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 Centennial California 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............................................10
     Other Investment Restrictions..........................................18
     Disclosure of Portfolio Holdings.......................................21
How the Trust is Managed....................................................24
     Organization and History...............................................24
     Board of Trustees and Oversight Committees.............................25
     Trustees and Officers of the Trust.....................................27
     The Manager............................................................36
Service Plan................................................................40
Payments to Trust Intermediaries............................................42
Performance of the Trust....................................................46

About Your Account
How To Buy Shares...........................................................49
How To Sell Shares..........................................................50
How To Exchange Shares......................................................51
Dividends and Taxes.........................................................53
Additional Information About the Trust......................................58

Financial Information About the Trust
Report of Independent Registered Public Accounting Firm.....................60
Financial Statements........................................................61

Appendix A: Description of Securities Ratings..............................A-1








                                    59
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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, school
districts 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
diversifications 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 this
investment.  However, the Trust intends to be as fully invested as possible
and will not invest in when-issued securities if its income or net asset
value will be materially adversely affected.  At the time the Trust makes the
commitment to purchase a municipal security on a when-issued basis, it will
record the transaction on its books and reflect the value of the security in
determining its net asset value.  It will also segregate cash or other liquid
high quality municipal securities equal in value to the commitment for the
when-issued securities. While when-issued securities may be sold prior to
settlement date, the Trust intends to acquire the securities upon settlement
unless a prior sale appears desirable for investment reasons.  There is a
risk that the yield available in the market when delivery occurs may be
higher than the yield on the security acquired.

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

      Pursuant to an Exemptive Order issued by the Securities and Exchange
Commission (the "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.

Loans of Portfolio Securities.  To attempt to increase its income, the Trust
may lend its portfolio securities to qualified borrowers (other than in
repurchase transactions).  There are risks in connection with securities
lending. The Trust might experience a delay in receiving additional
collateral to secure a loan, or a delay in recovery of the loaned securities.
The Trust presently does not intend to lend securities; but if it does, these
loans cannot exceed 25% of the value of the Trust's total assets.  Income
from securities loans does not constitute exempt-interest income for the
purpose of paying tax-exempt dividends.

      The Trust must receive collateral for a loan.  Under current applicable
regulatory requirements (which are subject to change), on each business day
the loan collateral must be at least equal to the value of the loaned
securities.  It must consist of cash, bank letters of credit, securities of
the U.S. government or its agencies or instrumentalities, 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.  The terms of the
letter of credit and the issuing bank both must be satisfactory to the
Trust.

      When it lends securities, the Trust receives amounts equal to the
dividends or interest on the loaned securities.  It also receives one or more
of (a) negotiated loan fees, (b) interest on securities used as collateral,
and (c) interest on short-term debt securities purchased with the loan
collateral. Either type of interest may be shared with the borrower.  The
Trust may pay reasonable finder's, administrative or other fees in connection
with these loans.  The terms of the Trust's loans must meet applicable tests
under the Internal Revenue Code and must permit the Trust to reacquire loaned
securities on five days' notice or in time to vote on any important matter.

Special Considerations Relating to California Municipal Obligations

      Because the Trust invests primarily in California tax-exempt
securities, the value of its portfolio investments will be highly sensitive
to events affecting the fiscal stability of the State of California
(sometimes referred to in this section as the "State") and its
municipalities, authorities and other instrumentalities that issue such
securities.  The following information is based on information available as
of the date of this Statement of Additional Information primarily from
official statements and prospectuses relating to securities offerings of the
State, the latest of which is dated June 20, 2007.

General Economic Conditions

      The economy of the State is the largest among the 50 states and one of
the largest in the world.  The diversified economy of the State has major
components in high technology, trade, entertainment, agriculture, tourism,
manufacturing, construction and services. Certain of the State's significant
industries, such as high technology, are sensitive to economic disruptions in
their export markets.

      In early 2001, California's economy slipped into a recession, which was
concentrated in the state's high-tech sector and, geographically, in the San
Francisco Bay Area.  The economy has since recovered with 887,100 jobs gained
between July 2003 and March 2007 compared with 362,000 jobs lost between
January 2001 and July 2003.  The economy got off to a fast start in 2006, but
declining housing sectors increasingly weighed on the economy as the year
progressed.  Cooling housing sectors continued to slow the economy in the
first quarter of 2007.  The downturn in the housing sector will likely last
longer than anticipated in the Governor's Budget forecast.

      Growth in taxable sales fell to 3.9 percent in 2006 from 7.4 percent in
2005.  New vehicle registration fell in 2006 and were also down from a year
ago in the first two months of 2007.  Decreased vehicle registration and
reduced home building likely contributed to the slowdown in taxable sales
growth.

      California's geographic location subjects it to earthquake risks.  It
is impossible to predict the time, magnitude or location of a major
earthquake or its effect on the California economy. In January 1994, a major
earthquake struck the Los Angeles area, causing significant damage in a four
county area.  The possibility exists that another such earthquake could
create a major dislocation of the California economy and significantly affect
State and local governmental budgets.

State Budgets

      2006 Budget Act. The State's 2006 Budget Act (adopted in June 2006 for
the fiscal year ending June 30, 2007) forecasted $93.9 billion in General
Fund revenues and transfers, $101.3 billion in expenditures, and after
application of the prior year's $9.5 billion General Fund balance, a positive
General Fund balance of $2.2 billion.  The State's Legislative Analyst's
Office (the "LAO"), in its Analysis of the 2007-08 Budget Bill Report issued
on February 21, 2007 (the "LAO February 2007 Report"), estimates General Fund
revenues and transfers of $94.1 billion, expenditures of $102.1 billion and a
positive General Reserve balance of $1.9 billion for the 2006-07 fiscal
year.  The May Revision to the Governor's Budget for 2007-08, released in May
2007 (the "2007 May Revision"), projects General Fund revenues and transfers
of $95.7 billion, expenditures of $102.3 billion and a positive General
Reserve balance of $3.7 billion for the 2006-07 fiscal year.  The 2007 Budget
Act, as of June 30, 2007, projects that the 2006-07 fiscal year will end with
revenues and transfers of $94.5 billion, expenditures of $102.1 billion and a
reserve of $2.9 billion.

      2007 Budget Act.  The Governor's Budget for the 2007-08 fiscal year,
released in January 2007, projects General Fund revenues and transfers for
the fiscal year ended June 30, 2008 of $101.3 billion, expenditures at $103.1
billion, and a year-end General Fund reserve of $2.1 billion.  The LAO
February 2007 Report projects revenues and transfers of $101.3 billion,
expenditures of $103.9 billion and a negative General Reserve balance of $726
million for the 2007-08 fiscal year (approximately $2.8 billion less than
that assumed in the budget estimate).

      The LAO believes that the Governor's budget is based on a number of
optimistic assumptions.  Using LAO estimates of revenue and expenditures
under the Governor's plan, LAO estimates that the State would conclude
2007-08 with a $726 million deficit, and would face a continuing structural
shortfall thereafter.  The difference in these numbers is due principally to
LAO's lower estimates of revenue in both the current and budget years, but
also due to higher expenditure estimates, primarily related to Proposition
98.  Adoption of the plan would also leave the State with large operating
shortfalls in future years, unless additional corrective actions are taken.
The LAO recommends finding additional budget savings and/or revenue to
address the near- and longer-term shortfalls and also reducing the amount of
supplemental repayments on deficit-financing bonds relative to the $1.6
billion proposed in the budget.

      The 2007 May Revision projected that the General Fund revenues are
expected to be $97.7 billion in 2006-07 and $101.3 billion in 2007-08.  This
represents an increase of $1.2 billion in 2006-07 and a reduction of $24
million compared to the Governor's January budget.  The May Revision
projected General Fund revenues and transfers for the fiscal year ended June
30, 2008 of $101.3 billion, expenditures at $103.8 billion, and a year-end
General Fund reserve of $2.2 billion.  The May Revision proposes to increase
General Fund expenditures in 2007-08 by $1.5 billion or 1.5 percent over the
level of spending in 2006-07.  Most General Fund spending is
non-discretionary.  Of the total spending proposed, $1.7 billion, or 2
percent, is for pre-paying debt and only $1.0 billion, or less than 1 percent
is proposed for policy choices.  The remainder is required either by the
constitution, federal laws, statutory entitlements, binding labor agreements
or court orders.

      The 2007 Budget Act has not been enacted as of July 31, 2007.  The
Budget Act must be approved by a two-thirds majority vote of each House of
the Legislature.  The Assembly passed the budget on July 20, 2007.  The State
Senate has not been able to reach the two-thirds majority needed to pass the
budget, now a month past deadline.

      Constraints on the Budget Process.  Approved in March 2004 with the
State's Economic Recovery Bonds, Proposition 58 requires the State to enact a
balanced budget and establish a special reserve in the General Fund and
restricts future borrowing to cover budget deficits. As a result of the
provisions requiring the enactment of a balanced budget and restricting
borrowing, the State would, in some cases, have to take more immediate
actions to correct budgetary shortfalls. Beginning with the budget for fiscal
year 2004-05, Proposition 58 requires the Legislature to pass a balanced
budget and provides for mid-year adjustments in the event that the budget
falls out of balance. The balanced budget determination is made by
subtracting expenditures from all available resources, including prior-year
balances.

      If the Governor determines that the State is facing substantial revenue
shortfalls or spending deficiencies, the Governor is authorized to declare a
fiscal emergency. He or she would then be required to propose legislation to
address the emergency, and call the Legislature into special session to
consider that legislation.  If the Legislature fails to pass and send to the
Governor legislation to address the budget fiscal emergency within 45 days,
the Legislature would be prohibited from acting on any other bills or
adjourning in joint recess until such legislation is passed.

      Proposition 58 also requires that a special reserve (the Budget
Stabilization Account) be established in the State's General Fund. Beginning
with fiscal year 2006-07, a specified portion of estimated annual General
Fund revenues would be transferred by the Controller into the Budget
Stabilization Account no later than September 30 of each fiscal year. These
transfers would continue until the balance in the Budget Stabilization
Account reaches $8 billion or 5 percent of the estimated General Fund
revenues for that fiscal year, whichever is greater. The annual transfer
requirement would be in effect whenever the balance falls below the $8
billion or 5 percent target. The annual transfers could be suspended or
reduced for a fiscal year by an executive order issued by the Governor no
later than June 1 of the preceding fiscal year.

      Proposition 58 will also prohibit certain future borrowing to cover
fiscal year end deficits. This restriction applies to general obligation
bonds, revenue bonds, and certain other forms of long-term borrowing. The
restriction does not apply to certain other types of borrowing, such as
short-term borrowing to cover cash shortfalls in the General Fund (including
revenue anticipation notes or revenue anticipation warrants currently used by
the State), or inter-fund borrowings.

      Future Budgets.  It cannot be predicted what actions will be taken in
the future by the State Legislature and the Governor to deal with changing
State revenues and expenditures. The State budget will be affected by
national and State economic conditions and other factors.
State Indebtedness

      General Obligation Bonds and Revenue Bonds. As of May 1, 2007, the
State had approximately $49.8 billion aggregate principal of its long-term
general obligation bonds and revenue bonds outstanding.  Inclusive of
estimated interest of approximately $30.6 billion, the State's debt service
requirements for general obligation bonds and revenue bonds totaled nearly
$80.4 billion.  General obligation bond authorizations in an aggregate amount
of approximately $70.5 billion remained unissued as of that date.

      Ratings.  As of June 2007, the State's general obligation bonds were
rated A1 by Moody's, A+ by Standard & Poor's, and A+ by Fitch Ratings.  It is
not presently possible to determine whether, or the extent to which, Moody's,
Standard & Poor's or Fitch Ratings will change such ratings in the future.

      New General Obligation Bond Measures.  In response to the Governor's
proposal for a $220 billion infrastructure investment plan, which would have
used $68 billion in new general obligation bonds, the Legislature approved
four bond measures, totaling approximately $37.3 billion, which were all
approved by the voters at the November 7, 2006 general election.

Local Government

      The primary units of local government in California are the counties,
ranging in population from 1,200 (Alpine) to approximately 10 million (Los
Angeles). Counties are responsible for the provision of many basic services,
including indigent healthcare, welfare, jails and public safety in
unincorporated areas. There are also 478 incorporated cities and thousands of
other special districts formed for education, utility and other services. The
fiscal condition of local governments has been constrained since the
enactment of "Proposition 13" in 1978 and later constitutional amendments,
which reduced and limited the future growth of property taxes and limited the
ability of local governments to impose "special taxes" (those devoted to a
specific purpose) without two-thirds voter approval. Proposition 218, another
initiative constitutional amendment enacted in 1996, further limited the
ability of local governments to impose or raise various taxes, fees, charges
and assessments without voter approval. Counties, in particular, have had
fewer options to raise revenues than many other local government entities,
and have been required to maintain many services.

      Some local governments in California have experienced notable financial
difficulties, including Los Angeles County, Orange County and San Diego
County, and there is no assurance that any California issuer will make full
or timely payments of principal or interest or remain solvent.  It should be
noted that the creditworthiness of obligations issued by local California
issuers may be unrelated to the creditworthiness of obligations issued by the
State, and there is no obligation on the part of the State to make payment on
such local obligations in the event of default.

      According to the State, the 2004 Budget Act, related legislation and
the enactment of Senate Constitutional Amendment No. 4 (described below) will
dramatically change the State-local fiscal relationship. These constitutional
and statutory changes implement an agreement negotiated between the Governor
and local governments officials (the "State-local agreement") in connection
with the 2004 Budget Act. One change relates to the reduction of the Vehicle
License Fee ("VLF") rate from 2 percent to 0.65 percent of the market value
of the vehicle. In order to protect local governments, the reduction in VLF
revenue to cities and counties from this rate change will be replaced by an
increase in the amount of property tax they receive.

      As part of the State-local agreement, Senate Constitutional Amendment
No. 4 was enacted by the Legislature and subsequently approved by the voters
at the November 2004 election.  Senate Constitutional Amendment No. 4 amends
the State Constitution to, among other things, reduce the Legislature's
authority over local government revenue sources by placing restrictions on
the State's access to local governments' property, sales, and VLF revenues as
of November 3, 2004. Beginning with fiscal year 2008-09, the State will be
able to borrow up to 8 percent of local property tax revenues, but only if
the Governor proclaims such action is necessary due to a severe State fiscal
hardship, two-thirds of both houses of the Legislature approves the borrowing
and the amount borrowed is required to be paid back within three years. The
State also will not be able to borrow from local property tax revenues for
more than two fiscal years within a period of 10 fiscal years. In addition,
the State cannot reduce the local sales tax rate or restrict the authority of
the local governments to impose or change the distribution of the statewide
local sales tax.

      Senate Constitutional Amendment No. 4 also prohibits the State from
mandating activities on cities, counties or special districts without
providing for the funding needed to comply with the mandates. Beginning in
fiscal year 2005-06, if the State does not provide funding for an activity
that has been determined to be mandated, the requirement on cities, counties
or special districts to abide by the mandate would be suspended. In addition,
Senate Constitutional Amendment No. 4 expands the definition of what
constitutes a mandate to encompass State action that transfers to cities,
counties and special districts financial responsibility for a required
program for which the State previously had partial or complete
responsibility. The State mandate provisions of Senate Constitutional
Amendment No. 4 do not apply to schools or community colleges or to mandates
relating to employee rights.

      Senate Constitutional Amendment No. 4 further requires the State to
reimburse cities, counties and special districts for mandated costs incurred
prior to the 2004-05 fiscal year over a term of years.  Chapter 72, Statutes
of 2005 requires the payment of mandated costs incurred prior to 2004-05 to
begin in 2006-07 and to be paid over a term of 15 years.  The 2006 Budget Act
appropriated $169.9 million, and the Legislature and the Administration
specified that these funds include prepayment of the 2007-08 State mandate
obligations.  The remaining estimated cost of claims for mandated costs
incurred prior to the 2004-05 fiscal year is $1.0 billion.

Constitutional, Legislative and Other Factors

      The State is subject to an annual appropriations limit imposed by
Article XIII B of the State Constitution (the "Appropriations Limit"). The
Appropriations Limit does not restrict appropriations to pay debt service on
voter-authorized bonds.

      Article XIII B prohibits the State from spending "appropriations
subject to limitation" in excess of the Appropriations Limit.
"Appropriations subject to limitation" are authorizations to spend "proceeds
of taxes," which consist of tax revenues and certain other funds, including
proceeds from regulatory licenses, user charges or other fees to the extent
that such proceeds exceed "the cost reasonably borne by that entity in
providing the regulation, product or service," but "proceeds of taxes"
exclude most State subventions to local governments, tax refunds and some
benefit payments such as unemployment insurance. No limit is imposed on
appropriations of funds which are not "proceeds of taxes," such as reasonable
user charges or fees and certain other non-tax funds.  Various types of
appropriations are excluded from the Appropriations Limit.

      The State's Appropriations Limit in each year is based on the Limit for
the prior year, adjusted annually for changes in State per capita personal
income and changes in population, and adjusted, when applicable, for any
transfer of financial responsibility for providing services to or from
another unit of government or any transfer of the financial source for the
provisions of services from tax proceeds to non-tax proceeds.

      The Legislature has enacted legislation to implement Article XIII B
which defines certain terms used in Article XIII B and sets forth the methods
for determining the Appropriations Limit. California Government code Section
7912 requires an estimate of the Appropriations Limit to be included in the
Governor's Budget, and thereafter to be subject to the budget process and
established in the Budget Act.

      On November 8, 1988, voters of the State approved Proposition 98, a
combined initiative constitutional amendment and statute called the
"Classroom Instructional Improvement and Accountability Act." Proposition 98
changed State funding of public education below the university level and the
operation of the State appropriations funding, primarily by guaranteeing K-14
schools a minimum share of General Fund revenues. Proposition 98 permits the
Legislature by two-thirds vote of both houses, with the Governor's
concurrence, to suspend the K-14 schools' minimum funding formula for a
one-year period.  Proposition 98 also contains provisions transferring
certain State tax revenues in excess of the Article XIII B limit to K-14
schools.

      Because of the complexities of Article XIII B, the ambiguities and
possible inconsistencies in its terms, the applicability of its exceptions
and exemptions and the impossibility of predicting future appropriations, it
is not possible to predict the impact of this or related legislation on the
bonds in the Trust's portfolio.

      Articles XIII A, XIII B, XIII C and XIII D were each adopted as
measures that qualified for the ballot pursuant to the State's initiative
process.  Other Constitutional amendments affecting State and local taxes and
appropriations have been proposed from time to time.  If any such initiatives
were adopted, the State could be pressured to provide additional financial
assistance to local Governments or appropriate revenues as mandated by such
initiatives. Propositions such as Proposition 98 and others that may be
adopted in the future may place increasing pressure on the State's budget
over future years, potentially reducing resources available for other State
programs, especially to the extent the Article XIII B spending limit would
restrain the State's ability to fund such other programs by raising taxes.

      Effect of other State Laws on Bond Obligations.  Some of the tax-exempt
securities that the Trust can invest in may be obligations payable solely
from the revenues of a specific institution or secured by specific
properties.  These are subject to provisions of California law that could
adversely affect the holders of such obligations.  For example, the revenues
of California health care institutions may be adversely affected by State
laws, and California law limits the remedies of a creditor secured by a
mortgage or deed of trust on real property.  Debt obligations payable solely
from revenues of health care institutions may also be insured by the State
but no guarantee exists that adequate reserve funds will be appropriated by
the State legislature for such purpose.

Pending Litigation

      The State is a party to numerous legal proceedings, many of which
normally occur in governmental operations.  In addition, the State is
involved in certain other legal proceedings that, if decided against the
State might require the State to make significant future expenditures or
impair future revenue sources.  Because of the prospective nature of these
proceedings, it is not presently possible to predict the outcome of such
litigation or estimate the potential impact on the ability of the State to
pay debt service costs on its obligations.

      On August 8, 2005, a lawsuit titled California Teachers Association et
al. v. Arnold Schwarzenegger et al. was filed.  Plaintiffs - California
Teachers Association, California Superintendent of Public Instruction Jack
O'Connell, and various other individuals - allege that the California
Constitution's minimum school funding guarantee was not followed for the
2004-2005 fiscal year and the 2005-06 fiscal year in the aggregate amount of
approximately $3.1 billion.  Plaintiffs seek a writ of mandate requiring the
State to recalculate the minimum-funding guarantee in compliance with the
California Constitution.  On May 10, 2006, counsel for all parties executed a
settlement agreement, and the action has been stayed pending implementation
legislation.  The settlement calls for payment of the outstanding balance of
the minimum funding obligation to school districts and community college
districts (approximately $3 billion in the aggregate) through the 2013-14
fiscal year.

      On November 15, 2005, a California Superior Court judge entered a
decision in a case which sought judicial validation for the issuance by the
State of pension obligation bonds.  The judge ruled the bonds were not
valid.  The State appealed, but the State will not be able to issue pension
obligation bonds until the matter is finally resolved.  For the 2005-2006
fiscal year, the State made payments of about $525 million for a portion of
the fiscal year contribution to the California Public Employees' Retirement
System which had been planned to be funded from the bonds.  The 2006 Budget
Act does not call for the issuance of any pension obligation bonds.

      On June 30, 2005, U.S. District Court for the Northern District of
California ruled on a class action regarding all prison medical care in the
State.  The district court appointed a Receiver, who took office in April
2006, to run and operate the approximately $1.3 billion adult health care
delivery system (excluding mental health and dental care) of the California
Department of Corrections and Rehabilitation ("CDCR"), affecting
approximately 32 prisons throughout the State.  CDCR continues to work with
the Receiver.  At this time, it is unknown what financial impact this
unprecedented litigation would have on the State's General Fund.

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
         other securities substantially similar thereto, and repurchase
         agreements; and the Trust may lend its portfolio securities as
         described in its investment policy stated above;

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
         Municipal Bonds or Notes secured by interests in real estate;

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

o     The Trust cannot invest in or hold securities of any issuer if those
         officers and Trustees of the Trust or the Manager individually
         owning more than 0.5% of the securities of such issuer together own
         more than 5% of the securities of such issuer;

o     The Trust cannot underwrite securities of other companies;

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

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     As a fundamental policy, 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 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 trustees, 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 1989, 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 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,
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, the Distributor or the Sub-Distributor
or of any entity directly or indirectly controlling, controlled by or under
common control with the Manager, the 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, Colorado 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
                                                                         y Shares
                                                              Range of   Beneficially
Position(s) Held      Years; Other                            Shares      Owned in
with the Trust,       Trusteeships/Directorships Held;        Beneficiall    All
Length of Service,    Number of Portfolios in Fund Complex    Owned in   Supervised
Age                   Currently Overseen                      the Trust     Funds
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
                                                                As of December 31,
                                                                       2006
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
William L. Armstrong, President, Colorado Christian           None       Over
Chairman of the       University (since 2006); Chairman,                 $100,000
Board since 2003 and  Cherry Creek Mortgage Company (since
Trustee since 2000    1991), Chairman, Centennial State
Age: 70               Mortgage Company (since 1994),
                      Chairman,The El Paso Mortgage Company
                      (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     None       Over
Trustee since 1990    the Manager (December 1991-April                   $100,000
Age: 70               1999); 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 1990    company) (since June 2002); Director               $100,000
Age: 65               of 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             None       Over
Trustee since 1996    (charitable organization) (since                   $100,000
Age: 66               September 1984). 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. Hamilton,  Trustee of Monterey Institute for       None       Over
Trustee since 2002    International Studies (educational                 $100,000
Age: 60               organization) (since February 2000);
                      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 Marshall,  Trustee of MassMutual Select Funds      None       Over
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
                                                             Range of      of Shares
Position(s) Held                                             Shares     yBeneficially
with the Trust,     Years; Other Trusteeships/Directorships  Beneficiall Owned in 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
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Richard F. Grabish, Senior Vice President and Assistant      None       Over $100,000
Trustee since 2001  Director of Sales and Marketing (since
Age: 58             March 1997), Director (since March
                    1987) 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 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 $100,000
President          Director of OppenheimerFunds, Inc. (since
Since 2001 and     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, 225 Liberty
Street, New York, New York 10281-1008, Messrs. Ullyatt, Petersen, Szilagyi,
Vandehey and Wixted and Ms. Ives, 6803 S. Tucson Way, Centennial, Colorado
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 Analyst;
Age:  32                       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 of
Vice President and Chief       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         of the following: Shareholder Services, Inc.,
Officer since April 1999       HarbourView Asset Management Corporation, Shareholder
Age: 47                        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 and
Age: 37                        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 Manager
Age: 59                        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 since 2001 and Assistant Secretary (since October 2003) of
Age: 41                        OppenheimerFunds, Inc.; Vice President (since 1999)
                               and Assistant Secretary (since October 2003) of the
                               Distributor; Assistant Secretary of the Manager (since
                               October 2003); Vice President and Assistant Secretary
                               of Shareholder Services, Inc. (since 1999); Assistant
                               Secretary of OppenheimerFunds Legacy Program and
                               Shareholder Financial Services, Inc. (since December
                               2001); Assistant Counsel of the Manager (August
                               1994-October 2003). An officer of 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.
---------------------------------------------------------------------------------------

o     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        Total Compensation
                                      Compensation       From Trust and Fund
                                     from Trust((1))     Complex((2)) Year
  Position(s) (as applicable)       Fiscal Year Ended    ended December 31,
                                      June 30, 2007             2006
------------------------------------------------------------------------------
------------------------------------------------------------------------------
 William L. Armstrong                     $987                $214,504
Chairman of the Board of
Trustees and Governance
Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
George Bowen                              $685                $143,000
 Audit Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Edward L. Cameron                         $822                $171,600
Audit Committee Chairman
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Jon S. Fossel                             $703                $154,174
Review Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Sam Freedman                              $724                $143,000
 Review Committee Chairman
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Richard F. Grabish((3))                   $685                 $13,167
Review Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Beverly Hamilton
Review Committee Member and             $685((4))             $143,000
Governance Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Robert J. Malone
Governance Committee Chairman             $788                $164,452
and Audit Committee Member
------------------------------------------------------------------------------
------------------------------------------------------------------------------
F. William Marshall, Jr.
Audit Committee Member and                $685              $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  MassMutual  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.  OppenheimerFunds,  Inc. does not consider  MassMutual
   Institutional  Funds,  MassMutual  Select  Funds and MML Series  Investment
   Fund to be part of the  OppenheimerFunds'  "Fund  Complex" as that term may
   be otherwise interpreted.
3.    Mr. Grabish serves as Trustee for only the following  funds:  Centennial
   California Tax Exempt Trust,  Centennial Government Trust, Centennial Money
   Market  Trust,  Centennial  New York Tax Exempt  Trust and  Centennial  Tax
   Exempt Trust.
4.    Includes $685 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 63103-2205, which owned
185,244,855.560 shares of the Trust which was 98.97% 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 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
  ending 6/30
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
      2005                                  $740,169
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
      2006                                  $925,041
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
      2007                                  $952,147
---------------------------------------------------------------------------------

      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 vary the amount of expenses
assumed or eliminate the assumption of expenses altogether. For the fiscal
years ended June 30, 2005, 2006 and 2007, the management fees payable by the
Trust would have been $740,169, $924,555 and $952,147 with the Manager's
voluntary expense assumption.  Those amounts reflect the effect of the
expense assumptions of $0, $486 and $0 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       1,762      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 - California 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 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 a plan is terminated as described below, the plan continues in
effect from year to year but only if the Trust's Board of Trustees and its
Independent Trustees specifically vote annually to approve its continuance.
Approval must be by a vote cast in person at a meeting called for the purpose
of voting on continuing the plan.  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
$380,570. The Distributor retained $0 and the remaining balance was paid out
by the Distributor to recipients, which included $5 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, $578,849 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
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Aegon                                   Aetna Life Ins & Annuity Co.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   AG Edwards                              AIG Financial Advisors
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   AIG Life                                Allianz Life Insurance Company
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  -------------------------------------------------------------------------------
   Allstate Life                           American Enterprise Life Insurance
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   American General Annuity                American Portfolios
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Ameriprise                              Ameritas
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  -------------------------------------------------------------------------------
   Annuity Investors Life                  Associated Securities
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   AXA Advisors                            AXA Equitable Life Insurance
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Banc One Securities Corporation         BNY Investment Center
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Cadaret Grant & Co, Inc.                Chase Investment Services
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Citicorp Investment Services, Inc.      Citigroup Global Markets Inc (SSB)
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   CitiStreet                              Citizen's Bank of Rhode Island
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Columbus Life                           Commonwealth Financial Network
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   CUNA Brokerage Services, Inc.           CUSO Financial Services, L.P.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Edward D Jones & Co.                    Federal Kemper
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Financial Network (ING)                 GE Financial Assurance
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   GE Life & Annuity                       Genworth Financial
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   GlenBrook Life and Annuity Co.          Great West Life
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  -------------------------------------------------------------------------------
   Hartford Life Insurance Co.             HD Vest Investment Services
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Hewitt Associates                       IFMG Securities, Inc.
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  -------------------------------------------------------------------------------
   ING Financial Advisers                  ING Financial Partners
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Jefferson Pilot Securities Co.          Kemper Investors Life Insurance Co.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Legend Equities Co.                     Legg Mason Wood Walker
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Lincoln Benefit National Life           Lincoln Financial
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Lincoln Investment Planning, Inc.       Linsco Private Ledger Financial
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Mass Mutual                             McDonald Investments, Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Merrill Lynch                           Minnesota Life
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  -------------------------------------------------------------------------------
   Mony Life                               Morgan Stanley Dean Witter
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  -------------------------------------------------------------------------------
   Multifinancial (ING)                    Mutual Service Co.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   National Planning Co.                   Nationwide
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  -------------------------------------------------------------------------------
   NFP                                     Park Avenue Securities LLC
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   PFS Investments, Inc.                   Phoenix Life Insurance Co.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Plan Member Securities                  Prime Capital Services, Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Primevest Financial Services, Inc.      Protective Life Insurance Co.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Provident Mutual Life & Annuity         Prudential
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Raymond James & Associates, Inc.        RBC Daine Rauscher
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Royal Alliance                          Securities America, Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Security Benefit                        Security First-Metlife
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Signator Investments                    Sun Life Insurance Co.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Sun Trust Securities, Inc.              Thrivent Financial
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Travelers Life & Annuity Co.            UBS Financial Services, Inc.
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   Union Central                           United Planners
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  -------------------------------------------------------------------------------
   Wachovia                                Walnut Street Securities (Met Life)
  -------------------------------------------------------------------------------
  -------------------------------------------------------------------------------
   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)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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 one percent.

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

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

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

      The 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

-------------------------------------------------------------------------------
                           Tax-Equivalent Yield
           Compounded   (41.05% 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)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
                            Yield       Compounded
                           (7 days      Effective
                            ended         Yield      1-Year  5 Years 10 Years
                          6/30/07)       (7 days
                                          ended
                                         6/30/07)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
  2.98%       3.02%         5.05%         5.12%      2.91%    1.40%    1.85%
-------------------------------------------------------------------------------



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


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 Allocation Fund
                                         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 Discovery Fund              Oppenheimer Quest Opportunity Value Fund
 Oppenheimer Dividend Growth Fund        Oppenheimer Quest Value Fund, Inc.
 Oppenheimer Emerging Growth Fund        Oppenheimer Real Estate Fund
                                         Oppenheimer Rochester Arizona Municipal
 Oppenheimer Emerging Technologies Fund  Fund
                                         Oppenheimer Rochester Maryland Municipal
 Oppenheimer Enterprise Fund             Fund
                                         Oppenheimer Rochester Massachusetts
 Oppenheimer Equity Fund, Inc.           Municipal Fund
                                         Oppenheimer Rochester Michigan Municipal
 Oppenheimer Global Fund                 Fund
                                         Oppenheimer Rochester Minnesota
 Oppenheimer Global Opportunities Fund   Municipal Fund
 Oppenheimer Gold & Special Minerals
 Fund                                    Oppenheimer Rochester National Municipals
                                         Oppenheimer Rochester North Carolina
 Oppenheimer Growth Fund                 Municipal Fund
 Oppenheimer International Bond Fund     Oppenheimer Rochester Ohio Municipal Fund
 Oppenheimer International Diversified   Oppenheimer Rochester Virginia Municipal
 Fund                                    Fund
 Oppenheimer International Growth Fund   Oppenheimer Select Value Fund
 Oppenheimer International Small
 Company Fund                            Oppenheimer Senior Floating Rate Fund
 Oppenheimer International Value Fund    Oppenheimer Small- & Mid- Cap Value 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 Trust 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
California  corporate  income and franchise  taxes.  It will also be qualified
under  California  law to pay exempt  interest  dividends  that will be exempt
from  California  personal  income tax. That  exemption  applies to the extent
that the Trust's  distributions  are  attributable  to interest on  California
municipal   securities  and  qualifying   obligations  of  the  United  States
government,  if at  least  50% of the  Trust's  assets  are  invested  in such
obligations at the close of each quarter in its tax year.  Distributions  from
the Trust attributable to income from sources other than California  municipal
securities  and U.S.  government  obligations  will  generally  be  subject to
California income tax as ordinary income.

      Distributions by the Trust from investment income and long- and
short-term capital gains will generally not be excludable from taxable income
in determining California corporate franchise tax or income 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 California 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). 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 sent to the IRS.

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

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

      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 CALIFORNIA TAX EXEMPT TRUST


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

--------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF CENTENNIAL CALIFORNIA TAX EXEMPT
TRUST: We have audited the accompanying statement of assets and liabilities of
Centennial California 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. 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 CALIFORNIA TAX EXEMPT TRUST


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

                                                                                PRINCIPAL           VALUE
                                                                                   AMOUNT      SEE NOTE 1
----------------------------------------------------------------------------------------------------------
SHORT-TERM TAX-EXEMPT OBLIGATIONS--99.4%
----------------------------------------------------------------------------------------------------------
CALIFORNIA--94.3%
Alameda, CA Transportation Corridor Agency RB, MSTFC
Series 2006-1514, 3.77% 1,2                                                   $   420,000   $     420,000
----------------------------------------------------------------------------------------------------------
CA Dept. of Water Resources RB, Central Valley Project,
Goldman Sachs Trust Series 2007-27G, 3.75% 1,2                                  3,000,000       3,000,000
----------------------------------------------------------------------------------------------------------
CA EDFAU IDV RB, Applied Aerospace Structure Corp.,
Series 1998, 3.77% 2                                                              100,000         100,000
----------------------------------------------------------------------------------------------------------
CA Golden State Tobacco Securitization Corp. RB, Reset Option
Certificates II-R Trust, Series 841CE, 3.74% 1,2                                4,700,000       4,700,000
----------------------------------------------------------------------------------------------------------
CA Golden State Tobacco Securitization Corp. RRB, Municipal
Securities Trust Certificates, Series 7046, Cl. A, 3.79% 1,2                    4,000,000       4,000,000
----------------------------------------------------------------------------------------------------------
CA GOUN, P-Floats, Series PT-3850, 3.79% 2                                      2,000,000       2,000,000
----------------------------------------------------------------------------------------------------------
CA GOUN, P-Floats, Series PT-4031, 3.77% 1,2                                    6,500,000       6,500,000
----------------------------------------------------------------------------------------------------------
CA GOUN, P-Floats, Series PZP-010, 3.80% 1,2                                    2,820,000       2,820,000
----------------------------------------------------------------------------------------------------------
CA GOUN, Series 2003 B-1, 3.70% 2                                              12,000,000      12,000,000
----------------------------------------------------------------------------------------------------------
CA HFA RB, Series F, 3.92% 2                                                      700,000         700,000
----------------------------------------------------------------------------------------------------------
CA I&E Development Bank RB, Starter & Alternator Project,
Series 1999, 3.83% 2                                                            3,900,000       3,900,000
----------------------------------------------------------------------------------------------------------
CA Imperial Irrigation District RB, Electrical & WS Projects,
Series A, 3.68%, 10/11/07                                                       5,000,000       5,000,000
----------------------------------------------------------------------------------------------------------
CA PCFAU RRB, Pacific Gas & Electric Co., Series F, 3.84% 2                       400,000         400,000
----------------------------------------------------------------------------------------------------------
CA PCFAU SWD RB, CR&R, Inc. Project, Series A, 3.81% 2                          2,000,000       2,000,000
----------------------------------------------------------------------------------------------------------
CA PCFAU SWD RB, Garden City Sanitation, Series A, 3.83% 2                      2,615,000       2,615,000
----------------------------------------------------------------------------------------------------------
CA PCFAU SWD RB, Greenwaste Recovery, Inc. Project, Series 2007A, 3.83% 2       3,305,000       3,305,000
----------------------------------------------------------------------------------------------------------
CA PCFAU SWD RB, Greenwaste Recovery, Inc. Project, Series A, 3.83% 2           2,880,000       2,880,000
----------------------------------------------------------------------------------------------------------
CA PCFAU SWD RB, Marin San Services Project, Series A, 3.83% 2                  1,400,000       1,400,000
----------------------------------------------------------------------------------------------------------
CA PCFAU SWD RB, Penas Disposal, Inc. Project, Series A, 3.83% 2                1,345,000       1,345,000
----------------------------------------------------------------------------------------------------------
CA PCFAU SWD RB, Sunset Waste Paper, Inc. Project, 3.83% 2                      2,960,000       2,960,000
----------------------------------------------------------------------------------------------------------
CA PCFAU SWD RB, Valley Vista Services, Inc., Series A, 3.83% 2                 2,000,000       2,000,000
----------------------------------------------------------------------------------------------------------
CA PCFAU SWD RB, Vanderham/J&D Wilson Dairy Project, Series 2004, 3.88% 2       2,500,000       2,500,000
----------------------------------------------------------------------------------------------------------
CA RB, MSTFC Series 2006-1544P, 3.76% 1,2                                       3,500,000       3,500,000
----------------------------------------------------------------------------------------------------------
CA RB, P-Floats, Series PZP-002, 3.80% 1,2                                      4,000,000       4,000,000
----------------------------------------------------------------------------------------------------------
CA RB, P-Floats, Series PZP-005, 3.83% 1,2                                      2,000,000       2,000,000
----------------------------------------------------------------------------------------------------------
CA RB, P-Floats, Series PZP-009, 3.80% 1,2                                      1,400,000       1,400,000
----------------------------------------------------------------------------------------------------------
CA RB, P-Floats, Series PZP-014, 3.80% 1,2                                        755,000         755,000
----------------------------------------------------------------------------------------------------------
CA RB, P-Floats, Series PZP-014, 3.80% 1,2                                        740,000         740,000
----------------------------------------------------------------------------------------------------------
CA REF GOUN, Kindergarten University, Series 2004B-6, 3.68% 2                   2,000,000       2,000,000
----------------------------------------------------------------------------------------------------------
CA REF GOUN, P-Floats, Series PT-4027, 3.77% 1,2                                2,500,000       2,500,000
----------------------------------------------------------------------------------------------------------
CA REF GOUN, Series 2005 B-5, 3.68% 2                                           2,885,000       2,885,000
----------------------------------------------------------------------------------------------------------
CA SCDAU RB, P-Floats, Series PT-3708, 3.82% 1,2                                1,000,000       1,000,000


                   7 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST


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

                                                                                PRINCIPAL           VALUE
                                                                                   AMOUNT      SEE NOTE 1
----------------------------------------------------------------------------------------------------------
CALIFORNIA Continued
CA Statewide FAU TS RB, P-Floats, Series PA-1287, 3.78% 1,2                   $ 3,150,000   $   3,150,000
----------------------------------------------------------------------------------------------------------
Chabot-Las Positas, CA GOUN, Community College District,
Goldman Sachs Trust Series 2006-87Z, 3.78% 1,2                                  2,545,000       2,545,000
----------------------------------------------------------------------------------------------------------
Clovis, CA USD GOB, P-Floats, Series PZ-42, 3.80% 1,2                             515,000         515,000
----------------------------------------------------------------------------------------------------------
Los Angeles Cnty., CA MTAU RB, Series A, 3.72%, 7/13/07                         3,000,000       3,000,000
----------------------------------------------------------------------------------------------------------
Los Angeles, CA MH RB, Windward, P-Floats, Series PT-3700, 3.82% 1,2            4,000,000       4,000,000
----------------------------------------------------------------------------------------------------------
Los Angeles, CA Municipal Improvement Corp. RB, Series A-1&2, 3.62%, 8/1/07     1,200,000       1,200,000
----------------------------------------------------------------------------------------------------------
Los Angeles, CA Municipal Improvement Corp. RB, Series A-1&2, 3.65%, 8/8/07     1,500,000       1,500,000
----------------------------------------------------------------------------------------------------------
Los Angeles, CA Municipal Improvement Corp. RB, Series A-1&2, 3.74%, 8/8/07     2,000,000       2,000,000
----------------------------------------------------------------------------------------------------------
Mt. Diablo, CA USD GOB, AAMC Series 2004-36, 3.75% 1,2                          4,590,000       4,590,000
----------------------------------------------------------------------------------------------------------
Pasadena, CA COP, Conference Center, PTTR, Series 1464, 3.78% 1,2               1,485,000       1,485,000
----------------------------------------------------------------------------------------------------------
Riverside Cnty., CA Transportation Commission RB, Series A, 3.52%, 7/9/07       1,000,000       1,000,000
----------------------------------------------------------------------------------------------------------
Riverside Cnty., CA Transportation Commission RB, Series A, 3.70%, 8/22/07      4,000,000       4,000,000
----------------------------------------------------------------------------------------------------------
Riverside Cnty., CA Transportation Commission RB, Series B, 3.62%, 9/5/07       1,000,000       1,000,000
----------------------------------------------------------------------------------------------------------
Riverside Cnty., CA Transportation Commission RB, Series B, 3.75%, 11/7/07        500,000         500,000
----------------------------------------------------------------------------------------------------------
San Diego Cnty., CA COP, Friends of Chabad Lubavitch Project, 3.72% 2             400,000         400,000
----------------------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. PUC Clean Water RRB, MERLOTS
Series 2003 B20, 3.77% 1,2                                                      6,970,000       6,970,000
----------------------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. PUC RB, Wastewater, 3.65%, 8/9/07                1,000,000       1,000,000
----------------------------------------------------------------------------------------------------------
San Francisco, CA City & Cnty. PUC RB, Wastewater, 3.68%, 10/19/07              2,500,000       2,500,000
----------------------------------------------------------------------------------------------------------
San Joaquin Delta Community College District, CA GOUN,
Municipal Securities Trust Certificates, Series 3020, Cl. A, 3.79% 1,2         10,925,000      10,925,000
----------------------------------------------------------------------------------------------------------
San Joaquin, CA Transportation Authority RB, 3.70%, 2/14/08                     2,500,000       2,500,000
----------------------------------------------------------------------------------------------------------
San Mateo Cnty., CA Community College District GOUN,
Goldman Sachs Trust Series 2007-30Z, 3.76% 1,2                                  1,000,000       1,000,000
----------------------------------------------------------------------------------------------------------
San Mateo Cnty., CA Community College District GOUN,
Goldman Sachs Trust Series 2007-5Z, 3.76% 1,2                                   2,405,000       2,405,000
----------------------------------------------------------------------------------------------------------
Santa Rosa, CA Wastewater RB, P-Floats, Series PZ-43, 3.77% 1,2                 4,880,000       4,880,000
----------------------------------------------------------------------------------------------------------
South Bay, CA Regional Public Communications Authority RB,
Manhattan Beach Project, Series C, 3.73% 2                                      1,030,000       1,030,000
----------------------------------------------------------------------------------------------------------
Turlock, CA Irrigation District RB, Series A, 3.67%, 9/13/07                    1,000,000       1,000,000
----------------------------------------------------------------------------------------------------------
Vallejo, CA Water RB, Series A, 3.71% 2                                         3,410,000       3,410,000
----------------------------------------------------------------------------------------------------------
Ventura Cnty., CA PFAU Lease RB, 3.53%, 7/9/07                                  2,300,000       2,300,000
----------------------------------------------------------------------------------------------------------
Victorville, CA Joint Powers FAU Lease RRB, CoGeneration Facilities,
Series 2007A, 3.72% 2                                                          11,000,000      11,000,000
                                                                                            --------------
                                                                                              169,130,000

----------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--5.1%
PR CMWLTH Aqueduct & Sewer Authority RB, Reset Option
Certificates II-R, Series 10001CE, 3.79% 2                                      3,500,000       3,500,000


                   8 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST


                                                                                PRINCIPAL           VALUE
                                                                                   AMOUNT      SEE NOTE 1
----------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS Continued
PR CMWLTH Infrastructure FAU RB, MSTFC
Series 2006-1534, 3.77% 1,2                                                   $ 1,000,000   $   1,000,000
----------------------------------------------------------------------------------------------------------
PR CMWLTH Infrastructure FAU RB, Tender Option Trust Certificates,
Series 2005 Z-6, 3.79% 1,2                                                      2,905,000       2,905,000
----------------------------------------------------------------------------------------------------------
PR CMWLTH Municipal Finance Agency RB, Series A, 4%, 8/1/07                       500,000         500,247
----------------------------------------------------------------------------------------------------------
PR CMWLTH Public Buildings Education HFAU RRB, Series M, 5.50%, 7/1/07          1,200,000       1,200,000
                                                                                            --------------
                                                                                                9,105,247

----------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $178,235,247)                                      99.4%    178,235,247
----------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES                                                       0.6       1,149,498
                                                                              ----------------------------

NET ASSETS                                                                          100.0%  $ 179,384,745
                                                                              ============================

FOOTNOTES TO STATEMENT OF INVESTMENTS

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

AAMC       ABN AMRO Munitops Certificates
CMWLTH     Commonwealth
COP        Certificates of Participation
EDFAU      Economic Development Finance Authority
FAU        Finance Authority
GOB        General Obligation Bonds
GOUN       General Obligation Unlimited Nts.
HFA        Housing Finance Agency/Authority
HFAU       Health Facilities Authority
I&E        Infrastructure and Economic
IDV        Industrial Development
MERLOTS    Municipal Exempt Receipts Liquidity Option Tender
MH         Multifamily Housing
MSTFC      Morgan Stanley & Co., Inc. Trust Floater Certificates
MTAU       Metropolitan Transportation Authority
P-Floats   Puttable Floating Option Tax Exempt Receipts
PCFAU      Pollution Control Finance Authority
PFAU       Public Finance Authority
PTTR       Puttable Tax Exempt Receipts
PUC        Public Utilities Commission
RB         Revenue Bonds
REF        Refunding
RRB        Revenue Refunding Bonds
SCDAU      Statewide Communities Development Authority
SWD        Solid Waste Disposal
TS         Tobacco Settlement
USD        Unified School District
WS         Water System

1. 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 $83,705,000 or 46.66% of the Trust's net
assets as of June 30, 2007.

2. 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.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                   9 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST


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

-----------------------------------------------------------------------------------------------------
ASSETS
-----------------------------------------------------------------------------------------------------
Investments, at value (cost $178,235,247)--see accompanying statement of investments   $ 178,235,247
-----------------------------------------------------------------------------------------------------
Cash                                                                                         134,685
-----------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest                                                                                   1,286,941
Investments sold                                                                              42,305
Other                                                                                         13,642
                                                                                       --------------
Total assets                                                                             179,712,820
                                                                                       ==============

-----------------------------------------------------------------------------------------------------
LIABILITIES
-----------------------------------------------------------------------------------------------------
Payables and other liabilities:
Dividends                                                                                    188,839
Distribution and service plan fees                                                            89,864
Legal, auditing and other professional fees                                                   19,199
Shareholder communications                                                                    12,095
Transfer and shareholder servicing agent fees                                                  3,467
Trustees' compensation                                                                         3,258
Other                                                                                         11,353
                                                                                       --------------
Total liabilities                                                                            328,075

-----------------------------------------------------------------------------------------------------
NET ASSETS                                                                             $ 179,384,745
                                                                                       ==============

-----------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
-----------------------------------------------------------------------------------------------------
Paid-in capital                                                                        $ 179,338,839
-----------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments                                                  45,906
                                                                                       --------------
NET ASSETS--applicable to 179,320,116 shares of beneficial interest outstanding        $ 179,384,745
                                                                                       ==============

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                   10 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST


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

-----------------------------------------------------------------------------------------------------
INVESTMENT INCOME
-----------------------------------------------------------------------------------------------------
Interest                                                                               $   6,882,353

-----------------------------------------------------------------------------------------------------
EXPENSES
-----------------------------------------------------------------------------------------------------
Management fees                                                                              952,147
-----------------------------------------------------------------------------------------------------
Service plan fees                                                                            380,570
-----------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees                                                 48,672
-----------------------------------------------------------------------------------------------------
Shareholder communications                                                                    26,019
-----------------------------------------------------------------------------------------------------
Trustees' compensation                                                                         7,449
-----------------------------------------------------------------------------------------------------
Administration service fees                                                                    1,500
-----------------------------------------------------------------------------------------------------
Custodian fees and expenses                                                                    1,077
-----------------------------------------------------------------------------------------------------
Other                                                                                         53,359
                                                                                       --------------
Total expenses                                                                             1,470,793
Less reduction to custodian expenses                                                            (267)
                                                                                       --------------
Net expenses                                                                               1,470,526

-----------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME                                                                      5,411,827

-----------------------------------------------------------------------------------------------------
NET REALIZED GAIN ON INVESTMENTS                                                              75,428

-----------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                                   $   5,487,255
                                                                                       ==============

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                   11 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST


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

YEAR ENDED JUNE 30,                                                       2007           2006
----------------------------------------------------------------------------------------------
OPERATIONS
----------------------------------------------------------------------------------------------
Net investment income                                             $  5,411,827   $  4,159,759
----------------------------------------------------------------------------------------------
Net realized gain                                                       75,428         42,239
                                                                  ----------------------------
Net increase in net assets resulting from operations                 5,487,255      4,201,998

----------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
----------------------------------------------------------------------------------------------
Dividends from net investment income                                (5,411,827)    (4,159,759)
----------------------------------------------------------------------------------------------
Distributions from net realized gain                                   (63,507)            --

----------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
----------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions                                    (2,691,893)    16,160,365

----------------------------------------------------------------------------------------------
NET ASSETS
----------------------------------------------------------------------------------------------
Total increase (decrease)                                           (2,679,972)    16,202,604
----------------------------------------------------------------------------------------------
Beginning of period                                                182,064,717    165,862,113
                                                                  ----------------------------
End of period                                                     $179,384,745   $182,064,717
                                                                  ============================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                   12 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST


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

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

--------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 3                                             2.91%        2.27%        1.13%        0.21%          0.52%
--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)               $179,385     $182,065     $165,862     $139,892       $152,856
--------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                      $190,423     $184,956     $148,312     $149,559       $156,348
--------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income                                      2.84%        2.25%        1.11%        0.21%          0.52%
Total expenses                                             0.77% 5      0.76% 6      0.77% 5      0.78% 5,6      0.76% 5,6

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.

5. Reduction to custodian expenses less than 0.005%.

6. Voluntary reimbursement of expenses less than 0.005%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                   13 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST


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

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

Centennial California 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 interest income exempt from federal and California personal
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
            ------------------------------------------------------
            $231,845                   $ 22,578               $ --

1. During the fiscal year ended June 30, 2007, the Trust did not utilize any
capital loss carryforward.

2. During the fiscal year ended June 30, 2006, the Trust utilized $8,254 of
capital loss carryforward to offset capital gains realized in that fiscal year.

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


                  14 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST


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     $ 5,411,827     $ 4,159,759
            Ordinary income                    15,396              --
            Long-term capital gain             48,111              --
                                          ---------------------------
            Total                         $ 5,475,334     $ 4,159,759
                                          ===========================

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


                  15 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST


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

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

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                         592,354,857   $ 592,354,857    567,108,511   $ 567,108,511
Dividends and/or
distributions reinvested       5,298,759       5,298,759      4,048,435       4,048,435
Redeemed                    (600,345,509)   (600,345,509)  (554,996,581)   (554,996,581)
                            ------------------------------------------------------------
Net increase (decrease)       (2,691,893)  $  (2,691,893)    16,160,365   $  16,160,365
                            ============================================================

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

--------------------------------------------------------------------------------
TRANSFER AGENT FEES. Shareholder Services, Inc. (SSI) acts as the transfer and
shareholder servicing agent for the Trust and for other registered investment
companies. The Trust pays SSI a per account fee. For the year ended June 30,
2007, the Trust paid $48,772 to SSI for services to the Trust.


                  16 | CENTENNIAL CALIFORNIA TAX EXEMPT TRUST


--------------------------------------------------------------------------------
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. 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. 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 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+."









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Centennial California Tax Exempt Trust
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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



PX0180.001. 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.