CENTENNIAL TAX EXEMPT TRUST

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EbyTrLfSTGRxkImRFwSOjwL29gsW7XJIxHy1spohfoCv+O3SSHeZBuP174pk2XbQ PSmnRIvvLqN4ehs+E5idsA== 0000728889-05-001261.txt : 20051206 0000728889-05-001261.hdr.sgml : 20051206 20051206111132 ACCESSION NUMBER: 0000728889-05-001261 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 20051206 DATE AS OF CHANGE: 20051206 EFFECTIVENESS DATE: 20051206 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTENNIAL TAX EXEMPT TRUST CENTRAL INDEX KEY: 0000319880 IRS NUMBER: 222328954 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 002-69653 FILM NUMBER: 051246116 BUSINESS ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY STREET 2: 34TH FLOOR CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 BUSINESS PHONE: 303-768-3200 MAIL ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 FORMER COMPANY: FORMER CONFORMED NAME: CENTENNIAL TAX EXEMPT TRUST /CO/ DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: DAILY CASH TAX EXEMPT FUND INC DATE OF NAME CHANGE: 19851009 FORMER COMPANY: FORMER CONFORMED NAME: CENTENNIAL TAX EXEMPT CASH FUND INC DATE OF NAME CHANGE: 19820720 497 1 revsai.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 October 14, 2005, revised December 6,
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 October 14, 2005. 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............................................
Disclosure of Portfolio Holdings........................................
How the Trust is Managed......................................................
Organization and History.................................................
Board of Trustees and Oversight Committees..............................
Trustees and Officers of the Trust.......................................
The Manager..............................................................
Service Plan..................................................................
Payments to Trust Intermediaries..............................................
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 Registered Public Accounting Firm's 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| Tender Option Bond Programs. The Trust may also invest a significant
portion of its assets in tender option bond programs. Tender option bond
programs are a type of municipal bond derivative security that provide for
tax-free income at a variable rate. In such programs, high quality longer-term
municipal bonds are held inside a trust and varying economic interests in the
bonds are created and sold to investors. One class of investors earns interest
at a rate based on current short-term tax-exempt interest rates and may tender
its holdings at par to the program sponsor at agreed upon intervals. This share
class is an eligible security for municipal money market fund investments. A
second class of investors has a residual income interest (earning any net income
produced by the underlying bonds that exceeds the variable income paid to the
other class of investors) and bears the risk that the underlying bonds decline
in value due to changes in market interest rates. The Funds do not invest in
this second class of shares. Under the terms of such programs, both investor
classes bear the risk of loss that would result from a default on the underlying
bonds as well as from other potential, yet remote, credit ot structural events.

|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 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.

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.

Disclosure of Portfolio Holdings. The Trust has adopted policies and procedures
concerning the dissemination of information about its portfolio holdings by
employees, officers and/or directors of OppenheimerFunds Inc., Distributor,
Sub-Distributor and Transfer Agent. These policies are designed to assure that
non-public information about portfolio securities is distributed only for a
legitimate business purpose, and is done in a manner that (a) conforms to
applicable laws and regulations and (b) is designed to prevent that information
from being used in a way that could negatively affect the Trust's investment
program or enable third parties to use that information in a manner that is
harmful to the Trust.

o Public Disclosure. The Trust's portfolio holdings are made publicly
available no later than 60 days after the close of each of the Fund's
fiscal quarters in semi-annual and annual reports to shareholders, or
in its Statements of Investments on Form N-Q, which are publicly
available at the SEC.

Until publicly disclosed, the Trust's portfolio holdings are proprietary,
confidential business information. While recognizing the importance of providing
the Trust's shareholders with information about their Trust's investments and
providing portfolio information to a variety of third parties to assist with the
management, distribution and administrative process, the need for transparency
must be balanced against the risk that third parties who gain access to the
Trust's portfolio holdings information could attempt to use that information to
trade ahead of or against the Trust, which could negatively affect the prices
the Trust is able to obtain in portfolio transactions or the availability of the
securities that portfolio managers are trading on the Trust's behalf.

The Manager and its subsidiaries and affiliates, employees, officers, and
directors, shall neither solicit nor accept any compensation or other
consideration (including any agreement to maintain assets in the Trust or in
other investment companies or accounts managed by the Manager or any affiliated
person of the Manager) in connection with the disclosure the Trust's non-public
portfolio holdings. The receipt of investment advisory fees or other fees and
compensation paid to the Manager and its subsidiaries pursuant to agreements
approved by the Trust's Board shall not be deemed to be "compensation" or
"consideration" for these purposes. It is a violation of the Code of Ethics for
any covered person to release holdings in contravention of portfolio holdings
disclosure policies and procedures adopted by the Trust.

A list of the top 10 or more portfolio securities holdings (based on
invested assets), listed by security or by issuer, as of the end of each month
may be disclosed to third parties (subject to the procedures below) no sooner
than 15 days after month-end.

Except under special limited circumstances discussed below, month-end
lists of the Trust's complete portfolio holdings may be disclosed no sooner than
30-days after the relevant month-end, subject to the procedures below. If the
Trust's complete portfolio holdings have not been disclosed publicly, they may
be disclosed pursuant to special requests for legitimate business reasons,
provided that:

o The third-party recipient must first submit a request for release of
Trust portfolio holdings, explaining the business reason for the request;
o Senior officers (a Senior Vice President or above) in the Manager's
Portfolio and Legal departments must approve the completed request for
release of Trust portfolio holdings; and
o The third-party recipient must sign the Manager's portfolio holdings
non-disclosure agreement before receiving the data, agreeing to keep
information that is not publicly available regarding the Trust's holdings
confidential and agreeing not to trade directly or indirectly based on the
information.

The Trust's complete portfolio holdings positions may be released to the
following categories of entities or individuals on an ongoing basis, provided
that such entity or individual either (1) has signed an agreement to keep such
information confidential and not trade on the basis of such information or (2)
is subject to fiduciary obligations, as a member of the Trust's Board, or as an
employee, officer and/or trustee of the Manager, Distributor, Sub-Distributor or
Transfer Agent, or their respective legal counsel, not to disclose such
information except in conformity with these policies and procedures and not to
trade for his/her personal account on the basis of such information:

o Employees of the Trust's Manager, Distributor and Transfer Agent who need
to have access to such information (as determined by senior officers of
such entity),
o The Trust's independent registered public accounting firm,
o Members of the Trust's Board and the Board's legal counsel,
o The Trust's custodian bank,
o A proxy voting service designated by the Trust and its Board,
o Rating/ranking organizations (such as Lipper and Morningstar),
o Portfolio pricing services retained by the Manager to provide portfolio
security prices, and
o Dealers, to obtain bids (price quotations, if securities are not priced by
the Trust's regular pricing services).

Portfolio holdings information of the Trust may be provided, under limited
circumstances, to brokers and/or dealers with whom the Trust trades and/or
entities that provide investment coverage and/or analytical information
regarding the Trust's portfolio, provided that there is a legitimate investment
reason for providing the information to the broker, dealer or other entity.
Month-end portfolio holdings information may, under this procedure, be provided
to vendors providing research information and/or analytics to the fund, with at
least a 15-day delay after the month end, but in certain cases may be provided
to a broker or analytical vendor with a 1- 2 day lag to facilitate the provision
of requested investment information to the manager to facilitate a particular
trade or the portfolio manager's investment process for the Trust. Any third
party receiving such information must first sign the Manager's portfolio
holdings non-disclosure agreement as a pre-condition to receiving this
information.

Portfolio holdings information (which may include information on
individual securities positions or multiple securities) may be provided to the
entities listed below (1) by portfolio traders employed by the Manager in
connection with portfolio trading, and (2) by the members of the Manager's
Security Valuation Group and Accounting Departments in connection with portfolio
pricing or other portfolio evaluation purposes:

o Brokers and dealers in connection with portfolio transactions (purchases
and sales)
o Brokers and dealers to obtain bids or bid and asked prices (if securities
held by the Trust are not priced by the fund's regular pricing services)
o Dealers to obtain price quotations where the fund is not identified as the
owner

Portfolio holdings information (which may include information on the
Trust's entire portfolio or individual securities therein) may be provided by
senior officers of the Manager or attorneys on the legal staff of the Manager,
Distributor, Sub-Distributor or Transfer Agent, in the following circumstances:

o Response to legal process in litigation matters, such as responses to
subpoenas or in class action matters where the Fund may be part of the
plaintiff class (and seeks recovery for losses on a security) or a
defendant,
o Response to regulatory requests for information (the SEC, NASD, state
securities regulators, and/or foreign securities authorities, including
without limitation requests for information in inspections or for position
reporting purposes),
o To potential sub-advisors of portfolios (pursuant to confidentiality
agreements),
o To consultants for retirement plans for plan sponsors/discussions at due
diligence meetings (pursuant to confidentiality agreements),
o Investment bankers in connection with merger discussions (pursuant to
confidentiality agreements)

Portfolio managers and analysts may, subject to the Manager's policies on
communications with the press and other media, discuss portfolio information in
interviews with members of the media, or in due diligence or similar meetings
with clients or prospective purchasers of Fund shares or their financial
intermediary representatives.

The Trust's shareholders may, under unusual circumstances (such as a lack
of liquidity in the Trust's portfolio to meet redemptions), receive redemption
proceeds of their Trust shares paid as pro rata shares of securities held in the
Trust's portfolio. In such circumstances, disclosure of the Trust's portfolio
holdings may be made to such shareholders.

The Chief Compliance Officer of the Trust and the Manager, Distributor,
Sub-Distributor and Transfer Agent (the "CCO") shall oversee the compliance by
the Manager, Distributor, Sub-Distributor Transfer Agent, and their personnel
with these policies and procedures. At least annually, the CCO shall report to
the Trust's Board on such compliance oversight and on the categories of entities
and individuals to which disclosure of portfolio holdings of the Trust has been
made during the preceding year pursuant to these policies. The CCO shall report
to the Trust's Board any material violation of these policies and procedures
during the previous calendar quarter and shall make recommendations to the Board
as to any amendments that the CCO believes are necessary and desirable to carry
out or improve these policies and procedures.

The Manager and/or the Trust have entered into ongoing arrangements to
make available information about the Trust's portfolio holdings. One or more of
the Oppenheimer funds may currently disclose portfolio holdings information
based on ongoing arrangements to the following parties:

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A.G. Edwards & Sons Keijser Securities
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ABG Securities Kempen & Co. USA Inc.
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ABN AMRO Kepler Equities/Julius
Baer Sec
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Advest KeyBanc Capital Markets
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AG Edwards Leerink Swan
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American Technology Research Legg Mason
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Auerbach Grayson Lehman
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Banc of America Securities Lehman Brothers
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Barclays Lipper
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Baseline Loop Capital Markets
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Bear Stearns MainFirst Bank AG
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Belle Haven Makinson Cowell US Ltd
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Bloomberg Maxcor Financial
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BNP Paribas Merrill
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BS Financial Services Merrill Lynch
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Buckingham Research Group Midwest Research
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Caris & Co. Mizuho Securities
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CIBC World Markets Morgan Stanley
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Citigroup Morningstar
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Citigroup Global Markets Natexis Bleichroeder
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Collins Stewart Ned Davis Research Group
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Craig-Hallum Capital Group LLCNomura Securities
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Credit Agricole Cheuvreux Pacific Crest
N.A. Inc.
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Credit Suisse First Boston Pacific Crest Securities
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Daiwa Securities Pacific Growth Equities
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Davy Petrie Parkman
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Deutsche Bank Pictet
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Deutsche Bank Securities Piper Jaffray Inc.
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Dresdner Kleinwort WassersteinPlexus
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Emmet & Co Prager Sealy & Co.
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Empirical Research Prudential Securities
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Enskilda Securities Ramirez & Co.
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Essex Capital Markets Raymond James
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Exane BNP Paribas RBC Capital Markets
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Factset RBC Dain Rauscher
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Fidelity Capital Markets Research Direct
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Fimat USA Inc. Robert W. Baird
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First Albany Roosevelt & Cross
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First Albany Corporation Russell Mellon
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Fixed Income Securities Ryan Beck & Co.
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Fortis Securities Sanford C. Bernstein
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Fox-Pitt, Kelton Scotia Capital Markets
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Friedman, Billing, Ramsey SG Cowen & Co.
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Fulcrum Global Partners SG Cowen Securities
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Garp Research Soleil Securities Group
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George K Baum & Co. Standard & Poors
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Goldman Stone & Youngberg
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Goldman Sachs SWS Group
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HSBC Taylor Rafferty
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HSBC Securities Inc Think Equity Partners
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ING Barings Thomas Weisel Partners
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ISI Group UBS
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Janney Montgomery Wachovia
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Jefferies Wachovia Corp
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Jeffries & Co. Wachovia Securities
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JP Morgan Wescott Financial
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JP Morgan Securities William Blair
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JPP Eurosecurities Yieldbook
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Keefe, Bruyette & Woods
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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.

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, but may hold shareholder meeting from time to time on important
matters or when required to do so by the Investment Company Act or other
applicable law. Shareholders have the right, upon a vote or declaration in
writing of two-thirds of the outstanding shares of the Trust, to remove a
Trustee or to take other action described in the Trust's Declaration of Trust.

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.

The Board of Trustees has an Audit Committee, a Review Committee and a
Governance Committee. Each 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 7 meetings during the fiscal year ended June 30, 2005. The Audit
Committee furnishes the Board with recommendations regarding the selection of
the Trust's independent registered public accounting firm (also referred to as
the "independent Auditors"). Other main functions of the Audit Committee,
outlined in the Audit Committee Charter, 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) reviewing reports from the Manager's Internal Audit Department;
(iv) maintaining a separate line of communication between the Trust's independent
Auditors and the Trustees who are not "interested persons" under the Investment
Company Act (the "Independent Trustees"); (v) reviewing the independence of the
Trust's independent Auditors; and (vi) pre-approving the provision of any audit
or non-audit services by the Trust's independent Auditors, including tax
services, that are not prohibited by the Sarbanes-Oxley Act, to the Trust; and
(vii) reviewing certain reports from and meeting periodically with the Trust's
Chief Compliance Officer.

The members of the Review Committee are Jon S. Fossel (Chairman), Robert
G. Avis, Sam Freedman, Richard F. Grabish and Beverly Hamilton. The Review
Committee held 6 meetings during the Trust's fiscal year ended June 30, 2005.
Among other duties set forth in the Review Committee's Charter, the Review
Committee reports and makes recommendations to the Board concerning the fees
paid to the Trust's Transfer Agent and the Manager and the services provided to
the Trust by the Transfer Agent and the Manager. The Review Committee also
reviews the Trust's investment performance as well as the policies and
procedures adopted by the Trust to comply with the Investment Company Act and
other applicable law.

The Governance Committee is comprised solely of Independent Trustees. The
members of the Governance Committee are, Robert J. Malone (Chairman), William
Armstrong, Beverly L. Hamilton and F. William Marshall, Jr. The Governance
Committee held 5 meetings during the Trust's fiscal year ended June 30, 2005.

The Governance Committee has adopted a charter setting forth its duties
and responsibilities. Among other duties, the Governance Committee reviews and
oversees the Trust's governance guidelines, the adequacy of the Trust's Code of
Ethics and the nomination of Trustees, including Independent Trustees. The
Governance Committee has adopted a process for shareholder submission of
nominees for board positions. Shareholders may submit names of individuals,
accompanied by complete and properly supported resumes, for the Governance
Committee's consideration by mailing such information to the Governance
Committee in care of the Trust. The Governance Committee may consider such
persons at such time as it meets to consider possible nominees. The Governance
Committee, however, reserves sole discretion to determine which candidates for
Trustees and independent Trustees it will recommend to the Board and/or
shareholders and it may identify candidates other than those submitted by
Shareholders. The Governance Committee may, but need not, consider the advice
and recommendation of the Manager and/or its affiliates in selecting nominees.
The full Board elects new Trustees except for those instances when a shareholder
vote is required.

Shareholders who desire to communicate with the Board should address
correspondence to the Board or an individual Board member and may submit their
correspondence electronically at www.oppenheimerfunds.com under the caption
"contact us" or by mail to the Trust at the address below. The Governance
Committee will consider if a different process should be recommended to the
Board.

Trustees and Officers of the Trust. Except for Messrs. Murphy and Grabish, each
of the Trustees is an "Independent Trustee," under the Investment Company Act.
Mr. Grabish is an "Interested Trustee," by virtue of his positions with A.G.
Edwards & Sons, Inc. Mr. Grabish, serves as Trustee for only the following
funds: Centennial California Tax Exempt Trust, Centennial Government Trust,
Centennial Money Market Trust, Centennial New York Tax Exempt Trust and
Centennial Tax Exempt Trust. With the exception of Mr. Grabish, all of the
Trustees are also trustees or directors of the following Oppenheimer/Centennial
Funds( referred to as "Board II Funds"):

Oppenheimer Cash Reserves Oppenheimer Principal Protected
Trust III
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 Integrity Funds Panorama Series Fund, Inc.
Oppenheimer International Bond Fund
Centennial California Tax Exempt
Oppenheimer Limited-Term Government Fund Trust
Oppenheimer Main Street Funds, Inc. Centennial Government Trust
Oppenheimer Main Street Opportunity Fund Centennial Money Market Trust
Centennial New York Tax Exempt
Oppenheimer Main Street Small Cap Fund Trust
Oppenheimer Municipal Fund Centennial Tax Exempt Trust
Oppenheimer Principal Protected Trust
Oppenheimer Principal Protected Trust II

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 charge on Class A shares is waived
for that group because of the reduced sales efforts realized by the Distributor.

Messrs. Bonnell, Gillespie, Murphy, Petersen, Vandehey, Vottiero, Wixted
and Zack, and Mss. Bloomberg and Ives, who are officers of the Trust, hold the
same offices with one or more of the other Board II Funds. As of September 30,
2005 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 Board II Funds. In addition, none of the
Independent Trustees (nor any of their immediate family members) own securities
of either the Manager, Distributor or Sub-Distributor or of any entity directly
or indirectly controlling, controlled by or under common control with the
Manager, Distributor or Sub-Distributor of the Board II Funds.

Biographical Information. The Trustees and officers, their positions with the
Trust length of service in such position(s), and principal occupations and
business affiliations during at least the past five years are listed in the
charts below. The charts also include information about each Trustee's
beneficial share ownership in the Trust and in all of the registered investment
companies that the Trustee oversees in the Oppenheimer family of funds
("Supervised Funds"). 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.

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Independent Trustees
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- -------------------------------------------------------------------------------------
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, 2004
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
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), and The El Paso Mortgage Company
2000 (since 1993); Chairman of the following
Age: 68 private companies: Ambassador Media
Corporation (since 1984) and Broadway
Ventures (since 1984); Director of the
following: Helmerich & Payne, Inc. (oil
and gas drilling/production company)
(since 1992), Campus Crusade for Christ
(since 1991) and The Lynde and Harry
Bradley Foundation, Inc. (non-profit
organization) (since 2002); former
Chairman of the following: Transland
Financial Services, Inc. (private
mortgage banking company) (1997-2003),
Great Frontier Insurance (insurance
agency) (1995-2000), Frontier Real
Estate, Inc. (residential real estate
brokerage) (1994-2000) and Frontier
Title (title insurance agency)
(1995-2000); former Director of the
following: UNUMProvident (insurance
company) (1991-2004), Storage Technology
Corporation (computer equipment company)
(1991-2003) and International Family
Entertainment (television channel)
(1992-1997); U.S. Senator (January
1979-January 1991). Oversees 38
portfolios in the OppenheimerFunds
complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Robert G. Avis, Director and President of A.G. Edwards None Over
Trustee since 1990 Capital, Inc. (General Partner of $100,000
Age: 74 private equity funds) (until February
2001); Chairman, President and Chief
Executive Officer of A.G. Edwards
Capital, Inc. (until March 2000);
Director of A.G. Edwards & Sons, Inc.
(brokerage company) (until 2000) and
A.G. Edwards Trust Company (investment
adviser) (until 2000); Vice Chairman and
Director of A.G. Edwards, Inc. (until
March 1999); Vice Chairman of A.G.
Edwards & Sons, Inc. (until March 1999);
Chairman of A.G. Edwards Trust Company
(until March 1999) and A.G.E. Asset
Management (investment adviser) (until
March 1999). Oversees 38 portfolios in
the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
George C. Bowen, Assistant Secretary and Director of the None Over
Trustee since 1998 Manager (December 1991-April 1999); $100,000
Age: 69 President, Treasurer and Director of
Centennial Capital Corporation (June
1989-April 1999); Chief Executive
Officer and Director of MultiSource
Services, Inc. (March 1996-April 1999);
Mr. Bowen held several positions with
OppenheimerFunds, Inc. and with
subsidiary or affiliated companies of
OppenheimerFunds, Inc. (September
1987-April 1999). Oversees 38 portfolios
in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Edward L. Member of The Life Guard of Mount Vernon None Over
Cameron, Trustee (George Washington historical site) $100,000
since 2000 (since June 2000); Director of Genetic
Age: 67 ID, Inc. (biotech company) (March
2001-May 2002); Partner at
PricewaterhouseCoopers LLP (accounting
firm) (July 1974-June 1999); Chairman of
Price Waterhouse LLP Global Investment
Management Industry Services Group (July
1994-June 1998). Oversees 38 portfolios
in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Jon S. Fossel, Director of UNUMProvident (insurance None Over
Trustee since 1990 company) (since June 2002); Director of $100,000
Age: 63 Northwestern Energy Corp. (public
utility corporation) (since November
2004); Director of P.R. Pharmaceuticals
(October 1999-October 2003); Director of
Rocky Mountain Elk Foundation
(non-profit organization) (February
1998-February 2003); Chairman and
Director (until October 1996) and
President and Chief Executive Officer
(until October 1995) of
OppenheimerFunds, Inc.; President, Chief
Executive Officer and Director of the
following: Oppenheimer Acquisition Corp.
("OAC") (parent holding company of
OppenheimerFunds, Inc.), Shareholders
Services, Inc. and Shareholder Financial
Services, Inc. (until October 1995).
Oversees 38 portfolios in the
OppenheimerFunds complex.

- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Sam Freedman, Director of Colorado Uplift (charitable None Over
Trustee since 1996 organization) (since September 1984). $100,000
Age: 65 Mr. Freedman held several positions with
OppenheimerFunds, Inc. and with
subsidiary or affiliated companies of
OppenheimerFunds, Inc. (until October
1994). Oversees 38 portfolios in the
OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Beverly L. Trustee of Monterey Institute for None Over
Hamilton, Trustee International Studies (educational $100,000
since 2002 organization) (since February 2000);
Age: 59 Director of The California Endowment
(philanthropic organization) (since
April 2002); Director of Community
Hospital of Monterey Peninsula (since
February 2002); Director of American
Funds' Emerging Markets Growth Fund,
Inc. (mutual fund) (since October 1991);
President of ARCO Investment Management
Company (February 1991-April 2000);
Member of the investment committees of
The Rockefeller Foundation and The
University of Michigan; Advisor at
Credit Suisse First Boston's Sprout
venture capital unit (venture capital
fund) (1994-January 2005); Trustee of
MassMutual Institutional Funds
(investment company) (1996-June 2004);
Trustee of MML Series Investment Fund
(investment company) (April 1989-June
2004); Member of the investment
committee of Hartford Hospital
(2000-2003); and Advisor to Unilever
(Holland) pension fund (2000-2003).
Oversees 38 portfolios in the
OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Robert J. Malone, Director of Jones International None Over
Trustee since 2002 University (educational organization) $100,000
Age: 61 (since August 2005); Chairman, Chief
Executive Officer and Director of Steele
Street State Bank (commercial banking)
(since August 2003); Director of
Colorado UpLIFT (charitable
organization) (since 1986); Trustee of
the Gallagher Family Foundation
(non-profit organization) (since 2000);
Former Chairman of U.S. Bank-Colorado
(subsidiary of U.S. Bancorp and formerly
Colorado National Bank) (July 1996-April
1999); Director of Commercial Assets,
Inc. (real estate investment trust)
(1993-2000); Director of Jones
Knowledge, Inc. (2001-July 2004); and
Director of U.S. Exploration, Inc. (oil
and gas exploration) (1997-February
2004). Oversees 38 portfolios in the
OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
F. William Trustee of MassMutual Select Funds None Over
Marshall, Jr., (formerly MassMutual Institutional $100,000
Trustee since 2002 Funds) (investment company) (since 1996)
Age: 63 and MML Series Investment Fund
(investment company) (since 1996), the
Springfield Library and Museum
Association (museums) (since 1995) and
the Community Music School of
Springfield (music school) (since 1996);
Chairman and Trustee (since 2003) and
Chairman of the Investment Committee
(since 1994) of the Worcester Polytech
Institute (private university);
President and Treasurer of the SIS Funds
(private charitable fund) (since January
1999); Chairman of SIS & Family Bank,
F.S.B. (formerly SIS Bank) (commercial
bank) (January 1999-July 1999); Member
of the Investment Committee of the
Community Foundation of Western
Massachusetts (1998-2003); and Executive
Vice President of Peoples Heritage
Financial Group, Inc. (commercial bank)
(January 1999-July 1999). Oversees 40
portfolios in the OppenheimerFunds
complex.*
- -------------------------------------------------------------------------------------
* Includes two open-end investment companies: MassMutual Select Funds and MML
Series Investment Fund. In accordance with the instructions for Form N-1A,
for purposes of this section only, MassMutual Select Funds and MML Series
Investment Fund are included in the "Fund Complex." The Manager does not
consider MassMutual Select Funds and MML Series Investment Fund to be part of
the OppenheimerFunds' "Fund Complex" as that term may be otherwise
interpreted.

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. Mr. Grabish is an "Interested
Trustee" because of his affiliation with A.G. Edwards & Sons, Inc., a
broker/dealer that sells shares of the Trust.

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,
2004
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Richard F. Senior Vice President and Assistant Over Over
Grabish, Director of Sales and Marketing (since $100,000 $100,000
Trustee since March 1997), Director (since March 1987)
2001 and Manager of Private Client Services
Age: 57 (since June 1985) of A.G. Edwards & Sons,
Inc. (broker/dealer and investment firm);
Chairman and Chief Executive Officer of
A.G. Edwards Trust Company (since March
2001); President and Vice Chairman of
A.G. Edwards Trust Company (investment
adviser) (April 1987-March 2001).
Oversees 5 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, New York 10281-1008. Mr. Murphy
serves as a Trustee for an indefinite term and as an officer for an annual term,
or until his resignation, retirement, death or removal. 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 director or
trustee.

- -------------------------------------------------------------------------------------
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,
2004
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
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
Age: 56 director or trustee of other Oppenheimer
funds; President and Director of OAC and
of Oppenheimer Partnership Holdings, Inc.
(holding company subsidiary of
OppenheimerFunds, Inc.) (since July
2001); Director of OppenheimerFunds
Distributor, Inc. (subsidiary of
OppenheimerFunds, Inc.) (since November
2001); Chairman and Director of
Shareholder Services, Inc. and of
Shareholder Financial Services, Inc.
(transfer agent subsidiaries of
OppenheimerFunds, Inc.) (since July
2001); President and Director of
OppenheimerFunds Legacy Program
(charitable trust program established by
OppenheimerFunds, Inc.) (since July
2001); 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 2001) and
Director (since July 2001) of Oppenheimer
Real Asset Management, Inc.; Executive
Vice President of Massachusetts Mutual
Life Insurance Company (OAC's parent
company) (since February 1997); Director
of DLB Acquisition Corporation (holding
company parent of Babson Capital
Management LLC) (since June 1995); Member
of the Investment Company Institute's
Board of Governors (since October 3,
2003); Chief Operating Officer of
OppenheimerFunds, Inc. (September
2000-June 2001); President and Trustee of
MML Series Investment Fund and MassMutual
Select Funds (open-end investment
companies) (November 1999-November 2001);
Director of C.M. Life Insurance Company
(September 1999-August 2000); President,
Chief Executive Officer and Director of
MML Bay State Life Insurance Company
(September 1999-August 2000); Director of
Emerald Isle Bancorp and Hibernia Savings
Bank (wholly-owned subsidiary of Emerald
Isle Bancorp) (June 1989-June 1998).
Oversees 77 portfolios as an officer and
director or trustee and 10 additional
portfolios as an officer in the
OppenheimerFunds complex.
- -------------------------------------------------------------------------------------

The address of the officers in the chart below are as follows: for Messrs.
Gillespie and Zack and Ms. Bloomberg, Two World Financial Center, 225 Liberty
Street - 11th Floor, New York, NY 10281-1008, for Messrs. Petersen, Vandehey,
Vottiero, Wixted and Ms. Ives, 6803 S. Tucson Way, Centennial, CO 80112-3924.
For Mr. Bonnell, 6803 S. Tucson Way, Centennial, CO 80112-3924. Each officer
serves for an indefinite term or until his or her resignation, retirement, 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.; a Chartered Financial
Manager since 2004 Analyst; an officer of 3 portfolios in the
Age: 40 OppenheimerFunds complex; formerly a portfolio
manager at Strong Financial Corp. (May 1999- May
2004).
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Mark S. Vandehey, Senior Vice President and Chief Compliance Officer
Vice President and Chief of OppenheimerFunds, Inc. (since March 2004); Vice
Compliance Officer since 2004 President of the Manager, OppenheimerFunds
Age: 55 Distributor, Inc., and Shareholder Services, Inc.
(since June 1983); Vice President and Director of
Internal Audit of OppenheimerFunds, Inc.
(1997-February 2004). An officer of 87 portfolios
in the Oppenheimer funds complex.

- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Philip Vottiero, Vice President/Fund Accounting of
Assistant Treasurer since 2002 OppenheimerFunds, Inc. (since March 2002); Vice
Age: 42 President/Corporate Accounting of
OppenheimerFunds, Inc. (July 1999-March 2002);
Chief Financial Officer of Sovlink Corporation
(April 1996-June 1999). An officer of 87
portfolios in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Robert G. Zack, Executive Vice President (since January 2004) and
Vice President & Secretary General Counsel (since March 2002) of
since 2001 OppenheimerFunds, Inc.; General Counsel of the
Age: 57 Manager and Distributor (since December 2001);
General Counsel and Director of OppenheimerFunds
Distributor, Inc. (since December 2001); Senior
Vice President, General Counsel and Director of
the Transfer Agent, Shareholder Financial
Services, Inc., OFI Private Investments, Inc. and
OFI Trust Company (since November 2001); Senior
Vice President and General Counsel of HarbourView
Asset Management Corporation (since December
2001); Secretary and General Counsel of OAC (since
November 2001); Assistant Secretary (since
September 1997) and Director (since November 2001)
of OppenheimerFunds International Ltd. and
OppenheimerFunds plc; Vice President and Director
of Oppenheimer Partnership Holdings, Inc. (since
December 2002); Director of Oppenheimer Real Asset
Management, Inc. (since November 2001); Vice
President of OppenheimerFunds Legacy Program
(since June 2003); Senior Vice President and
General Counsel of OFI Institutional Asset
Management, Inc. (since November 2001); Director
of OppenheimerFunds (Asia) Limited (since December
2003); 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 following: the Transfer
Agent (May 1985-November 2001), Shareholder
Financial Services, Inc. (November 1989-November
2001), and OppenheimerFunds International Ltd.
(September 1997-November 2001). An officer of 87
portfolios in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Kathleen T. Ives, Vice President (since June 1998) and Senior
Assistant Secretary Counsel and Assistant Secretary (since October
since 2001 2003) of OppenheimerFunds, Inc.; Vice President
Age: 40 (since 1999) and Assistant Secretary (since
October 2003) of the Distributor; Assistant
Secretary of the Manager (since October 2003);
Vice President and Assistant Secretary of
Shareholder Services, Inc. (since 1999); Assistant
Secretary of OppenheimerFunds Legacy Program and
Shareholder Financial Services, Inc. (since
December 2001); Assistant Counsel of the Manager
(August 1994-October 2003). An officer of 87
portfolios in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Lisa I. Bloomberg, Vice President and Associate Counsel of
Assistant Secretary since 2004 OppenheimerFunds, Inc. (since May 2004); First
Age: 37 Vice President (April 2001-April 2004), Associate
General Counsel (December 2000-April 2004),
Corporate Vice President (May 1999-April 2001) and
Assistant General Counsel (May 1999-December 2000)
of UBS Financial Services Inc. (formerly,
PaineWebber Incorporated). An officer of 87
portfolios in the OppenheimerFunds complex.
- -------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------
Phillip S. Gillespie, Senior Vice President and Deputy General Counsel
Assistant Secretary since 2004 of OppenheimerFunds, Inc. (since September 2004);
Age: 41 First Vice President (2000-September 2004),
Director (2000-September 2004) and Vice President
(1998-2000) of Merrill Lynch Investment
Management. An officer of 87 portfolios in the
OppenheimerFunds complex.
- -------------------------------------------------------------------------------------

Remuneration of the Officers and Trustees. The officers and the interested
Trustees of the Trust, who are affiliated with the Manager, receive no salary or
fee from the Trust. The Independent Trustees and Mr. Grabish received the
compensation shown below from the Trust for serving as a Trustee and member of a
committee (if applicable), with respect to the Trust's fiscal year ended June
30, 2005. The total compensation, including accrued retirement benefits, from the
Trust and fund complex represents compensation received for serving as a Trustee
and member of a committee (if applicable) of the Boards of the Trust and other
funds in the OppenheimerFunds complex during the calendar year ended December
31, 2004.

- ------------------------------------------------------------------------------
Trustee Name and Other Aggregate Total Compensation
Position(s) (as applicable) Compensation From the Trust and
from Trust(1) Fund Complex(2)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
William L. Armstrong $1,691 $178,000
Chairman of the Board and
Governance Committee Member
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Robert G. Avis $1,126 $118,500
Review Committee Member
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
George C. Bowen $1,126 $118,500
Audit Committee Member
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Edward L. Cameron $1,293 $136,000
Audit Committee Chairman
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Jon S. Fossel $1,293 $136,000
Review Committee Chairman
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Sam Freedman $1,126 $118,500
Review Committee Member
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Richard F. Grabish(3) $1,123 $11,938
Review Committee Member
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Beverly Hamilton
Review Committee Member and $1,132(4) $152,355(5)
Governance Committee Member
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Robert J. Malone
Governance Committee Chairman $1,272(6) $121,726
and Audit Committee Member
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
F. William Marshall, Jr.
Audit Committee Member and $1,126 $167,500(7)
Governance Committee Member
- ------------------------------------------------------------------------------
1. "Aggregate Compensation from the Trust" includes fees and deferred
compensation, if any.
2. In accordance with SEC regulations, for purposes of this section only,
"Fund Complex" includes the Oppenheimer funds, the Mass Mutual Select Funds
and the MML Series Investment Fund, the investment adviser for which is the
indirect parent company of OppenheimerFunds, Inc. also serves as the
Sub-Advisor to the following: MassMutual Premier International Equity Fund,
MassMutual Premier Main Street Fund, MassMutual Premier Strategic Income
Fund, MassMutual Premier Capital Appreciation Fund, and MassMutual Premier
Global Fund. OppenheimerFunds, Inc. does not consider MassMutual
Institutional Funds, MassMutual Select Funds and MML Series Investment Fund
to be part of the OppenheimerFunds' "Fund Complex" as that term may be
otherwise interpreted
3. Mr. Grabish serves as Trustee for only the following funds: Centennial
California Tax Exempt Trust, Centennial Government Trust, Centennial Money
Market Trust, Centennial New York Tax Exempt Trust and Centennial Tax Exempt
Trust.
4. Includes $1,132 deferred by Ms. Hamilton under the "Deferred Compensation
Plan" described below.
5. Includes $36,654 deferred by Ms. Hamilton under a deferred compensation
plan for serving as a Trustee for MassMutual Institutional Funds and MML
Series Investment Fund (until June 30, 2004).
6. Includes $1,272 deferred by Mr. Malone under the "Deferred Compensation
Plan" described below.
7. Includes $49,000 compensation paid to Mr. Marshall for serving as a
Trustee for MassMutual Select Funds and MML Series Investment Fund.

|X| Deferred Compensation Plan for Trustees. The Board of Trustees has
adopted a Deferred Compensation Plan for Independent 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 Trustees.
The amount paid to the Trustees under the plan will be determined based upon the
amount of compensation deferred and the performance of the selected funds.

Deferral of Trustees' 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 Trustees or to pay any particular level
of compensation to any Trustees. Pursuant to an Order issued by the SEC, the
Trust may invest in the funds selected by the Trustee under the plan without
shareholder approval for the limited purpose of determining the value of the
Trustees' deferred compensation account.

|X| Major Shareholders. As of September 30, 2005 the only
persons or entities who owned of record or were known by the Trust to own
beneficially 5% or more of any class of the Trust's outstanding shares were:

A.G. Edwards & Sons, Inc., 1 North Jefferson Avenue, St. Louis, Missouri 63103,
which owned 1,616,353,669.610 shares of the Trust which was 99.03% 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. A.G.
Edwards, Inc. is a minority owner of Oppenheimer Acquisition Corporation, the
parent company of the Manager, Distributor, and Transfer Agent.

The Manager. The Manager, Centennial Asset Management Corporation, is
wholly-owned by OppenheimerFunds, Inc., which is a wholly-owned subsidiary of
Oppenheimer Acquisition Corp., a holding company controlled by Massachusetts
Mutual Life Insurance Company, a global, diversified insurance and financial
services organization.

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

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

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

Expenses not expressly assumed by the Manager under the investment
advisory agreement are paid by the Trust. The investment advisory agreement
lists examples of expenses paid by the Trust. The major categories relate to
interest, taxes, fees to unaffiliated Trustees, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs, certain
printing and registration costs and non-recurring expenses, including litigation
costs. The management fees paid by the Trust to the Manager are calculated at
the rates described in the Prospectus. 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
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
2003 $7,900,919
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
2004 $7,801,969
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
2005 $7,590,892
- ---------------------------------------------------------------------------------

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
2003, 2004 or 2005.

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.

Portfolio Manager. The Trust's portfolio is managed by John C. Bonnell (The
"Portfolio Manager"). He is the person who is responsible for the
day-to-day management of the Trust's investments.

Other Accounts Managed. In addition to managing the Trust's
investment portfolio, the Portfolio Manager also manages other investment
portfolios and other accounts on behalf of the Manager or its affiliates.
The following table provides information regarding the other portfolios
and accounts managed by the Portfolio Manager as of June 30, 2005. No
account has a performance-based advisory fee:

Registered Other Pooled
Investment Investment Other
Companies Vehicles Accounts
----------------------------------------------------------------------
----------------------------------------------------------------------
3 None 1
Accounts Managed
----------------------------------------------------------------------
----------------------------------------------------------------------
$1,759.50* $0 $0.91910*
Total Assets Managed

*In millions

As indicated above, the Portfolio Manager also manages other trusts
and accounts. Potentially, at times, those responsibilities could
conflict with the interests of the Trust. That may occur whether the
investment strategies of the other trust or account are the same as, or
different from, the Trust's investment objectives and strategies. For
example, the Portfolio Manager may need to allocate investment
opportunities between the Trust and another fund or account having similar
objectives or strategies, or he may need to execute transactions for
another trust or account that could have a negative impact on the value of
securities held by the Trust. Not all trusts and accounts advised by the
Manager have the same management fee. If the management fee structure of
another fund or account is more advantageous to the Manager than the fee
structure of the Trust, the Manager could have an incentive to favor the
other trust or account. However, the Manager's compliance procedures and
Code of Ethics recognize the Manager's fiduciary obligations to treat all
of its clients, including the Trust, fairly and equitably, and are
designed to preclude the Portfolio Manager from favoring one client over
another. It is possible, of course, that those compliance procedures and
the Code of Ethics may not always be adequate to do so. At different
times, the Trust's Portfolio Manager may manage other funds or accounts
with investment objectives and strategies that are similar to those of the
Trust, or may manage funds or accounts with investment objectives and
strategies that are different from those of the Trust.

Compensation of the Portfolio Manager. The Trust's Portfolio Manager is
employed and compensated by the Manager, not the Trust. Under the
Manager's compensation program for its portfolio managers and portfolio
analysts, their compensation is based primarily on the investment
performance results of the trusts and accounts they manage, rather than on
the financial success of the Manager. This is intended to align the
portfolio managers and analysts' interests with the success of the trusts
and accounts and their shareholders. The Manager's compensation structure
is designed to attract and retain highly qualified investment management
professionals and to reward individual and team contributions toward
creating shareholder value. As of June 30, 2005 the Portfolio Manager's
compensation consisted of three elements: a base salary, an annual
discretionary bonus and eligibility to participate in long-term awards of
options and appreciation rights in regard to the common stock of the
Manager's holding company parent. Senior portfolio managers may also be
eligible to participate in the Manager's deferred compensation plan.

To help the Manager attract and retain talent, the base pay component of
each portfolio manager is reviewed regularly to ensure that it reflects
the performance of the individual, is commensurate with the requirements
of the particular portfolio, reflects any specific competence or specialty
of the individual manager, and is competitive with other comparable
positions. The annual discretionary bonus is determined by senior
management of the Manager and is based on a number of factors, including a
trust's pre-tax performance for periods of up to five years, measured
against an appropriate Lipper benchmark selected by management. The Lipper
benchmark with respect to the Fund is Lipper - Tax-Exempt Money Market
Funds. Other factors considered include management quality (such as style
consistency, risk management, sector coverage, team leadership and
coaching) and organizational development. The Portfolio Manager's
compensation is not based on the total value of the Trust's portfolio
assets, although the Trust's investment performance may increase those
assets. The compensation structure is also intended to be internally
equitable and serve to reduce potential conflicts of interest between the
Trust and other trusts and accounts managed by the Portfolio Manager. The
compensation structure of the other trust and accounts managed by the
Portfolio Manager is the same as the compensation structure of the Trust,
described above.

Ownership of the Trust's Shares. As of June 30, 2005 the
Portfolio Manager did not beneficially own any shares of the Trust.

|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. 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
Trustees(1), 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.

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 period 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 periodically 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, 2005 payments under the plan totaled
$3,580,047. The Distributor retained $0 and the remaining balance was paid out by
the Distributor to recipients, which included $5,383 paid to an affiliate of the
Distributor's parent company. 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.

For the fiscal year ended June 30, 2005, the Manager paid, in the aggregate,
$5,380,577 in fees out of its own resources for distribution assistance to A.G.
Edwards & Sons, Inc. Those distribution assistance payments were paid based on
annual rates applied to the average net asset value during the calendar quarter
of qualified assets of the Centennial Funds.

Payments to Trust Intermediaries

Financial intermediaries may receive various forms of compensation or
reimbursement from the Trust in the form of 12b-1 plan payments as described in
the preceding section of this Statement of Additional Information. Additionally,
the Manager and/or the Distributor (including their affiliates) may make
payments to financial intermediaries in connection with their offering and
selling shares of the Trust and other Oppenheimer funds, providing marketing or
promotional support, transaction processing and/or administrative services.
Among the financial intermediaries that may receive these payments are brokers
and dealers who sell and/or hold shares of the Trust, banks (including bank
trust departments), registered investment advisers, insurance companies,
retirement plan and qualified tuition program administrators, third party
administrators, and other institutions that have selling, servicing or similar
arrangements with the Manager or Distributor. The payments to intermediaries
vary by the types of product sold, the features of the Trust and the role played
by the intermediary.

Possible types of payments to financial intermediaries include, without
limitation, those discussed below.

o Payments made by the Trust, or by an investor buying or selling shares of
the Trust may include:

o ongoing asset-based payments attributable to the share class selected,
including fees payable under the Trust's service plans adopted under
Rule 12b-1 under the Investment Company Act, which are paid from the
Trust's assets and allocated to the class of shares to which the plan
relates (see "About the Trust -- Service Plan" above);
o shareholder servicing payments for providing omnibus accounting,
recordkeeping, networking, sub-transfer agency or other administrative
or shareholder services, including retirement plan and 529 plan
administrative services fees, which are paid from the assets of a Trust
as reimbursement to the Manager or Distributor for expenses they incur
on behalf of the Trust.
o Payments made by the Manager or Distributor out of their respective
resources and assets, which may include profits the Manager derives
from investment advisory fees paid by the Trust. These payments are
made at the discretion of the Manager and/or the Distributor. These
payments, often referred to as "revenue sharing" payments, may be in
addition to the payments by the Trust listed above.
o These types of payments may reflect compensation for marketing support,
support provided in offering the Trust or other Oppenheimer funds
through certain trading platforms and programs, transaction processing
or other services;
o The Manager and Distributor each may also pay other compensation to the
extent the payment is not prohibited by law or by any self-regulatory
agency, such as the NASD. Payments are made based on the guidelines
established by the Manager and Distributor, subject to applicable law.

These payments may provide an incentive to financial intermediaries to
actively market or promote the sale of shares of the Trust or other Oppenheimer
funds, or to support the marketing or promotional efforts of the Distributor in
offering shares of the Trust or other Oppenheimer funds. In addition, some types
of payments may provide a financial intermediary with an incentive to recommend
the Trust. Financial intermediaries may earn profits on these payments, since
the amount of the payment may exceed the cost of providing the service. Certain
of these payments are subject to limitations under applicable law. Financial
intermediaries may categorize and disclose these arrangements to their clients
and to members of the public in a manner different from the disclosures in the
Trust's prospectus and this Statement of Additional Information. You should ask
your financial intermediary for information about any payments it receives from
the Trust, the Manager or the Distributor and any services it provides, as well
as the fees and commissions it charges.

Although brokers or dealers that sell Trust shares may also act as a
broker or dealer in connection with the execution of the purchase or sale of
portfolio securities by the Trust or other Oppenheimer funds, a financial
intermediary's sales of shares of the Trust or such other Oppenheimer funds is
not a consideration for the Manager when choosing brokers or dealers to effect
portfolio transactions for the Trust or such other Oppenheimer funds.

Revenue sharing payments can pay for distribution-related or asset
retention items including, without limitation,

o transactional support, one-time charges for setting up access for the
Trust or other Oppenheimer funds on particular trading systems, and
paying the intermediary's networking fees;
o program support, such as expenses related to including the Oppenheimer
funds in retirement plans, college savings plans, fee-based advisory or
wrap fee programs, fund "supermarkets", bank or trust company products
or insurance companies' variable annuity or variable life insurance
products;
o placement on the dealer's list of offered funds and providing
representatives of the Distributor with access to a financial
intermediary's sales meetings, sales representatives and management
representatives.

Additionally, the Manager or Distributor may make payments for firm
support, such as business planning assistance, advertising, and educating a
financial intermediary's sales personnel about the Oppenheimer funds and
shareholder financial planning needs.

For the year ended December 31, 2004, the following financial
intermediaries that are broker-dealers offering shares of the Oppenheimer funds,
and/or their respective affiliates, received revenue sharing or similar
distribution-related payments from the Manager or Distributor for marketing or
program support:

===============================================================================
ADVEST INC. Aegon
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A.G. Edwards & Sons, Inc. AIG Network
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Allianz Life Insurance Company Allstate Life Insurance Company
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Ameritas Life Insurance Corporation American Centurian Life Insurance
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American Enterprise Life Insurance American Express Financial Advisors
Inc.
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American Portfolios Annuity Investors Life
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AXA Advisors Banc One Securities Corporation
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Bank of New York Cadaret Grant & Co. Inc.
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Charter One Securities Inc. Chase Investment Services
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Citigroup Financial Network CitiStreet
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Citizens Bank of Rhode Island CJM Planning Corp.
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Columbus Life Insurance Company Commonwealth Financial Network
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CUNA Brokerage Services Inc. CUSO Financial Services, L.P.
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Federal Kemper First Allied Securities Inc
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First Global Capital GE Financial Assurance
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GlenBrook Life and Annuity Co. Great West Life & Annuity Co., Inc.
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HD Vest Hewitt Associates
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HSBC Brokerage (USA) Inc. ING Network
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Jefferson Pilot Securities Corporation John Hancock Variable Life Insurance
Company
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Kemper Life Assurance Company Legend Equities Corporation
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Legg Mason Wood Walker, Incorporated Lincoln National Life Insurance
Company
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Lincoln Financial Advisors Corporation Lincoln Investment Planning
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Linsco/Private Ledger Corp. MassMutual Financial Group and
affiliates
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McDonald Investments, Inc. Merrill Lynch & Co., Inc. and
affiliates
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Metlife and affiliates Minnesota Life Insurance Company
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Morgan Stanley DW Inc. NPH Network
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Nationwide and affiliates New York Life Securities, LLC
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PacLife Network Park Avenue Securities LLC
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Planmember Securities Corporation Prime Capital Services, Inc.
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Princor Financial Services Corporation Protective Life Insurance Co.
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Provident Mutual Insurance Company Prudential Investment Management
Services LLC
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Raymond James Financial Services, Inc. Raymond James & Associates, Inc.
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RBC Dain Rauscher Inc. Securities America, Inc.
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Security Benefit Life Insurance Company Signator Investments
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Sun Life Insurance Company Suntrust Investment Services, Inc.
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Tower Square Securities, Inc Travelers Life & Annuity Co., Inc.
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UBS Financial Services Inc. Union Central Life Insurance Company
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Wachovia Securities LLC Wells Fargo Investments, LLC
===============================================================================

For the year ended December 31, 2004, the following firms, which in some
cases are broker-dealers, received payments from the Manager or Distributor for
administrative or other services provided (other than revenue sharing
arrangements), as described above:

===============================================================================
ABN AMRO ADP
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A.G. Edwards & Sons, Inc AMVESCAP Retirement Plans
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Alliance Benefit Group Baden Retirement
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American Stock & Transfer Benefit Administration Co., LLC
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BCG Benefit Plans Administrative Services
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Benefit Administration, Inc. BISYS Retirement Services
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Benetech, Inc. Ceridian
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Boston Financial Data Services Citigroup
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Circle Trust Company CPI
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CitiStreet Digital Retirement Solutions
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Daily Access.Com, Inc. ERISA Administrative Services, Inc.
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Dyatech FAScore
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ExpertPlan.com Federated Investors
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FBD Consulting First National Bank of Omaha
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Fidelity Institutional Franklin Templeton
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First Trust Corp. Gold K
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Geller Group Hartford Life Insurance Co.
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Great West Financial Services In West Pension Mgmt
Equities, Inc.
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ICMA - RC Services Ingham Group
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Independent Plan Coordinators Invesmart, Inc.
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Interactive Retirement Systems, Ltd. Leggette & Co., Inc.
-------------------------------------------------------------------------------
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Kaufman & Goble MassMutual Financial Group and
affiliates
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Manulife Mellon HR Solutions
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Matrix Settlement & Clearance Services Metavante
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Merrill Lynch & Co., Inc. MFS Investment Management
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Metlife Securities Inc. Milliman USA
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Mid Atlantic Capital Corp. National City Bank
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Morgan Stanley DW Inc. National Investors Services Corp.
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National Financial Services Corp. New York Life Investment Management,
Inc.
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Nationwide Investment Service Corp. Pension Administration and Consulting
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Northwest Plan Services PSMI Group
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PFPC, Inc. Quads Trust Company
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Putnam Fiduciary Trust Company SAFECO
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RSM McGladrey Security Trust Company
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Charles Schwab & Co., Inc. Standard Insurance Co
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Sentinel / National Life State Street Bank & Trust Company
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Stanley, Hunt, Dupree & Rhine Swerdlin & Co.
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Suntrust Investment Services, Inc. Taylor, Perky & Parker, LLC
-------------------------------------------------------------------------------
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T. Rowe Price Brokerage Services, L.P. The Investment Center, Inc.
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The 401k Company Union Bank and Trust Co.
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Trusource Vanguard Group
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USI Consulting Group Wilmington Trust Company
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Web401K.com
===============================================================================

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 6/30/05)
ended (7 days
6/30/05) ended
6/30/05)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Yield Compounded
(7 days Effective
ended Yield 1-Year 5 Years 10 Years
6/30/05) (7 days
ended
6/30/05)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1.82% 1.84% 2.80% 2.83% 1.21% 1.33% 2.15%
- -------------------------------------------------------------------------------

|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 "NYSE")
is open, at 12:00 Noon and at 4:00 p.m., on each day that the NYSE 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 NYSE's most recent annual announcement regarding
holidays and days when the market may close early is available on the NYSE'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 California
Municipal Fund
Oppenheimer AMT-Free New York Municipals Oppenheimer Limited Term Government Fund
Oppenheimer Balanced Fund Oppenheimer Limited Term Municipal Fund
Oppenheimer California Municipal Fund Oppenheimer Main Street Fund
Oppenheimer Capital Appreciation Fund Oppenheimer Main Street Opportunity Fund
Oppenheimer Capital Income Fund Oppenheimer Main Street Small Cap Fund
Oppenheimer Champion Income Fund Oppenheimer MidCap Fund
Oppenheimer Convertible Securities Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Core Bond Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Developing Markets Fund Oppenheimer Portfolio Series
Oppenheimer Disciplined Allocation Fund Oppenheimer Quest Balanced Fund
Oppenheimer Discovery Fund Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest International Value
Oppenheimer Dividend Growth Fund Fund, Inc.
Oppenheimer Emerging Growth Fund Oppenheimer Quest Opportunity Value
Oppenheimer Emerging Technologies Fund Oppenheimer Quest Value Fund, Inc.
Oppenheimer Enterprise Fund Oppenheimer Real Asset Fund
Oppenheimer Equity Fund, Inc. Oppenheimer Real Estate Fund
Oppenheimer Global Fund Oppenheimer Rochester National Municipals
Oppenheimer Global Opportunities Fund Oppenheimer Select Value Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Growth Fund Oppenheimer Small- & Mid- Cap Value Fund
Oppenheimer High Yield Fund Oppenheimer Strategic Income Fund
Oppenheimer International Bond Fund Oppenheimer Total Return Bond Fund
Oppenheimer International Diversified
Fund Oppenheimer U.S. Government Trust
Oppenheimer International Growth Fund Oppenheimer Value Fund
Oppenheimer International Small Company
Fund Limited-Term New York Municipal Fund
Oppenheimer International Large Cap Core
Fund Rochester Fund Municipals
Oppenheimer International Value Fund

And the following money market funds:
Centennial Money Market Trust
Oppenheimer Cash Reserves Centennial New York Tax Exempt Trust
Oppenheimer Money Market Fund, Inc. Centennial Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial Government 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.

|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). Any tax withheld by the
Trust is remitted by the Trust to the U.S. Treasury and all income and any tax
withheld is identified in reports mailed to shareholders in January of each year
with a copy sent to the IRS.

|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.
Any tax withheld by the Trust is remitted by the Trust to the U.S. Treasury and
all income and any tax withheld is identified in reports mailed to shareholders
in March of each year with a copy sent to the IRS.

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. 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 with a copy
sent to the IRS.

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 Registered Public Accounting Firm. Deloitte & Touche LLP serves as
the independent registered public accounting firm for the Trust. Deloitte &
Touche LLP audits the Trust's financial statements and performs other related
audit services. Deloitte & Touche LLP also acts as the independent registered
public accounting firm for certain other funds advised by the Manager and its
affiliates. Audit and non-audit services provided by Deloitte & Touche LLP to
the Trust 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, 2005, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Trusts management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with 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. The Trust is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trusts internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of June 30, 2005, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. 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, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP

Denver, ColoradoAugust
15, 2005

STATEMENT OF INVESTMENTS JUNE 30, 2005


                                                                               PRINCIPAL         VALUE
                                                                                  AMOUNT    SEE NOTE 1
- ------------------------------------------------------------------------------------------------------

SHORT-TERM TAX-EXEMPT OBLIGATIONS--99.6%
- ------------------------------------------------------------------------------------------------------
ALABAMA--2.8%
AL HFA MH RB, Rime Village Hoover Project, 1996 Series A, 2.40% 1            $   435,000   $   435,000
- ------------------------------------------------------------------------------------------------------
AL IDAU RB, Well Built Cabinet, Inc. Project, 2.55% 1                            480,000       480,000
- ------------------------------------------------------------------------------------------------------
AL IDAU RB, Whitesell Project, 2.63% 1                                         2,425,000     2,425,000
- ------------------------------------------------------------------------------------------------------
Calhoun Cnty., AL ED Council RB, IPC Aerospace Corp. Project,
Series 2000, 2.55% 1                                                           2,400,000     2,400,000
- ------------------------------------------------------------------------------------------------------
Calhoun Cnty., AL ED Council RB, Southern Bag Corp. Ltd. Expansion
Project, Series 1998, 2.60% 1                                                  3,150,000     3,150,000
- ------------------------------------------------------------------------------------------------------
Cullman Cnty., AL Medical Park South Medical Clinic Board RB,
Puttable Floating Option Tax Exempt Receipts, Series MT-121, 2.34% 1,2        12,250,000    12,250,000
- ------------------------------------------------------------------------------------------------------
Cullman Cnty., AL SWD Authority RB, Cullman Environmental, Inc. Project,
Series 2003-A, 2.63% 1                                                         2,115,000     2,115,000
- ------------------------------------------------------------------------------------------------------
Florence, AL IDB RB, Nichols Wire, Inc. Project, Series A, 2.63% 1             2,570,000     2,570,000
- ------------------------------------------------------------------------------------------------------
Hoover, AL BOE Capital Outlay TANs, AAMC Series 2001-16, 2.32% 1,2             4,950,000     4,950,000
- ------------------------------------------------------------------------------------------------------
Hoover, AL MH RB, Royal Oaks Apts. Project, Series 2004, 2.42% 1               5,200,000     5,200,000
- ------------------------------------------------------------------------------------------------------
Jefferson Cnty., AL GOLB, Puttable Floating Option Tax Exempt Receipts,
Series PT-2477, 2.35% 1                                                        6,955,000     6,955,000
- ------------------------------------------------------------------------------------------------------
Mobile, AL Medical Clinic Board RB, Springhill Professional Ltd.,
Series 1996, 2.40% 1                                                           1,885,000     1,885,000
- ------------------------------------------------------------------------------------------------------
Montgomery, AL Education Building Authority RB, Faulkner University
Campus Housing Project, Series 2004, 2.53% 1                                   3,000,000     3,000,000
- ------------------------------------------------------------------------------------------------------
Montgomery, AL IDB RB, Asphalt Contractors, Inc., 2.63% 1                        500,000       500,000
                                                                                           -----------
                                                                                            48,315,000

- ------------------------------------------------------------------------------------------------------
ALASKA--2.8%
AK Export & IDAU RB, Reset Option Certificates II-R Trust,
Series 320, 2.32% 1                                                           28,000,000    28,000,000
- ------------------------------------------------------------------------------------------------------
AK HFC RB, MERLOTS Series 2005-A08, 2.32% 1
                                                                               4,150,000     4,150,000
- ------------------------------------------------------------------------------------------------------
North Slope Borough, AK GOB, Series B, 2.32% 1                                15,900,000    15,900,000
                                                                                           -----------
                                                                                            48,050,000

- ------------------------------------------------------------------------------------------------------
ARIZONA--2.6%
AZ First Matrix Charter School Trust Pass-Through Certificates,
Series 2002-A, Cl. A, 2.58% 1,2                                               13,052,000    13,052,000
- ------------------------------------------------------------------------------------------------------
Phoenix, AZ IDAU MH RRB, Paradise Lakes Apts. Project, Series 1995, 2.35% 1   22,500,000    22,500,000
- ------------------------------------------------------------------------------------------------------
Tempe, AZ IDAU MH RB, Puttable Floating Option Tax Exempt Receipts,
Series MT-067, 2.37% 1,2                                                       8,295,000     8,295,000
                                                                                           -----------
                                                                                            43,847,000

- ------------------------------------------------------------------------------------------------------
CALIFORNIA--4.2%
Alameda, CA Corridor Transportation Authority RB, Puttable Floating
Option Tax Exempt Receipts, Series PZ-51, 2.35% 1,2                            8,660,000     8,660,000

7 | CENTENNIAL TAX EXEMPT TRUST

STATEMENT OF INVESTMENTS CONTINUED


                                                                              PRINCIPAL         VALUE
                                                                                 AMOUNT    SEE NOTE 1
- -----------------------------------------------------------------------------------------------------

CALIFORNIA Continued
Alameda/Contra Costa, CA Schools FAU COP, Capital Improvements
Financing Project, Series H, 2.45% 1                                        $ 4,365,000   $ 4,365,000
- -----------------------------------------------------------------------------------------------------
CA RB, Koch Trust Certificates, Series 1999-2, 2.33% 1                       12,775,000    12,775,000
- -----------------------------------------------------------------------------------------------------
CA Puttable Floating Option Tax Exempt Receipts, Series PZP-002, 2.43% 1      8,115,000     8,115,000
- -----------------------------------------------------------------------------------------------------
CA Puttable Floating Option Tax Exempt Receipts, Series PZP-005, 2.38% 1,2   20,245,000    20,245,000
- -----------------------------------------------------------------------------------------------------
CA SCDAU MH RB, Crossings at Madera, Series NN, 2.68%, 7/21/05 3              1,000,000     1,000,000
- -----------------------------------------------------------------------------------------------------
CA Various RB, Puttable Floating Option Tax Exempt Receipts,
Series PZP-008, 2.38% 1,2                                                     4,410,000     4,410,000
- -----------------------------------------------------------------------------------------------------
Mt. Diablo, CA USD GOB, AAMC Series 2004-36, 2.31% 1,2                        3,000,000     3,000,000
- -----------------------------------------------------------------------------------------------------
San Diego, CA Water Utility Fund Net System GOB, AAMC Series
1998-10, 2.30% 1,2                                                            3,700,000     3,700,000
- -----------------------------------------------------------------------------------------------------
Santa Rosa, CA Wastewater RB, Puttable Floating Option Tax Exempt
Receipts, Series PZ-43, 2.38% 1                                               3,040,000     3,040,000
- -----------------------------------------------------------------------------------------------------
Vallejo, CA COP, Capital Improvements Project, Series 2002, 2.41% 1           2,500,000     2,500,000
                                                                                          -----------
                                                                                           71,810,000

- -----------------------------------------------------------------------------------------------------
COLORADO--9.9%
Arapahoe Cnty., CO Water & Wastewater Authority RRB, Series A, 2.31% 1        2,500,000     2,500,000
- -----------------------------------------------------------------------------------------------------
Boulder Cnty., CO RB, Open Space Capital Improvements Trust Fund,
Reset Option Certificates II-R Trust, Series 340, 2.32% 1,2                   3,000,000     3,000,000
- -----------------------------------------------------------------------------------------------------
Brighton, CO Crossing Metro District No. 4 RB, Series 2004, 2.43% 1           2,500,000     2,500,000
- -----------------------------------------------------------------------------------------------------
Centerra Metropolitan District No. 1, CO RB, Series 2004, 2.31% 1            12,000,000    12,000,000
- -----------------------------------------------------------------------------------------------------
Central Platte Valley Metro District, CO GOB, Series B, 2.30%, 12/1/05 3      3,000,000     3,000,000
- -----------------------------------------------------------------------------------------------------
CO ECFA Public Radio RB, Community Wireless Park City, 2.33% 1                  790,000       790,000
- -----------------------------------------------------------------------------------------------------
CO ECFA RB, St. Marys Academy Project, 2.45% 1                                6,000,000     6,000,000
- -----------------------------------------------------------------------------------------------------
CO HFA SFM RB, 2004 Series B-4, Cl. I, 1.99%, 11/1/05                         7,985,000     7,985,000
- -----------------------------------------------------------------------------------------------------
CO MuniMae Trust Pass-Through Certificates, Canterberry Crossing,
Series 2002-A, Cl. A, 2.68% 1                                                12,330,000    12,330,000
- -----------------------------------------------------------------------------------------------------
Concord Metropolitan District, CO REF GO, Improvement Projects,
Series 2004, 2.25%, 12/1/05 3                                                 2,600,000     2,600,000
- -----------------------------------------------------------------------------------------------------
Denver, CO Cty. & Cnty. Excise Tax RB, Colorado Convention Center
Project, 2.30% 1                                                              5,650,000     5,650,000
- -----------------------------------------------------------------------------------------------------
Denver, CO International Business Center Metropolitan District No. 1
GOLB, Series 2002, 2.68% 1                                                    8,065,000     8,065,000
- -----------------------------------------------------------------------------------------------------
Ebert Metro District, CO Securitization Trust GOLB, Series 2004-S1,
Cl. A2, 2.43% 1                                                               8,500,000     8,500,000
- -----------------------------------------------------------------------------------------------------
Kipling Ridge Metro District, CO RB, Series 2005, 2.33% 1                     3,725,000     3,725,000
- -----------------------------------------------------------------------------------------------------
Midcities Metropolitan District No. 1, CO RB, BNP Paribas STARS
Certificates Trust, Series 2004-110, 2.35% 1                                 16,735,000    16,735,000
- -----------------------------------------------------------------------------------------------------
Midcities Metropolitan District No. 1, CO RRB, Series 2004A, 2.35% 1         14,900,000    14,900,000
- -----------------------------------------------------------------------------------------------------
Park Creek Metro District, CO RB, Puttable Floating Option Tax
Exempt Receipts, Series PT-2321, 2.37% 1,2                                    5,775,000     5,775,000

8 | CENTENNIAL TAX EXEMPT TRUST


                                                                               PRINCIPAL          VALUE
                                                                                  AMOUNT     SEE NOTE 1
- -------------------------------------------------------------------------------------------------------

COLORADO Continued
Parker, CO Automotive Metropolitan District GOLB, Series 2005, 2.85% 1      $  4,510,000   $  4,510,000
- -------------------------------------------------------------------------------------------------------
Stapleton Business Center Metro District, CO RB, 2.38% 1                       7,550,000      7,550,000
- -------------------------------------------------------------------------------------------------------
Superior Metro District No. 1, CO WSS RRB, Series 2000A, 2.338%, 12/1/05 3     3,035,000      3,035,000
- -------------------------------------------------------------------------------------------------------
Superior Metro District No. 1, CO WSS RRB, Series 2002, 2.33% 1                2,500,000      2,500,000
- -------------------------------------------------------------------------------------------------------
Superior/McCaslin Interchange Metro District, CO GOB, Series 2004,
2.10%, 11/15/05 3                                                              3,970,000      3,970,000
- -------------------------------------------------------------------------------------------------------
Thornton, CO RB, Puttable Floating Option Tax Exempt Receipts,
Series PT-2522, Newport Village Project, 2.32% 1,2                             3,075,000      3,075,000
- -------------------------------------------------------------------------------------------------------
Westminster, CO EDAU Tax Increment RB, North Huron Urban Renewal,
Series 2005, 2.31% 1                                                          11,000,000     11,000,000
- -------------------------------------------------------------------------------------------------------
Westminster, CO MH RB, Puttable Floating Option Tax Exempt Receipts,
Series MT-068, 2.37% 1,2                                                      14,670,000     14,670,000
- -------------------------------------------------------------------------------------------------------
Willow Trace Metro District, CO GOLB, Series 2001A, 2.30%, 12/1/05 3           2,295,000      2,295,000
                                                                                           ------------
                                                                                            168,660,000

- -------------------------------------------------------------------------------------------------------
FLORIDA--5.8%
Bay Cnty., FL EDLFA RB, Bay Haven Charter Academy, Series 2004, 2.42% 1       11,600,000     11,600,000
- -------------------------------------------------------------------------------------------------------
Broward Cnty., FL Airport Systems RB, Puttable Floating Option Tax
Exempt Receipts, Series PT-2417, 2.32% 1                                       5,310,000      5,310,000
- -------------------------------------------------------------------------------------------------------
Collier Cnty., FL IDAU RB, Gulf Coast American Blind, Series A, 2.63% 1        2,730,000      2,730,000
- -------------------------------------------------------------------------------------------------------
Hillsborough Cnty., FL IDAU PC COP, Tampa Electric Co. Project,
ETET Series 96C0911, Cl. A, 2.32% 1,2                                         17,795,000     17,795,000
- -------------------------------------------------------------------------------------------------------
Hillsborough Cnty., FL IDAU PC COP, Tampa Electric Co. Project,
ETET Series 97C0901, Cl. A, 2.32% 1,2                                         17,795,000     17,795,000
- -------------------------------------------------------------------------------------------------------
Jacksonville, FL HFAU RB, Baptist Medical Center Project, Series 2004,
1.93%, 7/27/05 3                                                               5,000,000      5,000,000
- -------------------------------------------------------------------------------------------------------
Jacksonville, FL Sales Tax RB, MERLOTS Series 2003 B26, 2.32% 1,2              9,980,000      9,980,000
- -------------------------------------------------------------------------------------------------------
Palm Beach Cnty., FL HFA MH RB, Emerald Bay Club Apts.,
Series 2004, 2.31% 1                                                           6,500,000      6,500,000
- -------------------------------------------------------------------------------------------------------
Port St. Lucie, FL Utility System RB, Series 2005, 2.31% 1                    10,000,000     10,000,000
- -------------------------------------------------------------------------------------------------------
Seminole Cnty., FL IDAU RB, Masters Academy Project, Series 2004, 2.32% 1      3,035,000      3,035,000
- -------------------------------------------------------------------------------------------------------
UCF Athletic Assn., FL RB, Roaring Fork Municipal Products LLC,
Series 2005-11, Cl. A, 2.36% 1,2                                               9,510,000      9,510,000
                                                                                           ------------
                                                                                             99,255,000

- -------------------------------------------------------------------------------------------------------
GEORGIA--2.0%
Cherokee Cnty., GA WSS RRB, MERLOTS Series 2003 A14, 2.32% 1,2                 7,005,000      7,005,000
- -------------------------------------------------------------------------------------------------------
Columbus, GA DAU RB, Jordan Co. Project, Series 2000, 2.65% 1                    700,000        700,000
- -------------------------------------------------------------------------------------------------------
GA GOB, Series 1995B, ETET Series 96C1004, Cl. A, 2.32% 1,2                   11,880,000     11,880,000
- -------------------------------------------------------------------------------------------------------
Greene Cnty., GA HA RANs, Series 2004, 2.42% 1                                 5,990,000      5,990,000
- -------------------------------------------------------------------------------------------------------
Rockdale Cnty., GA DAU MH RB, Series F3J, 2.48% 1                              7,835,000      7,835,000

9 | CENTENNIAL TAX EXEMPT TRUST

STATEMENT OF INVESTMENTS CONTINUED


                                                                                PRINCIPAL          VALUE
                                                                                   AMOUNT     SEE NOTE 1
- --------------------------------------------------------------------------------------------------------

GEORGIA Continued
Savannah, GA EDAU IDV RB, Savannah Steel & Metal Project,
Series 1995, 2.63% 1                                                          $   715,000   $    715,000
                                                                                            ------------
                                                                                              34,125,000
- --------------------------------------------------------------------------------------------------------
ILLINOIS--11.5%
Boone, McHenry & DeKalb Cntys., IL Community SDI No. 100,GOUN
Puttable Floating Option Tax Exempt Receipts, Series PZ-50, 2.40% 1,2           2,730,000      2,730,000
- --------------------------------------------------------------------------------------------------------
Chicago, IL BOE GOUN, AAMC Series 2002-4, 2.33% 1,2                             9,225,000      9,225,000
- --------------------------------------------------------------------------------------------------------
Chicago, IL GOB, AAMC Series 2001-34, 2.33% 1,2                                10,975,000     10,975,000
- --------------------------------------------------------------------------------------------------------
Chicago, IL GOUN, AAMC Series 1998-3, 2.33% 1,2                                 8,735,000      8,735,000
- --------------------------------------------------------------------------------------------------------
Chicago, IL RB, Boys & Girls Clubs Project, 2.45% 1                               900,000        900,000
- --------------------------------------------------------------------------------------------------------
Chicago, IL RB, Lakefront Millennium Parking Facility,
ETET Series 981303, Cl. A, 2.32% 1,2                                           22,495,000     22,495,000
- --------------------------------------------------------------------------------------------------------
Chicago, IL Water RB, Puttable Floating Option Tax Exempt
Receipts, Series MT-030, 2.31% 1,2                                              3,755,000      3,755,000
- --------------------------------------------------------------------------------------------------------
Crestwood, IL Tax Increment RB, Series 2003, 2.33% 1                           14,370,000     14,370,000
- --------------------------------------------------------------------------------------------------------
East Peoria, IL CDAU RRB, The Kroger Co., Series 2003, 2.38% 1                  3,125,000      3,125,000
- --------------------------------------------------------------------------------------------------------
IL DFA RB, Oak Crest Residence Project, Series 2000, 2.45% 1                    3,400,000      3,400,000
- --------------------------------------------------------------------------------------------------------
IL EDLFA RB, Field Museum Natural History, Series 1998, 2.35% 1                 2,950,000      2,950,000
- --------------------------------------------------------------------------------------------------------
IL FAU RB, Mercy Alliance, Inc. Project, Series 2005, 2.32% 1                   7,000,000      7,000,000
- --------------------------------------------------------------------------------------------------------
IL FAU RB, Sauk Valley Community College Project, Series 2004A, 2.37% 1         6,725,000      6,725,000
- --------------------------------------------------------------------------------------------------------
IL HFAU RB, Blessing Hospital, Series B, FSA Insured, 2.34% 1                   2,200,000      2,200,000
- --------------------------------------------------------------------------------------------------------
IL HFAU RB, Franciscan Eldercare & Community Services, Series 1996B, 2.30% 1    1,750,000      1,750,000
- --------------------------------------------------------------------------------------------------------
IL Metropolitan Pier & Exposition Authority RB, Puttable Floating
Option Tax Exempt Receipts, Series PZ-45, 2.40% 1,2                             5,805,000      5,805,000
- --------------------------------------------------------------------------------------------------------
IL Metropolitan Pier & Exposition Authority RB, Puttable Floating
Option Tax Exempt Receipts, Series PZ-52, 2.40% 1                               7,570,000      7,570,000
- --------------------------------------------------------------------------------------------------------
IL Puttable Floating Option Tax Exempt Receipts, Series PZP-006, 2.43% 1,2      5,815,000      5,815,000
- --------------------------------------------------------------------------------------------------------
IL RTA RB, Series 2003B Macon Trust Variable Certificates,
Series 2004B, 2.32% 1,2                                                         3,335,000      3,335,000
- --------------------------------------------------------------------------------------------------------
Lakemoor, IL MH RB, Lakemoor Apts. Project, Series 1985 A, 2.44% 1             26,860,000     26,860,000
- --------------------------------------------------------------------------------------------------------
Lakemoor, IL MH RB, Lakemoor Apts. Project, Series 1985 B, 2.53% 1             19,335,486     19,335,486
- --------------------------------------------------------------------------------------------------------
lL Metropolitan Pier & Exposition Authority RB, Puttable Floating
Option Tax Exempt Receipts, Series PZ-44, 2.40% 1,2                             6,605,000      6,605,000
- --------------------------------------------------------------------------------------------------------
Monmouth, IL Industrial Project RB, Monmouth College Project,
Series 2005, 2.31% 1                                                            6,500,000      6,500,000
- --------------------------------------------------------------------------------------------------------
West Frankfort, IL IDV RRB, The Kroger Co., Series 2004, 2.38% 1                  800,000        800,000
- --------------------------------------------------------------------------------------------------------
Will Cnty., IL Community Unit SDI No. 365 REF GOUN, Puttable
Floating Option Tax Exempt Receipts, Series PZ-47, 2.40% 1,2                    8,995,000      8,995,000
- --------------------------------------------------------------------------------------------------------
Will Cnty., IL New Lenox SDI No. 122 GOUN, Puttable Floating
Option Tax Exempt Receipts, Series PZ-48, 2.40% 1,2                             3,350,000      3,350,000
                                                                                            ------------
                                                                                             195,305,486

10 | CENTENNIAL TAX EXEMPT TRUST


                                                               PRINCIPAL          VALUE
                                                                  AMOUNT     SEE NOTE 1
- ---------------------------------------------------------------------------------------

INDIANA--2.4%
IN GOB, AAMC Series 2003-15, Single Asset Trust, 2.33% 1,2  $ 14,200,000   $ 14,200,000
- ---------------------------------------------------------------------------------------
IN HFFAU RB, Ascension Health Credit Group, Series 2001A,     10,000,000     10,000,000
2.50% 1
- ---------------------------------------------------------------------------------------
IN MPA PPS RB, ETET Series 981401, Cl. A, 2.32% 1,2           13,600,000     13,600,000
- ---------------------------------------------------------------------------------------
Indianapolis, IN Local Public Improvement RB, Puttable
Floating Option Tax Exempt Receipts, Series PZ-58, 2.40% 1,2   3,190,000      3,190,000
                                                                           ------------
                                                                             40,990,000

- ---------------------------------------------------------------------------------------
KANSAS--0.1%
Wyandotte Cnty., KS Utility System RB, Puttable Tax Exempt
Receipts, Series 595, 2.32% 1                                  1,695,000      1,695,000
- ---------------------------------------------------------------------------------------
KENTUCKY--1.7%
Hancock Cnty., KY SWD RB, NSA Ltd. Project, Series 1998,
2.58% 1                                                        7,815,000      7,815,000
- ---------------------------------------------------------------------------------------
Jefferson Cnty., KY Industrial Building RB, Franciscan
Eldercare Service, 2.32% 1                                     5,925,000      5,925,000
- ---------------------------------------------------------------------------------------
Morgantown, KY SWD Facilities RB, IMCO Recycling, Inc.
Project, Series 2004, 2.53% 1                                  5,000,000      5,000,000
- ---------------------------------------------------------------------------------------
Somerset, KY Industrial Building RB, Tibbals Flooring Co.
Project, Series 1989, 2.63% 1                                 10,000,000     10,000,000
                                                                           ------------
                                                                             28,740,000

- ---------------------------------------------------------------------------------------
LOUISIANA--3.4%
Jefferson Parish, LA Hospital Service District No. 001 RB,
Putters Series 522, 2.34% 1                                   22,000,000     22,000,000
- ---------------------------------------------------------------------------------------
Jefferson Parish, LA SFM RB, Series B, 3.248% 1               16,724,132     16,724,132
- ---------------------------------------------------------------------------------------
LA Gas & Fuels Tax Nts., AAMC Series 2002-17, 2.33% 1,2       15,000,000     15,000,000
- ---------------------------------------------------------------------------------------
LA HFA MH RB, Walmsley Housing Corp. Project, Series 2004,
2.33% 1                                                        1,900,000      1,900,000
- ---------------------------------------------------------------------------------------
LA TS Financing Corp. RB, Puttable Floating Option Tax
Exempt Receipts, Series PA-1288, 2.38% 1,2                     2,000,000      2,000,000
                                                                           ------------
                                                                             57,624,132

- ---------------------------------------------------------------------------------------
MASSACHUSETTS--0.1%
MA GOB, 2.30% 1                                                2,000,000      2,000,000
- ---------------------------------------------------------------------------------------
MICHIGAN--1.1%
MI Job DAU RB, East Lansing Residence Associates Project,
2.70% 1                                                        1,900,000      1,900,000
- ---------------------------------------------------------------------------------------
MI Multi-Modal GOB, Environmental Program, Series 2004A,
1.95% 1                                                       16,370,000     16,370,000
                                                                           ------------
                                                                             18,270,000

- ---------------------------------------------------------------------------------------
MINNESOTA--3.5%
Bloomington, MN CD RB, 94th Street Associates Project,
Series 1985, 2.59% 1                                           3,915,000      3,915,000
- ---------------------------------------------------------------------------------------
Bloomington, MN CD RB, James Avenue Associates Project,
Series 1985, 2.59% 1                                           3,805,000      3,805,000
- ---------------------------------------------------------------------------------------
East Grand Forks, MN SWD RB, American Crystal Sugar Co.,
Series 2000, 2.60% 1                                           5,750,000      5,750,000
- ---------------------------------------------------------------------------------------
Fulda, MN ISD No. 505 GO Aid Anticipation Certificates of
Indebtness, Series A, 3%, 9/30/05                              1,100,000      1,103,365

11 | CENTENNIAL TAX EXEMPT TRUST

STATEMENT OF INVESTMENTS CONTINUED


                                                               PRINCIPAL          VALUE
                                                                  AMOUNT     SEE NOTE 1
- ---------------------------------------------------------------------------------------

MINNESOTA Continued
Hayfield, MN ISD No. 203 GO Aid Anticipation Certificates
of Indebtedness, Series A, 3%, 9/30/05                      $  1,000,000   $  1,003,185
- ---------------------------------------------------------------------------------------
Mankato, MN IDV RB, Sacco Family Ltd. Partnership,
2.55% 1                                                          985,000        985,000
- ---------------------------------------------------------------------------------------
Minneapolis, MN HCF RRB, Fairview Health Services, Series
2005 B, 2.30% 1                                               12,000,000     12,000,000
- ---------------------------------------------------------------------------------------
MN GOB, ETET Series 20002301, Cl. A, 2.32% 1,2                16,010,000     16,010,000
- ---------------------------------------------------------------------------------------
Northfield, MN ISD No. 659 GO Aid Anticipation
Certificates of Indebtedness, Series C, 3%, 9/26/05            4,950,000      4,964,820
- ---------------------------------------------------------------------------------------
Park Rapids, MN ISD No. 309 GO Aid Anticipation
Certificates of Indebtedness, Series 2004A, 3%, 9/12/05        5,900,000      5,915,974
- ---------------------------------------------------------------------------------------
Rochester, MN IDV RRB, Seneca Foods Corp. Project, Series
1992, 2.53% 1                                                  4,675,000      4,675,000
                                                                           ------------
                                                                             60,127,344

- ---------------------------------------------------------------------------------------
MISSISSIPPI--0.2%
MS Home Corp. MH RRB, Summer Park Apts. Project,
Series 1999 D-2, 2.50% 1                                         650,000        650,000
- ---------------------------------------------------------------------------------------
Panola Cnty., MS IDV RRB, The Kroger Co., Series
2003, 2.38% 1                                                  3,250,000      3,250,000
                                                                           ------------
                                                                              3,900,000

- ---------------------------------------------------------------------------------------
MISSOURI--2.1%
Kansas City, MO IDAU RB, Puttable Floating Option Tax
Exempt Receipts, Series PT-2525, Whis Lake Project,
2.32% 1,2                                                      4,395,000      4,395,000
- ---------------------------------------------------------------------------------------
Kansas City, MO Municipal Assistance Corp. RB,
Puttable Floating Option Tax Exempt Receipts,
Series PZ-53, 2.40% 1,2                                        3,800,000      3,800,000
- ---------------------------------------------------------------------------------------
MO DFB Cultural Facilities RB, Center of Creative
Arts Project, Series 2004, 2.33% 1                             2,300,000      2,300,000
- ---------------------------------------------------------------------------------------
So. Pointe/Hunters Ridge MO, RB, Trust Certificates, Series
2005 A, 2.33% 1,2                                             10,575,000     10,575,000
- ---------------------------------------------------------------------------------------
So. Pointe/Hunters Ridge MO, RB, Trust Certificates,
Series 2005 B, 2.33% 1,2                                       8,365,000      8,365,000
- ---------------------------------------------------------------------------------------
Springfield, MO RB, Puttable Floating Option Tax
Exempt Receipts, Series PT-2521, Monclair Project,
2.32% 1,2                                                      4,200,000      4,200,000
- ---------------------------------------------------------------------------------------
St. Louis Cnty., MO IDAU MH RB, Heatherbrook Gardens
Apts., Series 1992, 2.46% 1                                    1,765,000      1,765,000
                                                                           ------------
                                                                             35,400,000

- ---------------------------------------------------------------------------------------
NEVADA--1.8%
NV GOLB, SGMSTR Series 1997 SG114, 2.31% 1,2                  15,000,000     15,000,000
- ---------------------------------------------------------------------------------------
Washoe Cnty., NV GOLB, AAMC Series 2001-24, Single Asset
Trust, 2.33% 1,2                                              16,090,000     16,090,000
                                                                           ------------
                                                                             31,090,000

- ---------------------------------------------------------------------------------------
NEW HAMPSHIRE--0.5%
Manchester, NH H&RA MH RB, Wall Street Tower Ltd.
Partnership, Series 1990A, 2.32% 1                             4,800,000      4,800,000
- ---------------------------------------------------------------------------------------
NH H&EFA RB, Antioch University Issue, 2.32% 1                 4,320,000      4,320,000
                                                                           ------------
                                                                              9,120,000

12 | CENTENNIAL TAX EXEMPT TRUST


                                                               PRINCIPAL          VALUE
                                                                  AMOUNT     SEE NOTE 1
- ---------------------------------------------------------------------------------------

NEW JERSEY--0.4%
NJ TS Financing Corp. RB, Puttable Floating Option Tax
Exempt Receipts, Series PA-1283, 2.35% 1                    $  6,250,000   $  6,250,000
- ---------------------------------------------------------------------------------------
NEW MEXICO--3.1%
Bernalillo Cnty., NM Gross Receipts Tax RRB, Macon Trust
Variable Certificates, Series 2004B, 2.32% 1,2                 5,160,000      5,160,000
- ---------------------------------------------------------------------------------------
NM MFA RB, SFM Program Issue 2005, 3.13% 1                    40,771,195     40,771,195
- ---------------------------------------------------------------------------------------
NM Region II Housing MH RB, Santa Fe Retirement Village
Apts., Series A, 2.20% 1                                       7,500,000      7,500,000
                                                                           ------------
                                                                             53,431,195

- ---------------------------------------------------------------------------------------
NEW YORK--2.0%
NY Upstate Telecommunications Corp. RB, Series 2005, 2.59% 1   7,300,000      7,300,000
- ---------------------------------------------------------------------------------------
NYC GOUN, Puttable Floating Option Tax Exempt Receipts,
Series PT-2848, 2.34% 1,2                                        790,000        790,000
- ---------------------------------------------------------------------------------------
NYC IDA Civic Facilities RB, Birch Wathen Lenox School
Project, 2.30% 1                                               1,600,000      1,600,000
- ---------------------------------------------------------------------------------------
NYC IDA Civic Facilities RB, Casa Project, 2.36% 1             2,600,000      2,600,000
- ---------------------------------------------------------------------------------------
NYC MTAU RRB, Puttable Floating Option Tax Exempt Receipts,
Series PA-1088, 2.31% 1,2                                      2,200,000      2,200,000
- ---------------------------------------------------------------------------------------
NYC MTAU RRB, Series A, MERLOTS Series 2004 B-16, 2.31% 1,2    2,995,000      2,995,000
- ---------------------------------------------------------------------------------------
NYS DA RB, MERLOTS Series 2003 B30, 2.31% 1,2                  1,000,000      1,000,000
- ---------------------------------------------------------------------------------------
NYS DA RB, Non State Supported Debt-Court Facilities Lease,
Series 2005B, 2.20% 1                                          9,000,000      9,000,000
- ---------------------------------------------------------------------------------------
NYS GOUN, Series A, 1.80%, 10/7/05 3                           1,900,000      1,900,000
- ---------------------------------------------------------------------------------------
Oneida Cnty., NY IDA RB, Civic Facilities, Rome Memorial
Hospital, Inc. Project, Series 2005, 2.33% 1                   5,000,000      5,000,000
                                                                           ------------
                                                                             34,385,000

- ---------------------------------------------------------------------------------------
NORTH CAROLINA--0.6%
Craven Cnty., NC IFPCFA RB, Wheatstone Corp. Project,
2.63% 1                                                        2,000,000      2,000,000
- ---------------------------------------------------------------------------------------
Hoke Cnty., NC IFPCFA RB, Triangle Building Supply, Inc.
Project, Series 1997, 2.63% 1                                  1,500,000      1,500,000
- ---------------------------------------------------------------------------------------
NC Community HCF RB, Carolina Meadows, Inc., Project,
Series 2004, 2.32% 1                                           5,000,000      5,000,000
- ---------------------------------------------------------------------------------------
Wake Cnty., NC IFPCFA RB, Aeroglide Corp. Project, Series
1997, 2.63% 1                                                    975,000        975,000
                                                                           ------------
                                                                              9,475,000

- ---------------------------------------------------------------------------------------
OHIO--4.3%
Columbus, OH RTA Capital Funding RB, OASBO Program,
Series 2004A, 2.30% 1                                         10,000,000     10,000,000
- ---------------------------------------------------------------------------------------
Franklin Cnty., OH HCF RB, Presbyterian Retirement Services,
Series 2002B, 2.32% 1                                          4,800,000      4,800,000
- ---------------------------------------------------------------------------------------
Franklin Cnty., OH HCF RB, Presbyterian Retirement Services,
Series 2005B, 2.32% 1                                          6,385,000      6,385,000
- ---------------------------------------------------------------------------------------
Gallia Cnty., OH IDV Mtg. RRB, Jackson Pike Assn., 3%,
12/15/05 3                                                     2,220,000      2,220,000

13 | CENTENNIAL TAX EXEMPT TRUST STATEMENT OF INVESTMENTS CONTINUED - --------------------------------------------------------------------------------


                                                                     PRINCIPAL         VALUE
                                                                        AMOUNT    SEE NOTE 1
- --------------------------------------------------------------------------------------------

OHIO Continued
Hamilton Cnty., OH HCF RB, Twin Towers & Twin Lakes
Project, Series A, 2.57% 1                                     $     8,000,000   $ 8,000,000
- --------------------------------------------------------------------------------------------
Hamilton Cnty., OH Hospital Facilities RB, Children's
Hospital & Medical Center, Series 2000, 2.26% 1                      8,250,000     8,250,000
- --------------------------------------------------------------------------------------------
Madeira, OH ED RRB, The Kroger Co., Series 2004, 2.38% 1             2,050,000     2,050,000
- --------------------------------------------------------------------------------------------
OH Water DAU RB, Series A, 2.35% 1                                  15,400,000    15,400,000
- --------------------------------------------------------------------------------------------
OH Water DAU RRB, 2.35% 1                                           13,835,000    13,835,000
- --------------------------------------------------------------------------------------------
Stark Cnty., OH IDV RRB, The Kroger Co., Series 2004, 2.38% 1        3,100,000     3,100,000
                                                                                 -----------
                                                                                  74,040,000

- --------------------------------------------------------------------------------------------
PENNSYLVANIA--0.7%
Berks Cnty., PA IDAU RB, Visiting Nurse Assn., Inc. Project,
Series B, 2.39% 1                                                      670,000       670,000
- --------------------------------------------------------------------------------------------
Harrisburg, PA Authority RB, Haverford Township
School, Subseries 2001-A, 2.33% 1                                    2,195,000     2,195,000
- --------------------------------------------------------------------------------------------
Moon, PA IDAU Community Facilities RB, YMCA of Greater
Pittsburg Project, Series 2005, 2.31% 1                              3,780,000     3,780,000
- --------------------------------------------------------------------------------------------
PA Public School Buildings RB, MERLOTS Series 2003 A42,
1.80% 1,4                                                            3,790,000     3,790,000
- --------------------------------------------------------------------------------------------
Philadelphia, PA IDAU RB, Friends of Mast School, Inc.
Project, 2.34% 1                                                       885,000       885,000
                                                                                 -----------
                                                                                  11,320,000

- --------------------------------------------------------------------------------------------
SOUTH CAROLINA--1.1%
SC Medical University HA RB, Series 2005-A, 2.33% 1,2               18,230,000    18,230,000
- --------------------------------------------------------------------------------------------
TENNESSEE--1.5%
Knox, TN Health, Education & Housing RB, Puttable Floating
Option Tax Exempt Receipts, Series PT-2524, Steeple Chase
Project, 2.32% 1,2                                                   6,245,000     6,245,000
- --------------------------------------------------------------------------------------------
Metropolitan Government Nashville & Davidson Cnty.,
TN Health & Education Board RB, Ascension Health,
Series 2001B, 1.65%, 8/3/05 3                                       14,000,000    14,000,000
- --------------------------------------------------------------------------------------------
Springfield, TN IDV Board RRB, The Kroger Co., Series
2004, 2.38% 1                                                        4,500,000     4,500,000
                                                                                 -----------
                                                                                  24,745,000

- --------------------------------------------------------------------------------------------
TEXAS--11.2%
Allen, TX ISD GOUN, Puttable Tax Exempt Receipts, Series
715, 2.32% 1                                                         1,505,000     1,505,000
- --------------------------------------------------------------------------------------------
Bexar Cnty., TX HFC MH RB, Summit Hills Apts. Project,
Series A, 2.33% 1                                                    3,500,000     3,500,000
- --------------------------------------------------------------------------------------------
Cedar Hill, TX ISD REF GOUN, School Building, Series 1996,
2.50%, 8/15/05 5                                                     2,830,000     2,821,367
- --------------------------------------------------------------------------------------------
Clipper, TX COP, Tax Exempt Certificates Trust
Multistate, Series 2005-7, 2.40% 1,2                                28,500,000    28,500,000
- --------------------------------------------------------------------------------------------
Comal, TX ISD GOUN, Puttable Tax Exempt Receipts, Series
756, 2.32% 1,2                                                       2,585,000     2,585,000
- --------------------------------------------------------------------------------------------
Garland, TX ISD GOUN, School Building, Series 2004-B, 2.75%,
12/15/05 3                                                           7,125,000     7,125,000
- --------------------------------------------------------------------------------------------
Hays, TX Consolidated ISD GOB, Puttable Tax Exempt
Receipts, Series 632, 2.32% 1                                        3,200,000     3,200,000
- --------------------------------------------------------------------------------------------
Houston, TX WSS RB, SGMSTR Series 1997 SG120, 2.31% 1,2             22,600,000    22,600,000
- --------------------------------------------------------------------------------------------
Keller, TX ISD GOUN, AAMC Series 2001-26, 2.33% 1,2                  3,000,000     3,000,000

14 | CENTENNIAL TAX EXEMPT TRUST


                                                                       PRINCIPAL           VALUE
                                                                          AMOUNT      SEE NOTE 1
- ------------------------------------------------------------------------------------------------

TEXAS Continued
Klein, TX ISD GOB, MERLOTS Series C-02, 2.32% 1                     $  4,175,000   $   4,175,000
- ------------------------------------------------------------------------------------------------
Lamar, TX Consolidated ISD Schoolhouse GOUN, Series 2004,
1.75%, 9/9/05 3                                                       11,500,000      11,500,000
- ------------------------------------------------------------------------------------------------
Mansfield, TX ISD School Building GOUN, MERLOTS Series B11,
2.32% 1,2                                                             14,590,000      14,590,000
- ------------------------------------------------------------------------------------------------
North TX/Dallas North TWY System RB, ETET Series 720050025,
Cl. A, 2.32% 1,2                                                       8,000,000       8,000,000
- ------------------------------------------------------------------------------------------------
Northside, TX ISD GOUN, Puttable Tax Exempt Receipts,
Series 751, 2.32% 1,2                                                  3,455,000       3,455,000
- ------------------------------------------------------------------------------------------------
San Antonio, TX Electric & Gas RB, Puttable Tax Exempt
Receipts, Series 769, 2.32% 1,2                                        5,385,000       5,385,000
- ------------------------------------------------------------------------------------------------
Spring Branch, TX ISD Schoolhouse GOLB, Series 2004, 1.75%,
9/9/05 3                                                              15,700,000      15,700,000
- ------------------------------------------------------------------------------------------------
Sunnyvale, TX ISD GOB, Puttable Tax Exempt Receipts, Series
619, 2.32% 1                                                           2,000,000       2,000,000
- ------------------------------------------------------------------------------------------------
TX SGMSTR Series SG P-19, 2.43% 1                                      1,620,000       1,620,000
- ------------------------------------------------------------------------------------------------
TX TANs & RANs, Series 2004, 3%, 8/31/05                              35,000,000      35,070,741
- ------------------------------------------------------------------------------------------------
TX TUAU RB, Dallas Northtollway, SGMSTR Series 1996 SG70,
2.31% 1,2                                                             11,000,000      11,000,000
- ------------------------------------------------------------------------------------------------
Upper Trinity Regional Water District, TX RB, Puttable Tax
Exempt Receipts, Series 579, 2.32% 1                                   2,835,000       2,835,000
                                                                                   -------------
                                                                                     190,167,108

- ------------------------------------------------------------------------------------------------
UTAH--0.8%
Beaver Cnty., UT Environmental Facilities RB, Best Biofuels
LLC Project, Series 2003A, 2.63% 1                                    10,985,000      10,985,000
- ------------------------------------------------------------------------------------------------
Davis Cnty., UT RB, Series 2003, 2.60% 1                               2,460,000       2,460,000
- ------------------------------------------------------------------------------------------------
Riverdale, UT RA Tax Increment RB, 2.40% 1                             1,000,000       1,000,000
                                                                                   -------------
                                                                                      14,445,000

- ------------------------------------------------------------------------------------------------
WASHINGTON--1.5%
Clark Cnty., WA Vancouver SDI No. 037 GOUN, Puttable
Floating Option Tax Exempt Receipts,
Series PZ-55, 2.40% 1,2                                                2,765,000       2,765,000
- ------------------------------------------------------------------------------------------------
King Cnty., WA GOLB, AAMC Series 2001-1, 2.33% 1,2                    12,770,000      12,770,000
- ------------------------------------------------------------------------------------------------
Marysville, WA WSS RB, Puttable Tax Exempt Receipts, Series
909, 2.32% 1,2                                                         7,345,000       7,345,000
- ------------------------------------------------------------------------------------------------
WA EDFA RB, A&T Mensonides Project, Series 2001-I, 2.60% 1             1,910,000       1,910,000
                                                                                   -------------
                                                                                      24,790,000

- ------------------------------------------------------------------------------------------------
WEST VIRGINIA--1.1%
Kanawha Cnty., WV IDV RRB, The Kroger Co., Series 2004-A,
2.38% 1                                                                4,500,000       4,500,000
- ------------------------------------------------------------------------------------------------
Kanawha Cnty., WV IDV RRB, The Kroger Co., Series 2004-B,
2.38% 1                                                                6,850,000       6,850,000
- ------------------------------------------------------------------------------------------------
Marmet, WV CD RRB, The Kroger Co., Series 2004, 2.38% 1                3,100,000       3,100,000
- ------------------------------------------------------------------------------------------------
WV HOFA RB, Pooled Financing Project, Series 2000 B-1,
2.34% 1                                                                3,800,000       3,800,000
                                                                                   -------------
                                                                                      18,250,000

15 | CENTENNIAL TAX EXEMPT TRUST

STATEMENT OF INVESTMENTS CONTINUED


                                                                        PRINCIPAL             VALUE
                                                                           AMOUNT        SEE NOTE 1
- ---------------------------------------------------------------------------------------------------

WISCONSIN--5.6%
Appleton, WI RED Authority RRB, Fox Cities Performing Arts
Center, Series 2001B, 2.45% 1                                        $  1,000,000   $     1,000,000
- ---------------------------------------------------------------------------------------------------
Clipper, WI COP, Tax Exempt Certificates Trust RB, Series
2005-29, 2.34% 1,2                                                     11,330,000        11,330,000
- ---------------------------------------------------------------------------------------------------
Columbus, WI IDV RB, Maysteel Corp. Project, Series 1994,
2.63% 1                                                                 2,000,000         2,000,000
- ---------------------------------------------------------------------------------------------------
Green Bay, WI HAU RB, Sisters of St. Francis Project,
Series 2004, 2.32% 1                                                    4,995,000         4,995,000
- ---------------------------------------------------------------------------------------------------
Janesville, WI IDV RRB, Seneca Foods Corp. Project, Series
2002, 2.53% 1                                                           7,710,000         7,710,000
- ---------------------------------------------------------------------------------------------------
Wausau, WI SDI TANs & RANs, 2%, 10/27/05                                6,500,000         6,502,466
- ---------------------------------------------------------------------------------------------------
West Allis, WI RB, State Fairgrounds Park Exposition
Center, 2.33% 1                                                         3,555,000         3,555,000
- ---------------------------------------------------------------------------------------------------
WI H&EFA RB, Divine Savior Healthcare, Series 2002 B, 2.32% 1           2,300,000         2,300,000
- ---------------------------------------------------------------------------------------------------
WI H&EFA RB, Group Health Cooperative of South Central
Wisconsin, 2.43% 1                                                      4,200,000         4,200,000
- ---------------------------------------------------------------------------------------------------
WI H&EFA RB, HospiceCare Holdings, Inc., Series 2005, 2.35% 1           1,750,000         1,750,000
- ---------------------------------------------------------------------------------------------------
WI H&EFA RB, Lakeland College, Series 2005, 2.64% 1                    14,050,000        14,050,000
- ---------------------------------------------------------------------------------------------------
WI H&EFA RB, Lindengrove, Inc. Project, Series 2003B, 2.32% 1           7,310,000         7,310,000
- ---------------------------------------------------------------------------------------------------
WI H&EFA RB, Lutheran Social Services, Series 2004, 2.35% 1             3,000,000         3,000,000
- ---------------------------------------------------------------------------------------------------
WI H&EFA RB, Oakwood Village Project, Series 2005, 2.32% 1             10,000,000        10,000,000
- ---------------------------------------------------------------------------------------------------
WI H&EFA RB, Southwest Health Center, Inc., 2.32% 1                     6,340,000         6,340,000
- ---------------------------------------------------------------------------------------------------
WI H&EFA RB, St. Camillus Health Center, Series 2005, 2.35% 1           1,125,000         1,125,000
- ---------------------------------------------------------------------------------------------------
WI Transit RB, Reset Option Certificates II-R Trust, Series
7500, 2.32% 1,2                                                         7,450,000         7,450,000
                                                                                    ---------------
                                                                                         94,617,466

- ---------------------------------------------------------------------------------------------------
WYOMING--0.3%
Campbell Cnty., WY IDV RB, Powder Basin Properties Project,
Series 1996, 2.47% 1                                                    4,430,000         4,430,000
- ---------------------------------------------------------------------------------------------------
OTHER TERRITORIES--6.2%
Floating Rate Trust Receipts, Series 2001 C5, 2.62% 1,2                11,170,000        11,170,000
- ---------------------------------------------------------------------------------------------------
Municipal Securities Pool Trust, SGMSTR Series P-18,
2.43% 1,2                                                              85,050,000        85,050,000
- ---------------------------------------------------------------------------------------------------
Puttable Floating Option Tax Exempt Receipts, Series
PZP-001, 2.43% 1,2                                                      8,950,000         8,950,000
                                                                                    ---------------
                                                                                        105,170,000

- ---------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--0.7%
PR CMWLTH GOUN, Floating Rate Trust Receipts, Series
2005-F2, 2.68% 1,2                                                      8,475,000         8,475,000
- ---------------------------------------------------------------------------------------------------
PR CMWLTH Infrastructure FAU RB, Tender Option Trust
Certificates, Series 2005 Z-6, 2.38% 1,2                                2,900,000         2,900,000
                                                                                    ---------------
                                                                                         11,375,000
                                                                                    ---------------
Total Short-Term Tax-Exempt Obligations
(Cost $1,693,444,731)                                                                 1,693,444,731

- ---------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $1,693,444,731)                            99.6%    1,693,444,731
- ---------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES                                               0.4         7,094,794
                                                                     ------------------------------

NET ASSETS                                                                  100.0%  $ 1,700,539,525
                                                                     ==============================

16 | CENTENNIAL TAX EXEMPT TRUST

FOOTNOTES TO STATEMENT OF INVESTMENTS

To simplify the listings of securities, abbreviations are used per the table below:

AAMC ABN AMRO Munitops Certificates

BOE Board of Education

CD Commercial Development

CDAU Community Development Authority

CMWLTH Commonwealth

COP Certificates of Participation

DA Dormitory Authority

DAU Development Authority

DFA Development Finance Authority

DFB Development Finance Board

ECFA Educational and Cultural Facilities Authority

ED Economic Development

EDAU Economic Development Authority

EDFA Economic Development Finance Authority

EDLFA Educational Facilities Authority

ETET Eagle Tax-Exempt Trust

FAU Finance Authority

GO General Obligation

GOB General Obligation Bonds

GOLB General Obligation Ltd. Bonds GOUN General Obligation Unlimited Nts.

H&EFA Health and Educational Facilities Authority

H&RA Housing and Redevelopment Authority

HA Hospital Authority

HAU Housing Authority

HCF Health Care Facilities

HFA Housing Finance Agency/Authority

HFAU Health Facilities Authority

HFC Housing Finance Corp.

HFFAU Health Facilities Finance Authority

HOFA Hospital Finance Agency/Authority

IDA Industrial Development Agency

IDAU Industrial Development Authority

IDB Industrial Development Board

IDV Industrial Development

IFPCFA Industrial Facilities and Pollution Control Financing Authority

ISD Independent School District

MERLOTS Municipal Exempt Receipts Liquidity Option Tender

MFA Mortgage Finance Authority

MH Multifamily Housing

MPA Municipal Power Agency

MTAU Metropolitan Transportation Authority

NYC New York City

NYS New York State

PC Pollution Control

PPS Public Power System

RA Redevelopment Agency/Authority

RANs Revenue Anticipation Nts.

RB Revenue Bonds

RED Redevelopment

REF Refunding

RRB Revenue Refunding Bonds

RTA Regional Transportation Authority/Agency

SCDAU Statewide Communities Development Authority

SDI School District

SFM Single Family Mtg.

SGMSTR Societe Generale, NY Branch Municipal Security Trust Receipts

SWD Solid Waste Disposal

TANs Tax Anticipation Nts.

TS Tobacco Settlement

TUAU Turnpike Authority

TWY Thruway/Tollway Authority/Agency

USD Unified School District

WSS Water & Sewer System

YMCA Young Mens Christian Association

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, 2005. 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.     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 $691,232,000 or 40.65% of the Trusts net assets as of June 30, 2005.

3.     Put obligation redeemable at full principal value on the date reported.

4.     Illiquid security. The aggregate value of illiquid securities as of June 30, 2005 was $3,790,000, which represents 0.22% of the Trusts net assets. See Note 4 of Notes to Financial Statements.

5.     Zero coupon bond reflects effective yield on the date of purchase.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

17 | CENTENNIAL TAX EXEMPT TRUST

STATEMENT OF ASSETS AND LIABILITIES JUNE 30, 2005

ASSETS

Investments, at value (cost $1,693,444,731)  see accompanying statement of investments $ 1,693,444,731                     Cash 3,127,766                     Receivables and other assets:

Investments sold 9,590,675 Interest 8,074,792 Shares of beneficial interest sold 6,114 Other 141,635

_________________

Total assets 1,714,385,713

LIABILITIES

Payables and other liabilities:

Investments purchased 12,602,976 Dividends 948,835 Distribution and service plan fees 114,259 Transfer and shareholder servicing agent fees 42,913 Shareholder communications 39,143 Shares of beneficial interest redeemed 34,086 Trustees' compensation 10,435 Other 53,541

_________________

Total liabilities 13,846,188

NET ASSETS $ 1,700,539,525

_________________

COMPOSITION OF NET ASSETS

Paid-in capital $ 1,700,545,069

Accumulated net realized loss on investments (5,544)

_________________

NET ASSETS  applicable to 1,700,574,704 shares of beneficial interest outstanding $ 1,700,539,525 ===============

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

18 | CENTENNIAL TAX EXEMPT TRUST

STATEMENT OF OPERATIONS FOR THE YEAR ENDED JUNE 30, 2005

INVESTMENT INCOME

Interest $ 33,112,641

EXPENSES

Management fees 7,590,892

Service plan fees 3,580,047

Transfer and shareholder servicing agent fees 523,705

Custodian fees and expenses 72,577

Shareholder communications 63,399

Trustees' compensation 11,822

Other 188,134

_________________

Total expenses 12,030,576 Less reduction to custodian expenses (50,247) Less waivers and reimbursements of expenses (354,413)

_________________

Net expenses 11,625,916

NET INVESTMENT INCOME 21,486,725

NET REALIZED GAIN ON INVESTMENTS 96,274

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 21,582,999

_________________

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

19 | CENTENNIAL TAX EXEMPT TRUST

STATEMENTS OF CHANGES IN NET ASSETS


- -----------------------------------------------------------------------------------------
YEAR ENDED JUNE 30,                                               2005              2004
- -----------------------------------------------------------------------------------------

OPERATIONS
- -----------------------------------------------------------------------------------------
Net investment income                                  $    21,486,725   $     6,492,424
- -----------------------------------------------------------------------------------------
Net realized gain (loss)                                        96,274           (79,810)
                                                       ----------------------------------
Net increase in net assets resulting from operations        21,582,999         6,412,614

- -----------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------
Dividends from net investment income                       (21,486,725)       (6,492,424)

- -----------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -----------------------------------------------------------------------------------------
Net decrease in net assets resulting from
beneficial interest transactions                           (77,683,115)      (98,384,454)

- -----------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------
Total decrease                                             (77,586,841)      (98,464,264)
- -----------------------------------------------------------------------------------------
Beginning of period                                      1,778,126,366     1,876,590,630
                                                       ----------------------------------
End of period                                          $ 1,700,539,525   $ 1,778,126,366
                                                       ==================================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

20 | CENTENNIAL TAX EXEMPT TRUST

FINANCIAL HIGHLIGHTS


YEAR ENDED JUNE 30,                                       2005      2004      2003      2002      2001
- -------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
- -------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                   $  1.00   $  1.00   $  1.00   $  1.00   $  1.00
- -------------------------------------------------------------------------------------------------------
Income from investment operations - net
investment income and net realized gain                    .01 1      -- 2     .01       .01       .03
Dividends and/or distributions to shareholders            (.01)       -- 2    (.01)     (.01)     (.03)
- -------------------------------------------------------------------------------------------------------

Net asset value, end of period                         $  1.00    $ 1.00   $  1.00   $  1.00   $  1.00
                                                       ================================================

- -------------------------------------------------------------------------------------------------------
TOTAL RETURN 3                                            1.21%     0.35%     0.69%     1.17%     3.26%
- -------------------------------------------------------------------------------------------------------

- -------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions)                $ 1,701   $ 1,778   $ 1,877   $ 1,824   $ 1,822
- -------------------------------------------------------------------------------------------------------
Average net assets (in millions)                       $ 1,797   $ 1,851   $ 1,882   $ 1,904   $ 1,779
- -------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income                                     1.20%     0.35%     0.68%     1.16%     3.21%
Total expenses                                            0.67%     0.67%     0.66%     0.69%     0.70%
Expenses after payments and waivers and
reduction to custodian expenses                           0.65%      N/A 5     N/A 5     N/A 5    0.69%

1.     Per share amounts calculated based on the average shares outstanding during the period.

2.     Less than $0.005 per share.

3.     Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Total returns are not annualized for periods less than one year. Returns do not reflect the deduction of taxes that a shareholder would pay on Trust distributions or the redemption of Trust shares.

4.     Annualized for periods of less than one full year.

5.     Reduction to custodian expenses less than 0.01%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

21 | 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 GAINS CARRYFORWARD 1,2

$ 983,793 $ -- $ 5,544

1.     As of June 30, 2005, the Trust had $5,544 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, 2005 details of the capital loss carry-forward were as follows:

      EXPIRING

2012 $ 5,544

2.     During the fiscal year June 30, 2005, the Trust utilized $96,274 of capital loss carryforward to offset capital gains realized in that fiscal year. During the fiscal year June 30, 2004, the Trust did not utilize any capital loss carryforwards.

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.

22 | CENTENNIAL TAX EXEMPT TRUST

The tax character of distributions paid during the years ended June 30, 2005 and June 30, 2004 were as follows:

YEAR ENDED YEAR ENDED JUNE 30, 2005 JUNE 30, 2004

      Distributions paid from:

Exempt-interest dividends $ 21,486,725 $ 6,492,424

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 purchases 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 but may be paid at other times to maintain the net asset value per share at $1.00.

CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may include interest expense incurred by the Trust on any cash overdrafts of its custodian account during the period. Such cash overdrafts may result from the effects of failed trades in portfolio securities and from cash outflows resulting from unanticipated shareholder redemption activity. The Trust pays interest to its custodian on such cash overdrafts at a rate equal to the Federal Funds Rate plus 0.50%. The Reduction to Custodian Expenses line item, if applicable, represents earnings on cash balances maintained by the Trust during the period. Such interest expense and other custodian fees may be paid with these earnings.

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.

23 | CENTENNIAL TAX EXEMPT TRUST

NOTES TO FINANCIAL STATEMENTS CONTINUED

2.     SHARES OF BENEFICIAL INTEREST

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


                                   YEAR ENDED JUNE 30, 2005           YEAR ENDED JUNE 30, 2004
                                   SHARES            AMOUNT           SHARES            AMOUNT
- -----------------------------------------------------------------------------------------------

Sold                        5,467,251,055   $ 5,467,251,055    5,127,413,724   $ 5,127,413,724
Dividends and/or
distributions reinvested       20,503,644        20,503,644        6,338,791         6,338,791
Redeemed                   (5,565,437,814)   (5,565,437,814)  (5,232,136,969)   (5,232,136,969)
                           --------------------------------------------------------------------
Net decrease                  (77,683,115)  $   (77,683,115)     (98,384,454)  $   (98,384,454)
                           ====================================================================

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, 2005, the Trust paid $524,110 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.

WAIVERS AND REIMBURSEMENTS 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.

        During the year ended June 30, 2005, the Manager voluntarily paid a one-time reimbursement of Trust expenses amounting to $354,413.

24 | CENTENNIAL TAX EXEMPT TRUST

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.

4.     ILLIQUID SECURITIES

As of June 30, 2005, investments in securities included issues that are illiquid. A security may be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Trust will not invest more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid securities. Securities that are illiquid are marked with the applicable footnote on the Statement of Investments.

25 | 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-1

                                    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










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Centennial Tax Exempt Trust
- ----------------------------------------------------------------------------------

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

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

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

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

Independent Registered 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
Bell, Boyd & Lloyd, LLC
Three First National Plaza
70 West Madison Street, Suite 3300
Chicago, Illinois 60602-4207

PX0160.01.rev1205



(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.

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