Centennial New York Tax Exempt Trust

497 1 sai.htm REVISED SAI WITH FINANCIAL INFORMATION Centennial New York Tax Exempt Trust

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

Statement of Additional Information dated August 23, 2007, revised December 17, 2007

This Statement of Additional Information ("SAI") is not a prospectus. This
document contains additional information about the Trust and supplements
information in the Prospectus dated August 23, 2007. It should be read together
with the Prospectus, which may be obtained by writing to the Trust's Transfer
Agent, Shareholder Services, Inc., at P.O. Box 5143, Denver, Colorado 80217, or
by calling the Transfer Agent at the toll-free number shown above.

Contents
Page
About the Trust
Additional Information about the Trust's Investment Policies and Risks....2
The Trust's Investment Policies......................................2
Other Investment Strategies..........................................9
Other Investment Restrictions.......................................27
Disclosure of Portfolio Holdings....................................28
How the Trust is Managed.................................................32
Organization and History............................................32
Board of Trustees and Oversight Committees.........................33
Trustees and Officers of the Trust..................................34
The Manager.........................................................43
Service Plan.............................................................47
Payments to Trust Intermediaries.........................................48
Performance of the Trust.................................................52

About Your Account
How To Buy Shares........................................................55
How To Sell Shares.......................................................56
How To Exchange Shares...................................................57
Dividends and Taxes......................................................59
Additional Information About the Trust...................................64

Financial Information About the Trust
Report of Independent Registered Public Accounting Firm..................65
Financial Statements.....................................................66

Appendix A: Description of Securities Ratings..............................A-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 SAI contains supplemental information about those policies and the
types of securities that the Trust's investment manager, Centennial Asset Management
Corporation (referred to as the "Manager"), will select for the Trust. Additional
explanations are also provided about the strategies the Trust may use to try to achieve its
objective.

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

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

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

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

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

|X| Municipal Bonds. We have classified municipal securities having a maturity
(when the security is issued) of more than one year as "municipal bonds." The principal
classifications of long-term municipal bonds are "general obligation" and "revenue"
(including "industrial development" and "private activity") 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 Bonds. The Tax Reform Act of 1986 amended and reorganized, under
the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), the rules
governing tax-exemption for interest on certain types of municipal securities known as
"private activity bonds" (or, "industrial development bonds" as they were referred to under
pre-1986 law), the proceeds of which are used to finance various non-governmental privately
owned and/or operated facilities. Under the Internal Revenue Code, interest on private
activity bonds is excludable from gross income for federal income tax purposes if the
financed activities fall into one of seven categories of "qualified private activity
bonds," consisting of mortgage bonds, veterans mortgage bonds, small issue bonds, student
loan bonds, redevelopment bonds, exempt facility bonds and 501(c)(3) bonds, and certain
tests are met. The types of facilities that may be financed with 501(c)(3) bonds include
hospitals and educational facilities that are owned by 501(c)(3) organizations. Normally,
the Trust will not invest more than 20% of its total assets in private activity municipal
securities or other taxable investments.

Whether a municipal security is a private activity bond (the interest on which is
taxable unless it is a qualified private activity bond) depends on whether (i) more than a
certain percentage (generally 10%) of (a) the proceeds of the security are used in a trade
or business carried on by a non-governmental person and (b) the payment of principal or
interest on the security is directly or indirectly derived from such private use, or is
secured by privately used property or payments in respect of such property, or (ii) more
than the lesser of 5% of the issue or $5 million is used to make or finance loans to
non-governmental persons.

Thus, certain municipal securities could lose their tax-exempt status retroactively
if the issuer or user fails to meet certain continuing requirements, for the entire period
during which the securities are outstanding, as to the use and operation of the
bond-financed facilities and the use and expenditure of the proceeds of such securities.
The Fund makes no independent investigation into the use of such facilities or the
expenditure of such proceeds. If the Fund 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.

The payment of the principal and interest on such qualified private activity bonds is
dependant solely on the ability of the facility's user to meet its financial obligations,
generally from the revenues derived from the operation of the financed facility, and the
pledge, if any, of real and personal property financed by the bond as security for those
payments.

Limitations on the amount of private activity bonds that each state may issue may
reduce the supply of such bonds. The value of the Fund's portfolio could be affected by
these limitations if they reduce the availability of such bonds.

Interest on certain qualified private activity bonds that is tax-exempt may
nonetheless be treated as a tax preference item subject to the alternative minimum tax to
which certain taxpayers are subject. If such qualified private activity bonds were held by
the Fund, a proportionate share of the exempt-interest dividends paid by the Fund would
constitute an item of tax preference to such shareholders.

|X| Municipal Notes. Municipal securities having a maturity (when the security is
issued) of less than one year 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 below in "Illiquid Securities." From
time to time the Trust may invest more than 5% of its net assets in municipal lease
obligations that the Manager has determined to be liquid under guidelines set by the Board
of Trustees. Those guidelines require the Manager to evaluate:
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.

While the Trust holds such securities, the Manager will also evaluate the likelihood
of a continuing market for these securities and their credit quality

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.

|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 or structural
events.

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.

Ratings of Securities - Portfolio Quality, Maturity and Diversification. Under Rule 2a-7
of the Investment Company Act of 1940, ("Investment Company Act"), the Trust uses the
amortized cost method to value its portfolio securities to determine the Trust's net asset
value per share. Rule 2a-7 imposes requirements for the maturity, quality and
diversification of the securities which the Trust buys. The Trust may purchase only those
securities that the Manager, under procedures approved by the Board of Trustees, has
determined have minimal credit risk and, as such, are "eligible securities."

|X| Quality. Eligible securities are securities that have received a rating in one of
the two highest short-term rating categories by a rating organization. Rating
organizations are designated by the SEC. Eligible securities may be "first tier" or
"second tier" securities. First tier securities are those that have received a rating in
the highest category for short term debt obligations by at least two rating organizations.
If only one rating organization has rated the security, it must be rated in the highest
category for that rating organization. U.S. government securities and securities issued by
a registered money market mutual fund are also first tier securities. A second tier
security is any eligible security that is not a first tier security.

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.

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

|X| Maturity. The Trust must maintain a dollar-weighted average portfolio maturity of
not more than 90 days, and the maturity of any single security must not be in excess of 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.

|X| Demand Features and Guarantees. Demand features and guarantees and some of their
uses are described in the Prospectus. The Trust also uses demand features and guarantees
to satisfy the maturity, quality and diversification requirements described above. The
Trust considers the person which issues the demand feature as the person to which the Trust
will look for payment. An unconditional demand feature is considered a guarantee and the
Trust looks to the person making the guarantee for payment of the obligation of the
underlying security.

When the Trust buys municipal securities, it may obtain a demand feature from the
seller to repurchase the securities that entitles the Trust to achieve same day settlement
from the repurchaser and to receive an exercise price equal to the amortized cost of the
underlying security plus accrued interest, if any, at the time of exercise. Another type
of demand feature purchased in conjunction with a Municipal Security enables the Trust to
sell the underlying security within a specified period of time at a fixed exercise price.
The Trust may pay for demand features either separately in cash or by paying a higher price
for the securities acquired subject to the demand features. The Trust will enter into
these transactions only with banks and dealers which, in the Manager's opinion, present
minimal credit risks. The Trust's purchases of demand features are subject to the
provisions of Rule 2a-7 under the Investment Company Act.

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

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

Loans of Portfolio Securities. To attempt to increase its income, the Trust may lend its
portfolio securities to brokers, dealers and other financial institutions. These loans are
limited to not more than 10% of the value of the Trust's total assets and are subject to
other conditions described below. The Trust will not enter into any securities lending
agreements having a maturity in excess the maximum time period provided for in Rule 2a-7.
The Trust presently does not intend to lend its portfolio securities, but if it does, the
value of securities loaned will not exceed 5% of the value of the Trust's total assets.
There are some risks in lending securities. The Trust could experience a delay in
receiving additional collateral to secure a loan, or a delay in recovering the loaned
securities.

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

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

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

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

Illiquid and Restricted Securities. Under the policies and procedures established by the
Trust's Board of Trustees, the Manager determines the liquidity of certain of the Trust's
investments. Investments may be illiquid because of the absence of an active trading
market, making it difficult to value them or dispose of them promptly at an acceptable
price. A restricted security is one that has a contractual restriction on its resale or
which cannot be sold publicly until it is registered under the Securities Act of 1933.

Illiquid securities the Trust can buy include issues that may be redeemed only by the
issuer upon more than seven days notice or at maturity, repurchase agreements maturing in
more than seven days, fixed time deposits subject to withdrawal penalties which mature in
more than seven days, and other securities that cannot be sold freely due to legal or
contractual restrictions on resale. Contractual restrictions on the resale of illiquid
securities might prevent or delay their sale by the Trust at a time when such sale would be
desirable.

There are restricted securities that are not illiquid that the Trust can buy. They
include certain master demand notes redeemable on demand, and short-term corporate debt
instruments that are related to current transactions of the issuer and therefore are exempt
from registration as commercial paper. Illiquid securities include repurchase agreements
maturing in more than seven days, or certain participation interests other than those with
puts exercisable within seven days.

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.

Special Investment Considerations - New York Municipal Securities. As explained in the
Prospectus, the Trust's investments are highly sensitive to the fiscal stability of New
York State (referred to in this section as the "State") and its subdivisions, agencies,
instrumentalities or authorities, including New York City (the "City"), which issue the
municipal securities in which the Trust invests. The following information on risk factors
in concentrating in New York municipal securities is only a summary, based on the State's
Annual Information Statement dated May 8, 2007 and on publicly-available official
statements relating to offerings by issuers of New York municipal securities on or prior to
March 1, 2007 with respect to offerings of New York State, and on or prior to May 3, 2007
with respect to offerings by the City. No representation is made as to the accuracy of
this information.

During the mid-1970's the State, some of its agencies, instrumentalities and public
benefit corporations (the "Authorities"), and certain of its municipalities faced serious
financial difficulties. To address many of these financial problems, the State developed
various programs, many of which were successful in reducing the financial crisis. Any
further financial problems experienced by these Authorities or municipalities could have a
direct adverse effect on the New York municipal securities in which the Trust invests.

New York is the third most populous state in the nation and has a relatively high
level of personal wealth. The State's economy is diverse, with a comparatively large share
of the nation's financial activities, information, education, and health services
employment, and a very small share of the nation's farming and mining activity. The State's
location and its air transport facilities and natural harbors have made it an important
link in international commerce. Travel and tourism constitute an important part of the
economy. Like the rest of the nation, New York has a declining proportion of its workforce
engaged in manufacturing, and an increasing proportion engaged in service industries.

|X| Factors Affecting Investments in New York State Securities. The 2007-08 Enacted
Budget Financial Plan ("Enacted Budget Financial Plan" or "Financial Plan") was prepared by
the New York State Division of Budget ("DOB")and reflects the actions of the Legislature
and Governor through May 8, 2007. The State finalized the Enacted Budget for 2007-08 on
April 1, 2007.

The Enacted Budget Financial Plan contains estimates and projections of future
results that should not be construed as statements of fact. These estimates and
projections are based upon various assumptions that may be affected by numerous factors,
including future economic conditions in the State and nation, Federal law changes, and
adverse judgments against the State. There can be no assurance that actual results will not
differ materially and adversely from the estimates and projections contained in the Enacted
Budget Financial Plan summarized herein.

The State reported that the General Fund (the main operating fund of the State) was
balanced on a cash basis, with annual spending projected to grow by 4.1%, reflecting
substantial increases in aid to public schools. All Governmental Funds spending, which
includes Federal aid, was estimated at $120.7 billion, an increase of 7.0% from 2006-07.
State tax receipts were expected to return to a historical growth rate of roughly 5% over
2006-07 levels, following three consecutive years in which growth exceeded 10% for the
first time ever. State debt outstanding was projected to total $52.0 billion in 2007-08,
with debt service equal to roughly 4.2% of All Funds receipts.

Entering the 2007-08 budget cycle, the State had estimated a budget imbalance of $1.6
billion in 2007-08 and gaps in the range of $3 billion to $6 billion in future years. The
Governor's Executive Budget proposal, if enacted in its entirety, would have eliminated the
2007-08 imbalance and left gaps of $2.3 billion in 2008-09, $4.5 billion in 2009-10, and
$6.3 billion in 2010-11. The Enacted Budget Financial Plan, which incorporated both the
Legislature's modifications to Executive recommendations and revisions to current service
receipts and spending estimates, was also balanced in 2007-08, but projected an estimated
gap of $3.1 billion in 2008-09 and $4.8 billion in 2009-10.

Many complex political, social and economic forces influence the State's economy and
finances, which may in turn affect the State's Financial Plan unpredictably from fiscal
year to fiscal year. For example, the Financial Plan is necessarily based on forecasts of
national and State economic activity. Economic forecasts have frequently failed to predict
accurately the timing and magnitude of specific and cyclical changes in the national and
State economies.

The U.S. Economy. DOB stated that data for the fourth quarter of 2006 showed a national
economy in the throes of a substantial inventory correction and a severe residential
housing market contraction. DOB projected that both will continue to keep economic growth
below its long-term trend rate through the first half of 2007. For all of 2006, real U.S.
GDP increased 3.3%, following a 3.2% rise in 2005. DOB projected growth of 2.4% for 2007,
virtually unchanged from the February forecast. A small upward revision in household
consumption spending was expected to compensate for weaker business investment spending
than anticipated in February.

The State reported that despite relatively low output growth, the resiliency of the
national labor market remained impressive. First quarter 2007 growth in U.S.
nonagricultural employment was somewhat stronger than anticipated. However, employment is
often a lagging indicator and DOB continued to project a deceleration in job growth for
2007. DOB also projected a gradual rise in the unemployment rate over the course of 2007,
consistent with the February forecast. Personal income growth was revised up slightly to
5.5% for 2007, due primarily to an upward revision in wage growth to 5.5%. Inflation of 2.2
%, as measured by growth in the Consumer Price Index, was projected for 2007, down from
3.2% for 2006. The State believed that a slightly stronger labor market, along with
stronger wage growth, will act to further restrain growth in U.S. corporate profits, which
are now projected to grow 5.3 % in 2007.

DOB's outlook for a soft landing of the national economy and a stable monetary policy
stance through the end of 2007 remained unchanged from February. However, there are a
number of risks to this forecast. If the labor market outperforms the forecast, higher
employment and wage growth could induce stronger growth in consumer spending than
projected. However, a tighter labor market than expected, particularly within the
service-producing sectors that are less vulnerable to global competition, could result in
higher inflation as well. Higher inflation, in turn, might induce the Federal Reserve to
raise its short-term interest rate target, restraining economic growth. Higher interest
rates and stronger employment and wages could also result in weaker profits and equity
markets than projected. Higher interest rates could also further delay the recovery of the
housing market, which could put downward pressure on consumer spending. Higher interest
rates could also compound the troubles emanating from the subprime mortgage market. A shock
to the economy related to geopolitical uncertainty, either in the form of a direct attack
or excessive energy price volatility, also remains a risk. On the other hand, lower energy
prices or stronger global growth than anticipated could result in stronger economic growth
than expected.

Risks to the U.S. Economic Forecast. Although DOB believed that the Federal Reserve has
successfully managed a soft landing and that the U.S. economy will avoid a near-term
recession, it noted that there is considerable risk to the forecast; the forecast is
contingent upon the absence of severe shocks to the economy. Unpredictable events, such as
a major terrorist attack, remain the biggest risk to continued economic expansion. Such a
shock could impair economic growth in many ways, such as causing a plunge in consumer
confidence, the stock market, investment spending by firms, or impairing the transportation
of goods and services, or causing a large spike in oil prices. A severe and extended
downturn could easily materialize from such shocks.

DOB also believed that a more severe-than-anticipated downturn in the housing market
could derail the national economy from its predicted path. The additional weakness
emanating from the housing and manufacturing sectors could result in lower job and income
growth than expected, which in turn would produce lower growth in household spending than
implied by the forecast. A more abrupt-than-projected increase in energy prices could
reduce the ability of consumers and businesses to spend on non-energy related items. Such
cutbacks could make firms behave even more cautiously and reduce business capital spending.
Persistently high energy prices also raise the possibility that inflationary expectations
could ratchet higher, causing the Federal Reserve Board to revert back to a tightening of
monetary policy. Higher interest rates would, in turn, further exacerbate the slowdown and
raise the likelihood of a recession.

DOB anticipates that a sharp reduction in the inflow of foreign funds could produce new
inflationary pressures by weakening the U.S. dollar, which might also cause the Federal
Reserve to resume tightening. Such a development might also produce an imbalance in the
market for U.S. Treasury securities, causing long term rates to rise higher-than-expected
in order to fund the Federal budget deficit. Higher-than anticipated Federal spending on
the Iraq war could have a similar effect. Higher interest rates could, in turn, induce
households to increase the personal saving rate, resulting in even further cutbacks in
consumer spending. This risk would only be exacerbated by lower-than-expected equity or
housing prices, particularly if the anticipated easing of home prices happens suddenly
rather than gradually, as expected. Again, lower consumption growth could weaken expected
future corporate profits and, in turn, lower employment and investment growth.

DOB also believes that, on the other hand, lower-than-expected inflation, perhaps as a
result of an even greater drop in the price of oil or more modest growth in unit labor
costs, possibly due to slower growth in wages or stronger productivity growth, could induce
the Federal Reserve to reduce its short-term interest rate target, resulting in stronger
consumption and investment growth than projected. A more rapid increase in export growth
due to either a weakened dollar or faster global growth could generate a somewhat stronger
increase in total output than expected. Moreover, DOB believes that stronger employment
growth could result in higher real wages, supporting faster growth in consumer spending
than currently anticipated.

The New York Economy. The State reported that the New York economy continues to expand.
Anticipated growth in total New York nonfarm employment for 2007 remained virtually
unchanged at 0.7%, following downward revised growth of 0.8% for 2006. Projected private
sector job growth is also unchanged at 0.8% for 2007, following an estimated 1.1% growth
for 2006. DOB's forecast for growth in State wages and salaries was revised up to 6.2% for
2007, following growth of 7.6% for 2006, due almost entirely to stronger finance and
insurance sector bonus growth than projected in February. The State noted that growth in
total New York personal income for 2007 was now projected at 5.6%, following growth of 6.0%
for 2006.

Risks to the New York Forecast. DOB believed that all of the risks to the U.S. forecast
described above apply to the State forecast as well, although interest rate risk and equity
market volatility pose a particularly large degree of uncertainty for New York. Should the
Federal Reserve revert to a tight monetary policy, the negative impact would
disproportionately affect New York due the importance of the finance industry to the State
economy. The DOB also believed that there are risks specific to New York. The chief risk
remains another attack targeted at New York City that could once again plunge the State
economy into a recession, resulting in substantially lower income and employment growth
than is reflected in the current forecast. Higher energy prices and the potential for
greater pass-through to core inflation, combined with a tightening labor market, raise the
probability that the Federal Reserve could tighten one more time. Such an outcome could
negatively affect the financial markets, which would also disproportionately affect the New
York State economy. In addition, the State's real estate market could decline more than
anticipated, which would negatively affect household consumption and taxable capital gains
realizations. DOB believed These effects could ripple though the economy, affecting both
employment and wages.

In contrast, DOB also believed that should the national and world economies grow faster
than expected, a stronger upturn in stock prices, along with even stronger activity in
mergers and acquisitions and other Wall Street activities is possible, resulting in higher
wage and bonuses growth than projected. DOB noted that the financial markets, which are so
pivotal to the direction of the downstate economy, are notoriously difficult to forecast.

Labor Contracts/Salary Increases. Existing labor contracts with all of the State's major
employee unions expired on April 1, 2007 (United University Professionals will expire on
July 1, 2007). The Financial Plan did not set aside any reserves for future collective
bargaining agreements in 2007-08 or beyond. Each future 1% salary increase would cost
roughly $86 million annually in the General Fund and $134 million in All Funds. The
projections do not contain any funding for pay raises for the Judiciary or elected
officials.

School Supportive Health Services. The Office of the Inspector General (OIG) of the
United States Department of Health and Human Services is conducting six audits of aspects
of New York State's School Supportive Health Services program with regard to Medicaid
reimbursement. The audits cover $1.4 billion in claims submitted between 1990 and 2001. To
date, OIG has issued four final audit reports, which cover claims submitted by upstate and
New York City school districts for speech pathology and transportation services. The final
audits recommend that the Centers for Medicare and Medicaid Services (CMS) disallow $173
million of the $362 million in claims for upstate speech pathology services, $17 million of
$72 million for upstate transportation services, $436 million of the $551 million in claims
submitted for New York City speech pathology services, and $96 million of the $123 million
for New York City transportation services. New York State disagrees with the audit findings
on several grounds and has requested that they be withdrawn.

While CMS has not taken any action with regard to the disallowances recommended by OIG,
CMS is deferring 25% of New York City claims and 9.7% of claims submitted by the rest of
the State, pending completion of the audits. Since the State has continued to reimburse
school districts for certain costs, these Federal deferrals are projected to drive
additional spending that has been reflected in the State's Financial Plan.

Proposed Federal Rule on Medicaid Funding. On January 18, 2007, CMS issued a proposed
rule that, if implemented, would significantly curtail Federal Medicaid funding to public
hospitals (including New York City's Health and Hospital Corporation (HHC)) and
institutions and programs operated by both the State OMRDD and the State OMH. The rule
seeks to restrict State access to Federal Medicaid resources. The provision replacing
prospective reimbursement with cost-based methodologies would have the most significant
impact on New York's health care system.

The proposed rule could go into effect as soon as September 2007. It is estimated the
rule could result in the loss of $350 million annually in Federal funds for HHC and
potentially larger losses in aid for the State Mental Hygiene System.

The states affected by the regulations are expected to challenge their adoption on the
basis that CMS is overstepping its authority and ignoring the intent of Congress. In recent
years, the Congress has rejected similar proposals in the President's budget.

Video Lottery Terminal Expansion. In developing annual VLT revenue estimates, the State's
four-year Financial Plan assumes the approval of an expansion plan sometime in 2007-08,
which is expected to provide $150 million in 2008-09, $357 million in 2009-10, and $766
million in 2010-11. Including expansion, VLT revenues are projected to increase by $476
million in 2008-09, $286 million in 2009-10, and $430 million in 2010-11, and are projected
to total $1.1 billion in 2008-09 growing to $1.8 billion in 2010-11. Additional VLT
revenues from the expansion support planned School Aid spending, offsetting General Fund
costs. Absent legislative approval for the expansion, General Fund support for School Aid,
as well as the estimated General Fund spending gaps, would increase by $150 million in
2008-09, $357 million in 2009-10, and $766 million in 2010-11.

School Aid Database Updates. After enactment of the State Budget, school districts
are authorized to submit additional State aid claims for payment in the September following
the close of such school year. In some cases, these additional claims have significantly
increased the State's liability on a school year basis. Recent database updates increased
the State's liability for School Aid by $222 million ($176 million net of SED
reclassifications) for increases for the 2006-07 school year, $161 million for 2005-06 and
$119 million for the 2004-05 school year, the vast majority of which was for New York City.
If school districts -- particularly New York City -- continue to submit additional claims
after enactment of the 2007-08 State Budget, the State will have an increased financial
obligation beyond what is currently reflected in the Financial Plan.

|X| The 2006-07 Financial Plan.

General Fund Receipts. Total 2007-08 General Fund receipts were projected to be $53.7
billion, an increase of $2.3 billion, or 4.5% from 2006-07 results. General Fund tax
receipt growth was projected to be 1.5% over 2006-07 results and General Fund miscellaneous
receipts were projected to increase by $217 million. DOB stated that the relatively small
growth in General Fund tax receipts largely reflects non-tax and non-economy related
factors including proposals increasing STAR benefits and earmarking additional funds to
debt service funds. Federal grants decline due to the loss of one-time Federal
reimbursement for emergency costs related to delays in implementation of the Federal
Medicare Part D program.

General Fund income tax receipts for 2007-08, which are net of deposits to the STAR Fund
and the Revenue Bond Tax Fund (RBTF), were estimated to remain almost flat at $22.9
billion. Deposits to the STAR Fund, which will increase by $736 million to $4.7 billion in
2007-08, reflect Enacted Budget legislation that will increase the current STAR program by
providing property tax relief rebates to middle-class homeowners and seniors. Deposits to
the RBTF of over $9.2 billion reflect Enacted Budget legislation that requires RBTF
deposits to be calculated before the deposit of income tax receipts to the STAR Fund.
Although this has the impact of decreasing General Fund receipts by nearly $1.2 billion
(25% of STAR), deposits in excess of debt service requirements are transferred back to the
General Fund. General Fund receipts from user taxes and fees were estimated to total $8.9
billion in 2008-09, an increase of $335 million from 2007-08. General Fund business tax
receipts for 2007-08 of $6.7 billion were estimated to increase $211 million, or 3.3% over
the prior year. General Fund receipts in 2007-08 from other taxes were projected to total
more than $1.1 billion, or a $60 million increase with estate tax collections expected to
grow modestly. General Fund miscellaneous receipts collections in 2007-08 were projected to
reach approximately $2.5 billion, up $218 million from 2006-07 results, reflecting license
and fee collections and expected receipts from the New York Power Authority, partially
offset by decreases in receipts from investment income.

General Fund Spending. The State projected General Fund spending, including transfers to
other funds, to total $53.7 billion in 2007-08, an increase of $2.1 billion (4.1%) over
2006-07 actual results.

Grants to Local Governments (Local Assistance) includes payments to local governments,
school districts, healthcare providers, and other local entities, as well as certain
financial assistance to, or on behalf of, individuals, families, and nonprofit
organizations. Local Assistance spending by the General Fund was projected at $37.2 billion
in 2007-08, an increase of $2.9 billion (8.3%) from the prior year. The largest annual
increases were for Medicaid, School Aid, Mental Hygiene, Children and Families, and
Temporary and Disability Assistance.

General Fund State Operations spending was projected to total $9.6 billion in 2007-08, an
increase of $300 million (3.2%) from the prior year. State Operations spending is for
personal service (PS) and non-personal service (NPS) costs. Personal service costs, which
account for approximately two-thirds of State Operations spending, includes salaries of
State employees of the Executive Branch, Legislature, and Judiciary, as well as overtime
payments and costs for temporary employees. Nonpersonal service costs, which account for
the remaining one-third of State Operations, represent the operating costs of State
agencies, including real estate rental, utilities, contractual payments (e.g., consultants,
information technology and professional business services), supplies and materials,
equipment, telephone service and employee travel.

Spending by the General Fund on General State Charges was projected to total $4.5 billion
in 2007-08, an increase of $127 million (2.9%) from the prior year. General State Charges
account for the costs of fringe benefits provided to State employees and retirees of the
Executive, Legislative and Judicial branches, tax payments to municipalities related to
public lands, and certain litigation against the State. Fringe benefit payments, many of
which are mandated by statute or collective bargaining agreements, include employer
contributions for pensions, social security, health insurance, workers' compensation and
unemployment insurance. Other costs include State taxes paid to local governments for
certain State-owned lands, and payments related to lawsuits against the State and its
public officers. Employee fringe benefits will be paid mostly from the General Fund (84%).
Other General State Charges costs will be paid in full by General Fund revenues.

General Fund debt service was projected at $1.6 billion in 2007-08, a decrease of $327
million (17.2%) from the prior year. The year-to-year decrease is due to the timing of
payments which were made at the end of 2006-07 (absent such payments, 2007-08 debt service
would have increased by an estimated 4.3%). The State pays debt service on all outstanding
State-supported bonds, including general obligation bonds, for which the State is
constitutionally obligated to pay debt service, as well as bonds issued by State public
authorities (e.g., Empire State Development Corporation, Dormitory Authority of the State
of New York, Thruway Authority) for which the State is contractually obligated to pay debt
service, subject to an appropriation. Depending on the credit structure, debt service is
financed through transfers from the General Fund, dedicated taxes and fees, and other
resources, such as patient income revenues.

General Fund spending on Capital Projects was projected to total $82 million billion in
2007-08, a decrease of $307 million (78.9%) from the prior year. The Capital Projects Fund
group accounts for spending across all functional areas to finance costs related to the
acquisition, construction, repair or renovation of fixed assets.

In 2007-08, transfers by the General Fund to other funds were projected to total $2.4
billion and transfers to the General Fund by other funds were projected to total $11.9
billion. The most significant General Fund transfer to other funds was for general debt
service ($1.6 billion). Other significant General Fund transfers to other funds included
Judiciary transfers to the Court Facilities Incentive Aid Fund, New York City County Clerks
Fund, and Judiciary Data Processing Fund ($211 million, total) and transfers representing
payments for patients residing in State-operated Health, Mental Hygiene and State
University facilities ($174 million), SUNY hospital subsidy payments ($110 million), and to
the Capital Projects fund for pay-as-you-go projects ($82 million). All other transfers to
other funds totaled $219 million; the most significant included $69 million for the payment
of banking services, $33 million for transit, $25 million for stem cell research, and $20
million for commitments and mandates for the Office of Mental Retardation and Developmental
Disabilities.

Of the $11.9 billion General Fund transfer from other funds, $11.3 billion resulted
from dedicated Personal Income, Sales and Real Estate Transfer taxes above required debt
service. All other fund/account sweeps total $537 million, the largest of which include
$133 million from the Tribal-State Compact, $100 million in miscellaneous special revenue
sweeps, $28 million from DMV, $27 million from the Hazardous Waste Fund, and $21 million
from the Cultural Education account.

Cash Flow Forecast. In 2007-08, the General Fund was projected to have
quarterly-ending balances of $4.2 billion in June 2007, $5.0 billion in September 2007,
$2.4 billion in December 2007, and $3.1 billion at the end of March 2008. The lowest
projected month-end cash flow balance was $2.4 billion in December 2007.

|_| State Governmental Funds Group. Substantially all State non-pension financial
operations are accounted for in the State's governmental funds group. Governmental funds
include the following four fund types, the State's projections of receipts and
disbursements in which comprise the State's Financial Plan:

o the General Fund, which is the major operating fund of the State and receives
all receipts that are not required by law to be deposited in another fund, including most
State tax receipts and certain fees, transfers from other funds and miscellaneous receipts
from other sources;

o Special Revenue Funds, which account for the proceeds of specific revenue
sources (other than expendable trusts or major capital projects), such as federal grants,
that are legally restricted to specified purposes;

o Capital Projects Funds, which account for financial resources of the State to
be used for the acquisition or construction of major capital facilities (other than those
financed by Special Revenue Funds, Proprietary Funds and Fiduciary Funds); and

o Debt Service Funds, which account for the accumulation of resources (including
receipts from certain taxes, transfers from other funds and miscellaneous revenues, such as
dormitory room rental fees, which are dedicated by statute for payment of lease-purchase
rentals) for the payment of general long-term debt service and related costs and payments
under lease-purchase and contractual-obligation financing arrangements.

|_| Local Government Assistance Corporation. In 1990, as part of a State fiscal
reform program, legislation was enacted creating Local Government Assistance Corporation
(LGAC), a public benefit corporation empowered to issue long-term obligations to fund
payments to local governments that had been traditionally funded through the State's annual
seasonal borrowing. The legislation also dedicated revenues equal to one percent of the
State sales and use tax to pay debt service on these bonds. As of June 1995, LGAC had
issued bonds and notes to provide net proceeds of $4.7 billion, completing the program.
The issuance of these long-term obligations, which are to be amortized over no more than 30
years, was expected to eliminate the need for continued short-term seasonal borrowing.

The legislation also eliminated annual seasonal borrowing of the State except in
cases where the Governor and the legislative leaders have certified the need for additional
seasonal borrowing, based on emergency or extraordinary factors or factors unanticipated at
the time of adoption of the budget, and provided a schedule for eliminating it over time.
Any seasonal borrowing is required by law to be eliminated by the fourth fiscal year after
the limit was first exceeded (i.e., no tax and revenue anticipation note (TRAN) seasonal
borrowing in the fifth year). This provision limiting the State's seasonal borrowing
practices was included as a covenant with LGAC's bondholders in the resolution authorizing
such bonds. No restrictions were placed upon the State's ability to issue deficit notes.

The impact of the LGAC reforms, as well as other changes in revenue and spending
patterns, is that the State has been able to meet its cash flow needs throughout the fiscal
year without relying on short-term seasonal borrowings.

|X| Authorities. The fiscal stability of the State is related in part to the
fiscal stability of its public Authorities. Authorities refer to public benefit
corporations, created pursuant to State law. Authorities have various responsibilities,
including those which finance, construct and/or operate revenue-producing public
facilities. Authorities are not subject to the constitutional restrictions on the
incurrence of debt that apply to the State itself, and may issue bonds and notes within the
amounts and restrictions set forth in their legislative authorization. The State's access
to the public credit markets could be impaired and the market price of its outstanding debt
may be materially and adversely affected if any of its Authorities were to default on their
respective obligations, especially those involving State-supported or State-related debt.
As of December 31, 2006, there were 19 public authorities that had outstanding debt of $100
million or more, and the aggregate outstanding debt, including refunding bonds, of these
State public authorities was approximately $129 billion, only a portion of which
constituted State-supported or State-related debt.

Authorities generally pay their operating expenses and debt service costs from
revenues generated by the projects they finance or operate, such as tolls charged for the
use of highways, bridges or tunnels, charges for public power, electric and gas utility
services, rentals charged for housing units and charges for occupancy at medical care
facilities. In addition, State legislation authorizes several financing techniques for
Authorities. There are statutory arrangements providing for State local assistance
payments otherwise payable to localities to be made under certain circumstances to
Authorities. Although the State has no obligation to provide additional assistance to
localities whose local assistance payments have been paid to Authorities under these
arrangements, the affected localities could seek additional State assistance if local
assistance payments are diverted. Some Authorities also receive moneys from State
appropriations to pay for the operating costs of certain of their programs.

|X| Ratings of the State's Securities. As of November 16, 2006, S&P had rated the
State's general obligation bonds "AA," Moody's had rated those bonds "Aa3" and Fitch had
rated those bonds "AA-".

Ratings reflect only the respective views of such organizations, and an explanation
of the significance of such ratings must be obtained from the rating agency furnishing the
rating. There is no assurance that a particular rating will continue for any given period
of time or that any such rating will not be revised downward or withdrawn entirely if, in
the judgment of the agency originally establishing the rating, circumstances so warrant. A
downward revision or withdrawal of a rating may have an effect on the market price of the
State and municipal securities in which the Trust invests.

|X| The State's General Obligation Debt. As of March 31, 2007, the State had
approximately $3.3 billion in general obligation debt outstanding.

|X| Pending Litigation. The State is a defendant in numerous legal proceedings
pertaining to matters incidental to the performance of routine governmental operations.
That litigation includes, but is not limited to, claims asserted against the State
involving State finances and programs and arising from alleged violations of civil rights,
alleged torts, alleged breaches of contracts, real property proceedings and other alleged
violations of State and Federal laws. These proceedings could affect adversely the
financial condition of the State in the 2007-08 fiscal year or thereafter.

Adverse developments in these proceedings, other proceedings for which there are
unanticipated, unfavorable and material judgments, or the initiation of new proceedings
could affect the ability of the State to maintain a balanced 2007-08 Financial Plan. The
State has reported its belief that the 2007-08 Financial Plan included sufficient reserves
to offset the costs associated with the payment of judgments that may be required during
the 2007-08 fiscal year. These reserves included (but were not limited to) amounts
appropriated for Court of Claims payments and projected fund balances in the General Fund.
In addition, any amounts ultimately required to be paid by the State may be subject to
settlement or may be paid over a multi-year period. There could be no assurance given,
however, that adverse decisions in legal proceedings against the State would not exceed the
amount of all potential 2007-08 Financial Plan resources available for the payment of
judgments, and could therefore adversely affect the ability of the State to maintain a
balanced 2007-08 Financial Plan.

In addition, the State is party to other claims and litigation that either its legal
counsel has advised that it is not probable that the State will suffer adverse court
decisions or the State has determined are not material. Although the amounts of potential
losses, if any, were not presently determinable, it was the State's opinion that its
ultimate liability in these cases was not expected to have a material adverse effect on the
State's financial position in the 2007-08 fiscal year or thereafter.

|X| Other Localities. Certain localities outside the City have experienced
financial problems and have requested and received additional State assistance during the
last several State fiscal years. The State noted that while deficit financing is a
relatively infrequent practice, it has become more common in recent years. Between 2004 and
2006, the State Legislature authorized 11 bond issuances to finance local government
operating deficits. The potential impact on the State of any future requests by localities
for additional oversight or financial assistance was not included in the projections of the
State's receipts and disbursements for the State's 2007-08 fiscal year or thereafter.

|X| Factors Affecting Investments in New York City Municipal Securities. The City
has a highly diversified economic base, with a substantial volume of business activity in
the service, wholesale and retail trade and manufacturing industries and is the location of
many securities, banking, law, accounting, news media and advertising firms.

The City is a major seaport and focal point for international business. Many of the
major corporations headquartered in the City are multinational in scope and have extensive
foreign operations. Numerous foreign-owned companies in the United States are also
headquartered in the City. These firms, which have increased in number substantially over
the past decade, are found in all sectors of the City's economy, but are concentrated in
trade, professional and business services, tourism and finance. The City is the location
of the headquarters of the United Nations, and several affiliated organizations maintain
their principal offices in the City. A large diplomatic community exists in the City to
staff the missions to the United Nations and the foreign consulates.

Economic activity in the City has experienced periods of growth and recession and can
be expected to experience periods of growth and recession in the future. The City
experienced a recession in the early 1970s through the middle of that decade, followed by a
period of expansion in the late 1970s through the late 1980s. The City fell into recession
again in the early 1990s which was followed by an expansion that lasted until 2001. The
economic slowdown that began in 2001 as a result of the September 11 terrorist attack, a
national economic recession, and a downturn in the securities industry came to an end in
2003. Since then, Wall Street activity, tourism, and the real estate market have driven a
broad based economic recovery. The City's financial plan assumed slower growth in calendar
year 2007, corresponding to a weakened economy.

For each of the 1981 through 2006 fiscal years, the City's General Fund had an
operating surplus, before discretionary and other transfers, and achieved balanced
operating results as reported in accordance with then applicable generally accepted
accounting principles ("GAAP") after discretionary and other transfers. City fiscal years
end on June 30 and are referred to by the calendar year in which they end. The City has
been required to close substantial gaps between forecast revenues and forecast expenditures
in order to maintain balanced operating results. There can be no assurance that the City
will continue to maintain balanced operating results as required by State law without tax
or other revenue increases or reductions in City services or entitlement programs, which
could adversely affect the City's economic base.

The Mayor is responsible for preparing the City's financial plan which relates to the
City and certain entities that receive funds from the City, including the financial plan
for the 2007 through 2010 fiscal years submitted to the Control Board in July 2006 (the
"July Financial Plan", Modification No. 07-4 to the July Financial Plan and the financial
plan for the 2008 through 2011 fiscal years submitted to the Control Board on June 20, 2007
(as so modified, the "2007-2011 Financial Plan", or "Financial Plan"). The City's
projections set forth in the Financial Plan are based on various assumptions and
contingencies which are uncertain and which may not materialize. Such assumptions and
contingencies include the condition of the regional and local economies, the provision of
State and federal aid, the impact on City revenues and expenditures of any future federal
or State policies affecting the City and the cost of future labor settlements.

Implementation of the Financial Plan is dependent upon the City's ability to market
its securities successfully. Implementation of the Financial Plan is also dependent upon
the ability to market the securities of other financing entities, including the New York
City Municipal Water Finance Authority ("Water Authority"), which issues debt secured by
water and sewer revenues. In addition, the City issues revenue and tax anticipation notes
to finance its seasonal working capital requirements. The success of projected public
sales of City, Water Authority and other bonds and notes will be subject to prevailing
market conditions. Future developments concerning the City and public discussion of such
developments, as well as prevailing market conditions, may affect the market for
outstanding City general obligation bonds and notes.

|X| The City's 2006-2010 Financial Plan. For the 2006 fiscal year, the City's
General Fund had an operating surplus of $3.756 billion, before discretionary transfers,
and achieved balanced operating results in accordance with GAAP, after discretionary and
other transfers. The 2006 fiscal year was the twenty-sixth consecutive year that the City
has achieved balanced operating results when reported in accordance with GAAP.

The City's expense and capital budgets for the 2007 fiscal year were adopted on June 30,
2006. The July Financial Plan, which was consistent with the City's expense and capital
budgets as adopted for the 2007 fiscal year, projected revenues and expenditures for the
2007 fiscal year balanced in accordance with GAAP, and projected gaps of $3.8 billion, $4.6
billion and $4.1 billion in fiscal years 2008 through 2010, respectively.

On June 20, 2007 the City submitted to the Control Board the Financial Plan for the 2007
through 2011 fiscal years which relates to the City and certain entities that receive funds
from the City and which reflects changes as a result of the City's expense and capital
budgets for the 2008 fiscal year which were adopted on June 15, 2007. The Financial Plan is
a modification to the July Financial Plan, as subsequently modified by the financial plans
submitted to the Control Board on November 1, 2006, January 26, 2007 and April 27, 2007
(the "April Financial Plan"). The Financial Plan projects revenues and expenses for the
2007 and 2008 fiscal years balanced in accordance with GAAP, and projects gaps of $1.6
billion, $3.4 billion and $4.4 billion in fiscal years 2009 through 2011, respectively.

The Financial Plan reflects, since the July Financial Plan, increases in projected net
revenues totaling $5.5 billion, $4.8 billion, $3.6 billion and $3.9 billion in fiscal years
2007 through 2010, respectively. Changes in projected revenues include (i) increases in
projected net tax revenues of $5.4 billion, $4.2 billion, $3.5 billion and $3.9 billion in
fiscal years 2007 through 2010, respectively, resulting primarily from increases in
projected real estate transaction, personal income and business tax revenues and (ii)
increases in other revenues of $424 million, $575 million, $97 million and $83 million in
fiscal years 2007 through 2010, respectively, offset by a decrease of $307 million in State
per capita aid in fiscal year 2007.

The Financial Plan also reflects, since the July Financial Plan, a decrease in projected
net expenditures totaling $128 million in fiscal year 2007 and increases in projected net
expenditures totaling $2.3 billion, $2.3 billion and $3.1 billion in fiscal years 2008
through 2010, respectively. Changes in projected expenditures since the July Financial Plan
include: (i) increases in labor costs totaling $314 million, $627 million, $990 million and
$1.2 billion in fiscal years 2007 through 2010, respectively, reflecting settlements of
labor negotiations and the provision for similar increases for collective bargaining units
not yet settled; (ii) increases in education spending of $103 million, $297 million, $330
million and $668 million in fiscal years 2007 through 2010, respectively; (iii) decreases
in State education aid of $41 million in each of fiscal years 2007 through 2010 associated
with debt service on bonds issued by the Municipal Bond Bank Agency to finance prior year
education claims by the City; (iv) decreases in fringe benefit costs of $108 million, $19
million, $24 million and $28 million in fiscal years 2007 through 2010, respectively; (v) a
decrease in pension contributions of $18 million in fiscal year 2007 and increases in
pension contributions of $120 million, $415 million and $450 million in fiscal years 2008
through 2010, respectively; (vi) a decrease in agency spending of $26 million in fiscal
year 2007 and increases in agency spending of $711 million, $518 million and $514 million
in fiscal years 2008 through 2010, respectively; (vii) City Council initiatives and
restorations of $233 million in fiscal year 2008 and $43 million in each of fiscal years
2009 and 2010; (viii) decreases of $79 million and $11 million in fiscal years 2007 and
2008, respectively, and increases of $19 million and $17 million in fiscal years 2009 and
2010, respectively, in energy expenditures; (ix) poverty initiative funding of $13 million,
$67 million, $65 million and $65 million in fiscal years 2007 through 2010, respectively;
(x) increases in medical assistance costs, due in part to an increase in the City share of
additional Medicaid claims, of $201 million, $452 million, $50 million and $144 million in
fiscal years 2007 through 2010, respectively; (xi) decreases in debt service costs of $410
million, $462 million, $453 million and $437 million in fiscal years 2007 through 2010,
respectively; (xii) decreases of $400 million and $260 million, respectively, in prior year
payables and the general reserve in fiscal year 2007; (xiii) PlaNYC 2030 environment and
infrastructure initiatives involving various tax credits and program funding with a net
cost of $1 million, $199 million, $341 million and $377 million in fiscal years 2007
through 2010, respectively; and (xiv) an increase of $500 million in fiscal year 2007 in
contributions to the trust fund for the future cost of retiree health benefits.

The Financial Plan also reflects, since the July Financial Plan, an agency program to
reduce expenditures or increase revenues for a net savings of $258 million, $473 million,
$346 million and $304 million in fiscal years 2007 through 2010, respectively. The
Financial Plan also reflects, since the July Financial Plan, a $1.3 billion increased
expense in fiscal year 2007 for the early retirement of debt including (i) the payment in
fiscal year 2007 of $718 million to the TFA for the early retirement of TFA debt due in
fiscal years 2009 and 2010, which results in increased personal income tax revenues of $33
million, $363 million and $382 million in fiscal years 2008 through 2010, respectively; and
(ii) an increase of $536 million in debt service funding in fiscal year 2007 for the early
retirement of general obligation debt due in fiscal years 2009 and 2010, which results in
debt service savings of $27 million, $278 million and $277 million in fiscal years 2008
through 2010, respectively.

The Financial Plan also reflects, since the July Financial Plan, tax programs including
(i) a 7% reduction in the real estate tax rate effective July 1, 2007 which has been
enacted and results in lower real estate tax collections of $1.05 billion, $1.14 billion
and $1.2 billion in fiscal years 2008 through 2010, respectively; and (ii) credits or
increases to other taxes including a childcare tax credit, various small business tax
credits and reductions, the City sales tax exemption for clothing and footwear purchases
and a cigarette tax increase, with an estimated impact of $238 million, $284 million and
$311 million in fiscal years 2008 through 2010, respectively, which require both State and
local approval. The Financial Plan also reflects the $256 million cost in each of fiscal
years 2008, 2009 and 2010 of the extension of the $400 property tax rebate for homeowners,
which has been approved by the State and the City.

The Financial Plan does not include the full cost of the recent tentative settlement with
the Sergeants Benevolent Association (the "SBA"). If settlements with other uniformed
forces employees and with civilian and pedagogical employees follow the pattern set by the
SBA, this would result in expenditures beyond those assumed in the Financial Plan of
approximately $73 million in fiscal year 2008, $418 million in fiscal year 2009, $1.055
billion in fiscal year 2010 and $1.591 in fiscal year 2011. The added cost of these
conforming settlements will continue to rise and reach $1.925 billion by fiscal year 2013.

The Financial Plan also does not reflect additional costs that would be incurred,
unless there is a change in applicable law, as a result of Statement No. 49 of the
Governmental Accounting Standards Board ("GASB 49"), which becomes effective on July 1,
2008 relating to the accounting treatment of pollution remediation costs. No estimates of
the amount of such costs are available at this time, but they are expected to be
substantial.

The Financial Plan is based on numerous assumptions, including the condition of the
City's and the region's economies and the concomitant receipt of economically sensitive tax
revenues in the amounts projected. The Financial Plan is subject to various other
uncertainties and contingencies relating to, among other factors, the extent, if any, to
which wage increases for City employees exceed the annual wage costs assumed for the 2006
through 2010 fiscal years; realization of projected interest earnings for pension fund
assets and assumptions with respect to wages for City employees affecting the City's
required pension fund contributions; the willingness and ability of the State to provide
the aid contemplated by the Financial Plan and to take various other actions to assist the
City; the ability of HHC and other such entities to maintain balanced budgets; the
willingness of the federal government to provide the amount of federal aid contemplated in
the Financial Plan; the impact on City revenues and expenditures of federal and State
welfare reform and any future legislation affecting Medicare or other entitlement programs;
adoption of the City's budgets by the City Council in substantially the forms submitted by
the Mayor; the ability of the City to implement cost reduction initiatives, and the success
with which the City controls expenditures; the impact of conditions in the real estate
market on real estate tax revenues; and the ability of the City and other financing
entities to market their securities successfully in the public credit markets. Certain of
these assumptions have been questioned by the City Comptroller and other public officials.

From time to time, the City Comptroller and other public officials issue reports and
make public statements regarding the City's financial condition, commenting on, among other
matters, the City's financial plans, projected revenues and expenditures and actions by the
City to eliminate projected operating deficits. Some of these reports and statements have
warned that the City may have underestimated certain expenditures and overestimated certain
revenues and have suggested that the City may not have adequately provided for future
contingencies. Certain of these reports have analyzed the City's future economic and
social conditions and have questioned whether the City has the capacity to generate
sufficient revenues in the future to meet the costs of its expenditure increases and to
provide necessary services. It is reasonable to expect that reports and statements will
continue to be issued and to engender public comment.

On May 22, 2007, the City Comptroller released a report on the City's Executive Budget
and April Financial Plan. The report notes that the City expected to end fiscal year 2007
with a record surplus, before discretionary transfers, of $5.63 billion. The fiscal year
2007 surplus was due primarily to increased tax revenue collections, which exceeded the
initial projections of the adopted June 2006 budget by $4.95 billion. The report noted that
$1.25 billion of the surplus will be used to pay City and TFA debt maturing in fiscal years
2009 and 2010 and the remaining $4.39 billion will be used for budgetary relief in fiscal
years 2008, 2009 and 2010, respectively. The report noted that pension contributions are
projected to increase from $4.0 billion in fiscal year 2006 to $6.4 billion in fiscal year
2010, and then remain stable through fiscal year 2011 and employee and retiree health care
costs are projected to increase between fiscal years 2007 through 2011 at an average annual
rate of about 8.2%. The report noted that after adjusting for prepayments, debt service,
including TFA debt service, is expected to increase by 35.5% over the period from fiscal
year 2007 through fiscal year 2011.

In his report, the City Comptroller identified net resources and risks for fiscal years
2007 through 2011, which, when added to the projected results in the April Financial Plan,
would result in a surplus of $200 million in fiscal year 2007, a surplus of $247 million in
fiscal year 2008, and lower gaps of $648 million, $2.72 billion and $3.99 billion in fiscal
years 2009, 2010 and 2011, respectively. Overall, the City Comptroller's report identified
additional net resources exceeding April Financial Plan projections by $200 million, $247
million, $905 million, $544 million and $298 million in fiscal years 2007 through 2011,
respectively. The difference from the April Financial Plan results primarily from City
Comptroller tax revenue projections which exceed those in the April Financial Plan by $200
million, $440 million, $1.1 billion, $755 million and $510 million in fiscal years 2007
through 2011, respectively, primarily due to higher forecast business, personal income and
real estate transaction tax revenues through the plan period. The report identified risks
which offset the higher revenue projections by $193 million, $200 million, $211 million and
$212 million in fiscal years 2008 through 2011, respectively, including: (i) increased
overtime expenditures of $123 million in fiscal year 2008 and $100 million in each of
fiscal years 2009 through 2011; (ii) the shortfall in assumed federal education aid of $50
million in fiscal year 2008 and $100 million in each of the fiscal years 2009 through 2011;
and (iii) increased costs of collective bargaining of $20 million in fiscal year 2008, $11
million in fiscal year 2010 and $12 million in fiscal year 2011.

The report projected significantly higher growth rates in the Gross City Product than
that assumed in the April Financial Plan in calendar years 2007 through 2011. The report
projected lower City job growth in calendar year 2007 and higher City job growth in each of
calendar years 2008 through 2011, than that assumed in the April Financial Plan.

The report also identified issues that could affect the City's financial outlook. These
include the significant recurring deficits of HHC which cast uncertainty on HHC's financial
outlook in future years and may require increased subsidies to HHC if sufficient
gap-closing measures fail to materialize. The report also noted that the April Financial
Plan sets aside approximately $199 million to finance PlaNYC 2030, a long-term plan to
accommodate future population and economic growth, and that the City's Ten Year Capital
Strategy also reserves $1.62 billion to finance capital improvements related to PlaNYC 2030.

On May 30, 2007, the staff of the OSDC issued a report on the April Financial Plan. The
OSDC report found that the City expects to realize $8.9 billion in unanticipated resources
during fiscal years 2007 and 2008, even after addressing funding needs that were not
contemplated at the start of the fiscal year. For fiscal year 2007 alone, the City realized
a net benefit of $5.6 billion of which $1.2 billion would be used to retire outstanding
debt due in fiscal years 2009 and 2010 and the remaining $4.4 billion used to prepay future
expenses in order to close the projected $3.8 billion budget gap in fiscal year 2008 and
narrow budget gaps in subsequent fiscal years.

The OSDC report identified net resources which, when added to the projected results in
the April Financial Plan, would result in a surplus of $275 million in fiscal year 2007, a
surplus of $400 million in fiscal year 2008 and lower gaps of $1.15 billion, $3.16 billion
and $4.18 billion in fiscal years 2009 through 2011, respectively. The OSDC report
identified the risk of increased spending for uniformed agency overtime of $100 million in
each of fiscal years 2008 through 2011 offset by higher forecast tax revenues of $275
million, $500 million, $500 million, $200 million and $200 million in each of fiscal years
2007 through fiscal year 2011, respectively. The OSDC report noted net resources exceeding
April Financial Plan projections by $275 million, $400 million, $400 million, $100 million
and $100 million in fiscal years 2007 through 2011, respectively.

In addition to the adjustments to the April Financial Plan projections, the OSDC report
identified additional risks and offsets that could have a significant impact on the City.
The risks include: (i) the elimination of revenue sharing payments from the State which
would produce a net loss of $327 million in each of fiscal years 2008 through 2011; (ii)
the possibility that after the expiration of current or tentative collective bargaining
agreements, wage increases are negotiated at the projected rate of inflation rather than
the 1.8% per annum provided for in the April Financial Plan, which would increase costs by
$175 million, $450 million and $795 million in fiscal years 2009 through 2011,
respectively. In addition to these risks, the OSDC report noted the potential offsets if
the Mayor's tax reduction proposals are not approved by the State which would result in
additional tax revenues of $581 million, $797 million, $867 million and $929 million in
fiscal years 2008 through 2011, respectively.

The OSDC report identified other actions taken by the City to provide future benefits,
including the contribution of $1 billion in each of fiscal years 2006 and 2007, and $500
million in fiscal year 2008, to fund future OPEBs, such as health insurance for current and
future retirees. In addition to the tax reduction proposal, the City also provided
increased funding for education and funded the PlaNYC 2030 initiatives to improve the
City's environment and infrastructure, to stimulate economic activity and improve the
City's competitiveness with surrounding jurisdictions.

The OSDC also noted that certain City-related public entities which face significant
financial challenges could draw on City resources. In addition, the OSDC report noted that
the City's debt service burden is projected to increase annually and consume 13.5% of City
fund revenues by fiscal year 2011.

The OSDC report indicated that additional potential risks to the City's budget could come
from a prolonged economic downturn, a slowdown in consumer spending, the declining value of
the dollar, changes in the mortgage industry and real estate markets, the volatility of
energy costs and food prices and the possibility of rising inflation.

On May 31, 2007, the Control Board released a report on fiscal year 2007, examining the
changes in the City's budget during fiscal year 2007 through the April Financial Plan. The
report attributed the City's then-projected $4.4 billion surplus to higher than anticipated
collections from taxes, audits and other miscellaneous revenue. The Control Board staff is
expected to issue its report on the Financial Plan in late July 2007.

On May 15, 2007, the IBO released a report analyzing the April Financial Plan. The
IBO report projected that fiscal year 2007 would end with a surplus of approximately $119
million below the $4.15 billion surplus in the April Financial Plan, that revenues would be
lower than in the April Financial Plan by $59 million and $17 million in fiscal years 2007
and 2008, respectively, and higher by $279 million, $465 million and $546 million in fiscal
years 2009 through 2011, respectively. The IBO report also projected that expenditures
would be higher than in the April Financial Plan by $60 million, $121 million, $166
million, $193 million and $168 million in fiscal years 2007 through 2011, respectively. The
IBO report differences in revenue projections from the April Financial Plan results are
primarily due to higher IBO forecast personal income and business taxes and lower forecast
real property transaction and commercial rent taxes. After giving effect to the use of the
fiscal year 2007 surplus for budget relief in future years, the report projected balanced
budgets in fiscal years 2007 and 2008, and projected budget gaps of $1.7 billion, $3.0
billion and $3.9 billion in fiscal years 2009 through 2011, respectively.

Various actions proposed in the Financial Plan are uncertain. If these measures
cannot be implemented, the City will be required to take other actions to decrease
expenditures or increase revenues to maintain a balanced financial plan.

The projections and assumptions contained in the Financial Plan are subject to
revision which may involve substantial change, and no assurance could be given that these
estimates and projections, which included actions which the City expected would be taken
but which were not within the City's control, would be realized.

|X| Ratings of the City's Bonds. As of July 19, 2007, Moody's, S&P and Fitch rated
the City's general obligations bonds Aa3, AA and AA-, respectively. These ratings
reflected only the views of Moody's, S&P and Fitch from which an explanation of the
significance of such ratings may be obtained. There is no assurance that those ratings
will continue for any given period of time or that they will not be revised downward or
withdrawn entirely. Any such downward revision or withdrawal could have an adverse effect
on the market prices of the City's bonds.

|X| The City's Outstanding Indebtedness. As of March 31, 2007, the City had
approximately $36.287 billion of outstanding net long-term indebtedness.

For its normal operations, the City depends on aid from the State both to enable the
City to balance its budget and to meet its cash requirements. There can be no assurance
that there will not be delays or reductions in State aid to the City from the amounts
projected; that State budgets in future fiscal years will be adopted by the April 1
statutory deadline; that interim appropriations will be enacted; or that any such
reductions or delays will not have adverse effects on the City's cash flow or
expenditures. In addition, the Federal budget negotiation process could result in a
reduction or a delay in the receipt of Federal grants which could have adverse effects on
the City's cash flow or revenues.

|X| Pending Litigation. The City is a defendant in lawsuits pertaining to material
matters as well as claims asserted that are incidental to performing routine governmental
and other functions. That litigation includes, but is not limited to, actions commenced and
claims asserted against the City arising out of alleged constitutional violations, torts,
breaches of contract, and other violations of law and condemnation proceedings. While the
ultimate outcome and fiscal impact, if any, on the City of such proceedings and claims were
not predictable, adverse determinations in certain of them might have a material adverse
effect upon the City's ability to carry out the Financial Plan.

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 SAI 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 SAI, 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 that the Trust may purchase debt securities
described in "Investment Objective and Policies" and repurchase agreements, and
the Trust may lend its portfolio securities as described in the Statement of
Additional Information;

o The Trust cannot borrow money in excess of 10% of the value of its total assets or
make any investment when borrowings exceed 5% of the value of its total assets; it
may borrow only as a temporary measure for extraordinary or emergency purposes; no
assets of the Trust may be pledged, mortgaged or assigned to secure a debt;

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 debt
securities issued by companies which invest in real estate or interests therein;

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

o The Trust cannot invest in or hold securities of any issuer if those officers and
trustees 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 of other companies except insofar as the Trust
may be deemed an underwriter under the Securities Act of 1933 in connection with
the disposition of portfolio securities;

o The Trust cannot purchase securities of other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization.

o The Trust cannot issue "senior securities," but this does not prohibit certain
investment activities for which assets of the Trust are designated as segregated,
or margin, collateral or escrow arrangements are established, to cover the related
obligations.

o The Trust cannot invest in any debt instrument having a maturity in excess of the
time period provided for in Rule 2a-7 of the Investment Company Act, or any other
applicable rule, or in the case of a debt instrument subject to a repurchase
agreement or called for redemption, unless purchased subject to a demand feature
which may not exceed the time period provided for in Rule 2a-7, or any other
applicable rule.

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.

For purposes of the investment restrictions listed above, the identification of the
"issuer" of a municipal security depends on the terms and conditions of the security. When
the assets and revenues of an agency, authority, instrumentality or other political
subdivision are separate from those of the government creating the subdivision and the
security is backed only by the assets and revenues of the subdivision, such subdivision
would be deemed to be the sole issuer. Similarly, in the case of an industrial development
bond, if that bond is backed only by the assets and revenues of the nongovernmental user,
then such nongovernmental user would be deemed to be the sole issuer. However, if in
either case the creating government or some other entity guarantees the security, such
guarantee would be considered a separate security and would be treated as an issue of such
government or other agency. Conduit securities are deemed to be issued by the person
ultimately responsible for payments of interest and principal on the security.

In applying the restrictions as to the Trust's investments, the Manager will consider
a nongovernmental user of facilities financed by industrial development bonds as being in a
particular industry, despite the fact that there is no industry concentration limitation as
to municipal securities the Trust may own. Although this application of the restriction is
not technically a fundamental policy of the Trust, it will not be changed without
shareholder approval. Should any such change be made, the Prospectus and/or SAI will be
supplemented to reflect the change.

Unless the Prospectus or this SAI 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 the purpose of the Trust's policy not to concentrate its investments as described
above, the Trust has adopted the industry classifications of industries and groups or
related industries. These classifications are not fundamental.

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
trustees of the Manager, 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 Trust's fiscal quarters in its
semi-annual report to shareholders and its annual reports to shareholders, or its
Statements of Investments on Form N-Q. Those documents 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 20 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
Trust, 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 Trust's regular pricing services)
o Dealers to obtain price quotations where the Trust 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, Financial Industry
Regulatory Authority ("FINRA"), 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.

Any permitted release of otherwise non-public portfolio holdings information must be
in accordance with the Trust's then current policy on approve methods for communicating
confidential information, including but not limited to the Trust's policy as to use of
secure e-mail technology.

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 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:

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

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 1988, 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 meetings 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.

Shareholder and Trustee Liability. The Trust's 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 and that 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. The Audit Committee and the Governance Committee are comprised solely of Trustees
who are not "interested persons" under the Investment Company Act (the "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 Trust's fiscal year ended June 30, 2007. 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) reviewing certain reports from and meet periodically with
the Trust's Chief Compliance Officer; (v) maintaining a separate line of communication
between the Trust's independent Auditors and the Independent Trustees; (vi) reviewing the
independence of the Trust's independent Auditors; and (vii) 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, the Manager and certain
affiliates of the Manager.

The members of the Review Committee are Sam Freedman (Chairman), Jon S. Fossel,
Richard F. Grabish and Beverly L. Hamilton. The Review Committee held 5 meetings during the
Trust's fiscal year ended June 30, 2007. Among other duties, as 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 L. Armstrong, Beverly L.
Hamilton and F. William Marshall, Jr. The Governance Committee held 4 meetings during the
Trust's fiscal year ended June 30, 2007. 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 Codes
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.

Trustees and Officers of the Trust. Except for Messrs. Murphy and Grabish, each of the
Trustees is an Independent Trustee. All of the Trustees are also trustees or directors of
the following Oppenheimer/Centennial funds (referred to as "Board II Funds") except for Mr.
Grabish who 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:

Oppenheimer Principal Protected
Oppenheimer Cash Reserves Trust II
Oppenheimer Principal Protected
Oppenheimer Capital Income Fund Trust III
Oppenheimer Senior Floating Rate
Oppenheimer Champion Income Fund Fund
Oppenheimer Commodity Strategy Total
Return Fund Oppenheimer Strategic Income Fund
Oppenheimer Equity Fund, Inc. Oppenheimer Variable Account Funds
Oppenheimer Integrity Funds Panorama Series Fund, Inc.
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Centennial California Tax Exempt
Oppenheimer Main Street Funds, Inc. Trust
Oppenheimer Main Street Opportunity Fund Centennial Government Trust
Oppenheimer Main Street Small Cap Fund Centennial Money Market Trust
Centennial New York Tax Exempt
Oppenheimer Municipal Fund Trust
Oppenheimer Principal Protected Trust Centennial Tax Exempt Trust

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

Messrs. Ullyatt, Gillespie, Murphy, Petersen, Szilagyi Vandehey, Wixted and Zack, and
Mss. Bloomberg and Ives, who are officers of the Trust, respectively hold the same offices
with one or more of the other Board II Funds. As of August 7, 2007 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) owns 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 the
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 chart below is 6803 S.
Tucson Way, Centennial, CO 80112-3924. Each Trustee serves for an indefinite term, or until
his or her resignation, retirement, death or removal.

-------------------------------------------------------------------------------------
Independent Trustees
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Name, Principal Occupation(s) During Past 5 Dollar Aggregate
Dollar
Range of
Shares
Range of Beneficially
Position(s) Held Shares Owned in
with the Trust, Years; Other Trusteeships/Directorships Beneficially All
Length of Service, Held; Number of Portfolios in Fund Owned in Supervised
Age Complex Currently Overseen the Trust Funds
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
As of December 31, 2006
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
William L. President, Colorado Christian None Over
Armstrong, University (since 2006); Chairman, $100,000
Chairman of the Cherry Creek Mortgage Company (since
Board since 2003 1991), Chairman, Centennial State
and Trustee since Mortgage Company (since 1994),
2000 Chairman,The El Paso Mortgage Company
Age: 70 (since 1993); Chairman, Ambassador
Media Corporation (since 1984);
Chairman, Broadway Ventures (since
1984); Director of Helmerich & Payne,
Inc. (oil and gas drilling/production
company) (since 1992), Campus Crusade
for Christ (non-profit) (since 1991);
Former Director, The Lynde and Harry
Bradley Foundation, Inc. (non-profit
organization) (2002-2006); former
Chairman of: Transland Financial
Services, Inc. (private mortgage
banking company) (1997-2003), Great
Frontier Insurance (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 37 portfolios in the
OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
George C. Bowen, Assistant Secretary and Director of the None Over
Trustee since 2000 Manager (December 1991-April 1999); $100,000
Age: 70 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 37
portfolios in the OppenheimerFunds
complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Edward L. Cameron, Member of The Life Guard of Mount None Over
Trustee since 2000 Vernon (George Washington historical $100,000
Age: 68 site) (June 2000 - May 2006); Partner
at PricewaterhouseCoopers LLP
(accounting firm) (July 1974-June
1999); Chairman of Price Waterhouse LLP
Global Investment Management Industry
Services Group (financial services
firm) (July 1994-June 1998). Oversees
37 portfolios in the OppenheimerFunds
complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Jon S. Fossel, Director of UNUMProvident (insurance None Over
Trustee since 2000 company) (since June 2002); Director of $100,000
Age: 65 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 and since February
2005); 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 37
portfolios in the OppenheimerFunds
complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Sam Freedman, Director of Colorado Uplift (charitable None Over
Trustee since 1996 organization) (since September 1984). $100,000
Age: 66 Mr. Freedman held several positions
with OppenheimerFunds, Inc. and with
subsidiary or affiliated companies of
OppenheimerFunds, Inc. (until October
1994). Oversees 37 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: 60 Board Member of Middlebury College
(educational organization) (since
December 2005); Director of The
California Endowment (philanthropic
organization) (since April 2002);
Director (February 2002-2005) and
Chairman of Trustees (since 2006) of
the Community Hospital of Monterey
Peninsula; Director (October 1991-2005)
and Vice Chairman (since 2006) of
American Funds' Emerging Markets Growth
Fund, Inc. (mutual fund); President of
ARCO Investment Management Company
(February 1991-April 2000); Member of
the investment committees of The
Rockefeller Foundation (since 2001) and
The University of Michigan (since
2000); 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 37 portfolios in
the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Robert J. Malone, Director of Jones Knowledge, Inc. None Over
Trustee since 2002 (since 2006); Director of Jones $100,000
Age: 62 International University (educational
organization) (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 37 portfolios in the
OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
F. William Trustee of MassMutual Select Funds None Over
Marshall, Jr., (formerly MassMutual Institutional $100,000
Trustee since 2000 Funds) (investment company) (since
Age: 65 1996) and MML Series Investment Fund
(investment company) (since 1996);
Trustee of Worchester Polytech
Institute (since 1985); Chairman (since
1994) of the Investment Committee 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); and Executive
Vice President of Peoples Heritage
Financial Group, Inc. (commercial bank)
(January 1999-July 1999). Oversees 39
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 SEC 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
y Shares
Position(s) Held Range of Beneficially
with the Trust, Shares Owned in
Length of Years; Other Trusteeships/Directorships Beneficiall All
Service, Held; Number of Portfolios in Fund Owned in Supervised
Age Complex Currently Overseen the Trust Funds
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
As of December 31,
2006
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Richard F. Senior Vice President and Assistant None Over $100,000
Grabish, Trustee Director of Sales and Marketing (since
since 2001 March 1997), Director (since March 1987)
Age: 58 and Manager of Private Client Services
(June 1985-June 2005) of A.G. Edwards &
Sons, Inc. (broker/dealer and investment
firm); Chairman and Chief Executive
Officer of A.G. Edwards Trust Company,
FSB (since March 2001); President and
Vice Chairman of A.G. Edwards Trust
Company, FSB (investment adviser) (April
1987-March 2001); President of A.G.
Edwards Trust Company, FSB (investment
adviser) (since June 2005). Oversees 5
portfolios in the OppenheimerFunds
complex.
------------------------------------------------------------------------------------

Mr. Murphy is an "Interested Trustee" because he is affiliated with the Manager and
OppenheimerFunds, Inc. by virtue of his positions as an officer and director of the Manager
and OppenheimerFunds, Inc., and as a shareholder of its parent company. 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, or until
his resignation, retirement, death or removal and as an officer for an indefinite term, or
until his resignation, retirement, death or removal. 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
Range of Beneficially
Position(s) Held Years; Shares Owned in
with Trust, Other Trusteeships/Directorships Held; BeneficiallAll
Length of Service, Number of Portfolios in Fund Complex Owned in Supervised
Age Currently Overseen by Trustee the Trust Funds
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
As of December 31, 2006
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
John V. Murphy, Chairman, Chief Executive Officer and None Over
President Director of OppenheimerFunds, Inc. (since $100,000
Since 2001and June 2001); President of
Trustee since 2003 OppenheimerFunds, Inc. (September
Age: 58 2000-March 2007); President and 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 102 portfolios in the
OppenheimerFunds complex.
--------------------------------------------------------------------------------------

The address of the officers in the chart below is as follows: Messrs. Gillespie and
Zack and Ms. Bloomberg, Two World Financial Center, New York, NY 10281-1008, Messrs.
Ullyatt, Petersen, Szilagyi, Vandehey and Wixted and Ms. Ives, 6803 S. Tucson Way,
Centennial, CO 80112-3924. Each officer serves for an annual term or until his or her
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 Service,
Age
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Cameron T. Ullyatt, Vice President (since August 2006) of the Fund and
Vice President and Portfolio Vice President (since July 2006) of the Manager and
Manager since 2006 OppenheimerFunds, Inc.; a Chartered Financial
Age: 32 Analyst; an officer of 3 portfolios in the
OppenheimerFunds complex. Formerly an Assistant Vice
President (since December 2000) and an analyst for
the Manager and OppenheimerFunds, Inc. (since
January 1999).
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Mark S. Vandehey, Senior Vice President and Chief Compliance Officer
Vice President and Chief of OppenheimerFunds, Inc. (since March 2004); Chief
Compliance Officer since 2004 Compliance Officer of the Manager, OppenheimerFunds
Age: 56 Distributor, Inc., and Shareholder Services, Inc.
(since March 2004); Vice President of the Manager,
OppenheimerFunds Distributor, Inc., and Shareholder
Services, Inc. (June 1983); Vice President and
Director of Internal Audit of OppenheimerFunds, Inc.
(1997-February 2004). An officer of 102 portfolios
in the Oppenheimer funds complex.
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer of
Treasurer and Principal OppenheimerFunds, Inc. (since March 1999); Treasurer
Financial & Accounting Officer of the following: Shareholder Services, Inc.,
since April 1999 HarbourView Asset Management Corporation,
Age: 47 Shareholder Financial Services, Inc., Oppenheimer
Real Asset Management Corporation, and Oppenheimer
Partnership Holdings, Inc. (since March 1999), OFI
Private Investments, Inc. (since March 2000),
OppenheimerFunds International Ltd. and
OppenheimerFunds plc (since May 2000), OFI
Institutional Asset Management, Inc. (since November
2000), and OppenheimerFunds Legacy Program (since
June 2003); Treasurer and Chief Financial Officer of
OFI Trust Company (trust company subsidiary of
OppenheimerFunds, Inc.) (since May 2000); Assistant
Treasurer of OAC (since March 1999); and Assistant
Treasurer of the Manager and Distributor (March
1999-October 2003) and OppenheimerFunds Legacy
Program (April 2000-June 2003); Principal and Chief
Operating Officer of Bankers Trust Company-Mutual
Fund Services Division (March 1995-March 1999). An
officer of 102 portfolios in the OppenheimerFunds
complex.
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Brian Petersen, Vice President of OppenheimerFunds, Inc. (since
Assistant Treasurer since 2004 February 2007); Assistant Vice President (August
Age: 36 2002-February 2007); Manager/Financial Product
Accounting of OppenheimerFunds, Inc. (November
1998-July 2002). An officer of 102 portfolios in the
OppenheimerFunds complex..
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Brian C. Szilagyi, Assistant Vice President of OppenheimerFunds, Inc.
Assistant Treasurer since 2005 (since July 2004); Director of Financial Reporting
Age: 37 and Compliance of First Data Corporation (April
2003-July 2004); Manager of Compliance of Berger
Financial Group LLC (May 2001-March 2003); Director
of Mutual Fund Operations at American Data Services,
Inc. (September 2000-May 2001). An officer of 102
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: 59 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 102
portfolios in the OppenheimerFunds complex.
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Lisa I. Bloomberg, Vice President and Associate Counsel of
Assistant Secretary since 2004 OppenheimerFunds, Inc. (since May 2004); First Vice
Age: 39 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 102 portfolios in the
OppenheimerFunds complex.
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Kathleen T. Ives, Vice President (since June 1998) and Senior Counsel
Assistant Secretary and Assistant Secretary (since October 2003) of
since 2001 OppenheimerFunds, Inc.; Vice President (since 1999)
Age: 41 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
102 portfolios in the OppenheimerFunds complex.
---------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------
Phillip S. Gillespie, Senior Vice President and Deputy General Counsel of
Assistant Secretary since 2004 OppenheimerFunds, Inc. (since September 2004); First
Age: 43 Vice President (2000-September 2004), Director
(2000-September 2004) and Vice President (1998-2000)
of Merrill Lynch Investment Management. An officer
of 102 portfolios in the OppenheimerFunds complex.
---------------------------------------------------------------------------------------

|X| Remuneration of the Officers and Trustees. The officers and Mr. Murphy, 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, 2007. 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, 2006.

-------------------------------------------------------------------------------
Trustee Name and Other Aggregate Compensation Total Compensation
From Trust and Fund
from Trust(1) Fiscal Complex(2) Year
Position(s) (as applicable) Year Ended June 30, ended December 31,
2007 2006
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
William L. Armstrong
Chairman of the Board of
Trustees and Governance $900 $214,504
Committee Member
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
George Bowen $625 $143,000
Audit Committee Member
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Edward L. Cameron $750 $171,600
Audit Committee Chairman
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Jon S. Fossel $641 $154,174
Review Committee Member
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Sam Freedman $660 $143,000
Review Committee Chairman
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Richard F. Grabish((3)) $625 $13,167
Review Committee Member
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Beverly Hamilton
Review Committee Member and $625((4)) $143,000
Governance Committee Member
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Robert J. Malone
Governance Committee Chairman $719 $164,452
and Audit Committee Member
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
F. William Marshall, Jr.
Audit Committee Member and $625 $205,500((5))
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 MassMutual Institutional 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. 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.
OppenheiemerFunds, 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 $625 deferred by Ms. Hamilton under the "Compensation Deferral Plan"
described below.
5. Includes $51,000 compensation paid to Mr. Marshall for serving as a Trustee for
MassMutual Select Funds and MML Series Investment Fund.

|X| Compensation Deferral Plan for Trustees. The Board of Trustees has adopted a
Compensation Deferral 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 the 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 August 7, 2007, the only person who
owned of record or was known by the Trust to own beneficially 5% or more of the Trust's
outstanding shares was A.G. Edwards & Sons, Inc. ("Edwards") for the sole Benefit of its
Customers, Attn. Money Fund Dept., 1 North Jefferson Avenue, St. Louis, Missouri 63103,
which owned 62,404,148.870 shares of the Trust which was 95.82% of the outstanding shares
of the Trust on that date, for accounts of its customers none of whom individually owned
more than 5% of the outstanding shares.

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

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

|X| 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 have access to information that could permit them to 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.

The Code of Ethics is an exhibit to the Trust's registration statement filed with the
SEC and can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
You can obtain information about the hours of operation of the Public Reference Room by
calling the SEC at 1.202.551.8090. The Code of Ethics can also be viewed as part of the
Trust's registration statement on the SEC's EDGAR database at the SEC's Internet website at
www.sec.gov. Copies may be obtained, after paying a duplicating fee, by electronic request
at the following E-mail address: publicinfo@sec.gov., or by writing to the SEC's Public
Reference Section, Washington, D.C. 20549-0102.

|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.

The Trust pays expenses not expressly assumed by the Manager under the investment
advisory agreement. 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
ended 6/30
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
2005 $289,837
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
2006 $298,993
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
2007 $316,297
---------------------------------------------------------------------------------

The Manager has undertaken that the total expenses of the Trust, in any fiscal year
of the Trust, exclusive of taxes, interest, brokerage commissions (if any) and
non-recurring expenses, including litigation, shall not exceed 0.80% of the average annual
net assets of the Trust. Additionally, effective July 7, 2003, the Manager has voluntarily
undertaken to waive receipt of its management fees to the extent necessary so that the
Trust may seek to maintain a positive yield. The payment of the management fee at the end
of any month will be reduced so that there will not be any accrued but unpaid liability
under those expense limitations. Any assumption of the Trust's expenses under either
arrangement lowers the Trust's overall expense ratio and increases its yield and total
return during the time such expenses are assumed. The Manager reserves the right to
terminate or amend either undertaking at any time. For the fiscal years ended June 30,
2005, 2006 and 2007, the management fees payable by the Trust would have been $289,837,
$270,869 and $280,704 with the Manager's voluntary expense assumption. Those amounts
reflect the effect of the expense assumptions of $0, $28,124 and $35,593 for the fiscal
years ended June 30, 2005, 2006 and 2007 respectively

The investment advisory agreement states that in the absence of willful misfeasance,
bad faith, gross negligence in the performance of its duties or reckless disregard of its
obligations and duties under the investment advisory agreement, the Manager is not liable
for any loss resulting from a good faith error or omission on its part with respect to any
of its duties under the agreement.

Portfolio Manager. The Trust's portfolio is managed by Cameron T. Ullyatt (referred to as
"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, Mr. Ullyatt 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 Mr. Ullyatt as of June 30, 2007. No
account has a performance-based advisory fee:

-------------------------------------------------------------------------------
Portfolio Manager RegisteredTotal Other Total Other Total
Assets in
Assets in Other
Registered Pooled Pooled Assets
InvestmentInvestment InvestmentInvestment in Other
Companies Companies Vehicles Vehicles AccountsAccounts
Managed Managed(1) Managed Managed(1) Managed Managed(2)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Cameron Ullyatt 2 1,880 None None None None
-------------------------------------------------------------------------------
1. In millions.
2. Does not include personal accounts of portfolio managers and their families,
which are subject to the Code of Ethics.

As indicated above, the Portfolio Manager also manages other funds and accounts.
Potentially, at times, those responsibilities could conflict with the interests of the
Trust. That may occur whether the investment objectives and strategies of the other fund
and accounts 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 fund or account that could
have a negative impact on the value of securities held by the Trust. Not all funds 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 fund 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 funds 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 funds 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, 2007 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.

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, to help the Manager attract
and retain talent. The annual discretionary bonus is determined by senior management of the
Manager and is based on a number of factors, including a fund'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 Trust is Lipper - New York 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
funds and accounts managed by the Portfolio Manager. The compensation structure of the
other funds 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, 2007 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, analytical
software 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. 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
(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 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, 2007 payments under the plan totaled $125,640. The
Distributor retained $0 and the remaining balance was paid out by the Distributor to
recipients, which included $808 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, 2007, the Manager paid, in the aggregate, $176,254
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 SAI. Additionally, the Manager, the Distributor and/or the Sub-Distributor (including
their affiliates) may make payments to financial intermediaries in connection with their
offering and selling shares of the Trust and other Oppenheimer or Centennial 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,
Distributor or Sub-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 plan adopted under Rule 12b-1 under the
Investment Company Act, which are paid from the Trust's assets (see " 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, Distributor or
Sub-Distributor for expenses they incur on behalf of the Trust.
o Payments made by the Manager, Distributor or Sub-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, the Distributor and/or the Sub-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 or Centennial funds through
certain trading platforms and programs, transaction processing or other services;
o The Manager, Distributor and Sub-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 FINRA. Payments are made based on the guidelines established by the
Manager, Distributor and Sub-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 or Centennial funds,
or to support the marketing or promotional efforts of the Distributor or Sub-Distributor
offering shares of the Trust or other Oppenheimer or Centennial 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 SAI. You should ask your financial
intermediary for information about any payments it receives from the Trust, the Manager,
the Distributor or the Sub-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 or Centennial funds, a financial intermediary's sales of shares
of the Trust or such other Oppenheimer or Centennial funds is not a consideration for the
Manager when choosing brokers or dealers to effect portfolio transactions for the Trust or
such 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 or Centennial funds on particular trading systems, and paying the
intermediary's networking fees;
o program support, such as expenses related to including the Oppenheimer and Centennial
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, Distributor or Sub-Distributor may make payments for firm
support, such as business planning assistance, advertising, and educating a financial
intermediary's sales personnel about the Oppenheimer and Centennial funds and shareholder
financial planning needs.

For the year ended December 31, 2006, the following financial intermediaries that are
broker-dealers offering shares of the Oppenheimer and Centennial funds, and/or their
respective affiliates, received revenue sharing or similar distribution-related payments
from the Manager, Distributor or Distributor for marketing or program support:

===============================================================================
1st Global Capital Co. Advantage Capital Corporation / FSC
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Aegon Aetna Life Ins & Annuity Co.
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AG Edwards AIG Financial Advisors
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AIG Life Allianz Life Insurance Company
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Allstate Life American Enterprise Life Insurance
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American General Annuity American Portfolios
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Ameriprise Ameritas
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Annuity Investors Life Associated Securities
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AXA Advisors AXA Equitable Life Insurance
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Banc One Securities Corporation BNY Investment Center
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Cadaret Grant & Co, Inc. Chase Investment Services
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Citicorp Investment Services, Inc. Citigroup Global Markets Inc (SSB)
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CitiStreet Citizen's Bank of Rhode Island
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Columbus Life Commonwealth Financial Network
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CUNA Brokerage Services, Inc. CUSO Financial Services, L.P.
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Edward D Jones & Co. Federal Kemper
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Financial Network (ING) GE Financial Assurance
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GE Life & Annuity Genworth Financial
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GlenBrook Life and Annuity Co. Great West Life
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Hartford Life Insurance Co. HD Vest Investment Services
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Hewitt Associates IFMG Securities, Inc.
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ING Financial Advisers ING Financial Partners
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Jefferson Pilot Securities Co. Kemper Investors Life Insurance Co.
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Legend Equities Co. Legg Mason Wood Walker
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Lincoln Benefit National Life Lincoln Financial
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Lincoln Investment Planning, Inc. Linsco Private Ledger Financial
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Mass Mutual McDonald Investments, Inc.
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Merrill Lynch Minnesota Life
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Mony Life Morgan Stanley Dean Witter
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Multifinancial (ING) Mutual Service Co.
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National Planning Co. Nationwide
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NFP Park Avenue Securities LLC
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PFS Investments, Inc. Phoenix Life Insurance Co.
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Plan Member Securities Prime Capital Services, Inc.
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Primevest Financial Services, Inc. Protective Life Insurance Co.
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Provident Mutual Life & Annuity Prudential
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Raymond James & Associates, Inc. RBC Daine Rauscher
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Royal Alliance Securities America, Inc.
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Security Benefit Security First-Metlife
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Signator Investments Sun Life Insurance Co.
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Sun Trust Securities, Inc. Thrivent Financial
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Travelers Life & Annuity Co. UBS Financial Services, Inc.
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Union Central United Planners
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Wachovia Walnut Street Securities (Met Life)
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Waterstone Financial Group Wells Fargo
===============================================================================

For the year ended December 31, 2006, the following firms, which in some cases are
broker-dealers, received payments from the Manager, Distributor or Sub-Distributor for
administrative or other services provided (other than revenue sharing arrangements), as
described above:

===============================================================================
1st Global Capital Co. A G Edwards
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ACS HR Solutions ADP
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AETNA Life Ins & Annuity Co. Alliance Benefit Group
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American Enterprise Investments American Express Retirement Service
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American Funds (Fascorp) American United Life Insurance Co.
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Ameriprise Ameritrade, Inc.
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AMG Administrative Management Group AST (American Stock & Transfer)
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AXA Advisors Baden Retirement
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BCG - New BCG (Programs for Benefit Plans)
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Bear Stearns Securities Co. Benefit Administration, Inc.(WA)
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Benefit Administration, Inc.(WIS) Benefit Plans Administration
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Benetech, Inc. Bisys
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Boston Financial Data Services Ceridian
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Charles Schwab & Co, Inc. Citigroup Global Markets Inc (SSB)
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CitiStreet City National Investments
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Clark Consulting CPI
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DA Davidson & Co. Daily Access. Com, Inc.
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Davenport & Co, LLC David Lerner Associates
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Digital Retirement Solutions DR, Inc.
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Dyatech E*Trade Clearing LLC
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Edgewood Edward D Jones & Co.
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Equitable Life / AXA ERISA Administrative Svcs, Inc
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ExpertPlan.com FAS Co. (FASCore/RK Pro)
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FBD Consulting Ferris Baker Watts, Inc.
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Fidelity First Clearing LLC
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First Southwest Co. First Trust - Datalynx
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First Trust Corp Franklin Templeton
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Geller Group Great West Life
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H&R Block Financial Advisors, Inc. Hartford Life Insurance Co.
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HD Vest Investment Services Hewitt Associates
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HSBC Brokerage USA, Inc. ICMA - RC Services
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Independent Plan Coordinators Ingham Group
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Interactive Retirement Systems Invesmart
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Janney Montgomery Scott, Inc. JJB Hillard W L Lyons, Inc.
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John Hancock JP Morgan
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July Business Services Kaufman & Goble
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Legend Equities Co. Legg Mason Wood Walker
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Lehman Brothers, Inc. Liberty-Columbia 529 Program
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Lincoln Investment Planning, Inc. Lincoln National Life Insurance Co.
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Linsco Private Ledger Financial MassMutual
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Matrix Settlement & Clearance Services McDonald Investments, Inc.
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Mercer HR Services Merrill Lynch
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Mesirow Financial, Inc. MetLife
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MFS Investment Management Mid Atlantic Capital Co.
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Milliman USA Morgan Keegan & Co, Inc.
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Morgan Stanley Dean Witter Nathan & Lewis Securities, Inc.
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National City Bank National Deferred Comp
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National Financial National Investor Services Co.
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Nationwide Newport Retirement Services
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Northwest Plan Services NY Life Benefits
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Oppenheimer & Co, Inc. Peoples Securities, Inc.
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Pershing PFPC
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Piper Jaffray & Co. Plan Administrators
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Plan Member Securities Primevest Financial Services, Inc.
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Principal Life Insurance Prudential
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PSMI Group Quads Trust Company
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Raymond James & Associates, Inc. Reliastar
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Robert W Baird & Co. RSM McGladrey
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Scott & Stringfellow, Inc. Scottrade, Inc.
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Southwest Securities, Inc. Standard Insurance Co
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Stanley, Hunt, Dupree & Rhine Stanton Group, Inc.
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Sterne Agee & Leach, Inc. Stifel Nicolaus & Co, Inc.
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Sun Trust Securities, Inc. Symetra
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T Rowe Price The 401k Company
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The Princeton Retirement Group Inc. The Retirement Plan Company, LLC
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TruSource TruSource Union Bank of CA
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UBS Financial Services, Inc. Unified Fund Services (UFS)
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US Clearing Co. USAA Investment Management Co.
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USI Consulting Group Valic
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Vanguard Group Wachovia
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Web401K.com Wedbush Morgan Securities
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Wells Fargo Wilmington Trust
===============================================================================

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 SEC. 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 1%.

The compounded effective yield for a seven-day period is calculated by
(1) adding 1 to the base period return (obtained as described above),
(2) raising the sum to a power equal to 365 divided by 7, and
(3) subtracting 1 from the result.

The yield as calculated above may vary for accounts less than approximately $100 in
value due to the effect of rounding off each daily dividend to the nearest full cent. The
calculation of yield under either procedure described above does not take into
consideration any realized or unrealized gains or losses on the Trust's portfolio
securities which may affect dividends. Therefore, the return on dividends declared during
a period may not be the same on an annualized basis as the yield for that period.

The Trust's "tax equivalent yield" adjusts the Trust's current yield, as calculated
above, by a stated federal tax rate. The tax equivalent yield is computed by dividing the
tax-exempt portion of the Trust's current yield by 1 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 tax-equivalent yield may be used to compare the tax effects of income derived from the
Trust with income from taxable investments at the tax rates stated. Your tax bracket is
determined by your federal and state taxable income (the net amount subject to federal and
state income tax after deductions and exemptions). The tax-equivalent yield table assumes
that the investor is taxed at the highest bracket, regardless of whether a switch to
non-taxable investments would cause a lower bracket to apply. For taxpayers with income
above certain levels, otherwise allowable itemized deductions are limited.

|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

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Tax-Equivalent Yield
Compounded (39.45% Combined State and Average Annual Total
Yield Effective Federal Tax Brackets) Returns
(7 days Yield (at 6/30/07)
ended (7 days
6/30/07) ended
6/30/07)
-------------------------------------------------------------------------------
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Yield Compounded
(7 days Effective
ended Yield 1-Year 5 Years 10 Years
6/30/07) (7 days
ended
6/30/07)
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3.10% 3.15% 5.33% 5.41% 2.93% 1.39% 1.92%
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|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 SAI mean "Eastern time." The NYSE's most recent annual announcement (which is subject
to change) states that it will close on New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. It may also close on other days.

The Trust's Board of Trustees has adopted the amortized cost method to value the
Trust's portfolio securities. Under the amortized cost method, a security is valued
initially at its cost and its valuation assumes a constant amortization of any premium or
accretion of any discount, regardless of the impact of fluctuating interest rates on the
market value of the security. This method does not take into consideration any unrealized
capital gains or losses on securities. While this method provides certainty in valuing
securities, in certain periods the value of a security determined by amortized cost may be
higher or lower than the price the Trust would receive if it sold the security.

The Trust's Board of Trustees has established procedures reasonably designed to
stabilize the Trust's net asset value at $1.00 per share. Those procedures include a
review of the valuations of the Trust's portfolio holdings by the Board of Trustees, at
intervals it deems appropriate, to determine whether the Trust's net asset value calculated
by using available market quotations deviates from $1.00 per share based on amortized cost.

The Board of Trustees receives information on 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 United Missouri Bank ("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 redemption
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.

Shares may be "redeemed in kind" under unusual circumstances (such as a lack of liquidity
in the Fund's portfolio to meet redemptions). This means that the redemption proceeds will
be paid with liquid securities from the Fund's portfolio. If the Fund redeems your shares
in kind, you may bear transaction costs and will bear market risks until such time as such
securities are converted into cash.

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 Absolute Return Fund Oppenheimer MidCap Fund
Oppenheimer AMT-Free Municipals Oppenheimer New Jersey Municipal Fund
Oppenheimer AMT-Free New York Municipals Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Balanced Fund Oppenheimer Portfolio Series:
Oppenheimer Baring China Fund Conservative Investor Fund
Oppenheimer Baring Japan Fund Moderate Investor Fund
Oppenheimer Core Bond Fund Equity Investor Fund
Oppenheimer California Municipal Fund Active AllocationFund
Oppenheimer Principal Protected Main
Oppenheimer Capital Appreciation Fund Street Fund
Oppenheimer Principal Protected Main
Oppenheimer Capital Income Fund Street Fund II
Oppenheimer Principal Protected Main
Oppenheimer Champion Income Fund Street Fund III
Oppenheimer Commodity Strategy Total
Return Fund Oppenheimer Quest Balanced Fund
Oppenheimer Quest Capital Value Fund,
Oppenheimer Convertible Securities Fund Inc.
Oppenheimer Quest International Value
Oppenheimer Developing Markets Fund Fund, Inc.
Oppenheimer Quest Opportunity Value
Oppenheimer Discovery Fund Fund
Oppenheimer Dividend Growth Fund Oppenheimer Quest Value Fund, Inc.
Oppenheimer Emerging Growth Fund Oppenheimer Real Estate Fund
Oppenheimer Rochester Arizona
Oppenheimer Emerging Technologies Fund Municipal Fund
Oppenheimer Rochester Maryland
Oppenheimer Enterprise Fund Municipal Fund
Oppenheimer Rochester Massachusetts
Oppenheimer Equity Fund, Inc. Municipal Fund
Oppenheimer Rochester Michigan
Oppenheimer Global Fund Municipal Fund
Oppenheimer Rochester Minnesota
Oppenheimer Global Opportunities Fund Municipal Fund
Oppenheimer Rochester National
Oppenheimer Gold & Special Minerals Fund Municipals
Oppenheimer Rochester North Carolina
Oppenheimer Growth Fund Municipal Fund
Oppenheimer Rochester Ohio Municipal
Oppenheimer International Bond Fund Fund
Oppenheimer Rochester Virginia
Oppenheimer International Diversified Fund Municipal Fund
Oppenheimer International Growth Fund Oppenheimer Select Value Fund
Oppenheimer International Small Company
Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Small- & Mid- Cap Value
Oppenheimer International Value Fund Fund
Oppenheimer Limited Term California
Municipal Fund Oppenheimer Strategic Income Fund
Oppenheimer Limited-Term Government Fund Oppenheimer U.S. Government Trust
Oppenheimer Limited Term Municipal Fund Oppenheimer Value Fund
Oppenheimer Main Street Fund Limited-Term New York Municipal Fund
Oppenheimer Main Street Opportunity Fund Rochester Fund Municipals
Oppenheimer Main Street Small Cap Fund

LifeCycle Funds
Oppenheimer Transition 2010 Fund
Oppenheimer Transition 2015 Fund
Oppenheimer Transition 2020 Fund
Oppenheimer Transition 2030 Fund

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

Shares of the Trust purchased without a sales charge may be exchanged for shares of
an eligible fund offered with a sales charge upon payment of the sales charge. Shares of
the Trust acquired by reinvestment of dividends or distributions from the Trust or any of
the other eligible funds (other than Oppenheimer Cash Reserves) or from any unit investment
trust for which reinvestment arrangements have been made with the Distributor may be
exchanged at net asset value for shares of any of the eligible funds.

|X| Limits on Multiple Exchange Orders. The Trust reserves the right to reject telephone
or written exchange requests submitted in bulk by anyone on behalf of more than one
account.

|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 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 SAI 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 SAI is based on tax law in effect on
the date of the Prospectus and this SAI. Those laws and regulations may be changed by
legislative, judicial, or administrative action, sometimes 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. Fund investments in partnerships, including in
qualified publicly traded partnerships, may result in the Fund's being subject to state,
local or Foreign income Franchise or withholding liabilities.

|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.

In any year in which the Trust qualifies as a regulated investment company under the
Internal Revenue Code, the Trust will also be exempt from New York corporate income and
franchise taxes. It will also be qualified under New York law to pay exempt-interest
dividends that will be exempt from New York State and New York City personal income taxes.
That exemption applies to the extent that the Trust's distributions are attributable to
interest on New York municipal securities. Distributions from the Trust attributable to
income from sources other than New York municipal securities and U.S. government
obligations will generally be subject to New York State and New York City personal income
taxes as ordinary income.

Distributions by the Trust from investment income and long- and short-term capital
gains will generally not be excludable from taxable net investment income in determining
New York corporate franchise tax and New York City general corporation tax for corporate
shareholders of the Trust. Additionally, certain distributions paid to corporate
shareholders of the Trust may be includable in income subject to the New York alternative
minimum tax.

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). And any tax withheld by the Trust is
remitted by the Trust to the U.S. Treasury and is identified in reports mailed to
shareholders in January of each year with a copy 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. 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.

|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 all income and any tax withheld 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
intermediaries and 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.

                    17 | CENTENNIAL NEW YORK TAX EXEMPT TRUST


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

--------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF CENTENNIAL NEW YORK TAX EXEMPT
TRUST: We have audited the accompanying statement of assets and liabilities of
Centennial New York Tax Exempt Trust (the "Trust"), including the statement of
investments, as of June 30, 2007, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.

      We conducted our audits in accordance with 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 audits included 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 Trust's 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, 2007, 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 the
Trust as of June 30, 2007, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the five years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America.

DELOITTE & TOUCHE LLP

Denver, Colorado
August 8, 2007


                    6 | CENTENNIAL NEW YORK TAX EXEMPT TRUST


STATEMENT OF INVESTMENTS  June 30, 2007
--------------------------------------------------------------------------------

                                                                                              PRINCIPAL        VALUE
                                                                                                 AMOUNT   SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------
SHORT-TERM TAX-EXEMPT OBLIGATIONS--101.9%
----------------------------------------------------------------------------------------------------------------------
NEW YORK--101.1%
Auburn, NY IDAU RB, Goulds Pumps, Inc. Project, Series 1989, 4.15% 1                        $   875,000   $   875,000
----------------------------------------------------------------------------------------------------------------------
Chautauqua Cnty., NY IDA IDV RB, Red Wing Co., Inc. Project, 3.81% 1,2                        2,800,000     2,800,000
----------------------------------------------------------------------------------------------------------------------
NY GOUN, Series B, Subseries B5, 3.85% 1                                                        700,000       700,000
----------------------------------------------------------------------------------------------------------------------
NY HFA RB, Ocean Park Apts., Series A, 3.75% 1                                                1,000,000     1,000,000
----------------------------------------------------------------------------------------------------------------------
NY MTAU Dedicated Tax Fund RB, ETET Series 20060133, Cl. A, 3.79% 1,2                         2,000,000     2,000,000
----------------------------------------------------------------------------------------------------------------------
NY TS Financing Corp. RB, P-Floats, Series PT-972, 3.70%, 12/1/07 3,4                         1,000,000     1,000,000
----------------------------------------------------------------------------------------------------------------------
NY TSASC, Inc. Tobacco RRB, P-Floats, Series PA-1355, 3.79% 1,2                                 920,000       920,000
----------------------------------------------------------------------------------------------------------------------
NY UDC RB, P-Floats, Series EC-1100, 3.81% 1,2                                                1,475,000     1,475,000
----------------------------------------------------------------------------------------------------------------------
NY Upstate Telecommunications Corp. RB, Series 2005, 3.78% 1                                  2,600,000     2,600,000
----------------------------------------------------------------------------------------------------------------------
NYC GOUN, P-Floats, Series PT-3823, 3.71% 1,3                                                 2,200,000     2,200,000
----------------------------------------------------------------------------------------------------------------------
NYC IDA Civic Facilities RB, Casa Project, 3.83% 1                                            4,000,000     4,000,000
----------------------------------------------------------------------------------------------------------------------
NYC IDA Civic Facilities RB, French Institute Alliance Project,
Series 2005, 3.82% 1                                                                          2,250,000     2,250,000
----------------------------------------------------------------------------------------------------------------------
NYC IDA Civic Facilities RB, Sephardic Community Youth Center Project,
Series 2006, 3.78% 1                                                                          2,000,000     2,000,000
----------------------------------------------------------------------------------------------------------------------
NYC IDA IDV RB, Abigail Press, Inc. Project, 4.10% 1                                            635,000       635,000
----------------------------------------------------------------------------------------------------------------------
NYC MWFAU WSS RRB, MSTFC Series 2005-1051, 3.78% 1,2                                          3,795,000     3,795,000
----------------------------------------------------------------------------------------------------------------------
NYC MWFAU WSS RRB, MSTFC Series 2004-1226, 3.78% 1,2                                          2,440,000     2,440,000
----------------------------------------------------------------------------------------------------------------------
NYC MWFAU WSS RRB, Series 2003 C-3, 3.75% 1                                                   1,000,000     1,000,000
----------------------------------------------------------------------------------------------------------------------
NYC TFA Building Aid RB, ETET Series 2006-0145, Cl. A, 3.79% 1,2                              2,300,000     2,300,000
----------------------------------------------------------------------------------------------------------------------
NYC TFA Future Tax Secured RRB, Subseries 2003-3E, 3.83% 1                                    1,700,000     1,700,000
----------------------------------------------------------------------------------------------------------------------
NYC TFA Future Tax Sub. RB, P-Floats, Series EC-1036, 3.81% 1,2                               1,300,000     1,300,000
----------------------------------------------------------------------------------------------------------------------
NYS DA RB, Eclipse Funding Trust, Series 2005-0005, 3.79%, 9/15/07 2,4                        1,500,000     1,500,000
----------------------------------------------------------------------------------------------------------------------
NYS DA RRB, P-Floats, Series PT-3639, 3.54%, 7/1/07 2,4                                       1,000,000     1,000,000
----------------------------------------------------------------------------------------------------------------------
NYS UDC RB, Personal Income Tax, Series B-2, 5%, 12/15/07                                       500,000       503,234
----------------------------------------------------------------------------------------------------------------------
NYS UDC RB, SGMSTR Series 2003 SG163, 3.79% 1,2                                               1,100,000     1,100,000
----------------------------------------------------------------------------------------------------------------------
NYS UDC RRB, Correctional & Youth Facilities Service Contracts,
Series 2002A, 5%, 1/1/08                                                                      1,500,000     1,510,082
----------------------------------------------------------------------------------------------------------------------
Ontario Cnty., NY IDA RB, Seneca Foods Corp. Project, Series 2002, 3.98% 1                    5,185,000     5,185,000
----------------------------------------------------------------------------------------------------------------------
PAUNYNJ RB, Equipment Nts., Series 2006-1, 3.85% 1                                            1,745,000     1,745,000
----------------------------------------------------------------------------------------------------------------------
PAUNYNJ RB, Equipment Nts., Series 2006-2, 3.78% 1                                            1,255,000     1,255,000
----------------------------------------------------------------------------------------------------------------------
PAUNYNJ RRB, MERLOTS Series 2007 C01, 3.83% 1,3                                               1,195,000     1,195,000
----------------------------------------------------------------------------------------------------------------------
Seneca Cnty., NY IDA SWD RB, MACON Trust, Series 2006 W, 3.83% 1,2                            2,000,000     2,000,000
----------------------------------------------------------------------------------------------------------------------
Southeast NY IDA IDV RB, Unilock NY, Inc. Project, Series 1997, 4.15% 1                       1,400,000     1,400,000
----------------------------------------------------------------------------------------------------------------------
Vestal, NY Central SDI GOUN, Series 2007, 4.125%, 6/15/08                                       245,000       245,921
----------------------------------------------------------------------------------------------------------------------
Wayne Cnty., NY IDA RB, Seneca Foods Corp. Project, Series 1992, 4.08% 1                      5,060,000     5,060,000
----------------------------------------------------------------------------------------------------------------------
Westchester Cnty., NY BANs, Series 2007A, 3.74%, 12/20/07 3                                   1,500,000     1,500,130
                                                                                                          ------------
                                                                                                           62,189,367


                    7 | CENTENNIAL NEW YORK TAX EXEMPT TRUST


STATEMENT OF INVESTMENTS  Continued
--------------------------------------------------------------------------------

                                                                                              PRINCIPAL         VALUE
                                                                                                 AMOUNT    SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--0.8%
PR CMWLTH Infrastructure FAU RB, Tender Option Trust Certificates,
Series 2005 Z-6, 3.79% 1,2                                                                     $ 73,000   $    73,000
----------------------------------------------------------------------------------------------------------------------
PR CMWLTH Public Buildings Education HFAU RRB,
Series M, 5.50%, 7/1/07                                                                         400,000       400,000
                                                                                                          ------------
                                                                                                              473,000

----------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $62,662,367)                                                    101.9%   62,662,367
----------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS                                                              (1.9)   (1,189,564)
                                                                                               -----------------------
NET ASSETS                                                                                        100.0%  $61,472,803
                                                                                               =======================

FOOTNOTES TO STATEMENT OF INVESTMENTS

TO SIMPLIFY THE LISTINGS OF SECURITIES, ABBREVIATIONS ARE USED PER THE TABLE
BELOW:

BANs      Bond Anticipation Nts.
CMWLTH    Commonwealth
DA        Dormitory Authority
ETET      Eagle Tax-Exempt Trust
FAU       Finance Authority
GOUN      General Obligation Unlimited Nts.
HFA       Housing Finance Agency/Authority
HFAU      Health Facilities Authority
IDA       Industrial Development Agency
IDAU      Industrial Development Authority
IDV       Industrial Development
MERLOTS   Municipal Exempt Receipts Liquidity
          Option Tender
MSTFC     Morgan Stanley & Co., Inc. Trust Floater
          Certificates
MTAU      Metropolitan Transportation Authority
MWFAU     Municipal Water Finance Authority
NYC       New York City
NYS       New York State
P-Floats  Puttable Floating Option Tax Exempt
          Receipts
PAUNYNJ   Port Authority of New York & New Jersey
RB        Revenue Bonds
RRB       Revenue Refunding Bonds
SDI       School District
SGMSTR    Societe Generale, NY Branch  Municipal
          Security Trust Receipts
SWD       Solid Waste Disposal
TFA       Transitional Finance Authority
TS        Tobacco Settlement
UDC       Urban Development Corp.
WSS       Water & Sewer System

1. Floating or variable rate obligation maturing in more than one year. The
interest rate, which is based on specific, or an index of, market interest
rates, is subject to change periodically and is the effective rate on June 30,
2007. 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 $22,703,000 or 36.93% of the Trust's net
assets as of June 30, 2007.

3. Illiquid security. The aggregate value of illiquid securities as of June 30,
2007 was $5,895,130, which represents 9.59% of the Trust's net assets. See Note
4 of accompanying Notes.

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                    8 | CENTENNIAL NEW YORK TAX EXEMPT TRUST


STATEMENT OF ASSETS AND LIABILITIES  June 30, 2007
--------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------
ASSETS
----------------------------------------------------------------------------------------------
Investments, at value (cost $62,662,367)--see accompanying statement of
investments                                                                      $ 62,662,367
----------------------------------------------------------------------------------------------
Receivables and other assets:
Interest                                                                              371,642
Shares of beneficial interest sold                                                        617
Other                                                                                   5,523
                                                                                 -------------
Total assets                                                                       63,040,149

----------------------------------------------------------------------------------------------
LIABILITIES
----------------------------------------------------------------------------------------------
Bank overdraft                                                                        404,354
----------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased                                                               1,001,436
Dividends                                                                              68,318
Distribution and service plan fees                                                     31,442
Shares of beneficial interest redeemed                                                 25,601
Shareholder communications                                                             11,675
Trustees' compensation                                                                  3,021
Transfer and shareholder servicing agent fees                                           2,398
Other                                                                                  19,101
                                                                                 -------------
Total liabilities                                                                   1,567,346

----------------------------------------------------------------------------------------------
NET ASSETS                                                                       $ 61,472,803
                                                                                 =============

----------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
----------------------------------------------------------------------------------------------
Paid-in capital                                                                  $ 61,470,064
----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments                                            2,739
                                                                                 -------------
NET ASSETS--applicable to 61,383,262 shares of beneficial interest outstanding   $ 61,472,803
                                                                                 =============

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                    9 | CENTENNIAL NEW YORK TAX EXEMPT TRUST


STATEMENT OF OPERATIONS  For the Year Ended June 30, 2007
--------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------
INVESTMENT INCOME
----------------------------------------------------------------------------------------------
Interest                                                                         $  2,338,928

----------------------------------------------------------------------------------------------
EXPENSES
----------------------------------------------------------------------------------------------
Management fees                                                                       316,297
----------------------------------------------------------------------------------------------
Service plan fees                                                                     125,640
----------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees                                          30,655
----------------------------------------------------------------------------------------------
Shareholder communications                                                             26,718
----------------------------------------------------------------------------------------------
Legal, auditing and other professional fees                                            22,906
----------------------------------------------------------------------------------------------
Trustees' compensation                                                                  6,795
----------------------------------------------------------------------------------------------
Administration service fees                                                             1,500
----------------------------------------------------------------------------------------------
Custodian fees and expenses                                                               319
----------------------------------------------------------------------------------------------
Other                                                                                  11,195
                                                                                 -------------
Total expenses                                                                        542,025
Less reduction to custodian expenses                                                     (288)
Less waivers and reimbursements of expenses                                           (35,593)
                                                                                 -------------
Net expenses                                                                          506,144

----------------------------------------------------------------------------------------------
NET INVESTMENT INCOME                                                               1,832,784

----------------------------------------------------------------------------------------------
NET REALIZED GAIN ON INVESTMENTS                                                       12,637

----------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                             $  1,845,421
                                                                                 =============

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                    10 | CENTENNIAL NEW YORK TAX EXEMPT TRUST


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

YEAR ENDED JUNE 30,                                            2007           2006
-----------------------------------------------------------------------------------
OPERATIONS
-----------------------------------------------------------------------------------
Net investment income                                  $  1,832,784   $  1,337,729
-----------------------------------------------------------------------------------
Net realized gain                                            12,637            102
                                                       ----------------------------
Net increase in net assets resulting from operations      1,845,421      1,337,831

-----------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
-----------------------------------------------------------------------------------
Dividends from net investment income                     (1,832,784)    (1,337,729)

-----------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
-----------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions                          3,001,971       (547,805)

-----------------------------------------------------------------------------------
NET ASSETS
-----------------------------------------------------------------------------------
Total increase (decrease)                                 3,014,608       (547,703)
-----------------------------------------------------------------------------------
Beginning of period                                      58,458,195     59,005,898
                                                       ----------------------------
End of period                                          $ 61,472,803   $ 58,458,195
                                                       ============================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                    11 | CENTENNIAL NEW YORK TAX EXEMPT TRUST


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

YEAR ENDED JUNE 30,                                   2007        2006        2005        2004        2003
-----------------------------------------------------------------------------------------------------------
------------------------
-----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period              $   1.00    $   1.00    $   1.00    $   1.00    $   1.00
-----------------------------------------------------------------------------------------------------------
Income from investment operations--net
investment income and net realized gain                .03 1       .02 1       .01 1        -- 2       .01
-----------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                  (.03)       (.02)       (.01)         -- 2      (.01)
-----------------------------------------------------------------------------------------------------------

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

-----------------------------------------------------------------------------------------------------------
TOTAL RETURN 3                                        2.93%       2.29%       1.08%       0.20%       0.50%
-----------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)          $ 61,473    $ 58,458    $ 59,006    $ 58,141    $ 67,599
-----------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                 $ 63,268    $ 59,797    $ 58,050    $ 65,140    $ 72,117
-----------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income                                 2.90%       2.24%       1.06%       0.19%       0.50%
Total expenses                                        0.86%       0.85%       0.83%       0.86%       0.82%
Expenses after payments, waivers
and/or reimbursements and reduction
to custodian expenses                                 0.80%       0.80%       0.78%       0.80%       0.80%

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 full 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 less than one full year.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                    12 | CENTENNIAL NEW YORK TAX EXEMPT TRUST


NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES

Centennial New York Tax Exempt Trust (the Trust) is registered under the
Investment Company Act of 1940, as amended, as a non-diversified, open-end
management investment company. The Trust's investment objective is to seek the
maximum current income exempt from federal, New York State and New York City
income taxes for individual investors as is consistent with the preservation of
capital. The Trust's investment advisor is Centennial Asset Management
Corporation (the Manager), a wholly owned 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. As permitted under Rule 2a-7 of the Investment Company Act of 1940,
portfolio securities are valued on the basis of amortized cost, which
approximates market value. If amortized cost is determined not to approximate
market value, the fair value of the portfolio securities will be determined
under procedures approved by the Trust's Board of Trustees.

--------------------------------------------------------------------------------
SECURITY CREDIT RISK. There are certain risks arising from geographic
concentration in any state. Certain revenue or tax related events in a state may
impair the ability of certain issuers of municipal securities to pay principal
and interest on their obligations.

--------------------------------------------------------------------------------
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
           -------------------------------------------------------
           $87,678                        $981                 $--

1. During the fiscal year ended June 30, 2007, the Trust utilized $9,898 of
capital loss carryforward to offset capital gains realized in that fiscal year.

2. During the fiscal year ended June 30, 2006, the Trust did not utilize any
capital loss carryforward.

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.


                    13 | CENTENNIAL NEW YORK TAX EXEMPT TRUST


NOTES TO FINANCIAL STATEMENTS  Continued
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
1. SIGNIFICANT ACCOUNTING POLICIES Continued

The tax character of distributions paid during the years ended June 30, 2007 and
June 30, 2006 was as follows:

                                         YEAR ENDED      YEAR ENDED
                                      JUNE 30, 2007   JUNE 30, 2006
          ---------------------------------------------------------
          Distributions paid from:
          Exempt-interest dividends     $ 1,832,784     $ 1,337,729

--------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Board of Trustees has adopted a compensation
deferral 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
Trust's assets, liabilities or net investment income per share. Amounts will be
deferred until distributed in accordance to the compensation deferral 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, to the extent they are not
offset by positive cash balances maintained by the Trust, 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.


                    14 | CENTENNIAL NEW YORK TAX EXEMPT TRUST


--------------------------------------------------------------------------------
INDEMNIFICATIONS. The Trust's organizational documents provide current and
former trustees and officers with a limited indemnification against liabilities
arising in connection with the performance of their duties to the Trust. In the
normal course of business, the Trust may also enter into contracts that provide
general indemnifications. The Trust's maximum exposure under these arrangements
is unknown as this would be dependent on future claims that may be made against
the Trust. The risk of material loss from such claims is considered remote.

--------------------------------------------------------------------------------
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.

--------------------------------------------------------------------------------
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, 2007       YEAR ENDED JUNE 30, 2006
                                  SHARES          AMOUNT         SHARES          AMOUNT
----------------------------------------------------------------------------------------
Sold                         197,521,069   $ 197,521,069    191,779,929   $ 191,779,929
Dividends and/or
distributions reinvested       1,826,727       1,826,727      1,306,547       1,306,846
Redeemed                    (196,345,825)   (196,345,825)  (193,634,580)   (193,634,580)
                            ------------------------------------------------------------
Net increase (decrease)        3,001,971   $   3,001,971       (548,104)  $    (547,805)
                            ============================================================

--------------------------------------------------------------------------------
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 average net assets as shown in the following table:

          FEE SCHEDULE
          -----------------------------------------------
          Up to $250 million                       0.500%
          Next $250 million                        0.475
          Next $250 million                        0.450
          Next $250 million                        0.425
          Over $1 billion                          0.400

--------------------------------------------------------------------------------
ADMINISTRATION SERVICE FEES. 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,
2007, the Trust paid $30,587 to SSI for services to the Trust.


                    15 | CENTENNIAL NEW YORK TAX EXEMPT TRUST


NOTES TO FINANCIAL STATEMENTS  Continued
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
3. FEES AND OTHER TRANSACTIONS WITH AFFILIATES  Continued

SERVICE PLAN (12b-1) FEES. The Trust has adopted a Service Plan (the "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 periodically 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 periodically 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. The Manager has voluntarily undertaken
to assume certain expenses of the Trust in any fiscal year that exceed 0.80% of
the Trust's average annual net assets. During the year ended June 30, 2007, the
Manager waived $35,593 of its management fees. Effective July 7, 2003, the
Manager has voluntarily undertaken to waive receipt of its management fees to
the extent necessary so that the Trust may seek to maintain a positive yield.
The Manager reserves the right to amend or terminate either voluntary expense
assumption at any time.

      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, 2007, 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.

--------------------------------------------------------------------------------
5. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Trust's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Trust's tax return
will be ultimately sustained. A tax liability and expense must be recorded in
respect of any tax position that, in Management's judgment, will not be fully
realized. FIN 48 is effective for fiscal years beginning after December 15,
2006. As of June 30, 2007, the Manager has evaluated the implications of FIN 48
and does not currently


                    16 | CENTENNIAL NEW YORK TAX EXEMPT TRUST


anticipate a material impact to the Trust's financial statements. The Manager
will continue to monitor the Trust's tax positions prospectively for potential
future impacts.

      In September 2006, ("FASB") issued Statement of Financial Accounting
Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS. This standard establishes a
single authoritative definition of fair value, sets out a framework for
measuring fair value and expands disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements already required or permitted by
existing standards. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. As of June 30, 2007, the Manager does not believe the
adoption of SFAS No. 157 will materially impact the financial statement amounts;
however, additional disclosures may be required about the inputs used to develop
the measurements and the effect of certain of the measurements on changes in net
assets for the period.

A-4
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+."

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.
1350 Lawrence Street, Suite 100
Denver, CO 80204

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

PX0780.001.0807rev1207

(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.