by
writing to the Trust's Transfer Agent, Shareholder Services, Inc., at P.O. Box 5143,
Denver, Colorado 80217, or by calling the Transfer Agent at the toll-free number shown
above.

Contents
Page
About the Trust
Additional Information about the Trust's Investment Policies and Risks........
The Trust's Investment Policies..........................................
Other Investment Strategies..............................................
Other Investment Restrictions............................................
How the Trust is Managed......................................................
Organization and History.................................................
Board of Trustees and Oversight Committees..............................
Trustees and Officers of the Trust.......................................
The Manager..............................................................
Service Plan..................................................................
Performance of the Trust......................................................

About Your Account
How To Buy Shares.............................................................
How To Sell Shares............................................................
How To Exchange Shares........................................................
Dividends and Taxes...........................................................
Additional Information About the Trust........................................

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

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

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ABOUT THE TRUST
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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 does not make investments with the objective of seeking capital growth.
However, the values of the securities held by the Trust may be affected by changes in
general interest rates and other factors, prior to their maturity. Because the current
values of debt securities vary inversely with changes in prevailing interest rates, if
interest rates increase after a security is purchased, that security will normally fall in
value. Conversely, should interest rates decrease after a security is purchased, normally
its value will rise.

However, those fluctuations in value will not generally result in realized gains or
losses to the Trust unless the Trust sells the security prior to the security's maturity. A
debt security held to maturity is redeemable by its issuer at full principal value plus
accrued interest. The Trust does not usually intend to dispose of securities prior to their
maturity, but may do so for liquidity purposes, or because of other factors affecting the
issuer that cause the Manager to sell the particular security. In that case, the Trust
could realize a capital gain or loss on the sale.

There are variations in the credit quality of municipal securities, both within a
particular rating classification and between classifications. These variations depend on
numerous factors. The yields of municipal securities depend on a number of factors,
including general conditions in the municipal securities market, the size of a particular
offering, the maturity of the obligation and rating (if any) of the issue. These factors
are discussed in greater detail below.

Municipal Securities. The types of municipal securities in which the Trust may invest are
described in the Prospectus under "About the Trust's Investments." Municipal securities are
generally classified as general obligation bonds, revenue bonds and notes. A discussion of
the general characteristics of these principal types of municipal securities follows below.

|X| Municipal Bonds. We have classified municipal securities having a maturity
(when the security is issued) of more than one year as "municipal bonds." The principal
classifications of long-term municipal bonds are "general obligation" and "revenue"
(including "industrial development") bonds. They may have fixed, variable or floating rates
of interest, as described below.

Some bonds may be "callable," allowing the issuer to redeem them before their
maturity date. To protect bondholders, callable bonds may be issued with provisions that
prevent them from being called for a period of time. Typically, that is 5 to 10 years from
the issuance date. When interest rates decline, if the call protection on a bond has
expired, it is more likely that the issuer may call the bond. If that occurs, the Trust
might have to reinvest the proceeds of the called bond in bonds that pay a lower rate of
return.

o General Obligation Bonds. The basic security behind general obligation bonds is the
issuer's pledge of its full faith and credit and taxing power, if any, for the repayment of
principal and the payment of interest. Issuers of general obligation bonds include states,
counties, cities, towns, and regional districts. The proceeds of these obligations are
used to fund a wide range of public projects, including construction or improvement of
schools, highways and roads, and water and sewer systems. The rate of taxes that can be
levied for the payment of debt service on these bonds may be limited or unlimited.
Additionally, there may be limits as to the rate or amount of special assessments that can
be levied to meet these obligations.

o Revenue Bonds. The principal security for a revenue bond is generally the net
revenues derived from a particular facility, group of facilities, or, in some cases, the
proceeds of a special excise tax or other specific revenue source. Revenue bonds are
issued to finance a wide variety of capital projects. Examples include electric, gas, water
and sewer systems; highways, bridges, and tunnels; port and airport facilities; colleges
and universities; and hospitals.

Although the principal security for these types of bonds may vary from bond to bond,
many provide additional security in the form of a debt service reserve fund that may be
used to make principal and interest payments on the issuer's obligations. Housing finance
authorities have a wide range of security, including partially or fully insured mortgages,
rent subsidized and/or collateralized mortgages, and/or the net revenues from housing or
other public projects. Some authorities provide further security in the form of a state's
ability (without obligation) to make up deficiencies in the debt service reserve fund.

o Industrial Development Bonds. Industrial development bonds are considered municipal
bonds if the interest paid is exempt from federal income tax. They are issued by or on
behalf of public authorities to raise money to finance various privately operated
facilities for business and manufacturing, housing, sports, and pollution control. These
bonds may also be used to finance public facilities such as airports, mass transit systems,
ports, and parking. The payment of the principal and interest on such bonds is dependent
solely on the ability of the facility's user to meet its financial obligations and the
pledge, if any, of real and personal property financed by the bond as security for those
payments.

o Private Activity Municipal Securities. The Tax Reform Act of 1986 (the "Tax Reform
Act") reorganized, as well as amended, the rules governing tax exemption for interest on
certain types of municipal securities. The Tax Reform Act generally did not change the tax
treatment of bonds issued in order to finance governmental operations. Thus, interest on
general obligation bonds issued by or on behalf of state or local governments, the proceeds
of which are used to finance the operations of such governments, continues to be
tax-exempt. However, the Tax Reform Act limited the use of tax-exempt bonds for
non-governmental (private) purposes. More stringent restrictions were placed on the use of
proceeds of such bonds. Interest on certain private activity bonds is taxable under the
revised rules. There is an exception for "qualified" tax-exempt private activity bonds,
for example, exempt facility bonds including certain industrial development bonds,
qualified mortgage bonds, qualified Section 501(c)(3) bonds, and qualified student loan
bonds. Normally, the Trust will not invest more than 20% of its total assets in private
activity municipal securities or other taxable investments.

In addition, limitations as to the amount of private activity bonds which each state
may issue were revised downward by the Tax Reform Act, which will reduce the supply of such
bonds. The value of the Trust's portfolio could be affected if there is a reduction in the
availability of such bonds.

Interest on certain private activity bonds issued after August 7, 1986, which
continues to be tax-exempt, will be treated as a tax preference item subject to the
alternative minimum tax (discussed below) to which certain taxpayers are subject. The Trust
may hold municipal securities the interest on which (and thus a proportionate share of the
exempt-interest dividends paid by the Trust) will be subject to the federal alternative
minimum tax on individuals and corporations.

The federal alternative minimum tax is designed to ensure that all persons who
receive income pay some tax, even if their regular tax is zero. This is accomplished in
part by including in taxable income certain tax preference items that are used to calculate
alternative minimum taxable income. The Tax Reform Act made tax-exempt interest from
certain private activity bonds a tax preference item for purposes of the alternative
minimum tax on individuals and corporations. Any exempt-interest dividend paid by a
regulated investment company will be treated as interest on a specific private activity
bond to the extent of the proportionate relationship the interest the investment company
receives on such bonds bears to all its exempt interest dividends.

In addition, corporate taxpayers subject to the alternative minimum tax may, under
some circumstances, have to include exempt-interest dividends in calculating their
alternative minimum taxable income. That could occur in situations where the "adjusted
current earnings" of the corporation exceeds its alternative minimum taxable income.

To determine whether a municipal security is treated as a taxable private activity
bond, it is subject to a test for: (a) a trade or business use and security interest, or
(b) a private loan restriction. Under the trade or business use and security interest test,
an obligation is a private activity bond if: (i) more than 10% of the bond proceeds are
used for private business purposes and (ii) 10% or more of the payment of principal or
interest on the issue is directly or indirectly derived from such private use or is secured
by the privately used property or the payments related to the use of the property. For
certain types of uses, a 5% threshold is substituted for this 10% threshold.

The term "private business use" means any direct or indirect use in a trade or
business carried on by an individual or entity other than a state or municipal governmental
unit. Under the private loan restriction, the amount of bond proceeds that may be used to
make private loans is limited to the lesser of 5% or $5.0 million of the proceeds. Thus,
certain issues of municipal securities could lose their tax-exempt status retroactively if
the issuer fails to meet certain requirements as to the expenditure of the proceeds of that
issue or the use of the bond-financed facility. The Trust makes no independent
investigation of the users of such bonds or their use of proceeds of the bonds. If the
Trust should hold a bond that loses its tax-exempt status retroactively, there might be an
adjustment to the tax-exempt income previously distributed to shareholders.

Additionally, a private activity bond that would otherwise be a qualified tax-exempt
private activity bond will not, under Internal Revenue Code Section 147(a), be a qualified
bond for any period during which it is held by a person who is a "substantial user" of the
facilities or by a "related person" of such a substantial user. This "substantial user"
provision applies primarily to exempt facility bonds, including industrial development
bonds. The Trust may invest in industrial development bonds and other private activity
bonds. Therefore, the Trust may not be an appropriate investment for entities which are
"substantial users" (or persons related to "substantial users") of such exempt facilities.
Those entities and persons should consult their tax advisers before purchasing shares of
the Trust.

A "substantial user" of such facilities is defined generally as a "non-exempt person
who regularly uses part of a facility" financed from the proceeds of exempt facility
bonds. Generally, an individual will not be a "related person" under the Internal Revenue
Code unless such individual or the individual's immediate family (spouse, brothers, sisters
and immediate descendants) own directly or indirectly in the aggregate more than 50% in
value of the equity of a corporation or partnership which is a "substantial user" of a
facility financed from the proceeds of exempt facility bonds.

|X| Municipal Notes. Municipal securities having a maturity (when the security is
issued) of one year or less are generally known as municipal notes. Municipal notes
generally are used to provide for short-term working capital needs. Some of the types of
municipal notes the Trust can invest in are described below.

o Tax Anticipation Notes. These are issued to finance working capital needs of
municipalities. Generally, they are issued in anticipation of various seasonal tax
revenue, such as income, sales, use or other business taxes, and are payable from these
specific future taxes.

o Revenue Anticipation Notes. These are notes issued in expectation of receipt of
other types of revenue, such as federal revenues available under federal revenue-sharing
programs.

o Bond Anticipation Notes. Bond anticipation notes are issued to provide interim
financing until long-term financing can be arranged. The long-term bonds that are issued
typically also provide the money for the repayment of the notes.

o Construction Loan Notes. These are sold to provide project construction financing
until permanent financing can be secured. After successful completion and acceptance of
the project, it may receive permanent financing through public agencies, such as the
Federal Housing Administration.
|X| Tax Exempt Commercial Paper. This type of short-term obligation (usually
having a maturity of 270 days or less) is issued by a municipality to meet current working
capital needs.

|X| Municipal Lease Obligations. The Trust's investments in municipal lease
obligations may be through certificates of participation that are offered to investors by
public entities. Municipal leases may take the form of a lease or an installment purchase
contract issued by a state or local government authority to obtain funds to acquire a wide
variety of equipment and facilities.

Some municipal lease securities may be deemed to be "illiquid" securities. Their
purchase by the Trust would be limited as described in the prospectus in "Illiquid
Securities." From time to time the Trust may invest more than 5% of its net assets in
municipal lease obligations that the Manager has determined to be liquid under guidelines
set by the Board of Trustees. Those guidelines require the Manager to evaluate:
o the frequency of trades and price quotations for such securities;
o the number of dealers or other potential buyers willing to purchase or sell such
securities;
o the availability of market-makers; and
o the nature of the trades for such securities.

Municipal leases have special risk considerations. Although lease obligations do not
constitute general obligations of the municipality for which the municipality's taxing
power is pledged, a lease obligation is ordinarily backed by the municipality's covenant to
budget for, appropriate and make the payments due under the lease obligation. However,
certain lease obligations contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease or installment purchase payments in future
years unless money is appropriated for that purpose on a yearly basis. While the
obligation might be secured by the lease, it might be difficult to dispose of that property
in case of a default.

Projects financed with certificates of participation generally are not subject to
state constitutional debt limitations or other statutory requirements that may apply to
other municipal securities. Payments by the public entity on the obligation underlying the
certificates are derived from available revenue sources. That revenue might be diverted to
the funding of other municipal service projects. Payments of interest and/or principal
with respect to the certificates are not guaranteed and do not constitute an obligation of
a state or any of its political subdivisions.

In addition to the risk of "non-appropriation," municipal lease securities do not
have as highly liquid a market as conventional municipal bonds. Municipal leases, like
other municipal debt obligations, are subject to the risk of non-payment of interest or
repayment of principal by the issuer. The ability of issuers of municipal leases to make
timely lease payments may be adversely affected in general economic downturns and as
relative governmental cost burdens are reallocated among federal, state and local
governmental units. A default in payment of income would result in a reduction of income
to the Trust. It could also result in a reduction in the value of the municipal lease and
that, as well as a default in repayment of principal, could result in a decrease in the net
asset value of the Trust. While the Trust holds such securities, the Manager will also
evaluate the likelihood of a continuing market for these securities and their credit
quality.

|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| When-Issued and Delayed Delivery Transactions. As stated in the Prospectus, the
Trust may invest in municipal securities on a "when-issued" or "delayed delivery" basis.
Payment for and delivery of the securities shall not exceed 120 days from the date the
offer is accepted. The purchase price and yield are fixed at the time the buyer enters
into the commitment. During the period between the time of commitment and settlement, no
payment is made by the Trust to the issuer and no interest accrues to the Trust from this
investment. However, the Trust intends to be as fully invested as possible and will not
invest in when-issued securities if its income or net asset value will be materially
adversely affected. At the time the Trust makes the commitment to purchase a municipal
security on a when-issued basis, it will record the transaction on its books and reflect
the value of the security in determining its net asset value. It will also segregate cash
or other liquid high quality Securities equal in value to the commitment for the
when-issued securities. While when-issued securities may be sold prior to settlement date,
the Trust intends to acquire the securities upon settlement unless a prior sale appears
desirable for investment reasons. There is a risk that the yield available in the market
when delivery occurs may be higher than the yield on the security acquired.

|X| 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."

o Quality. Eligible securities are securities that have received a rating in one of
the two highest short-term rating categories by a rating organization. Rating
organizations are designated by the SEC. Eligible securities may be "first tier" or
"second tier" securities. First tier securities are those that have received a rating in
the highest category for short term debt obligations by at least two rating organizations.
If only one rating organization has rated the security, it must be rated in the highest
category for that rating organization. U.S. government securities and securities issued by
a registered money market mutual fund are also first tier securities.

The Trust may also buy second tier "conduit securities." These eligible
securities are securities rated by rating organizations but are not first tier securities.
Conduit securities are municipal securities such as industrial development or revenue bonds
issued to finance non-government projects. The payment of the principal and interest on a
conduit security is not the obligation of the municipal issuer, but is the obligation of
another person who is ultimately responsible for the payment of principal and interest,
such as the user of the facility. The Trust may not invest more than 5% of its total
assets in second tier conduit securities.

The Trust may also buy unrated securities that the Manager determines are
comparable in quality to a first or second tier security by applying certain criteria
established by the Board to determine its creditworthiness. These criteria require a high
quality short term or long-term rating (depending on the security) from a rating
organization. Unrated securities the Trust may buy include asset backed securities and
securities subject to "demand features" or "guarantees."

The Trust may purchase a security subject to a guarantee if the guarantee is an
eligible security or a first tier security. The trust may also purchase a security subject
to a "conditional" demand feature if the demand feature is an eligible security and the
Manager has decided that the conditional demand feature meets the requirements imposed by
Rule 2a-7.

If a security's rating is downgraded, the Manager or the Board of Trustees may have
to reassess the security's credit risk. If a security is downgraded, the Manager or the
Board of Trustees will promptly reassess whether the security continues to present minimal
credit risk, reassess the status of the security as an "eligible security," and take such
actions as is appropriate. If the Trust disposes of the security within five days of the
Manager learning of the downgrade, the Manager will provide the Board of Trustees with
subsequent notice of such downgrade. If a security is in default, or ceases to be an
eligible security, or is determined no longer to present minimal credit risks, the Board of
Trustees must determine whether it would be in the best interests of the Trust to dispose
of the security.

o Diversification. With respect to 75% of its total assets, the Trust cannot invest
more than 5% of its total assets in securities issued by one issuer. It cannot invest
more than 5% of its total assets in securities of one issuer unless the security is a first
tier security. The Trust also cannot invest more than 1% of its total assets or $1.0
million, whichever is greater, in second tier securities of one issuer. For
diversification purposes, the Trust is considered to have purchased the security underlying
a repurchase agreement if the repurchase agreement is fully collateralized. For a refunded
security, the Trust is considered to have the U.S. government securities underlying the
refunded security. For conduit securities, the Trust considers the issuer to be the person
ultimately responsible for payment of the obligation. If the Trust buys an asset backed
security, the issuer of the security is deemed to be the "special purpose" entity which
issued the security. A special purpose entity is an entity which is organized solely for
the purpose of issuing asset backed securities. If the asset backed securities issued by
the special purpose entity include the obligations of another person or another special
purpose entity and those obligations amount to 10% or more of the asset backed securities
the Trust buys, that other person or entity is considered to be the issuer of a pro rata
percentage of the asset backed security.

The Trust may buy a security subject to a demand feature or guarantee. In this
case, with respect to 75% of its total assets, the Trust may not invest more than 10% of
its total assets in securities issued by or subject to demand features or guarantees issued
by the same issuer. If the demand feature or guarantee is a second tier security, the
Trust may not invest more than 5% of its total assets in securities subject to demand
features or guarantees from the same issuer. And, the Trust may not invest more than 10%
of its total assets in securities issued by or subject to demand features or guarantees
from the same issuer. However, if the demand feature or guarantee is issued by a person
who is a non-controlled person, the Trust does not have to limit its investments to no more
than 10% of its total assets in securities issued by or subject to demand features or
guarantees from the same issuer.

o 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.

o 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.

The Trust 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 enables the
Trust to sell the underlying security within a specified period of time at a fixed exercise
price. The Trust may pay for demand features either separately in cash or by paying a
higher price for the securities acquired subject to the demand features. The Trust will
enter into these transactions only with banks and dealers which, in the Manager's opinion,
present minimal credit risks. The Trust's purchases of demand features are subject to the
provisions of Rule 2a-7 under the Investment Company Act because the Trust uses the
amortized cost method to value its portfolio securities.

The Trust's ability to exercise a demand feature or guarantee will depend on the
ability of the bank or dealer to pay for the securities if the demand feature or guarantee
is exercised. If the bank or dealer should default on its obligation, the Trust might not
be able to recover all or a portion of any loss sustained from having to sell the security
elsewhere. Demand features and guarantees are not transferable by the Trust, and therefore
terminate if the Trust sells the underlying security to a third party. The Trust intends
to enter into these arrangements to facilitate portfolio liquidity, although such
arrangements may enable the Trust to sell a security at a pre-arranged price which may be
higher than the prevailing market price at the time the demand feature or guarantee is
exercised. Any considerations paid by the Trust for the demand feature (which increases the
cost of the security and reduces the yield otherwise available for the security) will be
reflected on the Trust's books as unrealized depreciation while the demand feature or
guarantee is held, and a realized gain or loss when demand feature is exercised or expires.

Other Investment Strategies

|X| Repurchase Agreements. In a repurchase transaction, the Trust acquires a security
from, and simultaneously resells it to, an approved vendor (a U.S. commercial bank or the
U.S. branch of a foreign bank having total domestic assets of at least $1 billion or a
broker-dealer with a net capital of at least $50 million and which has been designated a
primary dealer in government securities). They must meet credit requirements set by the
Manager from time to time. The resale price exceeds the purchase price by an amount that
reflects an agreed-upon interest rate effective for the period during which the repurchase
agreement is in effect. The majority of these transactions run from day to day, and
delivery pursuant to the resale typically will occur within one to five days of the
purchase. Repurchase agreements are considered "loans" under the Investment Company Act,
collateralized by the underlying security. The Trust's repurchase agreements require that
at all times while the repurchase agreement is in effect, the value of the collateral must
equal or exceed the repurchase price to fully collateralize the repayment obligation.
Additionally, the Manager will monitor the vendor's creditworthiness to confirm that the
vendor is financially sound and will continuously monitor the collateral's value.

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.

|X| Bank Loan Participation Agreements. The Trust 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.

|X| Diversification. For purposes of diversification under the Investment Company Act,
and the Trust's investment restrictions, the identification of the issuer of a Municipal
Bond or Note depends on the terms and conditions of the security. When the assets and
revenues of an agency, authority, instrumentality or other political subdivision are
separate from those of the government creating the subdivision and the security is backed
only by the assets and revenues of the subdivision, such subdivision would be deemed to be
the sole issuer. Similarly, in the case of an industrial development bond, if that bond is
backed only by the assets and revenues of the nongovernmental user, then such
nongovernmental user would be deemed to be the sole issuer. If, however, in either case,
the creating government or some other entity guarantees a security, such a guarantee would
be considered a separate security and is to be treated as an issue of such government or
other entity. Conduit securities are deemed to be issued by the person ultimately
responsible for payments of interest and principal on the security.

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 make loans, except by purchasing debt obligations in accordance with
its investment policies as approved by the Board, or by entering into repurchase
agreements, or by lending portfolio securities in accordance with applicable
regulations;

o The Trust cannot borrow money except as a temporary measure for extraordinary or
emergency purposes, and then only up to 10% of the value of its assets; no more
than 10% of the Trust's net assets may be pledged, mortgaged or assigned to
secure a debt; no investments may be made while outstanding borrowings, other
than by means of reverse repurchase agreements (which are not considered
borrowings under this restriction), exceed 5% of its assets;

o The Trust cannot invest more than 5% of the value of its total assets taken at market
value in the securities of any one issuer (not including the U.S. government or
its agencies or instrumentalities, whose securities may be purchased without
limitation for defensive purposes);

o The Trust cannot purchase more than 10% of the outstanding voting securities of any
one issuer or invest in companies for the purpose of exercising control;

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; however the Trust may purchase municipal
bonds or notes secured by interests in real estate;

o The Trust cannot make short sales of securities or purchase securities on margin,
except for short-term credits necessary for the clearance of purchases and sales
of portfolio securities;

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

o The Trust cannot underwrite securities issued by other persons except to the extent
that, in connection with the disposition of its portfolio investments, it may be
deemed to be an underwriter for purposes of the Securities Act of 1933;

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; or

o The Trust cannot invest 25% or more of its total assets in any one industry; however,
for the purposes of this restriction, municipal securities and U.S. government
obligations are not considered to be part of any single industry.

Except for the fundamental investment restriction regarding the Trust's borrowing
policy, unless the Prospectus or this Statement of Additional Information states that a
percentage restriction applies on an ongoing basis, it applies only at the time the Trust
makes an investment. The Trust need not sell securities to meet the percentage limits if
the value of the investment increases in proportion to the size of the Trust.

For purposes of the Trust's policy not to concentrate its investments in securities
of issuers, the Trust has adopted the industry classifications set forth in Appendix B to
this Statement of Additional Information. This is not a fundamental policy.

How the Trust is Managed

Organization and History. The Trust is an open-end, diversified management investment
company organized as a Massachusetts business trust in 1985, 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, a Review Committee and a Governance
Committee. The Audit Committee is comprised solely of Independent Trustees. The members
of the Audit Committee are Edward L. Cameron (Chairman), George C. Bowen, Robert J. Malone
and F. William Marshall, Jr. The Audit Committee held six meetings during the fiscal year
ended June 30, 2004. 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 and Beverly Hamilton. The Review Committee held six
meetings during the fiscal year ended June 30, 2004. 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.

The members of the Governance Committee are Robert Malone (Chairman), William Armstrong,
Beverly Hamilton and F. William Marshall, Jr. The Governance Committee was established in
August 2004 and did not hold any meetings during the Fund's fiscal year ended June 30,
2004. The Governance Committee is expected to review general governance matters.

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.
However, Mr. Grabish is only a Trustee/Managing General Partner of the 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. Ms. Hamilton and Mr. Malone are not Trustees of the 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. Bonnell, Murphy, Petersen, Pisapia, Vandehey, Vottiero, Wixted and Zack, and
Mses. Bloomberg, Lee and Ives, 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 July 30,
2004, 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.

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
Shares
Beneficially
Owned in
Range of any of the
Position(s) Held Years / Other Trusteeships/Directorships Shares Oppenheimer/Centennial
with the Trust, Held by Trustee / Number of Portfolios Beneficially Funds
Length of Service, in Fund Complex Currently Overseen by Owned in Overseen
Age Trustee the Trust by Trustee
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
As of December 31, 2003
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
William L. Chairman of the following private None Over
Armstrong, mortgage banking companies: Cherry Creek $100,000
Chairman of the Mortgage Company (since 1991),
Board since 2003 Centennial State Mortgage Company (since
and Trustee since 1994), The El Paso Mortgage Company
2001 (since 1993), Transland Financial
Age: 67 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 UNUM Provident
(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. None Over
Trustee since 1990 Edwards Capital, Inc. (General Partner $100,000
Age: 73 of 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
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 None Over
Trustee since 1998 director (December 1991-April 1999) of $100,000
Age: 67 the Manager; President, Treasurer and a
director (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
OppenheimerFunds, Inc. of which the
Manager is a subsidiary. Oversees 38
portfolios in the OppenheimerFunds
complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Edward L. A member of The Life Guard of Mount None Over
Cameron, Trustee Vernon, George Washington's home (since $100,000
since 2001 June 2000). Formerly Director (March
Age: 65 2001-May 2002) of Genetic ID, Inc. and
its 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 None Over
Trustee since 1990 Mountain Elk Foundation (a $100,000
Age: 62 not-for-profit foundation); a director
(since 1997) of Putnam Lovell Finance
(finance company); a director (since
June 2002) of UNUM Provident (an
insurance company). Formerly a director
(October 1999-October 2003) of P.R.
Pharmaceuticals (a privately held
company); and Mr. Fossel (until October
1996) held several positions in the
subsidiary or affiliated companies of
OppenheimerFunds Inc. Oversees 38
portfolios in the OppenheimerFunds
complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Sam Freedman, Director of Colorado Uplift (a $1-$10,000 Over
Trustee since 1996 non-profit charity) (since September $100,000
Age: 63 1984). Formerly (until October 1994) Mr.
Freedman held several positions in
subsidiary or affiliated companies of
the Manager. Oversees 38 portfolios in
the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Beverly L. Trustee of Monterey International None Over
Hamilton, Trustee Studies (an educational organization) $100,000
since 2002 (since February 2000); a director of The
Age: 57 California Endowment (a philanthropic
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 None Over
Trustee since 2002 Director of Steele Street State Bank (a $100,000
Age: 59 commercial banking entity) (since August
2003); director of Colorado UpLIFT (a
non-profit organization) (since 1986);
trustee (since 2000) of the Gallagher
Family Foundation (non-profit
organization). Formerly, Chairman of
U.S. Bank-Colorado (a subsidiary of U.S.
Bancorp and formerly Colorado National
Bank,) (July 1996-April 1, 1999), a
director of: Commercial Assets, Inc. (a
REIT) (1993-2000), Jones Knowledge, Inc.
(a privately held company) (2001-July
2004) and U.S. Exploration, Inc. (oil
and gas exploration) (1997-February
2004). Oversees 37 portfolios in the
OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
F. William Trustee of MassMutual Institutional None Over
Marshall, Jr., Funds (since 1996) and MML Series $100,000
Trustee since 2001 Investment Fund (since 1987) (both
Age: 62 open-end investment companies) and the
Springfield 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.
-------------------------------------------------------------------------------------

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,
2003
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Richard F. Senior Vice President, Assistant Director $50,001-$1$50,001-$100,000
Grabish, of Sales and Marketing (since March
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 6
portfolios in the OppenheimerFunds complex
---------------------------------------------------------------------------------

The address of Mr. Murphy in the chart below is Two World Financial Center, 225
Liberty Street 11th Floor, 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,
2003
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
John V. Murphy, Chairman, Chief Executive Officer and None Over
President director (since June 2001) and President $100,000
Since 2001and (since September 2000) of
Trustee since 2003 OppenheimerFunds, Inc.; President and a
Age: 55 director or trustee of other Oppenheimer
funds; President and a director (since
July 2001) of Oppenheimer Acquisition
Corp. (OppenheimerFunds, Inc.'s parent
holding company) and of Oppenheimer
Partnership Holdings, Inc. (a holding
company subsidiary of OppenheimerFunds,
Inc.); a director (since November 2001)
of OppenheimerFunds Distributor, Inc. (a
subsidiary of OppenheimerFunds, Inc.);
Chairman and a director (since July 2001)
of Shareholder Services, Inc. and of
Shareholder Financial Services, Inc.
(transfer agent subsidiaries of
OppenheimerFunds, 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.:
the Manager, OFI Institutional Asset
Management, Inc., 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 (OppenheimerFunds, Inc.'s parent
company); a director (since June 1995) of
DLB Acquisition Corporation (a holding
company that owns the shares of David L.
Babson & Company, Inc.); 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
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 (a wholly-owned
subsidiary of Emerald Isle Bancorp).
Oversees 73 portfolios as
Trustee/Director and 10 portfolios as
Officer in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------

The address of the officers in the chart below is as follows: for Messrs. Pisapia and
Zack and Mses. Bloomberg and Lee, Two World Financial Center, 225 Liberty Street - 11th
Floor, New York, NY 10281-1008, for Messrs. Bonnell, Petersen, Vandehey, Vottiero and
Wixted and Ms Ives, 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 C. Bonnell, Vice President (since May 2004) of
Vice President and Portfolio OppenheimerFunds, Inc.; an officer of 3 portfolios
Manager since 2004 in the OppenheimerFunds complex; formerly a
Age: 39 portfolio manager at Strong Financial Corp.
(1999-2004).
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Mark S. Vandehey, Senior Vice President and Chief Compliance Officer
Vice President and Chief (since March 2004) of OppenheimerFunds, Inc.; Vice
Compliance Officer since 2004 President (since June 1983) of the Manager,
Age: 53 OppenheimerFunds Distributor, Inc., and
Shareholder Services, Inc. Formerly (until
February 2004) Vice President and Director of
Internal Audit of OppenheimerFunds, Inc. An
officer of 82 portfolios in the Oppenheimer funds
complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer (since March
Treasurer since April 1999 1999) of OppenheimerFunds, Inc.; Treasurer of the
Age: 44 Transfer Agent, HarbourView Asset Management
Corporation, Shareholder Financial 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 OppenheimerFunds, Inc.); Assistant
Treasurer (since March 1999) of Oppenheimer
Acquisition Corp. Formerly Assistant Treasurer of
the Manager and Distributor (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.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Brian Petersen, Assistant Vice President of OppenheimerFunds, Inc.
Assistant Treasurer since 2004 since August 2002; formerly Manager/Financial
Age: 33 Product Accounting (November 1998-July 2002) of
OppenheimerFunds, Inc. An officer of 83 portfolios
in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Philip Vottiero, Vice President/Fund Accounting of
Assistant Treasurer since 2002 OppenheimerFunds, Inc. since March 2002. Formerly
Age: 41 Vice President/Corporate Accounting of
OppenheimerFunds, Inc. (July 1999-March 2002)
prior to which he was Chief Financial Officer at
Sovlink Corporation (April 1996-June 1999). An
officer of 83 portfolios in the OppenheimerFunds
complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Robert G. Zack, Executive Vice President (since January 2004) and
Vice President & Secretary General Counsel (since February 2002) of
since November 1, 2001 OppenheimerFunds, Inc.; General Counsel (since
Age: 56 November 2001) of the Manager and Distributor;
General Counsel and a director (since November
2001) of the Sub-Distributor; Senior Vice
President, General Counsel and a director (since
November 2001) of the Transfer Agent, Shareholder
Financial Services, Inc., OFI Private Investments,
Inc. and OFI Trust Company; 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.; 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
OppenheimerFunds, Inc.; Assistant Secretary of the
Transfer Agent (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.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Kathleen T. Ives, Assistant Secretary (since October 2003) of the
Assistant Secretary Manager and Distributor; Vice President (since
since November 1, 2001 1999) and Assistant Secretary (since October 2003)
Age: 38 of the Sub-Distributor.; Vice President and
Assistant Secretary (since 1999) of the Transfer
Agent; Vice President (since June 1998) and Senior
Counsel and Assistant Secretary (since October
2003) of OppenheimerFunds, Inc.; Assistant
Secretary (since December 2001) of
OppenheimerFunds Legacy Program and of Shareholder
Financial Services, Inc. Formerly an Assistant
Counsel (August 1994-October 2003) and Assistant
Vice President of OppenheimerFunds, Inc. (August
1997-June 1998). An officer of 83 portfolios in
the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Dina C. Lee, Assistant Vice President and Assistant Counsel of
Assistant Secretary since 2004 OppenheimerFunds, Inc. (since December 2000);
Age: 34 formerly an attorney and Assistant Secretary of
Van Eck Global (until December 2000). An officer
of 83 portfolios in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Peter E. Pisapia, Assistant Vice President and Assistant Counsel of
Assistant Secretary since 2004 OppenheimerFunds, Inc. since December 2002.
Age: 31 Formerly, Associate Counsel at AIG SunAmerica
Asset Management Corp. (October 1997-December
2002). An officer of 83 portfolios in the
OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Lisa I. Bloomberg, Vice President and Associate Counsel of
Assistant Secretary since 2004 OppenheimerFunds, Inc. since May 2004; formerly
Age: 36 First Vice President and Associate General Counsel
of UBS Financial Services Inc. (formerly,
PaineWebber Incorporated) (May 1999 - April 2004)
prior to which she was an Associate at Skaden,
Arps, Slate, Meagher & Flom, LLP (September 1996 -
April 1999). An officer of 48 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, 2004. 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 2003 (there were 38 funds at the end of
2003).

------------------------------------------------------------------------------
Trustee Name and Other Aggregate Total Compensation
From Trust and Fund
Position(s) (as applicable) Compensation Complex Paid to
from Trust1 Trustee/Director*
-
------------------------------------------------------------------------------
------------------------------------------------------------------------------
William L. Armstrong $1,687 $118,649
Chairman of the Board of
Trustees
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Robert G. Avis $1,183 $101,499
Review Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
George Bowen $1,183 $101,499
Audit Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Edward L. Cameron $1,351 $115,503
Audit Committee Chairman
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Jon S. Fossel $1,351 $115,503
Review Committee Chairman
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Sam Freedman $1,183 $101,499
Review Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Richard F. Grabish $ $28,6802
Review Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Beverly Hamilton $1,1663 $150,5424,5
Review Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Robert J. Malone $1,1666 $100,1794
Audit Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
F. William Marshall, Jr. $1,183 $149,4997
Audit Committee Member
------------------------------------------------------------------------------
As of June 30, 2004, James C. Swain retired as a Trustee from the Board II Funds. For the
fiscal year ended June 30, 2004, Mr. Swain received $957 aggregate compensation from the
Trust. For the calendar year ended December 31, 2003, Mr. Swain received $178,000 total
compensation from all of the Oppenheimer funds for which he had served as Trustee.
1. Aggregate Compensation from Trust includes fees and deferred compensation, if any,
for a Trustee.
2. "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 serves as Trustee on the Board II Funds).
3. Includes $1,166 deferred under Deferred Compensation described below.
4. Compensation for Mrs. Hamilton and Mr. Malone was paid by all the Board II Funds,
with the exception of Oppenheimer Senior Floating Rate Fund for which they currently do
not serve as Trustees (total of 37 Oppenheimer funds as of 12/31/03).
5. Includes $50,363 compensation (of which 100% was deferred under a deferred
compensation plan) paid to Mrs. Hamilton for previously 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 $1,166 deferred under Deferred Compensation Plan described below.
7. Includes $48,000 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 Board of Trustees has 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 Trustee's fees under this plan will not materially affect the Trust's
assets, liabilities or net income per share. The 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 Trustee's deferred fee
account.

|X| Major Shareholders. As of July 30, 2004 the only person who owned
of record or was known by the Trust to own beneficially 5% or more of the Trust's
outstanding shares was A.G. Edwards & Sons, Inc., 1 North Jefferson Avenue, St. Louis,
Missouri 63103, which owned 1,738,958,129.76 shares of the Trust which was 99.05% 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 Trust, 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. The management fees paid by the Trust to the Manager during its last
three fiscal years were:

---------------------------------------------------------------------------------
Fiscal Year Management Fee Paid to Centennial Asset Management Corporation
ending 6/30
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
2002 $7,975,860
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
2003 $7,900,919
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
2004 $7,801,969
---------------------------------------------------------------------------------

Under its agreement with the Trust, when the value of the Trust's net assets is less
than $1.5 billion, the annual fee payable to the Manager is reduced by $100,000 based on
the average net assets computed daily and paid monthly at the annual rates, but in no event
shall the annual fee be less than $0. This contractual provision did not result in a
reduction of the fee which would otherwise have been payable to the Manager during the
fiscal years ended 2002, 2003 or 2004.

In addition, under its agreement with the Trust, the Manager has agreed to assume
that Trust's expenses to the extent that the total expenses (as described above) of the
Trust exceed the most stringent limits prescribed by any state in which the Trust's shares
are offered for sale. The payment of the management fee at the end of any month will be
reduced so that at no time will there be any accrued but unpaid liabilities under any of
these expense assumptions. As a result of changes in federal securities laws which have
effectively pre-empted state expense limitations, the contractual commitment relating to
such reimbursements is no longer relevant.

The agreement provides that the Manager assumes no responsibility under the agreement
other than that which is imposed by law, and shall not be responsible for any action of the
Board of Trustees of the Trust in following or declining to follow any advice or
recommendations of the Manager. The agreement provides that the Manager shall not be
liable for any error of judgment or mistake of law, or for any loss suffered by the Trust
in connection with matters to which the agreement relates, except a loss resulting by
reason of the Manager's willful misfeasance, bad faith or gross negligence in the
performance of its duties, or 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. In
their sole discretion, they may also from time to time make substantial payments from their
own resources, which include the profits the Manager derives from the advisory fees it
receives from the Trust, to compensate brokers, dealers, financial institutions and other
intermediaries for providing distribution assistance and/or administrative services or that
otherwise promote sales of the Trust's shares. These payments, some of which may be
referred to as "revenue sharing," may relate to the Trust's inclusion on a financial
intermediary's preferred list of funds offered to its clients.

Financial intermediaries, brokers and dealers may receive other payments from the
Distributor or the Manager from their own resources in connection with the promotion and/or
sale of shares of the Trust, including payments to defray expenses incurred in connection
with educational seminars and meetings. The Manager or Distributor may share expenses
incurred by financial intermediaries in conducting training and educational meetings about
aspects of the Trust for employees of the intermediaries or for hosting client seminars or
meetings at which the Trust is discussed. In their sole discretion, the Manager and/or the
Distributor may increase or decrease the amount of payments they make from their own
resources for these purposes.

Unless the 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. The 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 the plan. An amendment to increase materially the amount of payments to be
made under the 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, 2004 payments under the plan totaled $3,697,181.
The Distributor retained $1,814 and the remaining balance was paid out by the Distributor
to recipients, which included $5,524 paid to an affiliate of the Distributor's parent
company. For the fiscal year ended June 30, 2004, the Manager paid, in the aggregate,
$5,638,004 in fees out of its own resources for distribution assistance. Any unreimbursed
expenses the Distributor incurs with respect to the shares in any fiscal quarter cannot be
recovered in subsequent quarters. The Distributor may not use payments received under the
plan to pay any of its interest expenses, carrying charges, or other financial costs, or
allocation of overhead.

Performance of the Trust

Explanation of Performance Terminology. The Trust uses a variety of terms to illustrate
its performance. These terms include "yield," "compounded effective yield," "tax-equivalent
yield" and "average annual total return." An explanation of how yields and total returns
are calculated is set forth below. The charts below show the Trust's performance as of the
Trust's most recent fiscal year end. You can obtain current performance information by
calling the Trust's Transfer Agent at 1.800.525.9310.

The Trust's illustrations of its performance data in advertisements must comply with
rules of the Securities and Exchange Commission. Those rules describe the types of
performance data that may be used and how it is to be calculated. If the Trust shows total
returns in addition to its yields, the returns must be for the 1-, 5- and 10-year periods
ending as of the most recent calendar quarter prior to the publication of the advertisement
(or its submission for publication).

Use of standardized performance calculations enables an investor to compare the
Trust's performance to the performance of other funds for the same periods. However, a
number of factors should be considered before using the Trust's performance information as
a basis for comparisons with other investments:

o Yields and total returns measure the performance of a hypothetical account in the
Trust over various periods and do not show the performance of each shareholder's
account. Your account's performance will vary from the model performance data if
your dividends are received in cash, or you buy or sell shares during the period,
or you bought your shares at a different time than the shares used in the model.
o An investment in the Trust is not insured by the FDIC or any other government agency.
o The Trust's yield is not fixed or guaranteed and will fluctuate.
o Yields and total returns for any given past period represent historical performance
information and are not, and should not be considered, a prediction of future
yields or returns.

|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| Tax-Equivalent Yield. The Trust's "tax equivalent yield" adjusts the Trust's current
yield, as calculated above, by a stated federal tax rate. The tax equivalent yield is
computed by dividing the tax-exempt portion of the Trust's current yield by one minus a
stated income tax rate and adding the result to the portion (if any) of the Trust's current
yield that is not tax-exempt. The tax equivalent yield may be compounded as described
above to provide a compounded effective tax equivalent yield.

The Trust's tax equivalent yield may be used to compare the tax effects of income
derived from the Trust with income from taxable investments at the tax rates stated. Your
tax bracket is determined by your federal taxable income (the net amount subject to federal
income tax after deductions and exemptions). The tax equivalent yield table assumes that
the investor is taxed at the highest bracket, regardless of whether a switch to non-taxable
investments would cause a lower bracket to apply and that state income tax payments are
fully deductible for income tax purposes. For taxpayers with income above certain levels,
otherwise allowable itemized deductions are limited.

|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:

ERV l/n - 1 = Average Annual Total
---
Return
P

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

-------------------------------------------------------------------------------
Tax-Equivalent Yield
Compounded (35.00% Combined State and Average Annual Total
Yield Effective Federal Tax Brackets) Returns
(7 days Yield (at 6/30/04)
ended (7 days
6/30/04) ended
6/30/04)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Yield Compounded
(7 days Effective
ended Yield 1-Year 5 Years 10 Years
6/30/04) (7 days
ended
6/30/04)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
0.43% 0.43% 0.66% 0.66% 0.35% 1.69% 2.35%
-------------------------------------------------------------------------------

|X| Other Performance Comparisons. Yield information may be useful to
investors in reviewing the Trust's performance. The Trust may make comparisons between its
yield and that of other investments, by citing various indices such as The Bank Rate
Monitor National Index (provided by Bank Rate Monitor(TM)) which measures the average rate
paid on bank money market accounts, NOW accounts and certificates of deposits by the 100
largest banks and thrifts in the top ten metro areas. When comparing the Trust's yield
with that of other investments, investors should understand that certain other investment
alternatives such as certificates of deposit, U.S. government securities, money market
instruments or bank accounts may provide fixed yields and may be insured or guaranteed.

From time to time, the Trust may include in its advertisements and sales literature
performance information about the Trust cited in other newspapers and periodicals, such as
The New York Times, which may include performance quotations from other sources.

From time to time the Trust may include in its advertisements and sales literature the total
return performance of a hypothetical investment account that includes shares of the Trust
and other Oppenheimer funds. The combined account may be part of an illustration of an
asset allocation model or similar presentation. The account performance may combine total
return performance of the Trust and the total return performance of other Oppenheimer funds
included in the account. Additionally, from time to time, the Trust's advertisements and
sales literature may include, for illustrative or comparative purposes, statistical data or
other information about general or specific market and economic conditions. That may
include, for example,
o information about the performance of certain securities or commodities markets or
segments of those markets,
o information about the performance of the economies of particular countries or
regions,
o the earnings of companies included in segments of particular industries, sectors,
securities markets, countries or regions,
o the availability of different types of securities or offerings of securities,
o information relating to the gross national or gross domestic product of the United
States or other countries or regions,
o comparisons of various market sectors or indices to demonstrate performance, risk, or
other characteristics of the Trust.

A B O U T Y O U R A C C O U N T

How to Buy Shares

Determination of Net Asset Value Per Share. The net asset value per share of the Trust is
determined twice each day that The New York Stock Exchange ("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 regarding holidays and days when the market may close early is
available on the Exchange's website at www.nyse.com.

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 Trust will provide you 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

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 Balanced Fund Oppenheimer Main Street Opportunity Fund
Oppenheimer Bond Fund Oppenheimer Main Street Small Cap Fund
Oppenheimer California Municipal Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Principal Protected Main
Oppenheimer Capital Preservation Fund Street Fund
Oppenheimer Principal Protected Main
Oppenheimer Capital Income Fund Street Fund II
Oppenheimer Champion Income Fund Oppenheimer Quest Balanced Fund
Oppenheimer Quest Capital Value Fund,
Oppenheimer Convertible Securities Fund Inc.
Oppenheimer Quest International Value
Oppenheimer Developing Markets Fund Fund, Inc.
Oppenheimer Disciplined Allocation Fund Oppenheimer Quest Opportunity Value Fund
Oppenheimer Discovery Fund Oppenheimer Quest Value Fund, Inc.
Oppenheimer Emerging Growth Fund Oppenheimer Real Asset Fund
Oppenheimer Emerging Technologies Fund Oppenheimer Real Estate Fund
Oppenheimer Rochester National
Oppenheimer Enterprise Fund Municipals
Oppenheimer Equity Fund, Inc. Oppenheimer Senior Floating Rate Fund
Oppenheimer Global Fund Oppenheimer Small Cap Value Fund
Oppenheimer Global Opportunities Fund Oppenheimer Strategic Income Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Total Return Bond Fund
Oppenheimer Growth Fund Oppenheimer U.S. Government Trust
Oppenheimer High Yield Fund Oppenheimer Value Fund
Oppenheimer International Bond Fund Limited-Term New York Municipal Fund
Oppenheimer International Growth Fund Rochester Fund Municipals
Oppenheimer International Small Company
Fund
Oppenheimer Limited Term California
Municipal
Fund
Oppenheimer Limited-Term Government Fund
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 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, possible with retroactive effect. State and local tax treatment of
exempt-interest dividends and potential capital gain distributions 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.

If the Trust qualifies as a "regulated investment company" under the Internal Revenue
Code, it will not be liable for federal income tax on amounts it pays as dividends and
other distributions. That qualification enables the Trust to "pass through" its income and
realized capital gains to shareholders without having to pay tax on them. The Trust
qualified as a regulated investment company in its last fiscal year and intends to qualify
in future years, but reserves the right not to qualify. The Internal Revenue Code contains
a number of complex tests to determine whether the Trust qualifies. The Trust might not
meet those tests in a particular year. If it does not qualify, the Trust will be treated
for tax purposes as an ordinary corporation and will receive no tax deduction for payments
of dividends and other distributions made to shareholders. In such an instance, all of the
Trust's dividends would be taxable 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) and at least 90% of its net
tax-exempt income 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 twelve 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 Fund Distributions. The Trust intends to qualify under the Internal
Revenue Code during each fiscal year to pay "exempt-interest dividends" to its
shareholders. To satisfy this qualification, at the end of each quarter of its taxable
year, at least 50% of the value of the Trust's total assets consists of obligations as
defined in Section 103(a) of the Internal Revenue Code, as amended. Exempt-interest
dividends that are derived from net investment income earned by the Trust on municipal
securities will be excludable from gross income of shareholders for federal income tax
purposes. To the extent the Trust fails to qualify to pay exempt-interest dividends in any
given form, such dividends would be included in the gross income of shareholders for
federal income tax purposes.

Net investment income includes the allocation of amounts of income from the municipal
securities in the Trust's portfolio that are free from federal income taxes. This
allocation will be made by the use of one designated percentage applied uniformly to all
income dividends paid during the Trust's tax year. That designation will normally be made
following the end of each fiscal year as to income dividends paid in the prior year. The
percentage of income designated as tax-exempt may substantially differ from the percentage
of the Trust's income that was tax-exempt for a given period.

A portion of the exempt-interest dividends paid by the Trust may be an item of tax
preference for shareholders subject to the federal alternative minimum tax. The amount of
any dividends attributable to tax preference items for purposes of the alternative minimum
tax will be identified when tax information is distributed by the Trust.

A shareholder receiving a dividend from income earned by the Trust from one or more
of the following sources must treat the dividend as ordinary income in the computation of
the shareholder's gross income, regardless of whether the dividend is reinvested:
(1) certain taxable temporary investments (such as certificates of deposit, repurchase
agreements, commercial paper and obligations of the U.S. government, its agencies
and instrumentalities);
(2) income from securities loans;
(3) income or gains from options or futures,
(4) any net short-term capital gain; and
(5) any market discount amortization on tax-exempt bonds.

The Trust's dividends will not be eligible for the dividends-received deduction for
corporations. Shareholders receiving Social Security benefits should be aware that
exempt-interest dividends are a factor in determining whether (and the extent to which)
such benefits are subject to federal income tax. Losses realized by shareholders on the
redemption of Fund shares within six months of purchase will be disallowed for federal
income tax purposes to the extent of exempt-interest dividends received on such shares.

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 the net
capital gain is 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,
the Trust will provide to shareholders of record on the last day of its taxable year
information regarding their pro rata share of the gain and tax paid. 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.

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 (not including "exempt-interest dividends"), capital gains distributions
(including short-term and long-term) 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 (not
including exempt-interest dividends paid by the Trust) 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
(not including "exempt-interest dividends"), capital gains distributions (including
short-term and long-term) 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 Fund. They
audit the Fund's financial statements and perform other related audit services. They also
act as auditors for certain other funds advised by the Manager and its affiliates. Audit
and non-audit services provided by Deloitte & Touche LLP to the Fund must be pre-approved
by the Audit Committee.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM -------------------------------------------------------------------------------- --------------------------------------------------------------------------------

TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF CENTENNIAL TAX EXEMPT TRUST: We have audited the accompanying statement of assets and liabilities of Centennial Tax Exempt 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 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 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 Tax Exempt 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 STATEMENT OF INVESTMENTS JUNE 30, 2004 --------------------------------------------------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 --------------------------------------------------------------------------------------------------------------------------- SHORT-TERM TAX-EXEMPT OBLIGATIONS--100.6% --------------------------------------------------------------------------------------------------------------------------- ALABAMA--2.0% AL HFA MH RB, Park Rocky Ridge Project, Series B, 1.21% 1 $ 9,980,000 $ 9,980,000 --------------------------------------------------------------------------------------------------------------------------- Birmingham, AL Waterworks & Sewer Board RB, AAMC Series 2002-21, 1.07%, 9/1/04 2,3 10,000,000 10,000,000 --------------------------------------------------------------------------------------------------------------------------- Demopolis, AL IDV Board RB, Del Mesa Farms Project, 1.20% 1 6,400,000 6,400,000 --------------------------------------------------------------------------------------------------------------------------- Hoover, AL BOE Capital Outlay TANs, AAMC Series 2001-16, 1.12% 1,3 4,950,000 4,950,000 --------------------------------------------------------------------------------------------------------------------------- Sylacauga, AL IDV Board RB, Harrells Fertilizer, Inc., 1.20% 1 3,400,000 3,400,000 ------------------ 34,730,000 --------------------------------------------------------------------------------------------------------------------------- ALASKA--0.9% North Slope Borough, AK GOB, Series B, 1.13% 1 13,400,000 13,400,000 --------------------------------------------------------------------------------------------------------------------------- Valdez, AK Marine Term RRB, BP Pipelines, Inc. Project-A, 1.10% 1 2,300,000 2,300,000 ------------------ 15,700,000 --------------------------------------------------------------------------------------------------------------------------- ARIZONA--1.6% Phoenix, AZ Civic Improvement Corp. Waste WS BANs, Series 2003, 0.98%, 7/14/04 5,000,000 5,000,000 --------------------------------------------------------------------------------------------------------------------------- Phoenix, AZ IDAU MH RRB, Paradise Lakes Apts. Project, Series 1995, 1.12% 1 22,500,000 22,500,000 ------------------ 27,500,000 --------------------------------------------------------------------------------------------------------------------------- CALIFORNIA--9.3% Alameda/Contra Cost, CA School FAU COP, Capital Improvements Financing Project, Series G, 1.19% 1 835,000 835,000 --------------------------------------------------------------------------------------------------------------------------- Alameda/Contra Cost, CA School FAU COP, Capital Improvements Financing Project, Series H, 1.19% 1 4,720,000 4,720,000 --------------------------------------------------------------------------------------------------------------------------- CA Department of Water Resources Power Supply RB, Series C-2, 1.07% 1 1,900,000 1,900,000 --------------------------------------------------------------------------------------------------------------------------- CA Department of Water Resources Power Supply RB, Series C-7, 1.08% 1 12,100,000 12,100,000 --------------------------------------------------------------------------------------------------------------------------- CA Department of Water Resources Power Supply RB, Series C-9, 1.08% 1 12,600,000 12,600,000 --------------------------------------------------------------------------------------------------------------------------- CA Department of Water Resources Power Supply RB, Series C-10, 1.09% 1 43,600,000 43,600,000 --------------------------------------------------------------------------------------------------------------------------- CA Department of Water Resources Power Supply RB, Series C-12, 1.06% 1 12,000,000 12,000,000 --------------------------------------------------------------------------------------------------------------------------- CA Department of Water Resources Power Supply RB, Series C-14, 1.08% 1 1,000,000 1,000,000 --------------------------------------------------------------------------------------------------------------------------- CA Infrastructure & ED Bank RRB, Independent System Operator Corp. Project-C, 1.04% 1 1,000,000 1,000,000 --------------------------------------------------------------------------------------------------------------------------- Lake Elsinore, CA Recreation Authority RB, Public Facilities, Series 2000A, 1.07% 1 13,535,000 13,535,000 --------------------------------------------------------------------------------------------------------------------------- Los Angeles Cnty., CA Pension Obligation RRB, Series B, 1.04% 1 8,050,000 8,050,000 --------------------------------------------------------------------------------------------------------------------------- Los Angeles, CA Community RA RB, Baldwin Hills Public Parking Facilities Project, Series 1984, 1.04% 1 15,000,000 15,000,000 --------------------------------------------------------------------------------------------------------------------------- Los Angeles, CA Community RA RB, Skyline at Southpark Apts., Series 1985, 1.07% 1 1,900,000 1,900,000 --------------------------------------------------------------------------------------------------------------------------- Oakland/Alameda Cntys., CA Coliseum Authority RB, Coliseum Project, Series C-2, 1.03% 1 14,000,000 14,000,000 5 | CENTENNIAL TAX EXEMPT TRUST STATEMENT OF INVESTMENTS CONTINUED --------------------------------------------------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 --------------------------------------------------------------------------------------------------------------------------- CALIFORNIA Continued Orange Cnty., CA Apt. Development RB, Niguel Summit 2, Series B, 1.02% 1 $ 590,000 $ 590,000 --------------------------------------------------------------------------------------------------------------------------- Orange Cnty., CA HAU MH RB, Lantern Pines Project-CC, 1.05% 1 300,000 300,000 --------------------------------------------------------------------------------------------------------------------------- Sacramento Cnty., CA COP, Administration Center & Court House Project, 1.06% 1 11,250,000 11,250,000 --------------------------------------------------------------------------------------------------------------------------- San Bernardino Cnty., CA MH HAU RRB, Somerset Apts.-A, 1.07% 1 1,500,000 1,500,000 --------------------------------------------------------------------------------------------------------------------------- Santa Clara Cnty., CA El Camino Hospital FAU RB, 1.08% 1 1,338,000 1,338,000 --------------------------------------------------------------------------------------------------------------------------- Santa Clara Cnty., CA El Camino Hospital FAU RB, 1.08% 1 600,000 600,000 --------------------------------------------------------------------------------------------------------------------------- Santa Clara, CA Transportation District RRB, Series 1985 A, 1.04% 1 8,235,000 8,235,000 ------------------ 166,053,000 --------------------------------------------------------------------------------------------------------------------------- COLORADO--2.4% Arapahoe Cnty., CO MH Senior RB, Centennial East Apt. Project, 2000 Series A-1, Revenue Bond Certificates Trust, Series 2004-13, 1.38% 1,3 3,115,000 3,115,000 --------------------------------------------------------------------------------------------------------------------------- Arapahoe Cnty., CO Water & Wastewater Authority RRB, Series A, 1.11% 1 2,500,000 2,500,000 --------------------------------------------------------------------------------------------------------------------------- Castle Rock, CO MH RB, Castlegate Apt. Project, Revenue Bond Certificates Trust, Series 2004-1, 1.38% 1,3 11,896,000 11,896,000 --------------------------------------------------------------------------------------------------------------------------- Central Platte Valley & Denver Cnty., CO Metro District GOB, Series B, 1.30%, 12/1/04 2 3,000,000 3,000,000 --------------------------------------------------------------------------------------------------------------------------- CO Educational & Cultural FA Public Radio RB, Community Wireless Park City, 1.10% 1 790,000 790,000 --------------------------------------------------------------------------------------------------------------------------- Denver, CO Cty. & Cnty. Excise Tax RB, Colorado Convention Center Project, 1.08% 1 1,000,000 1,000,000 --------------------------------------------------------------------------------------------------------------------------- Denver, CO Cty. & Cnty. REF COP, Wellington E. Webb Building, Series 2003C, 1.05% 1 3,550,000 3,550,000 --------------------------------------------------------------------------------------------------------------------------- E-470 Public Highway, CO RRB, Vehicle Registration Fee, 1.05% 1 2,100,000 2,100,000 --------------------------------------------------------------------------------------------------------------------------- Stapleton Business Center Metro District, CO RB, 1.18% 1 7,550,000 7,550,000 --------------------------------------------------------------------------------------------------------------------------- Superior Metro District No. 1, CO WSS BANs, 1.18% 1 2,000,000 2,000,000 --------------------------------------------------------------------------------------------------------------------------- Superior/McCaslin Interchange Metro District, CO GOB, Series 2004, 1.10%, 11/15/04 2 2,075,000 2,075,000 --------------------------------------------------------------------------------------------------------------------------- Willow Trace Metro District, CO GOLB, Series A, 1.30%, 12/1/04 2 2,295,000 2,295,000 ------------------ 41,871,000 --------------------------------------------------------------------------------------------------------------------------- CONNECTICUT--2.0% CT SPTX Obligations RRB, Transportation Infrastructure-1, 1.06% 1 33,830,000 33,830,000 --------------------------------------------------------------------------------------------------------------------------- CT SPTX Obligations RRB, Transportation Infrastructure-2, 1.06% 1 1,410,000 1,410,000 ------------------ 35,240,000 --------------------------------------------------------------------------------------------------------------------------- FLORIDA--7.7% Broward Cnty., FL Airport Facilities RB, Learjet, Inc. Project-2000, 1.20% 1 2,450,000 2,450,000 --------------------------------------------------------------------------------------------------------------------------- Collier Cnty., FL IDAU RB, Gulf Coast American Blind, Series A, 1.18% 1 2,805,000 2,805,000 --------------------------------------------------------------------------------------------------------------------------- Dade Cnty., FL WSS RB, ETET Series 96C0908, Cl. A, 1.14% 1,3 9,900,000 9,900,000 --------------------------------------------------------------------------------------------------------------------------- FL Gulf Coast University Financing Corp./Capital Improvement RB, Series 2003, 1.08% 1 46,000,000 46,000,000 6 | CENTENNIAL TAX EXEMPT TRUST PRINCIPAL VALUE AMOUNT SEE NOTE 1 --------------------------------------------------------------------------------------------------------------------------- FLORIDA Continued FL TUAU RB, Series A, ETET Series 96C0910, Cl. A, 1.14% 1,3 $14,850,000 $ 14,850,000 --------------------------------------------------------------------------------------------------------------------------- Hillsborough Cnty., FL IDAU PC COP, Tampa Electric Co. Project, ETET Series 96C0911, Cl. A, 1.14% 1,3 17,795,000 17,795,000 --------------------------------------------------------------------------------------------------------------------------- Hillsborough Cnty., FL IDAU PC COP, Tampa Electric Co. Project, ETET Series 97C0901, Cl. A, 1.14% 1,3 17,795,000 17,795,000 --------------------------------------------------------------------------------------------------------------------------- Jacksonville, FL Sales Tax RB, MERLOTS Series 2003 B26, 1.12% 1,3 9,990,000 9,990,000 --------------------------------------------------------------------------------------------------------------------------- Polk Cnty., FL School Board Master Lease Program COP, Series 2003A, 1.05% 1 15,200,000 15,200,000 ------------------ 136,785,000 --------------------------------------------------------------------------------------------------------------------------- GEORGIA--5.9% Atlanta, GA TXAL Bonds, Westside Project, 1.09% 1 14,995,000 14,995,000 --------------------------------------------------------------------------------------------------------------------------- Burke Cnty., GA PC RB, Series 98-B, 1.12%, 8/16/04 25,000,000 25,000,000 --------------------------------------------------------------------------------------------------------------------------- Cherokee Cnty., GA WSS RRB, MERLOTS Series 2003 A14, 1.12% 1,3 7,035,000 7,035,000 --------------------------------------------------------------------------------------------------------------------------- Cobb Cnty., GA DAU RB, Kennesaw St. University Foundation-Parking Facilities, 1.09% 1 11,150,000 11,150,000 --------------------------------------------------------------------------------------------------------------------------- Dahlonega, GA Downtown DAU Student Housing RB, 1.07% 1 2,100,000 2,100,000 --------------------------------------------------------------------------------------------------------------------------- East Point, GA HAU RB, Village Highlands Apts. Project, Series 2004, 1.13% 1 4,000,000 4,000,000 --------------------------------------------------------------------------------------------------------------------------- Fulton, GA DAU RB, Woodard Academy, Inc. Project, 1.05% 1 10,200,000 10,200,000 --------------------------------------------------------------------------------------------------------------------------- GA GOB, Series 1995B, ETET Series 96C1004, Cl. A, 1.14% 1,3 11,880,000 11,880,000 --------------------------------------------------------------------------------------------------------------------------- GA GOB, Series E, 6%, 7/1/04 180,000 180,000 --------------------------------------------------------------------------------------------------------------------------- Gainsville, GA RA EDLFA RRB, Riverside Military Project, 1.09% 1 6,250,000 6,250,000 --------------------------------------------------------------------------------------------------------------------------- Kennesaw, GA DAU MH RB, Walton Ridenour Apts., 1.13% 1 6,000,000 6,000,000 --------------------------------------------------------------------------------------------------------------------------- Valdosta/Lowndes Cntys., GA HA RB, South Georgia Medical Center Project, Series 1998, 1.08% 1 6,200,000 6,200,000 ------------------ 104,990,000 --------------------------------------------------------------------------------------------------------------------------- IDAHO--1.2% Custer Cnty., ID PC RB, Amoco Standard Oil of Indiana, 0.90%, 10/1/04 2 20,375,000 20,375,000 --------------------------------------------------------------------------------------------------------------------------- ILLINOIS--15.6% Chicago, IL BOE GOUN, AAMC Series 2002-4, 1.12% 1,3 9,225,000 9,225,000 --------------------------------------------------------------------------------------------------------------------------- Chicago, IL General Obligation Nts., Series 2004, 1.05%, 1/13/05 2 5,000,000 5,000,000 --------------------------------------------------------------------------------------------------------------------------- Chicago, IL GOB, AAMC Series 2001-34, 1.12% 1,3 10,975,000 10,975,000 --------------------------------------------------------------------------------------------------------------------------- Chicago, IL GOUN, AAMC Series 1998-3, 1.12% 1,3 8,735,000 8,735,000 --------------------------------------------------------------------------------------------------------------------------- Chicago, IL RB, Lakefront Millennium Parking Facility, ETET Series 981303, Cl. A, 1.14% 1,3 22,495,000 22,495,000 --------------------------------------------------------------------------------------------------------------------------- Crestwood, IL HEAU RB, Trinity Christian College, Series 2003, 1.08% 1 7,480,000 7,480,000 --------------------------------------------------------------------------------------------------------------------------- Crestwood, IL RB, Trinity Christian College, Series 2003, 1.13% 1 7,185,000 7,185,000 --------------------------------------------------------------------------------------------------------------------------- IL Development FAU IDV RB, Knead Dough Baking Co. Project, Series A, 1.28% 1 3,000,000 3,000,000 --------------------------------------------------------------------------------------------------------------------------- IL Development FAU RB, Jewish Federation of Chicago, Series 1999, 1.05% 1 1,270,000 1,270,000 --------------------------------------------------------------------------------------------------------------------------- IL Development FAU SWD RB, Waste Management, Inc. Project, 1.15% 1 9,000,000 9,000,000 --------------------------------------------------------------------------------------------------------------------------- IL EDLFA RN, Pooled Financing Program, Series 95, 1.10%, 8/12/04 32,000,000 32,000,000 7 | CENTENNIAL TAX EXEMPT TRUST STATEMENT OF INVESTMENTS CONTINUED --------------------------------------------------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 --------------------------------------------------------------------------------------------------------------------------- ILLINOIS Continued IL EDLFA RN, Pooled Financing Program, Series 95, 1.12%, 8/11/04 $15,000,000 $ 15,000,000 --------------------------------------------------------------------------------------------------------------------------- IL EDLFA RN, Pooled Financing Program, Series 95, 1.12%, 8/16/04 12,000,000 12,000,000 --------------------------------------------------------------------------------------------------------------------------- IL EDLFA RN, Pooled Financing Program, Series 95, 1.12%, 8/18/04 11,840,000 11,840,000 --------------------------------------------------------------------------------------------------------------------------- IL HFAU RB, Evanston Hospital Corp., Series 1985-B, 1.20%, 11/15/04 5,000,000 5,000,000 --------------------------------------------------------------------------------------------------------------------------- IL HFAU RB, Evanston Hospital Corp., Series 1992, 1.03%, 11/30/04 17,000,000 17,000,000 --------------------------------------------------------------------------------------------------------------------------- IL HFAU RB, Evanston Hospital Corp., Series 1996, 1.40%, 11/12/04 5,000,000 5,000,000 --------------------------------------------------------------------------------------------------------------------------- IL HFAU RB, Evanston Northwestern Corp., Series 1998, 1.03%, 11/1/04 2 50,000,000 50,000,000 --------------------------------------------------------------------------------------------------------------------------- IL HFAU RB, Swedish Covenant Hospital Project, 1.04% 1 10,950,000 10,950,000 --------------------------------------------------------------------------------------------------------------------------- IL RTA RB, MERLOTS Series 2003 B15, 1.12% 1,3 12,960,000 12,960,000 --------------------------------------------------------------------------------------------------------------------------- Lombard, IL RB, Elmhurst Healthcare Project, Series 2004, 1.08% 1 6,482,000 6,482,000 --------------------------------------------------------------------------------------------------------------------------- Macon Cnty., IL RB, Millikin University, Series 1999, 1.05% 1 4,500,000 4,500,000 --------------------------------------------------------------------------------------------------------------------------- Mundelein, IL IDV RRB, Town Line Road, Series 1992, 1.05% 1 3,600,000 3,600,000 --------------------------------------------------------------------------------------------------------------------------- Oak Forest, IL RB, Homewood Pool, 1.08% 1 4,500,000 4,500,000 --------------------------------------------------------------------------------------------------------------------------- West Frankfort, IL IDV RRB, Kroger Co., 1.18% 1 800,000 800,000 --------------------------------------------------------------------------------------------------------------------------- Will Cnty., IL Industrial Facilities RB, Amoco Chemical Co. Project, Series 2001, 1.13% 1 2,000,000 2,000,000 ------------------ 277,997,000 --------------------------------------------------------------------------------------------------------------------------- INDIANA--2.9% Goshen, IN ED RB, Goshen College Project, Series 2004, 1.10% 1 3,280,000 3,280,000 --------------------------------------------------------------------------------------------------------------------------- IN Development HFA Education Facilities RB, Indianapolis Museum of Art, Series 2004, 1.05% 1 12,000,000 12,000,000 --------------------------------------------------------------------------------------------------------------------------- IN GOB, AAMC Series 2003-15, Single Asset Trust, 1.08%, 10/6/04 2,3 14,200,000 14,200,000 --------------------------------------------------------------------------------------------------------------------------- IN MPA PPS RB, ETET Series 981401, Cl. A, 1.14% 1,3 13,600,000 13,600,000 --------------------------------------------------------------------------------------------------------------------------- Kokomo, IN ED RB, Village Community Partner IV Project, 1.15% 1 2,640,000 2,640,000 --------------------------------------------------------------------------------------------------------------------------- Lawrence/Fort Harrison, IN Reuse Authority Tax Increment RB, Harrison Military Base, 1.11% 1 2,725,000 2,725,000 --------------------------------------------------------------------------------------------------------------------------- Whiting, IN EFC RB, BP Products of North America, 1.13% 1 3,600,000 3,600,000 ------------------ 52,045,000 --------------------------------------------------------------------------------------------------------------------------- KENTUCKY--1.4% Jackson/Clay/Magoffin Cntys., KY SFM RB, Series A, 1.27% 1 25,000,000 25,000,000 --------------------------------------------------------------------------------------------------------------------------- LOUISIANA--3.9% LA Gas & Fuels Tax Nts., AAMC Series 2002-17, 1.12% 1,3 15,000,000 15,000,000 --------------------------------------------------------------------------------------------------------------------------- LA PFFAU RB, Pennington Medical Foundation Project, 1.05% 1 9,950,000 9,950,000 --------------------------------------------------------------------------------------------------------------------------- LA University & Mechanic College Auxillary RB, Series 2000, 1.06% 1 5,840,000 5,840,000 --------------------------------------------------------------------------------------------------------------------------- New Orleans, LA IDV Board MH RB, Orleans LLC Project, Series 3700, 1.30% 1 29,000,000 29,000,000 --------------------------------------------------------------------------------------------------------------------------- St. James Parish, LA PC RRB, Texaco Project, Series A, 1.12%, 7/13/04 2 10,000,000 10,000,000 ------------------ 69,790,000 8 | CENTENNIAL TAX EXEMPT TRUST PRINCIPAL VALUE AMOUNT SEE NOTE 1 --------------------------------------------------------------------------------------------------------------------------- MARYLAND--1.8% MD Health & HEFAU RB, Johns Hopkins University, Series B, 1.12%, 8/19/04 $17,732,000 $ 17,732,000 --------------------------------------------------------------------------------------------------------------------------- MD Health & HEFAU RB, Maryland Medical System, Series 2004A, 1.12%, 8/18/04 1,500,000 1,500,000 --------------------------------------------------------------------------------------------------------------------------- MD Health & HEFAU RRB, University of Maryland Medical System-A, 1.08% 1 4,000,000 4,000,000 --------------------------------------------------------------------------------------------------------------------------- Montgomery Cnty., MD Consolidated BANs, Series 2002, 0.97%, 8/11/04 8,000,000 8,000,000 ------------------ 31,232,000 --------------------------------------------------------------------------------------------------------------------------- MASSACHUSETTS--0.9% MA Route 3 Transportation Improvement Assn. Lease RB, Series 2002B, 1.05% 1 8,400,000 8,400,000 --------------------------------------------------------------------------------------------------------------------------- MA Water Resources Authority RB, Series A, 1.05% 1 6,990,000 6,990,000 ------------------ 15,390,000 --------------------------------------------------------------------------------------------------------------------------- MICHIGAN--4.2% MI GANs, 1.04% 1 6,850,000 6,850,000 --------------------------------------------------------------------------------------------------------------------------- MI GANs, 1.07% 1 6,000,000 6,000,000 --------------------------------------------------------------------------------------------------------------------------- MI GANs, 1.07% 1 1,500,000 1,500,000 --------------------------------------------------------------------------------------------------------------------------- MI GANs, 1.07% 1 2,400,000 2,400,000 --------------------------------------------------------------------------------------------------------------------------- MI GANs, Series B, 1.07% 1 32,300,000 32,300,000 --------------------------------------------------------------------------------------------------------------------------- MI GOB, 2%, 9/30/04 15,450,000 15,488,805 --------------------------------------------------------------------------------------------------------------------------- MI Job DAU RB, East Lansing Residence Associates Project, 1.03% 1 1,900,000 1,900,000 --------------------------------------------------------------------------------------------------------------------------- St. Clair Cnty., MI ED RRB, MSTFC Series 2000-282X, 1.10%, 8/5/04 2,3 8,000,000 8,000,000 ------------------ 74,438,805 --------------------------------------------------------------------------------------------------------------------------- MINNESOTA--1.0% MN GOB, 4.75%, 8/1/04 250,000 250,785 --------------------------------------------------------------------------------------------------------------------------- MN GOB, ETET Series 20002301, Cl. A, 1.14% 1,3 16,010,000 16,010,000 --------------------------------------------------------------------------------------------------------------------------- North Suburban Hospital District, MN RB, Anoka/ Ramsey Cntys. Hospital Health Center, 1% 1 2,200,000 2,200,000 ------------------ 18,460,785 --------------------------------------------------------------------------------------------------------------------------- MISSISSIPPI--0.5% Jackson Cnty., MS WS RB, 0.95%, 8/2/04 2 8,440,000 8,440,000 --------------------------------------------------------------------------------------------------------------------------- MISSOURI--0.8% Boatmens St. Louis, MO Grantor Trust RB, Series 1996A, 1.20% 1,3 13,475,000 13,475,000 --------------------------------------------------------------------------------------------------------------------------- MO Development Finance Board of Education Facilities RB, Southeast Missouri St. University, Series 2003B, 1.05% 1 1,210,000 1,210,000 ------------------ 14,685,000 --------------------------------------------------------------------------------------------------------------------------- NEVADA--2.0% Clark Cnty., NV IDV RB, Nevada Cogeneration Assn. No. 2, 1.14% 1 4,000,000 4,000,000 --------------------------------------------------------------------------------------------------------------------------- NV GOLB, SGMSTR Series 1997 SG114, 1.12% 1,3 15,000,000 15,000,000 --------------------------------------------------------------------------------------------------------------------------- Washoe Cnty., NV GOLB, AAMC Series 2001-24, Single Asset Trust, 1.12% 1,3 16,090,000 16,090,000 ------------------ 35,090,000 9 | CENTENNIAL TAX EXEMPT TRUST STATEMENT OF INVESTMENTS CONTINUED --------------------------------------------------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT SEE NOTE 1 --------------------------------------------------------------------------------------------------------------------------- NEW JERSEY--0.1% NJ Sports & Exposition Authority Contract Bonds, 2002 Series B-1, 1.03% 1 $ 2,000,000 $ 2,000,000 --------------------------------------------------------------------------------------------------------------------------- NEW YORK--2.1% NYC GOUN, Subseries J3, 1.03% 1 5,200,000 5,200,000 --------------------------------------------------------------------------------------------------------------------------- NYC HDC MH RB, Monterey Project, Series A, 1% 1 2,750,000 2,750,000 --------------------------------------------------------------------------------------------------------------------------- NYC IDA Civic Facility RB, Casa Project, 1.09% 1 1,000,000 1,000,000 --------------------------------------------------------------------------------------------------------------------------- NYC MTAU BANs, Series CP-1A, 0.95%, 7/7/04 3,000,000 3,000,000 --------------------------------------------------------------------------------------------------------------------------- NYC MTAU RB, Series D-2, 1.06% 1 2,930,000 2,930,000 --------------------------------------------------------------------------------------------------------------------------- NYC MTAU RRB, Series A, MERLOTS Series 2004 B-16, 1.11% 1,3 2,000,000 2,000,000 --------------------------------------------------------------------------------------------------------------------------- NYS DA RRB, Municipal Securities Trust Receipts-CMC1B, 1.08% 1,3 800,000 800,000 --------------------------------------------------------------------------------------------------------------------------- NYS HFA RB, Historic Front Street Housing, Series 2003A, 1.05% 1 3,550,000 3,550,000 --------------------------------------------------------------------------------------------------------------------------- NYS MTAU BANs, Series CP-1A, 0.97%, 8/4/04 15,400,000 15,400,000 --------------------------------------------------------------------------------------------------------------------------- NYS UDC RB, SGMSTR, Series 2003 SG163, 1.10% 1,3 900,000 900,000 ------------------ 37,530,000 --------------------------------------------------------------------------------------------------------------------------- NORTH CAROLINA--0.9% Fayetteville, NC Public Works Commission RRB, Series 20003B, 1.07% 1 5,135,000 5,135,000 --------------------------------------------------------------------------------------------------------------------------- NC Med Care Community Hospital RB, Northeast Medical Center Project, Series B, 1.05% 1 11,100,000 11,100,000 ------------------ 16,235,000 --------------------------------------------------------------------------------------------------------------------------- OHIO--4.2% Columbus, OH Regional AA Capital Funding RB, Municipal Pooled Financing Program, 1.10% 1 6,660,000 6,660,000 --------------------------------------------------------------------------------------------------------------------------- Gallia Cnty., OH IDV Mtg. RRB, Jackson Pike Assn., 1.55%, 12/15/04 2 2,475,000 2,475,000 --------------------------------------------------------------------------------------------------------------------------- Hamilton Cnty., OH HCF RB, Twin Towers & Twin Lakes Project, Series A, 1.11% 1 11,000,000 11,000,000 --------------------------------------------------------------------------------------------------------------------------- Hamilton Cnty., OH Hospital Facilities RB, Children's Hospital & Medical Center, Series 2000, 1.08% 1 1,500,000 1,500,000 --------------------------------------------------------------------------------------------------------------------------- Hamilton Cnty., OH Hospital Facilities RB, Children's Hospital & Medical Center, Series 2002-I, 1.08% 1 5,800,000 5,800,000 --------------------------------------------------------------------------------------------------------------------------- Hamilton Cnty., OH Hospital Facilities RB, Elizabeth Gamble Deaconess Home, Series 2002, 1.04% 1 7,800,000 7,800,000 --------------------------------------------------------------------------------------------------------------------------- Hamilton Cnty., OH Hospital Facilities RB, Elizabeth Gamble Deaconess Home, Series 2002, 1.08% 1 600,000 600,000 --------------------------------------------------------------------------------------------------------------------------- Hamilton Cnty., OH Parking System RB, Series 2001, 1.08% 1 7,960,000 7,960,000 --------------------------------------------------------------------------------------------------------------------------- Madeira, OH ED RRB, Kroger Co., 1.18% 1 2,050,000 2,050,000 --------------------------------------------------------------------------------------------------------------------------- OH Air Quality DAU RB, Ohio Edison Project, Series A, 1.04% 1 3,500,000 3,500,000 --------------------------------------------------------------------------------------------------------------------------- OH Water DAU RRB, 1.09% 1 18,585,000 18,585,000 --------------------------------------------------------------------------------------------------------------------------- Scioto Cnty., OH HCF RB, Hill View Retirement Center, 1.55% 1 3,565,000 3,565,000 --------------------------------------------------------------------------------------------------------------------------- Stark Cnty., OH IDV RRB, Kroger Co., 1.18% 1 3,100,000 3,100,000 ------------------ 74,595,000 10 | CENTENNIAL TAX EXEMPT TRUST PRINCIPAL VALUE AMOUNT SEE NOTE 1 --------------------------------------------------------------------------------------------------------------------------- PENNSYLVANIA--2.1% Berks Cnty., PA IDAU RB, Visiting Nurse Assn., Inc. Project, Series B, 1.19% 1 $ 690,000 $ 690,000 --------------------------------------------------------------------------------------------------------------------------- Harrisburg, PA School RB, SDI of Harrisburg, Series 2003, 1.08% 1 24,675,000 24,675,000 --------------------------------------------------------------------------------------------------------------------------- Lehigh Cnty., PA IDAU RB, Allentown Airport, 1.16% 1 410,000 410,000 --------------------------------------------------------------------------------------------------------------------------- PA Public School Buildings RB, MERLOTS Series 2003 A42, 1.12% 1,3 3,795,000 3,795,000 --------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA IDAU RB, Friends of Mast School, Inc. Project, 1.14% 1 975,000 975,000 --------------------------------------------------------------------------------------------------------------------------- Philadelphia, PA IDV RB, Girard Estate Aramark Tower Acquisition Project, 1.08% 1 7,600,000 7,600,000 ------------------ 38,145,000 --------------------------------------------------------------------------------------------------------------------------- SOUTH CAROLINA--1.7% Myrtle Beach, SC Hospitality Fee RRB, Series A, AAMC Series 2004-27, 1.33%, 10/20/04 2,3 5,000,000 5,000,000 --------------------------------------------------------------------------------------------------------------------------- SC Assn. of Governmental Organizations Nts., 2.75%, 4/15/05 10,000,000 10,095,000 --------------------------------------------------------------------------------------------------------------------------- SC Jobs EDAU RB, WUREF Development LLC Project, Series A, 1.09% 1 7,700,000 7,700,000 --------------------------------------------------------------------------------------------------------------------------- SC POAU GOB, AAMC Series 1998-7, 1.16% 1,3 7,325,000 7,325,000 ------------------ 30,120,000 --------------------------------------------------------------------------------------------------------------------------- TENNESSEE--0.8% Chattanooga, TN Health, Education & Housing RB, Tuff/ Chattanooga Housing Project, 1.09% 1 1,655,000 1,655,000 --------------------------------------------------------------------------------------------------------------------------- Chattanooga, TN IDV Board RB, Tennessee Aquarium Project, Series 2004, 1.08% 1 4,000,000 4,000,000 --------------------------------------------------------------------------------------------------------------------------- Memphis/Shelby, TN IDV Board RB, YMCA Project, Series 2002, 1.08% 1 8,430,000 8,430,000 ------------------ 14,085,000 --------------------------------------------------------------------------------------------------------------------------- TEXAS--11.0% Hockley Cnty., TX IDV Corp. PC RB, Amoco Project, 1.15%, 11/1/04 2 13,940,000 13,940,000 --------------------------------------------------------------------------------------------------------------------------- Houston, TX General Obligation Nts., Series B, 1.12%, 8/11/04 3,000,000 3,000,000 --------------------------------------------------------------------------------------------------------------------------- Houston, TX Hotel Occupancy Tax and Parking RB, Sub. Lien, Series A, 1.12%, 9/13/04 20,500,000 20,500,000 --------------------------------------------------------------------------------------------------------------------------- Houston, TX WSS RB, SGMSTR Series 1997 SG120, 1.12% 1,3 32,600,000 32,600,000 --------------------------------------------------------------------------------------------------------------------------- Keller, TX ISD GOUN, AAMC Series 2001-26, 1.12% 1,3 3,000,000 3,000,000 --------------------------------------------------------------------------------------------------------------------------- Mansfield, TX ISD School Building Bond, Series 2003, 1.08% 1 10,000,000 10,000,000 --------------------------------------------------------------------------------------------------------------------------- Mansfield, TX ISD School Building Bond, Series 2003, 1.12% 1,3 14,595,000 14,595,000 --------------------------------------------------------------------------------------------------------------------------- Port of Port Arthur, TX Navigation PC RRB, Texaco, Inc. Project, Series 1994, 1.10% 1 6,700,000 6,700,000 --------------------------------------------------------------------------------------------------------------------------- San Marcos, TX IDV Corp. RB, Butler Manufacturing Co. Project, 1.28% 1 6,250,000 6,250,000 --------------------------------------------------------------------------------------------------------------------------- TX TANs & RANs, Series 2003, 2%, 8/31/04 74,000,000 74,111,721 --------------------------------------------------------------------------------------------------------------------------- TX TUAU RB, Dallas Northtollway, SGMSTR Series 1996 SG70, 1.12% 1,3 11,000,000 11,000,000 ------------------ 195,696,721 11 | CENTENNIAL TAX EXEMPT TRUST

STATEMENT OF INVESTMENTS  CONTINUED
---------------------------------------------------------------------------------------------------------------------------

                                                                                         PRINCIPAL                VALUE
                                                                                            AMOUNT           SEE NOTE 1
---------------------------------------------------------------------------------------------------------------------------
 UTAH--1.3%
 Eagle Mountain, UT Gas & Electric RRB, 1.07% 1                                        $ 9,500,000       $    9,500,000
---------------------------------------------------------------------------------------------------------------------------
 Salt Lake City, UT PC RRB, Amoco Project, 0.95%, 10/1/04 2                              4,715,000            4,715,000
---------------------------------------------------------------------------------------------------------------------------
 Salt Lake Cnty., UT HAU MH RB, Crossroads Apts. Project, 1.10% 1                        4,435,000            4,435,000
---------------------------------------------------------------------------------------------------------------------------
 Salt Lake Cnty., UT TANs & RANs, 2.50%, 12/30/04                                        4,650,000            4,676,366
                                                                                                         ------------------
                                                                                                             23,326,366

---------------------------------------------------------------------------------------------------------------------------
 WASHINGTON--4.6%
 Energy Northwest, WA Electric RRB, Project No. 3, Series A, 5%, 7/1/04                  1,000,000            1,000,000
---------------------------------------------------------------------------------------------------------------------------
 Energy Northwest, WA Electric RRB, Project No. 3, Series E, 1.04% 1                     3,200,000            3,200,000
---------------------------------------------------------------------------------------------------------------------------
 Everett, WA Public Facilities District RANs & TANs, 1%, 10/27/04                       12,500,000           12,500,000
---------------------------------------------------------------------------------------------------------------------------
 Everett, WA Public Facilities District RANs, Series A, 1%, 10/27/04                    24,460,000           24,460,000
---------------------------------------------------------------------------------------------------------------------------
 King Cnty., WA GOLB, AAMC Series 2001-1, 1.12% 1,3                                     12,770,000           12,770,000
---------------------------------------------------------------------------------------------------------------------------
 King Cnty., WA Sewer RB, Jr. Lien, Series B, 1.06% 1                                    5,215,000            5,215,000
---------------------------------------------------------------------------------------------------------------------------
 Snohomish Cnty., WA Public Utility District BANs, Generation System,
 Series A, 1.07% 1                                                                       2,100,000            2,100,000
---------------------------------------------------------------------------------------------------------------------------
 Snohomish Cnty., WA Public Utility District BANs, Generation System,
 Series A, 1.07% 1                                                                       9,500,000            9,500,000
---------------------------------------------------------------------------------------------------------------------------
 WA Housing Finance Commission Nonprofit RRB, Judson Park Project,
 Series A, 1.10% 1                                                                      10,200,000           10,200,000
---------------------------------------------------------------------------------------------------------------------------
 WA PPSS RRB, Nuclear Project No. 3, Series 3A-3, 1.07% 1                                1,380,000            1,380,000
                                                                                                         ------------------
                                                                                                             82,325,000

---------------------------------------------------------------------------------------------------------------------------
 WEST VIRGINIA--0.4%
 Marmet, WV CD RRB, Kroger Co., 1.18% 1                                                  3,100,000            3,100,000
---------------------------------------------------------------------------------------------------------------------------
 Monogalia Cnty., WV Community Hospital Building RB, Monogalia
 General Hospital, Series 2002A, 1.10% 1                                                 4,300,000            4,300,000
                                                                                                         ------------------
                                                                                                              7,400,000

---------------------------------------------------------------------------------------------------------------------------
 WISCONSIN--1.6%
 West Allis, WI RB, State Fair Park Exposition Center, 1.13% 1                           3,555,000            3,555,000
---------------------------------------------------------------------------------------------------------------------------
 WI Education & HFAU RB, Divine Savior Healthcare, Series 2002B, 1.07% 1                   400,000              400,000
---------------------------------------------------------------------------------------------------------------------------
 WI Education & HFAU RB, Southwest Health Center, Inc., 1.07% 1                          6,340,000            6,340,000
---------------------------------------------------------------------------------------------------------------------------
 WI Education & HFAU RB, Wheaton Franciscan Services-B, 1.08% 1                         17,750,000           17,750,000
                                                                                                         ------------------
                                                                                                             28,045,000

---------------------------------------------------------------------------------------------------------------------------
 WYOMING--0.5%
 Lincoln Cnty., WY PC RRB, Amoco Oil Co. of Indiana Project, 0.95%, 10/1/04 2            9,250,000            9,250,000
---------------------------------------------------------------------------------------------------------------------------
 DISTRICT OF COLUMBIA--0.6%
 District of Columbia GOB, Series 2000A, 1.06% 1                                        11,345,000           11,345,000
---------------------------------------------------------------------------------------------------------------------------
 OTHER TERRITORIES--0.7%
 Class B RB Certificates Trust, Series 2004-1, 1.43% 1                                   3,740,000            3,740,000
---------------------------------------------------------------------------------------------------------------------------
 USBI 2002 Trust Pass-Through Certificates, Series 2002-A, 1.55% 1,3                     9,278,000            9,278,000
                                                                                                         ------------------
                                                                                                             13,018,000


                                   12  | CENTENNIAL TAX EXEMPT TRUST


                                                                                         PRINCIPAL                VALUE
                                                                                            AMOUNT           SEE NOTE 1
---------------------------------------------------------------------------------------------------------------------------
 U.S. POSSESSIONS--0.0%
 PR CMWLTH HTAU RB, Putters Project-246, 1.09% 1,3                                     $   450,000       $      450,000

---------------------------------------------------------------------------------------------------------------------------
 TOTAL INVESTMENTS, AT VALUE (COST $1,789,378,677)                                           100.6%       1,789,378,677
---------------------------------------------------------------------------------------------------------------------------
 LIABILITIES IN EXCESS OF OTHER ASSETS                                                        (0.6)         (11,252,311)
                                                                                       ------------------------------------
 NET ASSETS                                                                                  100.0%      $1,778,126,366
                                                                                       ====================================

FOOTNOTES TO STATEMENT OF INVESTMENTS TO SIMPLIFY THE LISTINGS OF SECURITIES, ABBREVIATIONS ARE USED PER THE TABLE BELOW: AA Airport Authority AAMC ABN AMRO Munitops Certificates BANs Bond Anticipation Nts. BOE Board of Education CD Commercial Development CMWLTH Commonwealth COP Certificates of Participation DA Dormitory Authority DAU Development Authority ED Economic Development EDAU Economic Development Authority EDLFA Educational Facilities Authority EFC Environmental Facilities Corp. ETET Eagle Tax-Exempt Trust FA Facilities Authority FAU Finance Authority GANs Grant Anticipation Nts. GOB General Obligation Bonds GOLB General Obligation Ltd. Bonds GOUN General Obligation Unlimited Nts. HA Hospital Authority HAU Housing Authority HCF Health Care Facilities HDC Housing Development Corp. HEAU Higher Education Authority HEFAU Higher Educational Facilities Authority HFA Housing Finance Agency/Authority HFAU Health Facilities Authority HTAU Highway & Transportation Authority IDA Industrial Development Agency IDAU Industrial Development Authority IDV Industrial Development ISD Independent School District MERLOTS Municipal Exempt Receipts Liquidity Option Tender MH Multifamily Housing MPA Municipal Power Agency MSTFC Morgan Stanley & Co., Inc. Trust Floater Certificates MTAU Metropolitan Transportation Authority NYC New York City NYS New York State PC Pollution Control PFFAU Public Facilities Finance Authority POAU Port Authority PPS Public Power System PPSS Public Power Supply System RA Redevelopment Agency/Authority RANs Revenue Anticipation Nts. RB Revenue Bonds REF Refunding RN Revenue Nts. RRB Revenue Refunding Bonds RTA Regional Transportation Authority/Agency SDI School District SFM Single Family Mtg. SGMSTR Societe Generale, NY Branch Municipal Security Trust Receipts SPTX Special Tax SWD Solid Waste Disposal TANs Tax Anticipation Nts. TUAU Turnpike Authority TXAL Tax Allocation UDC Urban Development Corp. WS Water System WSS Water & Sewer System YMCA Young Men's Christian Association 13 | CENTENNIAL TAX EXEMPT TRUST STATEMENT OF INVESTMENTS CONTINUED -------------------------------------------------------------------------------- FOOTNOTES TO STATEMENT OF INVESTMENTS Continued 1. Floating or variable rate obligation maturing in more than one year. The interest rate, which is based on specific, or an index of, market interest rates, is subject to change periodically and is the effective rate on June 30, 2004. This instrument has a demand feature which allows, on up to 30 days' notice, the recovery of principal at any time, or at specified intervals not exceeding one year. 2. Put obligation redeemable at full principal value on the date reported. 3. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $398,484,000 or 22.41% of the Trust's net assets as of June 30, 2004. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 14 | CENTENNIAL TAX EXEMPT TRUST


STATEMENT OF ASSETS AND LIABILITIES  JUNE 30, 2004
------------------------------------------------------------------------------------------------------------------

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

 ASSETS
------------------------------------------------------------------------------------------------------------------
 Investments, at value (cost $1,789,378,677)--see accompanying statement of investments           $1,789,378,677
------------------------------------------------------------------------------------------------------------------
 Cash                                                                                                  4,685,064
------------------------------------------------------------------------------------------------------------------
 Receivables and other assets:
 Interest                                                                                              4,657,573
 Investments sold                                                                                      3,425,361
 Shares of beneficial interest sold                                                                    3,006,582
 Other                                                                                                    83,105
                                                                                                  ----------------
 Total assets                                                                                      1,805,236,362

------------------------------------------------------------------------------------------------------------------
LIABILITIES
------------------------------------------------------------------------------------------------------------------
 Payables and other liabilities:
 Investments purchased                                                                                14,771,366
 Shares of beneficial interest redeemed                                                               11,782,868
 Dividends                                                                                               275,923
 Distribution and service plan fees                                                                      136,098
 Shareholder communications                                                                               48,198
 Transfer and shareholder servicing agent fees                                                            43,318
 Trustees' compensation                                                                                    7,489
 Other                                                                                                    44,736
                                                                                                  ----------------
 Total liabilities                                                                                    27,109,996

------------------------------------------------------------------------------------------------------------------
 NET ASSETS                                                                                       $1,778,126,366
                                                                                                  ================

------------------------------------------------------------------------------------------------------------------
 COMPOSITION OF NET ASSETS
------------------------------------------------------------------------------------------------------------------
 Paid-in capital                                                                                  $1,778,228,184
------------------------------------------------------------------------------------------------------------------
 Accumulated net realized loss on investments                                                           (101,818)
                                                                                                  ----------------
 NET ASSETS--applicable to 1,778,257,819 shares of beneficial interest outstanding                $1,778,126,366
                                                                                                  ================

------------------------------------------------------------------------------------------------------------------
 NET ASSET VALUE, REDEMPTION PRICE PER SHARE AND OFFERING PRICE PER SHARE                                  $1.00

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 15 | CENTENNIAL TAX EXEMPT TRUST STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- INVESTMENT INCOME -------------------------------------------------------------------------------- Interest $18,838,298 -------------------------------------------------------------------------------- EXPENSES -------------------------------------------------------------------------------- Management fees 7,801,969 -------------------------------------------------------------------------------- Service plan fees 3,697,181 -------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees 544,922 -------------------------------------------------------------------------------- Custodian fees and expenses 50,685 -------------------------------------------------------------------------------- Shareholder communications 49,584 -------------------------------------------------------------------------------- Trustees' compensation 13,325 -------------------------------------------------------------------------------- Other 202,056 -------------- Total expenses 12,359,722 Less reduction to custodian expenses (13,848) -------------- Net expenses 12,345,874 -------------------------------------------------------------------------------- NET INVESTMENT INCOME 6,492,424 -------------------------------------------------------------------------------- NET REALIZED LOSS ON INVESTMENTS (79,810) -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 6,412,614 ============== SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 16 | CENTENNIAL TAX EXEMPT TRUST


STATEMENTS OF CHANGES IN NET ASSETS
-----------------------------------------------------------------------------------------------------



 YEAR ENDED JUNE 30,                                                     2004                 2003
-----------------------------------------------------------------------------------------------------
 OPERATIONS
-----------------------------------------------------------------------------------------------------
 Net investment income                                         $    6,492,424       $   12,882,236
-----------------------------------------------------------------------------------------------------
 Net realized gain (loss)                                             (79,810)              32,171
                                                               --------------------------------------
 Net increase in net assets resulting from operations               6,412,614           12,914,407

-----------------------------------------------------------------------------------------------------
 DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
-----------------------------------------------------------------------------------------------------
 Dividends from net investment income                              (6,492,424)         (12,882,236)

-----------------------------------------------------------------------------------------------------
 BENEFICIAL INTEREST TRANSACTIONS
-----------------------------------------------------------------------------------------------------
 Net increase (decrease) in net assets resulting from
 beneficial interest transactions                                 (98,384,454)          53,057,495

-----------------------------------------------------------------------------------------------------
 NET ASSETS
-----------------------------------------------------------------------------------------------------
 Total increase (decrease)                                        (98,464,264)          53,089,666
-----------------------------------------------------------------------------------------------------
 Beginning of period                                            1,876,590,630        1,823,500,964
                                                               --------------------------------------
 End of period                                                 $1,778,126,366       $1,876,590,630
                                                               ======================================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 17 | CENTENNIAL TAX EXEMPT TRUST


FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------------------------------


 YEAR ENDED JUNE 30,                                2004       2003       2002       2001      2000
------------------------------------------------------------------------------------------------------
 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              -- 1      .01        .01        .03       .03
 Dividends and/or distributions to shareholders       -- 1     (.01)      (.01)      (.03)     (.03)
------------------------------------------------------------------------------------------------------
 Net asset value, end of period                   $ 1.00     $ 1.00     $ 1.00     $ 1.00    $ 1.00
                                                  ====================================================

------------------------------------------------------------------------------------------------------
 TOTAL RETURN 2                                     0.35%      0.69%      1.17%      3.26%     3.01%
------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------
 RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------
 Net assets, end of period (in millions)          $1,778     $1,877     $1,824     $1,822    $1,692
------------------------------------------------------------------------------------------------------
 Average net assets (in millions)                 $1,851     $1,882     $1,904     $1,779    $1,737
------------------------------------------------------------------------------------------------------
 Ratios to average net assets: 3
 Net investment income                              0.35%      0.68%      1.16%      3.21%     2.94%
 Total expenses                                     0.67%      0.66%      0.69%      0.70%     0.72%
 Expenses after payments and waivers
 and reduction to custodian expenses                 N/A 4      N/A 4      N/A 4     0.69%      N/A 4



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 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. Reduction to custodian expenses less than 0.01%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 18 | CENTENNIAL TAX EXEMPT TRUST NOTES TO FINANCIAL STATEMENTS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES

Centennial Tax Exempt Trust (the Trust) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trusts investment objective is to seek the maximum short-term interest income exempt from federal income taxes that is consistent with low capital risk and the maintenance of liquidity. The 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. 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.

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

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 GAIN CARRYFORWARD 1,2,3 -------------------------------------------------------- $307,724 $-- $101,818 1. As of June 30, 2004, the Trust had $101,818 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 carryforwards were as follows: EXPIRING

2008 $ 22,008 2012 79,810

Total $101,818 ======== 2. During the fiscal year ended June 30, 2004, the Trust did not utilize any capital loss carryforward. 3. During the fiscal year ended June 30, 2003, the Trust utilized $32,171 of capital loss carryforward to offset capital gains realized in that fiscal year.

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.

19 | CENTENNIAL TAX EXEMPT TRUST NOTES TO FINANCIAL STATEMENTS CONTINUED -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued

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: Exempt-interest dividends $6,492,424 $12,882,236 --------------------------------------------------------------------------------

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 Trusts assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the Plan.

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

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, if applicable, 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 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. 20 | CENTENNIAL TAX EXEMPT TRUST -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST

The Trust has authorized an unlimited number of no par value shares of beneficial interest. Transactions in shares of beneficial interest were as follows:


                                     YEAR ENDED JUNE 30, 2004             YEAR ENDED JUNE 30, 2003
                                     SHARES            AMOUNT             SHARES            AMOUNT
-----------------------------------------------------------------------------------------------------

 Sold                         5,127,413,724   $ 5,127,413,724      4,883,642,642   $ 4,883,642,642
 Dividends and/or
 distributions reinvested         6,338,791         6,338,791         12,855,713        12,855,713
 Redeemed                    (5,232,136,969)   (5,232,136,969)    (4,843,440,860)   (4,843,440,860)
                             ------------------------------------------------------------------------
 Net increase (decrease)        (98,384,454)  $   (98,384,454)        53,057,495   $    53,057,495
                             ========================================================================

-------------------------------------------------------------------------------- 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 the next $500 million and 0.325% of net assets in excess of $2 billion.

-------------------------------------------------------------------------------- ADMINISTRATION SERVICES. The Trust pays the Manager a fee of $1,500 per year for preparing and filing the Trust's tax returns. -------------------------------------------------------------------------------- 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 $547,773 to SSI for services to the Trust. --------------------------------------------------------------------------------

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.

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

PAYMENTS AND WAIVERS OF EXPENSES. Under the investment advisory agreement, when the value of the Trusts net assets is less than $1.5 billion, the annual fee payable to the Manager shall be reduced by $100,000 based on average net assets computed daily and paid monthly at the annual rates, however, the annual fee cannot be less than $0.

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.

21 | CENTENNIAL TAX EXEMPT 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-2

Appendix B

MUNICIPAL BOND INDUSTRY CLASSIFICATIONS

Adult Living Facilities
Airlines
Automobiles
Chemicals
Corporate Backed
Education
Electric Utilities
Food Products
Gas Utilities
General Obligation
Higher Education
Highways/Railways
Hospital/Healthcare
Hotels, Restaurants & Leisure
Manufacturing, Durable Goods
Manufacturing, Non Durable Goods
Marine/Aviation Facilities
Metals & Mining
Multi-Family Housing
Municipal Leases
Non Profit Organization
Oil & Gas
Paper, Containers & Packaging
Parking Fee Revenue
Pollution Control
Real Estate
Resource Recovery

Sales Tax Revenue
Sewer Utilities
Single Family Housing
Special Assessment
Special Tax
Sports Facility Revenue
Student Loans

Telephone Utilities
Tobacco

U.S. Government - Full Faith & Credit
U.S. Government Agencies-GSEs
Water Utilities

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 Public Accounting Firm
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

PX0160.01.0305 revised

--------
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.