Rochester Fund Municipals

497 1 sai.htm REVISED SAI WITH FINANCIAL INFORMATION Rochester Fund Municipals

Rochester Fund Municipals
6803 S. Tucson Way, Centennial, CO 80112
1.800.225.5677

Statement of Additional Information dated April 30, 2006

This Statement of Additional Information ("SAI") is not a Prospectus. This document
contains additional information about the Fund and supplements information in the
Prospectus dated April 30, 2006, as further supplemented thereafter. It should be read
together with the Prospectus, which may be obtained by writing to the Fund's Transfer
Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217 or by calling
the Transfer Agent at the toll-free number shown above or by downloading it from the
OppenheimerFunds Internet website at www.oppenheimerfunds.com.

Contents Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks...
The Fund's Investment Policies.....................................
Municipal Securities...............................................
Other Investment Techniques and Strategies.........................
Other Investment Restrictions......................................
Disclosure of Portfolio Holdings
How the Fund is Managed.................................................
Organization and History...........................................
Board of Trustees and Oversight Committees.........................
Trustees and Officers of the Fund..................................
The Manager........................................................
Brokerage Policies of the Fund..........................................
Distribution and Service Plans..........................................
Payments to Fund Intermediaries.........................................
Performance of the Fund.................................................

About Your Account
How To Buy Shares.......................................................
How To Sell Shares......................................................
How to Exchange Shares..................................................
Dividends, Capital Gains and Taxes......................................
Additional Information About the Fund...................................

Financial Information About the Fund
Independent Registered Public Accounting Firm's Report..................
Financial Statements ...................................................

Appendix A: Municipal Bond Ratings Definitions..........................A-1
Appendix B: Industry Classifications....................................B-1
Appendix C: Special Sales Charge Arrangements and Waivers...............C-1

1
ABOUT THE FUND

Additional Information About the Fund's Investment Policies and Risks

The investment objective, principal investment policies and main risks of the Fund are
described in the Prospectus. This SAI contains supplemental information about those
policies and risks and the types of securities that the Fund's investment manager,
OppenheimerFunds, Inc., (the "Manager") can select for the Fund. Additional explanations
are also provided about the strategies the Fund can use to try to achieve its objective.

The Fund's Investment Policies. The composition of the Fund's portfolio and the techniques
and strategies that the Manager uses will vary over time. The Fund is not required to use
all of the investment techniques and strategies described in this SAI in seeking its goal.
It may use some of the investment techniques and strategies at some times or not at all.
The Fund does not make investments with the objective of seeking capital growth. However,
the values of the securities held by the Fund may be affected by changes in general
interest rates and other factors prior to their maturity. 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 will normally fall in value.
Conversely, should interest rates decrease after a security is purchased, normally its
value will rise.

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

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

Municipal Securities. The types of municipal securities in which the Fund can invest are
described in the Prospectus under "What does the Fund Mainly Invest In" and "About the
Fund's Investments." The Fund may from time to time invest in municipal securities other
than New York municipal securities. For example, to seek a higher yield, the Fund may
invest in municipal securities issued by other states and their respective political
subdivisions. Although any interest from these securities generally would be exempt from
federal income tax, any such interest may be subject to New York State and New York City
personal income tax. Nonetheless, the Fund does not expect to invest a significant portion
of its assets in securities other than New York municipal securities.

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. Long-term municipal securities (which have a maturity of more
than one year when issued) are classified as "municipal bonds." The principal
classifications of long-term municipal bonds are "general obligation" and "revenue" bonds
(including "industrial development" and "private activity" bonds). They may have fixed,
variable or floating rates of interest, or may be "zero-coupon" bonds, 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 five 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 Fund
might have to reinvest the proceeds of the called bond in bonds that pay a lower rate of
return. In turn, that could reduce the Fund's yield.

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

o Revenue Bonds. The principal security for a revenue bond is generally the net
revenues derived from a particular facility, group of facilities, or, in some cases, the
proceeds of a special excise tax or other specific revenue source such as a state's or
local government's proportionate share of the tobacco Master Settlement Agreement. 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.

The Fund will purchase industrial development bonds only if the interest paid on the
bonds is tax-exempt under the Internal Revenue Code; provided however, that interest paid
on these securities may be subject to alternative minimum taxation, as discussed in the
prospectus and under "Municipal Securities - Municipal Bonds - Private Activity Municipal
Bonds" below. The Internal Revenue Code limits the types of facilities that may be financed
with tax-exempt industrial development bonds and private-activity bonds (discussed below)
and the amounts of these bonds that each state can issue.

The Fund will not invest more than 5% of its total assets in industrial development
bonds for which the underlying credit is one business or one charitable entity.
Additionally, the Fund will not invest more than 5% of its total assets in securities for
which industrial users having less than three years' operating history are responsible for
the payments of interest and principal on the securities.

o Private Activity Municipal Bonds. Interest on certain Qualified Private Activity
Bonds is excludable from gross income for federal income tax purposes if certain tests are
met. 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 securities 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 municipal 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 security as security for those payments.

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

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

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

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

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

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

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

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

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

|X| Municipal Notes. Municipal securities having a maturity (when the security is
issued) of 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 Fund 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.

o Miscellaneous, Temporary and Anticipatory Instruments. These instruments may include
notes issued to obtain interim financing pending entering into alternate financial
arrangements such as receipt of anticipated federal, state or other grants or aid, passage
of increased legislative authority to issue longer term instruments or obtaining other
refinancing.

|X| Municipal Lease Obligations. The Fund'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 financing to acquire a
wide variety of equipment and facilities.

Some municipal lease securities may be deemed to be "illiquid" securities. If they
are illiquid, their purchase by the Fund will be subject to the percentage limitations on
the Fund's investments in illiquid securities described in the Prospectus and below in
"Illiquid and Restricted Securities." The Fund may not invest more than 5% of its net
assets in unrated or illiquid municipal lease obligations. That limitation does not apply
to a municipal lease obligation that the Manager has determined to be liquid under
guidelines set by the Board of Trustees and that has received an investment grade rating
from a nationally-recognized rating organization.

Those Board guidelines require the Manager to evaluate, among other things:
o the frequency of trades and price quotations for the obligation;
o the number of dealers willing to purchase or sell the securities and the number of
potential buyers;
o the willingness of dealers to undertake to make a market in the obligation;
o the nature of the marketplace trades for the securities;
o the likelihood that the marketability of the obligation will continue while the Fund
owns it; and
o the likelihood that the municipality will continue to appropriate funding for the
leased property.

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.

To reduce the risk of "non-appropriation," the Fund will not invest more than 10% of
its total assets in municipal leases that contain "non-appropriation" clauses. Also, the
Fund will invest in leases with non-appropriation clauses only if certain conditions are
met:

o the nature of the leased equipment or property is such that its ownership or use is
essential to a governmental function of a municipality,
o appropriate covenants are obtained from the municipal obligor prohibiting the
substitution or purchase of similar equipment if lease payments are not
appropriated,
o the lease obligor has maintained good market acceptability in the past,
o the investment is of a size that will be attractive to institutional investors, and
o the underlying leased equipment has elements of portability and/or use that enhance
its marketability if foreclosure is ever required on the underlying equipment.

Municipal leases may be subject to an "abatement" risk. The leases underlying certain
municipal lease obligations may state that lease payments are subject to partial or full
abatement. That abatement might occur, for example, if material damage or destruction of
the leased property interferes with the lessee's use of the property. In some cases that
risk might be reduced by insurance covering the leased property, or by the use of credit
enhancements such as letters of credit to back lease payments, or perhaps by the lessee's
maintenance of reserve funds for lease payments.

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, 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 Fund. 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 Fund. While the Fund
holds these securities, the Manager will evaluate their credit quality and the likelihood
of a continuing market for them.

Subject to the foregoing percentage limitations on investments in Illiquid
Securities, the Fund may invest in a tax-exempt lease only if the following requirements
are met:
o the Fund must receive the opinion of issuer's legal counsel that the tax-exempt
obligation will generate interest income that is exempt from federal and New York
State income taxes; that legal counsel must be experienced in municipal lease
transactions;
o the Fund must receive an opinion that, as of the effective date of the lease or at
the date of the Fund's purchase of the obligation (if that occurs on a date other
than the effective date of the lease), the lease is the valid and binding
obligation of the governmental issuer;
o the Fund must receive an opinion of issuer's legal counsel that the obligation has
been issued in compliance with all applicable federal and state securities laws;
o the Manager must perform its own credit analysis in instances where a credit rating
has not been provided for the lease obligation by a national rating agency;
o if a particular exempt obligation is unrated and, in the opinion of the Manager, not
of investment- grade quality, then at the time the Fund makes the investment the
Manager must include the investment within the Fund's illiquid investments; it
will also be subject to the Fund's overall limitation on investments in unrated
tax-exempt leases.

Municipal lease obligations are generally not rated by rating organizations. In those
cases the Manager must perform its own credit analysis of the obligation. In those cases,
the Manager generally will rely on current information furnished by the issuer or obtained
from other sources considered by the Manager to be reliable.

Tobacco Settlement Revenue Bonds. The Fund may invest a significant portion of its assets
in tobacco settlement revenue bonds. As of the Fund's fiscal year ended December 31, 2005,
23.8% of the Fund's assets were invested in tobacco revenue settlement bonds.

Tobacco settlement revenue bonds are secured by an issuing state's
proportionate share in the Master Settlement Agreement ("MSA"). The MSA is an agreement,
reached out of court in November 1998 between 46 states and six other U.S. jurisdictions
(including Puerto Rico and Guam), and the four largest U.S. tobacco manufacturers (Philip
Morris, RJ Reynolds, Brown & Williamson, and Lorillard). Subsequently, a number of smaller
tobacco manufacturers signed on to the MSA, bringing the current combined market share of
participating tobacco manufacturers to approximately 92%. The MSA provides for payments
annually by the manufacturers to the states and jurisdictions in perpetuity, in exchange
for releasing all claims against the manufacturers and a pledge of no further litigation.
The MSA established a base payment schedule and a formula for adjusting payments each year.
Tobacco manufacturers pay into a master escrow trust based on their market share, and each
state receives a fixed percentage of the payment as set forth in the MSA.

A number of states have securitized the future flow of those payments by selling
bonds pursuant to indentures, some through distinct governmental entities created for such
purpose. The bonds are backed by the future revenue flow that is used for principal and
interest payments on the bonds. Annual payments on the bonds, and thus risk to the Fund,
are highly dependent on the receipt of future settlement payments to the state or its
governmental entity, as well as several other factors. The actual amount of future
settlement payments, therefore, is dependent on many factors, including, but not limited
to, annual domestic cigarette shipments, cigarette consumption, inflation and the financial
capability of participating tobacco companies. As a result, payments made by tobacco
manufacturers could be negatively impacted if the decrease in tobacco consumption is
significantly greater than the forecasted decline.

Because tobacco settlement bonds are backed by payments from the tobacco
manufacturers, and generally not by the credit of the state or local government issuing the
bonds, their creditworthiness depends on the ability of tobacco manufacturers to meet their
obligations. A market share loss by the MSA companies to non-MSA participating tobacco
manufacturers could also cause a downward adjustment in the payment amounts. A
participating manufacturer filing for bankruptcy also could cause delays or reductions in
bond payments, which could affect the fund's net asset value.

The MSA and tobacco manufacturers have been and continue to be subject to various
legal claims. An adverse outcome to any litigation matters relating to the MSA or
affecting tobacco manufacturers could adversely affect the payment streams associated with
the MSA or cause delays or reductions in bond payments by tobacco manufacturers. The MSA
itself has been subject to legal challenges as to its unconstitutionality, and until
recently, courts have rejected those claims. Following is a summary of the more significant
litigation relating to the MSA or tobacco manufacturers.

Litigation Challenging the MSA. The participating manufacturers and states in the
MSA are subject to several pending lawsuits challenging the MSA and/or related state
legislation or statutes adopted by the states to implement the MSA (referred to herein as
the "MSA-related legislation"). One or more of the lawsuits, allege, among other things,
that the MSA and/or the states' MSA-related legislation are void or unenforceable under the
Commerce Clause and certain other provisions of the U.S. Constitution, the federal
antitrust laws, federal civil rights laws, state constitutions, consumer protection laws
and unfair competition laws.

To date, challenges to the MSA or the states' MSA-related legislation have not been
ultimately successful, although three such challenges have survived initial appellate
review of motions to dismiss. Two of these three challenges (referred to herein as Grand
River and Freedom Holdings) are pending in the U.S. District Court for the Southern
District of New York and have proceeded to a stage of litigation where the ultimate outcome
may be determined by, among other things, findings of fact based on extrinsic evidence as
to the operation and impact of the MSA and the states' MSA-related legislation. In these
two cases, certain decisions by the U.S. Court of Appeals for the Second Circuit have
created heightened uncertainty as a result of that court's interpretation of federal
antitrust immunity and Commerce Clause doctrines as applied to the MSA and the states'
MSA-related legislation, which interpretation appears to conflict with interpretations by
other courts, which have rejected challenges to the MSA and the states' MSA-related
legislation. Prior decisions rejecting such challenges have concluded that the MSA and the
MSA-related legislation do not violate the Commerce Clause of the U.S. Constitution and are
protected from antitrust challenges based on established antitrust immunity doctrines.
Such a conflict may result in significant uncertainty regarding the validity and
enforceability of the MSA and/or the states' related MSA-legislation and could adversely
affect payment streams associated with the MSA and the bonds. The existence of a conflict
as to the rulings of different federal courts on these issues, especially between Circuit
Courts of Appeals, is one factor that the U.S. Supreme Court may take into account when
deciding whether to exercise its discretion in agreeing to hear an appeal. No assurance can
be given that the U.S. Supreme Court would choose to hear and determine any appeal relating
to the substantive merits of the cases challenging the MSA or the states' MSA-related
legislation.

Grand River and Freedom Holdings. Both cases are pending in the U.S. District Court
for the Southern District of New York and seek to enjoin the enforcement of states'
MSA-related legislation. The Grand River case is pending against the attorneys general of
31 states. The plaintiffs seek to enjoin the enforcement of the states' MSA-related
legislation, and allege, among other things, (a) violations of federal antitrust law, the
accompanying state legislation enacted pursuant to the MSA mandates or authorizes such
violations and is thus preempted by federal law and that (b) the MSA and related statutes
are invalid or unenforceable under the Commerce Clause of the U.S. Constitution. Grand
River was remanded and remains pending in the Southern District and the parties have
engaged in discovery with respect to the antitrust and Commerce Clause claims.

The Freedom Holdings case is pending against the attorney general and the
commissioner of taxation and finance of the State of New York and is based on the same
purported claims as the Grand River case. On February 10, 2006, plaintiffs filed an
amended complaint seeking (1) a declaratory judgment that the operation of the MSA and New
York's MSA-related legislation implements an illegal per se output cartel in violation of
the federal antitrust laws and is preempted thereby, (2) a declaratory judgment that New
York's MSA-related legislation, together with the similar legislation of other states,
regulates interstate commerce in violation of the Commerce Clause of the U.S. Constitution
and (3) an injunction permanently enjoining the enforcement of New York's MSA-related
legislation.

To date, the Second Circuit is the only federal court that has sustained a Commerce
Clause challenge to the MSA and MSA-related legislation after reviewing a motion to
dismiss. A final decision in these cases by the District Court would be subject to appeal
to the Second Circuit and would likely be further appealed to the U.S. Supreme Court. A
Supreme Court decision to affirm or to decline to review a Second Circuit ruling that is
adverse to the participating manufacturers and states, challenging validity or
enforceability of MSA or the states' MSA-related legislation, could potentially lead to
invalidation of the MSA and states' MSA-related legislation in their entirety, materially
affect the payment streams under the MSA and/or result in the complete loss of the Fund's
outstanding investment.

A third case challenging the MSA (Xcaliber v. Ieyoub) in federal court in Louisiana
(Fifth Circuit) also has survived appellate review of motions to dismiss. Certain
non-participating manufacturers are alleging, among other things, that certain provisions
of Louisiana's MSA-related legislation violate various provisions of the U.S. Constitution
and the Louisiana constitution. On March 1, 2006, the U.S. Court of Appeals for the Fifth
Circuit vacated the district court's dismissal of the plaintiffs' complaint and remanded
the case for reconsideration. In addition to the three cases identified above, proceedings
are pending in federal courts that challenge the MSA and/or the states' MSA-related
legislation in California, Louisiana, Oklahoma, Kansas, Kentucky, Tennessee and Arkansas.
The issues raised in Freedom Holdings or Grand River are also raised in many of these other
cases. The MSA and states' MSA-related legislation may also continue to be challenged in
the future. A determination that the MSA or states' MSA-related legislation is void or
unenforceable would have a material adverse effect on the payments made by the
participating manufacturers under the MSA.

Litigation Seeking Monetary Relief from Tobacco Industry Participants. The tobacco
industry has been the target of litigation for many years. Both individual and class action
lawsuits have been brought by or on behalf of smokers alleging that smoking has been
injurious to their health, and by non-smokers alleging harm from environmental tobacco
smoke, also known as "secondhand smoke." Plaintiffs seek various forms of relief,
including compensatory and punitive damages aggregating billions of dollars,
treble/multiple damages and other statutory damages and penalties, creation of medical
monitoring and smoking cessation funds, disgorgement of profits, legal fees, and injunctive
and equitable relief.

The MSA does not release participating manufacturers from liability in either
individual or class action cases. Healthcare cost recovery cases have also been brought by
governmental and non-governmental healthcare providers seeking, among other things,
reimbursement for healthcare expenditures incurred in connection with the treatment of
medical conditions allegedly caused by smoking. The participating manufacturers are also
exposed to liability in these cases, because the MSA only settled healthcare cost recovery
claims of the participating states. Litigation has also been brought against certain
participating manufacturers and their affiliates in foreign countries. Following is a brief
description of two of the more significant litigation cases.

In 1999 the U.S. Department of Justice filed a lawsuit against the tobacco industry.
The federal government alleges that the major tobacco companies defrauded and misled the
American public about the health risks associated with smoking cigarettes. On February 4,
2005, the U.S. Court of Appeals for the District of Columbia dismissed the government's
specific claim seeking the disgorgement of $280 billion representing past industry profits,
funding for cessation and counter-advertising programs and release of all industry
documents. On October 17, 2005, the U.S. Supreme Court denied the U.S. government's
petition for certiorari seeking further review of the dismissal of the specific claim
seeking disgorgement. During final arguments of the case before the U.S. District Court in
June 2005, the government reduced its demand for damages from the tobacco industry to $14
billion - a significant reduction from the original claim for $280 billion. Although the
government could again seek appellate review of the dismissal following the verdict in the
trial, the Supreme Court ruling eliminates the government's claim for $280 billion and
limits the government's potential remedies principally to forward-looking relief, including
measures such as those already included in the MSA. The trial in District Court has
concluded but the Court has not announced when it will issue its verdict.

In Engle v. R.J. Reynolds Tobacco Co., a Florida state court certified a class of
Florida smokers alleging injury due to their tobacco use. The estimated size of the class
ranges from 300,000 to 700,000 members. In July 1999, the jury found against the defendants
regarding the issues common to the class, such as whether smoking caused certain diseases,
whether tobacco was addictive, and whether the tobacco companies withheld information from
the public. In July 2000, the jury returned a verdict assessing punitive damages totaling
approximately $145 billion against the tobacco industry defendants. Following entry of
judgment in November 2000, the defendants posted appeal bonds in the amount of $100 million
each, the maximum amount required pursuant to a Florida bond cap statute enacted in May
2000 and initiated the appeals process. In May 2003, the Florida Third District Court of
Appeal reversed the judgment entered by the trial court and instructed the trial court to
order the decertification of the class. The plaintiffs petitioned the Florida Supreme Court
for further review and, in May 2004, the Florida Supreme Court agreed to review the case.
Oral arguments were heard in November 2004 but the Florida Supreme Court has not yet ruled.

It has been reported that the plaintiffs in Engle believe the Florida appeal bond cap
legislation is unconstitutional. In the event that a court of final jurisdiction were to
declare the legislation unconstitutional, and in a worst case scenario, it is possible that
a judgment for punitive damages could be entered in an amount not capable of being bonded,
resulting in an execution of the judgment before it could be set aside on appeal.

The ultimate outcome of these and any other pending or future lawsuits is uncertain.
Verdicts of substantial magnitude that are enforceable as to one or more participating
manufacturers, if they occur, could encourage commencement of additional litigation, or
could negatively affect perceptions of potential triers of fact with respect to the tobacco
industry, possibly to the detriment of pending litigation. An unfavorable outcome or
settlement or one or more adverse judgments could result in a decision by the affected
participating manufacturers to substantially increase cigarette prices, thereby reducing
cigarette consumption beyond the forecasts under the MSA. In addition, the financial
condition of any or all of the participating manufacturer defendants could be materially
and adversely affected by the ultimate outcome of pending litigation, including bonding and
litigation costs or a verdict or verdicts awarding substantial compensatory or punitive
damages. Depending upon the magnitude of any such negative financial impact (and
irrespective of whether the participating manufacturer is thereby rendered insolvent), an
adverse outcome in one or more of the lawsuits could substantially impair the affected
participating manufacturer's ability to make payments under the MSA.

|X| Credit Ratings of Municipal Securities. Ratings by ratings organizations such
as Moody's Investors Service ("Moody's"), Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. ("Standard and Poor's") and Fitch, Inc. ("Fitch"),
represent the respective rating agency's opinions of the credit quality of the municipal
securities they undertake to rate. However, their ratings are general opinions and are not
guarantees of quality. Credit ratings typically evaluate the safety of municipal and
interest payments, not market risk. Municipal securities that have the same maturity,
coupon and rating may have different yields, while other municipal securities that have the
same maturity and coupon but different ratings may have the same yield.

After the Fund buys a municipal security, it may cease to be rated or its rating may
be reduced below the minimum required to enable the Fund to buy it. Neither event requires
the Fund to sell a security, but the Manager will consider those events in determining
whether the Fund should continue to hold that security. If ratings given by Moody's,
Standard & Poor's, or another rating organization change as a result of changes in those
rating organizations or their rating systems, the Fund will attempt to use comparable
ratings as standards for investments in accordance with the Fund's investment policies.

The Fund may buy municipal securities that are "pre-refunded." The issuer's
obligation to repay the principal value of the security is generally collateralized with
U.S. government securities placed in an escrow account. This causes the pre-refunded
security to have essentially the same risks of default as a "AAA"-rated security.

The rating definitions of Moody's, Standard & Poor's and Fitch municipal securities
are contained in Appendix A to this SAI. The Fund can purchase securities that are unrated
by nationally-recognized rating organizations. The Manager will make its own assessment of
the credit quality of unrated issues the Fund buys. The Manager will use criteria similar
to those used by the rating agencies, and assign a rating category to a security that is
comparable to what the Manager believes a rating agency would assign to that security.
However, the Manager's rating does not constitute a guarantee of the quality of a
particular issue.

In evaluating the credit quality of a particular security, whether it is rated or
unrated, the Manager will normally take into consideration a number of factors. Among them
are the financial resources of the issuer, or the underlying source of funds for debt
service on a security, the issuer's sensitivity to economic conditions and trends, any
operating history of the facility financed by the obligation and the degree of community
support for it, the capabilities of the issuer's management and regulatory factors
affecting the issuer and the particular facility.

o Special Risks of Lower-Grade Securities. Lower-grade securities, commonly called
"junk bonds," may offer higher yields than securities rated in investment grade rating
categories. In addition to having a greater risk of default than higher-grade securities,
there may be less of a market for these securities. As a result they may be more difficult
to value and harder to sell at an acceptable price. These additional risks mean that the
Fund might not receive the anticipated level of income from these securities, and the
Fund's net asset value could be affected by declines in the value of lower-grade
securities. However, because the added risk of lower-grade securities might not be
consistent with the portion of the Fund's objective to seek preservation of capital, the
Fund limits its investments in lower-grade securities to not more than 25% of its
tax-exempt investments (including New York municipal securities).

While securities rated "Baa" by Moody's or "BBB" by Standard & Poor's or Fitch are
considered investment grade, they may be subject to special risks and have some speculative
characteristics. The Fund will not invest more than 5% of its net assets in the securities
of any one issuer if the securities are rated "B" or below by a national rating
organization or are given a comparable rating by the Manager.

Special Investment Considerations - New York Municipal Securities. As explained in the
Prospectus, the Fund's investments are highly sensitive to the fiscal stability of New York
State (referred to in this section as the "State") and its subdivisions, agencies,
instrumentalities or authorities, including New York City (the "City"), which issue the
municipal securities in which the Fund invests. The following information on risk factors
in concentrating in New York municipal securities is only a summary, based on the State's
Annual Information Statement dated May 4, 2005, as updated through January 26, 2006, and on
publicly-available official statements relating to offerings by issuers of New York
municipal securities on or prior to March 22, 2006 with respect to offerings of New York
State, and on or prior to April 6, 2006 with respect to offerings by the City. No
representation is made as to the accuracy of this information.

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

|X| Factors Affecting Investments in New York State Securities. On April 18, 2005,
the New York State Division of Budget ("DOB") issued the "2005-06 Enacted Budget Report"
containing the 2005-06 Enacted Budget Financial Plan ("Enacted Budget Financial Plan") for
the State. On January 17, 2006, the Governor presented the Executive Budget Financial Plan
for 2006-07 to the legislature. The Executive Budget Financial Plan (the "Executive Budget
Financial Plan" or "Financial Plan") is the third quarterly update to the Enacted Budget
Financial Plan and includes updated projections for State fiscal years 2005-06 through
2008-09 and an assessment of the risks affecting the Financial Plan.

The State's economy has been growing since September 2003, a trend DOB expected to
continue, albeit more modestly, over the four-year period of the State's Financial Plan
(2005-06 through 2008-09). DOB estimated underlying revenue growth of 11 percent in
2005-06 (the second year in a row in which revenues have grown at this rate), and
still-strong 8 percent growth in 2006-07. The State's multi-year budget outlook showed a
commensurate improvement. DOB projected a net General Fund (the major operating fund of
the State) operating surplus of $2.0 billion in 2005-06 (the third consecutive year in
which a surplus will have been recorded on both a budgetary and GAAP-basis accounting) and
lowered its estimate of the budget gaps for the 2006-07 through 2008-09 period.

The net General Fund surplus estimate of $2.0 billion was approximately $1.0 billion
higher than projected in the preceding update to the Financial Plan. Strong growth in tax
collections, particularly in business taxes and the personal income tax (PIT), led DOB to
raise its General Fund receipts forecast for the 2005-06 year by $1.4 billion At the same
time, projected General Fund disbursements were revised upward by over $300 million, mainly
for Medicaid and transit aid payments now planned for 2005-06 rather than 2006-07. DOB
believed the overall Financial Plan estimates to be reasonable, but subject to a number of
risks, including the performance of the State economy in general and the financial services
sector in particular.

Many complex political, social and economic forces influence the State's economy and
finances, which may in turn affect the State's Financial Plan. These forces may affect the
State from fiscal year to fiscal year and are influenced by governments, institutions, and
events that are not subject to the State's control. The Financial Plan is also necessarily
based on forecasts of national and State economic activity. Economic forecasts have
frequently failed to predict accurately the timing and magnitude of changes in the national
and State economies. DOB believed that its receipts and spending estimates related to the
performance of the State and national economies were reasonable. However, there can be no
assurance that actual results will not differ materially and adversely from the results
forecasted. Other risks inherent in the current projections include the performance of the
State and national economies, adverse judgments against the State, and changes in the level
of Federal aid.

The Financial Plan projections assumed that Video Lottery Terminal (VLT) revenues
would be used to continue to finance the State's Sound Basic Education (SBE) program. The
SBE program is part of the State's efforts to comply with a State Court of Appeals ruling
that found that the school finance system failed to provide students in New York City with
an adequate education in violation of the State Constitution. The compliance plan also
includes traditional school aid and Federal aid. The State Court of Appeals has upheld the
constitutionality of VLTs as a lottery game for education funding.

Aside from the $21 million in the Contingency Reserve Fund, the Financial Plan did
not set aside specific reserves to cover potential costs that could materialize as a result
of adverse rulings in pending litigation, Federal disallowances, or other Federal actions
that could adversely affect the State's projections of receipts and disbursements.

An ongoing risk to the Financial Plan arises from the potential impact of certain
litigation and Federal disallowances pending against the State, which could produce adverse
effects on the State's projections of receipts and disbursements. For example, the Federal
government has been auditing Medicaid claims submitted since 1993 under the School
Supportive Health Services Program. These audits had not been finalized, and, as a result,
the liability of the State and school districts for any disallowances could not be
determined. Federal regulations include an appeals process that could postpone repayment
of any disallowances. The Financial Plan assumed the Federal government would fully
reimburse these costs.

In addition, a portion of Federal Medicaid payments related to School Supportive
Health Services has been deferred by the Federal Centers for Medicare and Medicaid pending
finalization of audits. Since the State has continued to reimburse local school districts
for these costs, these Federal deferrals, if not resolved, could negatively impact the
Financial Plan. Alternatively, if the State suspends reimbursement, local governments
could be adversely affected. It was unclear what impact, if any, Federal actions would
have on the Financial Plan. The Financial Plan assumed no significant Federal
disallowances or other Federal Actions that could adversely affect State finances.

Although DOB believed that the U.S. economy would grow at approximately its long-term
trend growth rate through the end of its forecast horizon, many risks attend this
forecast. In general, the forecast is contingent upon the absence of severe shocks to the
economy. Unpredictable events such as a terrorist attack remain the biggest risk to
continued economic expansion. Such a shock could impair economic growth in many ways, such
as causing a plunge in consumer confidence, the stock market, investment spending by firms
or impairing the transportation of economic goods and services, or causing a large spike in
oil prices. A severe and extended downturn could easily materialize from such shocks.

There are other significant factors that could lead to noticeably lower economic
growth. An extended period of energy prices that are higher than projected could well
reduce the ability of consumers and businesses to spend on non-energy related items.
Colder weather than normal in the Northeast could raise natural gas prices even further,
and consumers might respond by reducing spending by more than is anticipated over the
coming months. Such cutbacks could make firms behave even more cautiously and reduce
business capital spending. Persistently high energy prices also raise the possibility that
inflation expectations could ratchet higher, causing the Federal Reserve Board to raise
interest rates more than anticipated, and raising the likelihood of a major economic
slowdown or even a recession.

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

On the other hand, lower inflation than expected, perhaps as a result of an even
greater drop in the price of oil or more modest growth in unit labor costs, possibly due to
slower growth in wages or stronger productivity growth, could induce the Federal Reserve to
keep monetary policy much less restrictive than expected, resulting in stronger consumption
and investment growth than projected. A more rapid increase in export growth due to either
a weakened dollar or faster global growth could generate a somewhat stronger increase in
total output than expected. Moreover, stronger employment growth could result in higher
real wages, supporting faster growth in consumer spending than currently anticipated.

In addition to the risks described above for the national forecast, there are risks
specific to New York. Another terrorist attack targeted at New York City would once again
disproportionately affect the State economy, resulting in lower income and employment
growth than reflected in the State's forecast. Higher energy prices and the potential for
greater pass-through to core inflation, combined with a growing rate of capacity
utilization and a tightening labor market, raise the probability that the Federal Reserve
will over-tighten. Such an outcome could negatively affect the financial markets, which
would also disproportionately affect the New York State economy. In addition, the State's
real estate market could decline more than anticipated, which would negatively affect
household consumption and taxable capital gains realizations. These effects could ripple
through the economy, affecting both employment and wages.

In contrast, should the national and world economies grow faster than expected, a
stronger upturn in stock prices, along with even stronger activity in mergers and
acquisitions and other Wall Street activities is possible, resulting in higher wage and
bonuses growth than projected. The financial markets, which are so pivotal to the
direction of the downstate economy, are notoriously difficult to forecast. With the
economy becoming increasingly globalized, and the pace of both technological and regulatory
change accelerating, projecting finance industry revenues and profits has never been more
challenging.

|X| The 2005-06 Financial Plan. DOB projected the State would end the 2005-06 fiscal
year with a net $2 billion surplus in the General Fund, after paying certain Medicaid ($500
million) and mass transit ($45 million) expenses in 2005-06 rather than 2006-07, and making
the maximum annual contribution of $73 million to the State's Rainy Day Reserve. The State
attributed the net surplus to continued strength in revenues from 2004-05 levels.

General Fund receipts, including transfers from other funds, were projected to total
$47.9 billion in 2005-06. DOB had revised the revenue estimate upward based on actual
revenue collections and the strength of key economic indicators, both of which had exceeded
expectations. Both personal income taxes and business taxes had shown robust growth,
similar to the experience in prior economic expansions. Real estate-related tax
collections had also exceeded projected levels, reflecting strength in home sales and
mortgage refinancings.

General Fund disbursements, including transfers to other funds, were expected to
total $47.2 billion in 2005-06, an increase of $337 million above the previous forecast.
The most substantive revisions were attributed to timing, with the higher spending from the
acceleration of Medicaid and mass transit payments offset in part by lower spending for
labor settlements that were expected to occur in 2005-06 but were re-budgeted for 2006-07.

DOB projected the State would end the 2005-06 fiscal year with a General Fund balance
of 3.2 billion. The forecasted balance consists of $1.0 billion in undesignated reserves
and $2.2 billion in designated reserves. The undesignated reserves consist of $945 million
in the Rainy Day Fund, after a maximum deposit of $73 million in 2005-06, and $21 million
in the Contingency Reserve Fund. The designated reserves consist of $2.0 billion in a
spending stabilization reserve, which was planned for use in equal installments to help
reduce the 2007-08 and 2008-09 budget gaps, and $286 million in the Community Projects Fund
that finances discretionary spending initiatives by the Legislature and Governor. The
projected year-end balance was affected by the planned payment of an additional $552
million in tax refunds before the end of the 2005-06 fiscal year, from a reserve
established for that purpose, based on enhancements in tax processing.

Looking ahead, DOB projected General Fund receipts, including transfers from other
funds, to total $502 billion in 2006-07, an increase of $2.2 billion (4.7 percent) from
2005-06. The increase in General Fund receipts was attributed to increased collections
from PIT and sales taxes, and miscellaneous receipts. General Fund tax receipt growth was
projected at 5.8 percent. General Fund miscellaneous receipts were projected to increase
by 4.5 percent.

The State projected General Fund disbursements, including transfers to other funds,
of $49.6 billion in 2006-07, an increase of $2.4 billion (5.1 percent) from 2005-06.
Increases in Grants to Local Governments ($1.6 billion), State Operations ($642 million),
and General State Charges ($341 million) are partially offset by a decrease in transfers to
other funds ($148 million.)

|_| State Governmental Funds Group. Substantially all State non-pension financial
operations are accounted for in the State's governmental funds group. Governmental funds
include the following four fund types, the State's projections of receipts and
disbursements in which comprise the State's Financial Plan:
o the General Fund, which is the major operating fund of the State and receives
all receipts that are not required by law to be deposited in another fund, including most
State tax receipts and certain fees, transfers from other funds and miscellaneous receipts
from other sources;

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

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

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

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

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

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

|X| Authorities. The fiscal stability of the State is related in part to the
fiscal stability of its public Authorities. Authorities refer to public benefit
corporations, created pursuant to State law, other than local authorities. Authorities
have various responsibilities, including those which finance, construct and/or operate
revenue-producing public facilities. Authorities are not subject to the constitutional
restrictions on the incurrence of debt that apply to the State itself, and may issue bonds
and notes within the amounts and restrictions set forth in their legislative
authorization. The State's access to the public credit markets could be impaired and the
market price of its outstanding debt may be materially and adversely affected if any of its
Authorities were to default on their respective obligations, especially those involving
State-supported or State-related debt. As of December 31, 2004, there were 18 public
authorities that had outstanding debt of $100 million or more, and the aggregate
outstanding debt, including refunding bonds, of these State public authorities was $120.4
billion, only a portion of which constituted State-supported or State-related debt.

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

|X| Ratings of the State's Securities. As of March 22, 2006, Standard & Poor's had
rated the State's general obligation bonds "AA," Moody's had rated those bonds "Aa3" and
Fitch had rated those bonds "AA-".

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

|X| The State's General Obligation Debt. As of March 31, 2005, the State had
approximately $3.7 billion in general obligation bonds outstanding. Principal and interest
due on general obligation bonds were $484 million for the 2004-05 fiscal year and were
estimated to be $490 million for the State's 2005-06 fiscal year.

|X| Pending Litigation. The State is a defendant in numerous legal proceedings
pertaining to matters incidental to the performance of routine governmental operations.
That litigation includes, but is not limited to, claims asserted against the State
involving State finances and programs and arising from alleged violations of civil rights,
alleged torts, alleged breaches of contracts, real property proceedings and other alleged
violations of State and Federal laws. These proceedings could affect adversely the
financial condition of the State in the 2005-06 fiscal year or thereafter.

The State reported its belief that the 2005-06 Financial Plan included sufficient
reserves to offset the costs associated with the payment of judgments that may be required
during the 2005-06 fiscal year. These reserves included (but were not limited to) amounts
appropriated for Court of Claims payments and projected fund balances in the General Fund.
In addition, any amounts ultimately required to be paid by the State may be subject to
settlement or may be paid over a multi-year period. There could be no assurance given,
however, that adverse decisions in legal proceedings against the State would not exceed the
amount of all potential 2005-06 Financial Plan resources available for the payment of
judgments, and could therefore adversely affect the ability of the State to maintain a
balanced 2005-06 Financial Plan.

In addition, the State is party to other claims and litigation that either its legal
counsel has advised are not probable that the State will suffer adverse court decisions or
the State has determined are not material. Although the amounts of potential losses, if
any, are not presently determinable, it was the State's opinion that its ultimate liability
in these cases is not expected to have a material adverse effect on the State's financial
position in the 2005-06 fiscal year or thereafter.

|X| Other Functions. Certain localities in addition to the City have experienced
financial problems and have requested and received additional State assistance during the
last several State fiscal years. The potential impact on the State of any future requests
by localities for additional oversight or financial assistance was not included in the
projections of the State's receipts and disbursements for the State's 2005-06 fiscal year
or thereafter.

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

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

Economic activity in the City has experienced periods of growth and recession and can
be expected to experience periods of growth and recession in the future. The City
experienced a recession in the early 1970s through the middle of that decade, followed by a
period of expansion in the late 1970s through the late 1980s. The City fell into recession
again in the early 1990s which was followed by an expansion that lasted until 2001. The
City's financial plan assumed that the economic slowdown that began in 2001 as a result of
the September 11 attack, a national economic recession, and a downturn in the securities
industry had come to an end in 2003. Since then, Wall Street activity, tourism, and the
real estate market have driven a broad based economic recovery. The City's financial plan
assumed continued moderate growth in calendar year 2006.

For each of the 1981 through 2005 fiscal years, the City's General Fund had an
operating surplus, before discretionary and other transfers, and achieved balanced
operating results as reported in accordance with then applicable generally accepted
accounting principles ("GAAP") after discretionary and other transfers. The City has been
required to close substantial gaps between forecast revenues and forecast expenditures in
order to maintain balanced operating results. There can be no assurance that the City will
continue to maintain balanced operating results as required by State law without tax or
other revenue increases or reductions in City services or entitlement programs, which could
adversely affect the City's economic base.

The Mayor is responsible for preparing the City's financial plan, which relates to
the City and certain entities that receive funds from the City, including the City's
financial plan for the 2006 through 2009 fiscal years submitted to the Control Board on
July 6, 2005 (the "July Financial Plan"), and Modification No. 06-2 to the July Financial
Plan submitted to the Control Board on February 1 and February 13, 2006, which, among other
things, contains the Mayor's preliminary budget for the 2007 fiscal year and extends the
financial plan to include the 2010 fiscal year (the July Financial Plan , as so modified,
the "2006-2010 Financial Plan", or "Financial Plan"). The City's projections set forth in
the Financial Plan are based on various assumptions and contingencies which are uncertain
and which may not materialize.

Implementation of the Financial Plan is dependent upon the City's ability to market
its securities successfully. Implementation of the Financial Plan is also dependent upon
the ability to market the securities of other financing entities, including the New York
City Municipal Water Finance Authority ("Water Authority"), which issues debt secured by
water and sewer revenues. In addition, the City may issue revenue and tax anticipation
notes to finance its seasonal working capital requirements, although it did not expect to
issue such notes in fiscal year 2006. The success of projected public sales of City, Water
Authority and other bonds and notes will be subject to prevailing market conditions.
Future developments concerning the City and public discussion of such developments, as well
as prevailing market conditions, may affect the market for outstanding City general
obligation bonds and notes.

|X| The City's 2006-10 Financial Plan. For the 2005 fiscal year, the City's
General Fund had an operating surplus of $3.534 billion, before discretionary transfers,
and achieved balanced operating results in accordance with GAAP, after discretionary and
other transfers. The 2005 fiscal year was the twenty-fifth consecutive year that the City
had achieved balanced operating results when reported in accordance with GAAP.

______The Financial Plan projected revenues and expenses for the 2006 and 2007 fiscal years
balanced in accordance with GAAP, and projected gaps of $3.4 billion, $3.5 billion and $2.7
billion in fiscal years 2008 through 2010, respectively, after implementation of a
gap-closing program.

The Financial Plan reflected increases in projected net revenues since the July
Financial Plan totaling $2.8 billion, $1.8 billion, $1.9 billion and $1.6 billion in fiscal
years 2006 through 2009, respectively, resulting primarily from increases in estimated real
estate transaction, personal income and business tax revenues offset by decreases in real
estate tax revenues. The Financial Plan also reflected a decrease in projected net
expenditures since the July Financial Plan of $268 million in fiscal year 2006, excluding
the prepayment of $3.3 billion of expenditures otherwise due in fiscal year 2007, and
increases in projected net expenditures totaling approximately $1.2 billion, $1.0 billion,
and $1.4 billion in fiscal years 2007 through 2009, respectively. Increases in projected
expenditures since the July Fiscal Plan include: (i) increased labor costs as a result of
settlements of labor negotiations and provision for similar increases for collective
bargaining units not yet settled of $661 million, $1.1 billion, $1.2 billion and $1.2
billion in fiscal years 2006 through 2009, respectively; (ii) increased energy costs of
$101 million, $102 million, $88 million and $83 million in fiscal years 2006 through 2009,
respectively; (iii) increased agency spending of $102 million, $216 million, $216 million
and $223 million in fiscal years 2006 through 2009, respectively; and (iv) the contribution
of $1 billion in each of fiscal years 2006 and 2007 to a trust to be established to
advance-fund a portion of the future cost of health benefits for retirees. Decreases in
projected City-funded expenditures since the July Financial Plan resulted from (i)
increases in State education aid of $35 million, $300 million, $337 million and $337
million in fiscal years 2006 through 2009, respectively; (ii) a one-time decrease in
Medicaid expenses of $450 million due to a change in accrual methods for Medicaid payments
beginning in fiscal year 2006; (iii) decreases in debt service costs of $41 million, $117
million, $33 million and $9 million in fiscal years 2006 through 2009, respectively; and
(iv) a reduction in prior year payables of $400 million and a reduction in the general
reserve of $200 million in fiscal year 2006.

In addition, the Financial Plan reflected decreased pension contributions of $925
million and $571 million in fiscal years 2006 and 2007, respectively, and increased pension
contributions of $161 million and $452 million in fiscal years 2008 and 2009, respectively,
as a result of changes in actuarial assumptions and funding methodologies, which had been
approved by the boards of trustees of the five major actuarial pension systems and which
were expected to be approved by the State legislature. The Financial Plan included the
proposed prepayment in fiscal year 2006 of $3.3 billion in debt service and other payments
otherwise due in fiscal year 2007.

The Financial Plan set forth gap-closing actions to eliminate the previously
projected gap for the 2007 fiscal year and to reduce previously projected gaps for fiscal
years 2008 and 2009. The gap-closing actions included: (i) reduced agency expenditures or
increased revenues totaling $228 million, $262 million, $211 million, and $211 million in
fiscal years 2006 through 2009, respectively; and (ii) additional State actions of $250
million annually in fiscal years 2007 through 2009 and federal actions of $100 million in
fiscal year 2007, which require the approval of the State and federal governments,
respectively. The gap-closing actions set forth in the Financial Plan were partially
offset by $256 million annually through the proposed extension of the property tax rebate
for homeowners in fiscal years 2008 and 2009.

______The Financial Plan included funding for all recent labor contract settlements
covering the vast majority of City employees and made provision for wage increases for all
employees in collective bargaining units without contract settlements consistent with the
patterns established in the settlements. The Financial Plan made provision for a fourth
contract year under the current round of collective bargaining with a 3.15% wage increase
in that year and made provision for 1.25% wage increases annually thereafter for all City
employees.

______The Financial Plan did not reflect the expected expenditure by the City in fiscal
year 2006 of approximately $575 million for Medicaid costs resulting from additional
Medicaid payments expected to be made to the New York City Health and Hospitals Corporation
("HHC") totaling approximately $1.15 billion. The amount of the City's payment reflects
the State and local share of these eligible Medicaid costs, which the City is required by
law to pay.

______Depending on the amount of State aid provided to localities in the State's adopted
budget, the City might be required to make changes in its Financial Plan. The Financial
Plan included anticipated State actions of $250 million for fiscal year 2007. The Financial
Plan also included an increase in unrestricted State education aid in fiscal year 2007 of
$291 million. The Legislative budget agreement increased unrestricted education aid to the
City by an estimated $427 million and included other actions benefiting the City totaling
$17 million. The City anticipated reflecting the impact of an adopted State budget in its
next update to the financial plan.

Although the City has maintained balanced budgets in each of its last 25 fiscal
years, and is projected to achieve balanced operating results for the 2006 and 2007 fiscal
years, there is no assurance that the Financial Plan or future actions to close projected
outyear gaps can be successfully implemented or that the City will maintain a balanced
budget in future years without additional State aid, revenue increases or expenditure
reductions. Additional tax increases and reductions in essential City services could
adversely affect the City's economic base.

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

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

On March 6, 2006, the City Comptroller released a report on the Financial Plan. The
report noted that the housing market and the overall economy are slowing, that financial
markets face uncertainty due to rising interest rates and high debt levels and that
additional extraordinary savings of the magnitude of current lower pension costs and the
benefits from the State Medicaid cap are unlikely, suggesting that much of the good fortune
experienced by the City in recent years is unlikely to continue. The report also stated
that efforts by the State and Federal governments to contain Medicaid costs are expected to
have negative impacts on the already weakening financial condition of HHC, and that the
City may find that its subsidy to HHC, which is in the $150 million range throughout fiscal
years 2007 through 2010, will need to increase. The report observed that pension costs
appear to be near the end of a cyclical increase and are expected to remain at a level
comparable to that reached in the mid-1980's, when considered as a percentage of general
fund revenues, and that health insurance costs, which consumed more than 5 percent of total
revenues in fiscal year 2005, are expected to consume more than 7 percent of total revenues
in fiscal year 2010.

On February 23, 2006, the staff of the Office of the State Deputy Comptroller issued
a report on the Financial Plan. The report found that the City has a $4.5 billion surplus
in fiscal year 2006, of which $1.2 billion would be set aside to pay for future costs. The
report also identified additional net benefits of approximately $486 million, $251 million,
$210 million, $110 million and $110 million for fiscal years 2006 through 2010,
respectively, which, when added to the results projected in the Financial Plan, would
produce an additional surplus of $737 million in fiscal year 2007 and, after and assumed
transfer to fiscal year 2008 of that additional surplus, result in gaps of $2.5 billion,
$3.4 billion and $2.6 billion in fiscal years 2008 through 2010, respectively.

On March 13, 2006, the staff of the Control Board issued a report on the Financial
Plan. The report quantified certain risks and possible resources. The report identified
possible net resources of $484 million for fiscal year 2006 and net risks of $167 million,
$176 million, $179 million and $180 million in fiscal years 2007 through 2010,
respectively, which when combined with the results projected in the Financial Plan, result
in an estimated surplus of $484 million in fiscal year 2006 (after providing for the
prepayment of $3.3 billion of fiscal year 2007 expenses with fiscal year 2006 resources),
and estimated gaps of $167 million, $3.6 billion, $3.7 billion, and $2.9 billion in fiscal
years 2007 through 2010, respectively.

On March 27, 2006 the Independent Budget Office released a report reviewing the
Financial Plan. In this report, the IBO estimated the City's fiscal year 2006 surplus
would be $3.1 billion, and expected budget gaps of $445 million, $2.5 billion, $2.4 billion
and $1.7 billion in fiscal years 2007 through 2010, respectively. These results would be
less favorable than the Financial Plan by $137 million and $445 million in fiscal years
2006 and 2007, respectively, and more favorable by $1.0 billion, $1.1 billion and $1.0
billion in fiscal years 2008 through 2010, respectively. The IBO's lower budget gap
projections resulted in part from the IBO's higher forecast of property tax revenues, which
exceeded the Financial Plan projections by $313 million, $693 million, $923 million and
$1.2 billion in fiscal years 2007 through 2010, respectively.

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

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

|X| Ratings of the City's Bonds. As of April 6, 2006, Moody's, Standard & Poor's
and Fitch rated the City's general obligations bonds A1, A+ and A+, respectively. These
ratings reflected only the views of Moody's, Standard & Poor's and Fitch from which an
explanation of the significance of such ratings may be obtained. There is no assurance
that those ratings will continue for any given period of time or that they will not be
revised downward or withdrawn entirely. Any such downward revision or withdrawal could
have an adverse effect on the market prices of the City's bonds.

|X| The City's Outstanding Indebtedness. As of September 30, 2005, the City had
$34.209 billion of outstanding net long-term indebtedness.

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

|X| Pending Litigation. The City is a defendant in lawsuits pertaining to material
matters as well as claims asserted that are incidental to performing routine governmental
and other functions. That litigation includes, but is not limited to, actions commenced and
claims asserted against the City arising out of alleged constitutional violations, torts,
breaches of contract, and other violations of law and condemnation proceedings. While the
ultimate outcome and fiscal impact, if any, on the City of such proceedings and claims were
not predictable, adverse determinations in certain of them might have a material adverse
effect upon the City's ability to carry out the Financial Plan. For the fiscal year ended
on June 30, 2005, the City expended $590.3 million for judgments and claims, $147.2 million
of which was reimbursed by the HHC. The Financial Plan included provisions for the payment
of judgments and claims of $600.7 million, $646.5 million, $689.8 million, $742.7 million
and $793.2 for the 2006 through 2010 fiscal years, respectively. The City is a party to
numerous lawsuits and is the subject of numerous claims and investigations. The City has
estimated that its potential future liability for outstanding claims against it as of June
30, 2005 amounted to approximately $4.8 billion.

Other Investment Techniques and Strategies. In seeking its objective, the Fund may from
time to time employ the types of investment strategies and investments described below. It
is not required to use all of these strategies at all times, and at times may not use any
of them.

|X| Floating Rate and Variable Rate Obligations. Variable rate demand obligations,
a form of derivative investments, may have a demand feature that allows the Fund to tender
the obligation to the issuer or a third party prior to its maturity. The tender may be at
par value plus accrued interest, according to the terms of the obligations.

The interest rate on a floating rate demand note is based on a stated prevailing
market rate, such as a bank's prime rate, the 91-day U.S. Treasury Bill rate or some other
standard, and is adjusted automatically each time such rate is adjusted. The interest rate
on a variable rate note is also based on a stated prevailing market rate but is adjusted
automatically at specified intervals of not less than one year. Generally, the changes in
the interest rate on such 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 of the same maturity.

The Manager may determine that an unrated floating rate or variable rate obligation
meets the Fund's quality standards by reason of the backing provided by a letter of credit
or guarantee issued by a bank that meets those quality standards.

Floating rate and variable rate demand notes that have a stated maturity in excess of
one year may have features that permit the holder to recover the principal amount of the
underlying security at specified intervals not exceeding one year and upon no more than 30
days' notice. The issuer of that type of note normally has a corresponding right in its
discretion, after a given period, to prepay the outstanding principal amount of the note
plus accrued interest. Generally the issuer must provide a specified number of days' notice
to the holder. Floating rate or variable rate obligations that do not provide for the
recovery of principal and interest within seven (7) days are subject to the Fund'
limitations on investments in illiquid securities.

|X| Inverse Floaters. Variable rate bonds known as "inverse floaters" pay interest
at rates that move in the opposite direction of yields on short-term bonds in response to
market changes. As short term interest rates rise, inverse floaters produce less current
income and their market value can become volatile. As short term interest rates fall,
inverse floaters produce more current income. Inverse floaters are a type of derivative
security.

To provide investment leverage, a municipal issuer might decide to issue two variable
rate obligations instead of a single long-term, fixed-rate bond. For example, the interest
rate on one obligation reflects short-term interest rates. The interest rate on the other
instrument, the inverse floater, reflects the approximate rate the issuer would have paid
on a fixed-rate bond, multiplied by a factor of two, minus the rate paid on the short-term
instrument. The two portions may be recombined to create a fixed-rate bond. The Manager
might acquire both portions of that type of offering, to reduce the effect of the
volatility of the individual securities. This provides the Manager with a flexible
portfolio management tool to vary the degree of investment leverage efficiently under
different market conditions. The Fund can invest up to 5% of its total assets in inverse
floaters.

Inverse floaters may offer relatively high current income, reflecting the spread
between long-term and short-term tax exempt interest rates. As long as the municipal yield
curve remains relatively steep and short-term rates remain relatively low, owners of
inverse floaters will have the opportunity to earn interest at above-market rates because
they receive interest at the higher long-term rates but have paid for bonds with lower
short-term rates. If the yield curve flattens and shifts upward, an inverse floater will
lose value more quickly than a conventional long-term bond. The Fund will invest in inverse
floaters to seek higher tax-exempt yields than are available from fixed-rate bonds that
have comparable maturities and credit ratings. In some cases the holder of an inverse
floater may have an option to convert the floater to a fixed-rate bond, pursuant to a
"rate-lock option."

Some inverse floaters have a feature known as an interest rate "cap" as part of the
terms of the investment. Investing in inverse floaters that have interest rate caps might
be part of a portfolio strategy to try to maintain a high current yield for the Fund when
the Fund has invested in inverse floaters that expose the Fund to the risk of short-term
interest rate fluctuations. "Embedded" caps can be used to hedge a portion of the Fund's
exposure to rising interest rates. When interest rates exceed a pre-determined rate, the
cap generates additional cash flows that offset the decline in interest rates on the
inverse floater, and the hedge is successful. However, the Fund bears the risk that if
interest rates do not rise above the pre-determined rate, the cap (which is purchased for
additional cost) will not provide additional cash flows and will expire worthless.

Under certain circumstances, the Fund may enter into a "shortfall and forbearance"
agreement with the sponsor of an inverse floater held by the Fund. Upon the termination of
the trust issuing the inverse floater, such an agreement would require the Fund to
reimburse the sponsor of the inverse floater the difference between the liquidation value
of the underlying security (which is the basis of the inverse floater) and the principal
amount due to the holders of the floating rate security issued in conjunction with the
inverse floater. The Fund would not be required to make such a reimbursement under standard
terms of a more typical inverse floater not subject to such an agreement. Although entering
into a "shortfall and forebearance" agreement would expose the Fund to the risk that it may
be required to make the reimbursement described above, the Fund would usually receive
higher interest payments than under a typical inverse floater and would be able to defer
recognizing any loss on an inverse floater covered by the shortfall and forbearance
agreement.

|X| Other Derivatives. In addition to floating rate and variable rate obligations and
inverse floaters, the Fund can invest in other municipal derivative securities that pay
interest that depends on the change in value of an underlying asset, interest rate or
index. Examples are interest rate swaps, municipal bond indices or swap indices. Certain
derivatives, such as options, can be used to increase or decrease the Fund's exposure to
changing security prices, interest rates or other factors that affect the value of
securities. However, these techniques could result in losses to the Fund, if the Manager
judges market conditions incorrectly or employs a strategy that does not correlate well
with the Fund's other investments. These techniques can cause losses if the counterparty
does not perform its promises. An additional risk of investing in municipal securities that
are derivative investments is that their market value could be expected to vary to a much
greater extent than the market value of municipal securities that are not derivative
investments but have similar credit quality, redemption provisions and maturities. The Fund
can invest in other municipal derivative securities that pay interest that depends on the
change in value of an underlying asset, interest rate or index. Examples are interest rate
swaps, municipal bond indices or swap indices.

|X| Hedging. The Fund can use hedging to attempt to protect against declines in the
market value of its portfolio, to permit the Fund to retain unrealized gains in the value
of portfolio securities that have appreciated, or to facilitate selling securities for
investment reasons. To do so the Fund could:
o buy puts on securities, or
o write covered calls on securities. Covered calls can also be written on debt
securities to attempt to increase the Fund's income, but that income would not
be tax-exempt. Therefore it is unlikely that the Fund would write covered calls
for that purpose.

The Fund is not obligated to use hedging instruments, even though it is permitted to
use them in the Manager's discretion, as described below. The particular options the Fund
can use are described below. The Fund may employ other hedging instruments and strategies
in the future, if those investment methods are consistent with the Fund's investment
objective, are
permissible under applicable regulations governing the Fund and are approved by the Fund's
Board of Trustees.

o Put and Call Options. The Fund can buy and sell certain kinds of put options (puts)
and call options (calls). These strategies are described below.

|X| Writing Covered Call Transactions. The Fund can write (that is, sell) call
options. The Fund's call writing is subject to a number of restrictions:
(1) Calls the Fund sells must be listed on a national securities exchange.
(2) Each call the Fund writes must be "covered" while it is outstanding. That means the
Fund must own the investment on which the call was written.
(3) As an operating policy, no more than 5% of the Fund's net assets will be invested in
options transactions.

When the Fund writes a call on a security, it receives cash (a premium). The Fund
agrees to sell the underlying investment to a purchaser of a corresponding call on the same
security during the call period at a fixed exercise price regardless of market price
changes during the call period. The call period is usually not more than nine months. The
exercise price may differ from the market price of the underlying security. The Fund has
retained the risk of loss that the price of the underlying security may decline during the
call period. That risk may be offset to some extent by the premium the Fund receives. If
the value of the investment does not rise above the call price, it is likely that the call
will lapse without being exercised. In that case the Fund would keep the cash premium and
the investment.

The Fund's custodian bank, or a securities depository acting for the custodian, will
act as the Fund's escrow agent through the facilities of the Options Clearing Corporation
("OCC"), as to the investments on which the Fund has written calls traded on exchanges, or
as to other acceptable escrow securities. In that way, no margin will be required for such
transactions. OCC will release the securities on the expiration of the calls or upon the
Fund's entering into a closing purchase transaction.

To terminate its obligation on a call it has written, the Fund may purchase a
corresponding call in a "closing purchase transaction." The Fund will then realize a
profit or loss, depending upon whether the net of the amount of the option transaction
costs and the premium received on the call the Fund wrote was more or less than the price
of the call the Fund purchased to close out the transaction. A profit may also be realized
if the call lapses unexercised, because the Fund retains the underlying investment and the
premium received. Any such profits are considered short-term capital gains for federal tax
purposes, as are premiums on lapsed calls. When distributed by the Fund they are taxable as
ordinary income.

Purchasing Calls and Puts. The Fund may buy calls only on securities that relate to
securities the Fund owns, broadly-based municipal bond indices, municipal bond index
futures and interest rate futures. It can also buy calls to close out a call it has
written, as discussed above. Calls the Fund buys must be listed on a securities or
commodities exchange, or quoted on NASDAQ(R), or traded in the over-the-counter market. A
call or put option may not be purchased if the purchase would cause the value of all the
Fund's put and call options to exceed 5% of its total assets.

When the Fund purchases a call (other than in a closing purchase transaction), it
pays a premium. For calls on securities that the Fund buys, it has the right to buy the
underlying investment from a seller of a corresponding call on the same investment during
the call period at a fixed exercise price. The Fund benefits only if (1) the call is sold
at a profit or (2) the call is exercised when the market price of the underlying investment
is above the sum of the exercise price plus the transaction costs and premium paid for the
call. If the call is not either exercised or sold (whether or not at a profit), it will
become worthless at its expiration date. In that case the Fund will lose its premium
payment and the right to purchase the underlying investment.

Calls on municipal bond indices, interest rate futures and municipal bond index
futures are settled in cash rather than by delivering the underlying investment. Gain or
loss depends on changes in the securities included in the index in question (and thus on
price movements in the debt securities market generally) rather than on changes in price of
the individual futures contract.

The Fund may buy only those puts that relate to securities that the Fund owns,
broadly-based municipal bond indices, municipal bond index futures or interest rate futures
(whether or not the Fund owns the futures).

When the Fund purchases a put, it pays a premium. The Fund then has the right to sell
the underlying investment to a seller of a corresponding put on the same investment during
the put period at a fixed exercise price. Puts on municipal bond indices are settled in
cash. Buying a put on a debt security the Fund owns enables it to protect itself during the
put period against a decline in the value of the underlying investment below the exercise
price. If the market price of the underlying investment is equal to or above the exercise
price and as a result the put is not exercised or resold, the put will become worthless at
its expiration date. In that case the Fund will lose its premium payment and the right to
sell the underlying investment. A put may be sold prior to expiration (whether or not at a
profit).

o Risks of Hedging with Options. The use of hedging instruments requires special skills
and knowledge of investment techniques that are different than what is required for normal
portfolio management. If the Manager uses a hedging instrument at the wrong time or judges
market conditions incorrectly, hedging strategies may reduce the Fund's returns. The Fund
could also experience losses if the prices of its options positions were not correlated
with its other investments.

The Fund's option activities could affect its portfolio turnover rate and brokerage
commissions. The exercise of calls written by the Fund might cause the Fund to sell related
portfolio securities, thus increasing its turnover rate. The exercise by the Fund of puts
on securities will cause the sale of underlying investments, increasing portfolio
turnover. Although the decision whether to exercise a put it holds is in the Fund's
control, holding a put might cause the Fund to sell the related investments for reasons
that would not exist in the absence of the put. The Fund could pay a brokerage commission
each time it buys a call or put, sells a call or put, or buys or sells an underlying
investment in connection with the exercise of a call or put. Such commissions might be
higher on a relative basis than the commissions for direct purchases or sales of the
underlying investments. Premiums paid for options are small in relation to the market value
of the underlying investments. Consequently, put and call options offer large amounts of
leverage. The leverage offered by trading in options could result in the Fund's net asset
value being more sensitive to changes in the value of the underlying investment.

If a covered call written by the Fund is exercised on an investment that has
increased in value, the Fund will be required to sell the investment at the call price. It
will not be able to realize any profit if the investment has increased in value above the
call price.

There is a risk in using short hedging by purchasing puts on municipal bond indices
or futures to attempt to protect against declines in the value of the Fund's securities.
The risk is that the prices of such futures or the applicable index will correlate
imperfectly with the behavior of the cash (that is, market) prices of the Fund's
securities. It is possible for example, that while the Fund has used hedging instruments in
a short hedge, the market might advance and the value of debt securities held in the Fund's
portfolio might decline. If that occurred, the Fund would lose money on the hedging
instruments and also experience a decline in value of its debt securities. However, while
this could occur over a brief period or to a very small degree, over time the value of a
diversified portfolio of debt securities will tend to move in the same direction as the
indices upon which the hedging instruments are based.

The risk of imperfect correlation increases as the composition of the Fund's
portfolio diverges from the securities included in the applicable index. To compensate for
the imperfect correlation of movements in the price of debt securities being hedged and
movements in the price of the hedging instruments, the Fund might use hedging instruments
in a greater dollar amount than the dollar amount of debt securities being hedged. It might
do so if the historical volatility of the prices of the debt securities being hedged is
greater than the historical volatility of the applicable index.

An option position may be closed out only on a market that provides secondary trading
for options of the same series. There is no assurance that a liquid secondary market will
exist for a particular option. If the Fund could not effect a closing purchase transaction
due to a lack of a market, it would have to hold the callable investment until the call
lapsed or was exercised, and could experience losses.

|X| Interest Rate Swap Transactions. In an interest rate swap, the Fund and another
party exchange their right to receive or their obligation to pay interest on a security.
For example, they may swap a right to receive floating rate payments for fixed rate
payments. The Fund can enter into swaps only on securities it owns. The Fund cannot enter
into swaps with respect to more than 25% of its total assets. Also, the Fund will
segregate liquid assets (such as cash or U.S. Government securities) to cover any amounts
it could owe under swaps that exceed the amounts it is entitled to receive, and it will
adjust that amount daily, as needed. Income from interest rate swaps may be taxable.

Swap agreements entail both interest rate risk and credit risk. There is a risk that,
based on movements of interest rates in the future, the payments made by the Fund under a
swap agreement will have been greater than those received by it. Credit risk arises from
the possibility that the counterparty will default. If the counterparty to an interest
rate swap defaults, the Fund's loss will consist of the net amount of contractual interest
payments that the Fund has not yet received. The Manager will monitor the creditworthiness
of counterparties to the Fund's interest rate swap transactions on an ongoing basis.

The Fund can enter into swap transactions with appropriate counterparties pursuant to
master netting agreements. A master netting agreement provides that all swaps done between
the Fund and that counterparty under the master agreement shall be regarded as parts of an
integral agreement. If on any date amounts are payable under one or more swap transactions,
the net amount payable on that date shall be paid. In addition, the master netting
agreement may provide that if one party defaults generally or on one swap, the counterparty
can terminate the swaps with that party. Under master netting agreements, if there is a
default resulting in a loss to one party, that party's damages are calculated by reference
to the average cost of a replacement swap with respect to each swap. The gains and losses
on all swaps are then netted, and the result is the counterparty's gain or loss on
termination. The termination of all swaps and the netting of gains and losses on
termination is generally referred to as "aggregation."

o Regulatory Aspects of Hedging Instruments. The Commodities Futures Trading Commission
(the "CFTC") has eliminated limitations on futures trading by certain regulated entities
including registered investment companies and consequently registered investment companies
may engage in unlimited futures transactions and options thereon provided that the Fund
claims an exclusion from regulation as a commodity pool operator. The Fund has claimed such
an exclusion from registration as a commodity pool operator under the Commodity Exchange
Act ("CEA"). The Fund may use futures and options for hedging and non-hedging purposes to
the extent consistent with its investment objective, internal risk management guidelines
adopted by the Fund's investment advisor (as they may be amended from time to time), and as
otherwise set forth in the Fund's prospectus or this statement of additional information.

Transactions in options by the Fund are subject to limitations established by the
option exchanges. The exchanges limit the maximum number of options that may be written or
held by a single investor or group of investors acting in concert. Those limits apply
regardless of whether the options were written or purchased on the same or different
exchanges, or are held in one or more accounts or through one or more different exchanges
or through one or more brokers. Thus, the number of options that the Fund may write or hold
may be affected by options written or held by other entities, including other investment
companies having the same adviser as the Fund (or an adviser that is an affiliate of the
Fund's adviser). The exchanges also impose position limits on futures transactions. An
exchange may order the liquidation of positions found to be in violation of those limits
and may impose certain other sanctions.

When the Fund purchases an interest rate future or municipal bond index future, it
must maintain cash or readily marketable short-term debt instruments in an amount equal to
the market value of the investments underlying the future, less the margin deposit
applicable to it. The account must be a segregated account or accounts held by its
custodian bank.

|X| When-Issued and Delayed-Delivery Transactions. Subject to the Fund's fundamental
policy as stated in the Prospectus, the Fund may purchase securities on a "when-issued"
basis, and may purchase or sell such securities on a "delayed-delivery" or "forward
commitment" basis. "When-issued" or "delayed delivery" refers to securities whose terms and
indenture are available and for which a market exists, but which are not available for
immediate delivery.

When such transactions are negotiated the price (which is generally expressed in
yield terms) is fixed at the time the commitment is made. Delivery and payment for the
securities take place at a later date. Normally the settlement date is within six months of
the purchase of municipal bonds and notes. However, the Fund may, from time to time,
purchase municipal securities having a settlement date more than six months and possibly as
long as two years or more after the trade date. The securities are subject to change in
value from market fluctuation during the settlement period. The value at delivery may be
less than the purchase price. For example, changes in interest rates in a direction other
than that expected by the Manager before settlement will affect the value of such
securities and may cause loss to the Fund. No income begins to accrue to the Fund on a
when-issued security until the Fund receives the security at settlement of the trade.

The Fund may engage in when-issued transactions in order to secure what is considered
to be an advantageous price and yield at the time of entering into the obligation. When the
Fund engages in when-issued or delayed-delivery transactions, it relies on the buyer or
seller, as the case may be, to complete the transaction. Its failure to do so may cause the
Fund to lose the opportunity to obtain the security at a price and yield it considers
advantageous.

When the Fund engages in when-issued and delayed-delivery transactions, it does so
for the purpose of acquiring or selling securities consistent with its investment objective
and policies or for delivery pursuant to options contracts it has entered into, and not for
the purposes of investment leverage. Although the Fund will enter into when-issued or
delayed-delivery purchase transactions to acquire securities, the Fund may dispose of a
commitment prior to settlement. If the Fund chooses to dispose of the right to acquire a
when-issued security prior to its acquisition or to dispose of its right to deliver or
receive against a forward commitment, it may incur a gain or loss.

At the time the Fund makes a commitment to purchase or sell a security on a
when-issued or forward commitment basis, it records the transaction on its books and
reflects the value of the security purchased. In a sale transaction, it records the
proceeds to be received, in determining its net asset value. The Fund will identify on its
books liquid securities at least equal to the value of purchase commitments until the Fund
pays for the investment.

When-issued transactions and forward commitments can be used by the Fund as a
defensive technique to hedge against anticipated changes in interest rates and prices. For
instance, in periods of rising interest rates and falling prices, the Fund might sell
securities in its portfolio on a forward commitment basis to attempt to limit its exposure
to anticipated falling prices. In periods of falling interest rates and rising prices, the
Fund might sell portfolio securities and purchase the same or similar securities on a
when-issued or forward commitment basis, to obtain the benefit of currently higher cash
yields.

|X| Zero-Coupon Securities. The Fund can invest without limit in zero-coupon and
delayed interest municipal securities. Zero-coupon securities do not make periodic interest
payments and are sold at a deep discount from their face value. The buyer recognizes a rate
of return determined by the gradual appreciation of the security, which is redeemed at face
value on a specified maturity date. This discount depends on the time remaining until
maturity, as well as prevailing interest rates, the liquidity of the security and the
credit quality of the issuer. In the absence of threats to the issuer's credit quality, the
discount typically decreases as the maturity date approaches. Some zero-coupon securities
are convertible, in that they are zero-coupon securities until a predetermined date, at
which time they convert to a security with a specified coupon rate.

Because zero-coupon securities pay no interest and compound semi-annually at the rate
fixed at the time of their issuance, their value is generally more volatile than the value
of other debt securities. Their value may fall more dramatically than the value of
interest-bearing securities when interest rates rise. When prevailing interest rates fall,
zero-coupon securities tend to rise more rapidly in value because they have a fixed rate of
return.

The Fund's investment in zero-coupon securities may cause the Fund to recognize
income and make distributions to shareholders before it receives any cash payments on the
zero-coupon investment. To generate cash to satisfy those distribution requirements, the
Fund may have to sell portfolio securities that it otherwise might have continued to hold
or to use cash flows from other sources such as the sale of Fund shares.

|X| Puts and Standby Commitments. The Fund can acquire "stand-by commitments" or
"puts" with respect to municipal securities it purchases in order to enhance portfolio
liquidity. These arrangements give the Fund the right to sell the securities at a set price
on demand to the issuing broker-dealer or bank. However, securities having this feature may
have a relatively lower interest rate.

When the Fund buys a municipal security subject to a standby commitment to repurchase
the security, the Fund is entitled to same-day settlement from the purchaser. The Fund
receives an exercise price equal to the amortized cost of the underlying security plus any
accrued interest at the time of exercise. A put purchased in conjunction with a municipal
security enables the Fund to sell the underlying security within a specified period of time
at a fixed exercise price.

The Fund might purchase a standby commitment or put separately in cash or it might
acquire the security subject to the standby commitment or put (at a price that reflects
that additional feature). The Fund will enter into these transactions only with banks and
securities dealers that, in the Manager's opinion, present minimal credit risks. The Fund's
ability to exercise a put or standby commitment will depend on the ability of the bank or
dealer to pay for the securities if the put or standby commitment is exercised. If the bank
or dealer should default on its obligation, the Fund might not be able to recover all or a
portion of any loss sustained from having to sell the security elsewhere.

Puts and standby commitments are not transferable by the Fund. They terminate if the
Fund sells the underlying security to a third party. The Fund intends to enter into these
arrangements to facilitate portfolio liquidity, although such arrangements might enable the
Fund to sell a security at a pre-arranged price that may be higher than the prevailing
market price at the time the put or standby commitment is exercised. However, the Fund
might refrain from exercising a put or standby commitment if the exercise price is
significantly higher than the prevailing market price, to avoid imposing a loss on the
seller that could jeopardize the Fund's business relationships with the seller.

A put or standby commitment increases the cost of the security and reduces the yield
otherwise available from the security. Any consideration paid by the Fund for the put or
standby commitment will be reflected on the Fund's books as unrealized depreciation while
the put or standby commitment is held, and a realized gain or loss when the put or
commitment is exercised or expires. Interest income received by the Fund from municipal
securities subject to puts or stand-by commitments may not qualify as tax-exempt in its
hands if the terms of the put or stand-by commitment cause the Fund not to be treated as
the tax owner of the underlying municipal securities.

|X| Repurchase Agreements. The Fund may acquire securities subject to
repurchase agreements. It might do so for liquidity purposes to meet anticipated
redemptions of Fund shares, or pending the investment of the proceeds from sales of Fund
shares, or pending the settlement of portfolio securities transactions.

In a repurchase transaction, the Fund acquires a security from, and simultaneously
resells it to an approved vendor for delivery on an agreed upon future date. 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. Approved
vendors include U.S. commercial banks, U.S. branches of foreign banks or broker-dealers
that have been designated a primary dealer in government securities, which meet the credit
requirements set by the Manager from time to time.

The majority of these transactions run from day to day. Delivery pursuant to resale
typically will occur within one to five days of the purchase. Repurchase agreements having
a maturity beyond seven days are subject to the Fund's limits on holding illiquid
securities.

Repurchase agreements, considered "loans" under the Investment Company Act of 1940
(the "Investment Company Act"), are collateralized by the underlying security. The Fund'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.

The Manager will monitor the vendor's creditworthiness to confirm that the vendor is
financially sound and will monitor the collateral's value on an ongoing basis. However, if
the vendor fails to pay the resale price on the delivery date, the Fund may incur costs in
disposing of the collateral and may experience losses if there is any delay in its ability
to do so.

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission (the
"SEC"), the Fund, along with other affiliated entities managed by the Manager, may transfer
uninvested cash balances into one or more joint repurchase accounts. These balances are
invested in one or more repurchase agreements, secured by U.S. government securities.
Securities that are pledged as collateral for repurchase agreements are held by a custodian
bank until the agreements mature. Each joint repurchase arrangement requires that the
market value of the collateral be sufficient to cover payments of interest and principal;
however, in the event of default by the other party to the agreement, retention or sale of
the collateral may be subject to legal proceedings.

|X| Illiquid and Restricted Securities. Under the policies and procedures
established by the Fund's Board of Trustees, the Manager determines the liquidity of
certain of the Fund's investments and monitors holdings of illiquid securities on an
ongoing basis to determine whether to sell any holdings to meet percentage restrictions. To
enable the Fund to sell its holdings of a restricted security not registered under the
Securities Act of 1933, the Fund may have to cause those securities to be registered. The
expenses of registering restricted securities may be negotiated by the Fund with the issuer
at the time the Fund buys the securities. When the Fund must arrange registration because
the Fund wishes to sell the security, a considerable period may elapse between the time the
decision is made to sell the security and the time the security is registered so that the
Fund could sell it. The Fund would bear the risks of any downward price fluctuation during
that period.

The Fund may also acquire restricted securities through private placements. Those
securities have contractual restrictions on their public resale. Those restrictions might
limit the Fund's ability to dispose of the securities and might lower the amount the Fund
could realize upon the sale.

The Fund has limitations that apply to purchases of restricted securities, as stated
in the Prospectus. Those percentage restrictions do not limit purchases of restricted
securities that are eligible for sale to qualified institutional purchasers under Rule 144A
of the Securities Act of 1933, if those securities have been determined to be liquid by the
Manager under Board-approved guidelines. Those guidelines take into account the trading
activity for such securities and the availability of reliable pricing information, among
other factors. If there is a lack of trading interest in a particular Rule 144A security,
the Fund's holdings of that security may be considered to be illiquid. Illiquid securities
include repurchase agreements maturing in more than seven days.

|X| Borrowing for Leverage. The Fund has the ability to invest borrowed funds in
portfolio securities. This speculative investment technique is known as "leverage". Under
its fundamental policies, the Fund may not borrow, except to the extent permitted under the
Investment Company Act, the rules or regulations thereunder or any exemption therefrom that
is applicable to the Fund, as such statutes, rules or regulations may be amended or
interpreted from time to time. Currently, under the Investment Company Act, a mutual fund
may borrow only from banks and the maximum amount it may borrow is up to one-third of its
total assets (including the amount borrowed) less its liabilities, other than borrowings,
except that a fund may borrow up to 5% of its total assets for temporary purposes from any
person. Under the Investment Company Act, there is a rebuttable presumption that a loan is
temporary if it is repaid within 60 days and not extended or renewed. The Fund may borrow
for temporary or emergency purposes only to the extent necessary in emergency situations to
meet redemption requests after using all cash held by the Fund to meet such redemption
requests, other than cash necessary to pay Fund fees and expenses. If the value of a Fund's
assets fails to meet the 300% asset coverage requirement, the Fund is required, within
three days, to reduce its bank debt to the extent necessary to meet such requirement and
may have to sell a portion of its investments at a time when independent investment
judgment would not dictate such sale.

The Fund will pay interest on these loans, and that interest expense will raise the
overall expenses of the Fund and reduce its returns. If it does borrow, its expenses will
be greater than comparable funds that do not borrow for leverage. The interest on a loan
might be more (or less) than the yield on the securities purchased with the loan proceeds.
Additionally, the Fund's net asset value per share might fluctuate more than that of funds
that do not borrow.

In addition, pursuant to an exemptive order issued by the SEC to Citicorp North
America, Inc. ("Citicorp"), the Fund also has the ability to borrow, subject to the limits
established by its investment policies, from commercial paper and medium-term note conduits
administered by Citicorp that issue promissory notes to fund loans to investment companies
such as the Fund. These loans may be secured by assets of the Fund, so long as the Fund's
policies permit it to pledge its assets to secure a debt. Liquidity support for these loans
will be provided by banks obligated to make loans to the Fund in the event the conduit or
conduits are unable or unwilling to make such loans. The Fund will have the right to prepay
such loans and terminate its participation in the conduit loan facility at any time upon
prior notice. As a borrower under a conduit loan facility, the Fund maintains rights and
remedies under state and federal law comparable to those it would maintain with respect to
a loan from a bank.

|X| Taxable Investments. While the Fund can invest up to 20% of its net assets in
investments that generate income subject to income taxes, it attempts to invest 100% of its
assets in tax-exempt securities under normal market conditions. The Fund does not
anticipate investing substantial amounts of its assets in taxable investments under normal
market conditions or as part of its normal trading strategies and policies. To the extent
it invests in taxable securities, the Fund would not be able to meet its objective of
providing tax-exempt income to its shareholders. Taxable investments include, for example,
options, repurchase agreements and some of the types of securities it would buy for
temporary defensive purposes.

|X| Portfolio Turnover. A change in the securities held by the Fund from buying and
selling investments is known as "portfolio turnover." Short-term trading increases the rate
of portfolio turnover and could increase the Fund's transaction costs. However, the Fund
ordinarily incurs little or no brokerage expense because most of the Fund's portfolio
transactions are principal trades that do not require payment of brokerage commissions.

The Fund ordinarily does not trade securities to achieve capital gains, because they
would not be tax-exempt income. To a limited degree, the Fund may engage in short-term
trading to attempt to take advantage of short-term market variations. It may also do so to
dispose of a portfolio security prior to its maturity. That might be done if, on the basis
of a revised credit evaluation of the issuer or other considerations, the Manager believes
such disposition is advisable or the Fund needs to generate cash to satisfy requests to
redeem Fund shares. In those cases, the Fund may realize a capital gain or loss on its
investments. The Fund's annual portfolio turnover rate normally is not expected to exceed
50%. The Financial Highlights table at the end of the Prospectus shows the Fund's portfolio
turnover rates during the past five fiscal years.

|X| Temporary Defensive and Interim Investments. The securities the Fund can invest in
for temporary defensive purposes include the following:
o short-term municipal securities;
o obligations issued or guaranteed by the U.S. government or its agencies or
instrumentalities;
o commercial paper rated "A-1" by Standard & Poor's, or having a comparable rating by
another nationally-recognized rating agency; and
o certificates of deposit of domestic banks with assets of $1 billion or more.

The Fund also might hold these types of securities pending the investment of proceeds
from the sale of portfolio securities or to meet anticipated redemptions of Fund shares.
The income from some of these temporary defensive or interim investments may not be
tax-exempt. Therefore when making those investments, the Fund might not achieve its
objective.

|X| Investments in Other Investment Companies. On a temporary basis, the Fund can
invest up to 5% of its total assets in shares of other investment companies that have an
investment objective of seeking income exempt from federal, New York State and New York
City personal income taxes. It can invest up to 5% of its total assets in any one
investment company (but cannot own more than 3% of the outstanding voting stock of that
company). These limits do not apply to shares acquired in a merger, consolidation,
reorganization or acquisition of another investment company. Because the Fund would be
subject to its ratable share of the other investment company's expenses, the Fund will not
make these investments unless the Manager believes that the potential investment benefits
justify the added costs and expenses.

Other Investment Restrictions

|X| What Are "Fundamental Policies?" Fundamental policies are those policies that
the Fund has adopted to govern its investments that can be changed only by the vote of a
"majority" of the Fund's outstanding voting securities. Under the Investment Company Act,
such 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 Fund'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
Fund'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 Fund's most significant
investment policies are described in the Prospectus.

|X| Does the Fund Have Additional Fundamental Policies? The following investment
restrictions are fundamental policies of the Fund:

o The Fund may not borrow money, except to the extent permitted under the Investment
Company Act, the rules or regulations thereunder or any exemption therefrom that is
applicable to the Fund, as such statute, rules or regulations may be amended or interpreted
from time to time.

o The Fund cannot make loans, except to the extent permitted under the Investment
Company Act, the rules or regulations thereunder or any exemption therefrom that is
applicable to the Fund, as such statute, rules or regulations may be amended or interpreted
from time to time.

o The Fund may not underwrite securities of other issuers, except to the extent that a
Fund may be considered an underwriter within the meaning of the Securities Act of 1933, as
amended, when reselling securities held in its own portfolio.

o The Fund cannot buy securities or other instruments issued or guaranteed by any one
issuer if more than 5% of its total assets would be invested in securities or other
instruments of that issuer or if it would then own more than 10% of the issuer's voting
securities. That limitation applies to 75% of the Fund's total assets. The limit does not
apply to securities issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities or securities of other investment companies.

o The Fund cannot invest in real estate, physical commodities or commodity contracts,
except to the extent permitted under the Investment Company Act, the rules or regulations
thereunder or any exemption therefrom, as such statute, rules or regulations may be amended
or interpreted from time to time.

o The Fund cannot invest 25% or more of its total assets in any one industry. That
limit does not apply to securities issued or guaranteed by the U.S. government or its
agencies and instrumentalities or securities issued by investment companies. Nor does that
limit apply to municipal securities in general or to New York municipal securities.

o The Fund cannot issue senior securities, except to the extent permitted under the
Investment Company Act, the rules or regulations thereunder or any exemption therefrom, as
such statute, rules or regulations may be amended or interpreted from time to time.

Unless the Prospectus or Statement of Additional Information states that a percentage
restriction applies on an ongoing basis, it applies only at the time the Fund makes an
investment. In that case the Fund need not sell securities to meet the percentage limits if
the value of the investment increases in proportion to the size of the Fund.

|X| Does the Fund Have Any Restrictions That Are Not Fundamental? The Fund has the
additional operating policies which are stated below, that are not "fundamental," and which
can be changed by the Board of Trustees without shareholder approval.

o The Fund may not acquire more than 3% of the voting securities issued by any one
investment company. An exception is if the acquisition results from a dividend or a merger,
consolidation or other reorganization. Also, the Fund cannot invest more than 5% of its
assets in securities issued by any one investment company or invest more than 5% of the
Fund's assets in securities of other investment companies.

o For purposes of the Fund's investment restriction as to concentration described
above, its policy with respect to concentration of investments shall be interpreted as
prohibiting the Fund from making an investment in any given industry if, upon making the
proposed investment, 25% or more of the value of its total assets would be invested in such
industry.

o For the purposes of the Fund's policy regarding minimum investments in the tax-exempt
securities, the minimum investment requirement is based on net assets plus borrowings used
for investment purposes.

Diversification. The Fund intends to be "diversified," as defined in the Investment Company
Act, with respect to 75% of its total assets, and to satisfy the restrictions against
investing too much of its assets in any "issuer" as set forth above. Under the Investment
Company Act's requirements for diversification, as to 75% of its total assets, the Fund
cannot invest more than 5% of its total assets in the securities of any one issuer (other
than the U.S. government, its agencies or instrumentalities) nor can it own more than 10%
of an issuer's voting securities. In applying its diversification policy with respect to
the remaining 25% of its total assets not covered by that diversification requirement, the
Fund will not invest more than 10% of its assets in the securities of any one issuer.

In implementing this policy, 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 it and the security is backed only by the assets and revenues of
the subdivision, agency, authority or instrumentality, the latter would be deemed to be the
sole issuer. Similarly, if an industrial development bond is backed only by the assets and
revenues of the non-governmental user, then that user would be deemed to be the sole
issuer. However, if in either case the creating government or some other entity guarantees
a security, the guarantee would be considered a separate security and would be treated as
an issue of that government or other entity.

Concentration. In implementing the Fund's policy not to concentrate its investments, the
Manager will consider a non-governmental user of facilities financed by industrial
development bonds as being in a particular industry. That is done even though the bonds are
municipal securities, as to which the Fund has no concentration limitation.

For the purposes of the Fund's policy not to concentrate in securities of issuers as
described in the investment restrictions listed in the Prospectus and this Statement of
Additional Information, the Fund has adopted the industry classifications set forth in
Appendix B to this Statement of Additional Information. This is not a fundamental policy.
Bonds which are refunded with escrowed U.S. government securities are considered U.S.
government securities for purposes of the Fund's policy not to concentrate.

Subject to the limitations stated above, from time to time the Fund may increase the
relative emphasis of its investments in a particular segment of the municipal securities
market above 25% of its net assets. For example, these might include, among others, general
obligation bonds, pollution control bonds, hospital bonds, tobacco settlement bonds or any
other segment of the municipal securities market as listed in Appendix B to this Statement
of Additional Information. To the extent it does so, the Fund's exposure to market risks
from economic, business, political or other changes affecting one bond in a particular
segment (such as proposed legislation affecting the financing of a project or decreased
demand for a type of project) might also affect other bonds in the same way.

Disclosure of Portfolio Holdings. The Fund has adopted policies and procedures
concerning the dissemination of information about its portfolio holdings by employees,
officers and/or directors of the Manager, 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 Fund's investment
program or enable third parties to use that information in a manner that is harmful to
the Fund.

o Public Disclosure. The Fund's portfolio holdings are made publicly available no later
than 60 days after the close of each of the Fund's fiscal quarters in
semi-annual and annual reports to shareholders, or in its Statements of
Investments on Form N-Q, which are publicly available at the SEC. In addition,
the top 10 or more holdings are posted on the OppenheimerFunds' website at
www.oppenheimerfunds.com in the "Fund Profiles" section. Other general
information about the Fund's portfolio investments, such as portfolio
composition by asset class, industry, country, currency, credit rating or
maturity, may also be posted with a 15-day lag.

Until publicly disclosed, the Fund's portfolio holdings are proprietary,
confidential business information. While recognizing the importance of providing Fund
shareholders with information about their Fund'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 Fund's portfolio holdings information could
attempt to use that information to trade ahead of or against the Fund, which could
negatively affect the prices the Fund is able to obtain in portfolio transactions or
the availability of the securities that portfolio managers are trading on the Fund's
behalf.

The Fund, the Manager and its subsidiaries and affiliates, employees, officers, and
directors, shall neither solicit nor accept any compensation or other consideration
(including any agreement to maintain assets in the Fund or in other investment
companies or accounts managed by the Manager or any affiliated person of the Manager)
in connection with the disclosure of the Fund'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 Fund'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 Fund.

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

Except under special limited circumstances discussed below, month-end lists of the
Fund's complete portfolio holdings may be disclosed no sooner than 30-days after the
relevant month-end, subject to the procedures below. If the Fund'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 Fund 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 Fund
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 Fund's holdings confidential and agreeing not
to trade directly or indirectly based on the information.

The Fund'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 Fund's Board, or as an employee, officer and/or director of the
Manager, 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 Fund's Manager, Distributor and Transfer Agent who need to have
access to such information (as determined by senior officers of such entity),
o The Fund's independent registered public accounting firm,
o Members of the Fund's Board and the Board's legal counsel,
o The Fund's custodian bank,
o A proxy voting service designated by the Fund 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 Fund's
regular pricing services).

Portfolio holdings information of the Fund may be provided, under limited
circumstances, to brokers and/or dealers with whom the Fund trades and/or entities that
provide investment coverage and/or analytical information regarding the Fund's
portfolio, provided that there is a legitimate investment reason for providing the
information to the broker, dealer or other entity. Month-end portfolio holdings
information may, under this procedure, be provided to vendors providing research
information and/or analytics to the fund, with at least a 15-day delay after the month
end, but in certain cases may be provided to a broker or analytical vendor with a 1-2
day lag to facilitate the provision of requested investment information to the manager
to facilitate a particular trade or the portfolio manager's investment process for the
Fund. 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
Fund are not priced by the fund's regular pricing services)
o Dealers to obtain price quotations where the fund is not identified as the owner.

Portfolio holdings information (which may include information on the Fund'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, or Transfer Agent,
in the following circumstances:

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

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

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

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

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

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

How the Fund Is Managed

Organization and History. The Fund is an open-end, diversified management investment
company with an unlimited number of authorized shares of beneficial interest. The Fund was
organized as a New York corporation in June 1965 and reorganized as Massachusetts business
trust in February 1991.

Classes of Shares. The Trustees are authorized, without shareholder approval, to
create new series and classes of shares, to reclassify unissued shares into additional
series or classes and to divide or combine the shares of a class into a greater or lesser
number of shares without changing the proportionate beneficial interest of a shareholder in
the Fund. Shares do not have cumulative voting rights, preemptive rights or subscription
rights. Shares may be voted in person or by proxy at shareholder meetings.

The Fund currently has four classes of shares: Class A, Class B, Class C and Class
Y. All classes invest in the same investment portfolio. Generally, only certain
institutional investors may elect to purchase Class Y shares. Each class of shares:
o has its own dividends and distributions,
o pays certain expenses which may be different for the different classes,
o will generally have a different net asset value,
o will generally have separate voting rights on matters in which interests of one class
are different from interests of another class, and
o votes as a class on matters that affect that class alone.

Shares are freely transferable, and each share of each class has one vote at
shareholder meetings, with fractional shares voting proportionally on matters submitted to
a vote of shareholders. Each share of the Fund represents an interest in the Fund
proportionately equal to the interest of each other share of the same class.

Meetings of Shareholders. As a Massachusetts business trust, the Fund 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
the declaration in writing or vote of two-thirds of the outstanding shares of the Fund, to
remove a Trustee or to take other action described in the Fund'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 Fund'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
Fund valued at $25,000 or more or constituting at least 1% of the Fund's outstanding
shares. The Trustees may also take other action as permitted by the Investment Company Act.

|X| Shareholder and Trustee Liability. The Fund's Declaration of Trust contains an
express disclaimer of shareholder or Trustee liability for the Fund's obligations. It also
provides for indemnification and reimbursement of expenses out of the Fund's property for
any shareholder held personally liable for its obligations. The Declaration of Trust also
states that upon request, the Fund shall assume the defense of any claim made against a
shareholder for any act or obligation of the Fund and shall satisfy any judgment on that
claim. Massachusetts law permits a shareholder of a business trust (such as the Fund) to
be held personally liable as a "partner" under certain circumstances. However, the risk
that a Fund shareholder will incur financial loss from being held liable as a "partner" of
the Fund is limited to the relatively remote circumstances in which the Fund would be
unable to meet its obligations.

The Fund's contractual arrangements state that any person doing business with the
Fund (and each shareholder of the Fund) agrees under its Declaration of Trust to look
solely to the assets of the Fund for satisfaction of any claim or demand that may arise out
of any dealings with the Fund. Additionally, the Trustees shall have no personal liability
to any such person, to the extent permitted by law.

Board of Trustees and Audit Committee. The Fund is governed by a Board of Trustees, which
is responsible for protecting the interests of shareholders under federal and Massachusetts
law. The Trustees meet periodically throughout the year to oversee the Fund's activities,
review its performance, and review the actions of the Manager.

The Board of Trustees has an Audit Committee comprised solely of Trustees who are not
"interested persons" under the Investment Company Act (the "Independent Trustees"). The
members of the Audit Committee are David K. Downes (Chairman), John Cannon, Thomas W.
Courtney, Robert G. Galli, Lacy B. Herrmann and Brian Wruble. The Audit Committee held 6
meetings during the Fund's fiscal year ended December 31, 2005. The Audit Committee
furnishes the Board with recommendations regarding the selection of the Fund'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 Fund's independent registered
public accounting firm regarding the Fund's internal accounting procedures and controls;
(iii) reviewing reports from the Manager's Internal Audit Department; (iv) maintaining a
separate line of communication between the Fund's independent Auditors and the Independent
Trustees; (v) reviewing the independence of the Fund's independent Auditors;
(vi) pre-approving the provision of any audit or non-audit services by the Fund's
independent Auditors, including tax services, that are not prohibited by the Sarbanes-Oxley
Act, to the Fund, the Manager and certain affiliates of the Manager.

The Audit Committee's functions include selecting and nominating, to the full Board,
nominees for election as Trustees, and selecting and nominating Independent Trustees for
election. The Audit Committee may, but need not, consider the advice and recommendation of
the Manager and its affiliates in selecting nominees. The full Board elects new trustees
except for those instances when a shareholder vote is required.

To date, the Audit Committee has been able to identify from its own resources an ample
number of qualified candidates. Nonetheless, shareholders may submit names of individuals,
accompanied by complete and properly supported resumes, for the Audit Committee's
consideration by mailing such information to the Audit Committee. Shareholders wishing to
submit a nominee for election to the Board may do so by mailing their submission to the
offices of OppenheimerFunds, Inc., Two World Financial Center, 225 Liberty Street, 11th
Floor, New York, NY 10281-1008, to the attention of the Board of Trustees of Rochester Fund
Municipals, c/o the Secretary of the Fund. Submissions should, at a minimum, be accompanied
by the following: (1) the name, address, and business, educational, and/or other pertinent
background of the person being recommended; (2) a statement concerning whether the person
is an "interested person" as defined in the Investment Company Act; (3) any other
information that the Fund would be required to include in a proxy statement concerning the
person if he or she was nominated; and (4) the name and address of the person submitting
the recommendation and, if that person is a shareholder, the period for which that person
held Fund shares. Shareholders should note that a person who owns securities issued by
Massachusetts Mutual Life Insurance Company ("MassMutual") (the parent company of the
Manager) would be deemed an "interested person" under the Investment Company Act. In
addition, certain other relationships with MassMutual or its subsidiaries, with registered
broker-dealers, or with the Funds' outside legal counsel may cause a person to be deemed an
"interested person."

Although candidates are expected to provide a mix of attributes, experience,
perspective and skills necessary to effectively advance the interests of shareholders, the
Audit Committee has not established specific qualifications that must be met by a trustee
nominee. In evaluating trustee nominees, the Audit Committee considers, among other things,
an individual's background, skills, and experience; whether the individual is an
"interested person" as defined in the Investment Company Act; and whether the individual
would be deemed an "audit committee financial expert" within the meaning of applicable SEC
rules. The Audit Committee also considers whether the individual's background, skills, and
experience will complement the background, skills, and experience of other nominees. The
Audit Committee may, upon Board approval, retain an executive search firm or use the
services of legal, financial, or other external counsel to assist in screening potential
candidates.

There are no differences in the manner in which the Audit Committee evaluates nominees for
trustees based on whether the nominee is recommended by a shareholder.

Trustees and Officers of the Fund. Except for Mr. Murphy, each of the Trustees is an
"Independent Trustee" under the Investment Company Act. All of the Trustees, except for Mr.
Cannon are also directors or trustees of the following Oppenheimer funds (referred to as
"Board III Funds"):

Oppenheimer Bond Fund Series
Oppenheimer MidCap Fund
Oppenheimer Quest Capital Value Fund
Oppenheimer Quest For Value Funds
Oppenheimer Quest International Value
Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Municipals
Rochester Portfolio Series

Mr. Cannon is a Trustee of Bond Fund Series, Rochester Fund Municipals and Rochester
Portfolio Series. In addition to being a director or trustee of each of the Board III
Funds, Messrs. Galli and Wruble are also directors or trustees of 38 other portfolios in
the OppenheimerFunds complex.

Present or former officers, directors, trustees and employees (and their immediate
family members) of the Fund, the Manager and its affiliates, and retirement plans
established by them for their employees are permitted to purchase Class A shares of the
Fund 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. Fielding, Loughran, Cottier, Willis, Gillespie, Murphy, Petersen, Szilagyi,
Vandehey, Wixted and Zack, and Mss. Bloomberg and Ives who are officers of the Fund, hold
the same offices of one or more of the other Oppenheimer Funds as with the Fund. As of
March 31, 2006, the Trustees and officers of the Fund, as a group, owned of record or
beneficially less than 1% of any class of shares of the Fund. 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 Fund listed above. In addition, none of the Independent Trustees (nor any of their
immediate family members) owns securities of either the Manager or the Distributor of the
Board III Funds or of any entity directly or indirectly controlling, controlled by or under
common control with the Manager or the Distributor.

Biographical Information. The Trustees and officers, their positions with the Fund, 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 Fund 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 Shares
Beneficially
Owned in Any
Years; Range of of the
Other Trusteeships/Directorships Held by Shares Oppenheimer
Position(s) Held Trustee; BeneficiallFunds
with Fund, Length Number of Portfolios in Fund Complex Owned in Overseen by
of Service, Age Currently Overseen by Trustee the Fund Trustee
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
As of December 31, 2005
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Thomas W. Principal of Courtney Associates, Inc. $0 $10,001-$50,000
Courtney, (venture capital firm) (since 1982);
Chairman of the General Partner of Trivest Venture Fund
Board of Trustees (private venture capital fund); President
since 2001, of Investment Counseling Federated
Trustee since 1995 Investors, Inc. (1973-1982); Trustee of
Age: 72 the following open-end investment
companies: Cash Assets Trust (1984),
Premier VIT (formerly PIMCO Advisors
VIT), Tax Free Trust of Arizona (since
1984) and four funds for the Hawaiian Tax
Free Trust. Oversees 10 portfolios in the
OppenheimerFunds complex.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
John Cannon, Director of Neuberger Berman Income $0 $10,001-$50,000
Trustee, since Managers Trust, Neuberger & Berman Income
1992 Funds and Neuberger Berman Trust,
Age: 76 (open-end investment companies)
(1995-present); Director of Neuberger
Berman Equity Funds (open-end investment
company) (since November 2000); Trustee,
Neuberger Berman Mutual Funds (open-end
investment company) (since October 1994);
Mr. Cannon held the following positions
at CDC Investment Advisors (registered
investment adviser): Chairman and
Treasurer (December 1993-February 1996),
Independent Consultant and Chief
Investment Officer (1996-June 2000) and
Consultant and Director (December
1993-February 1999). Oversees 3
portfolios in the OppenheimerFunds
complex.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
David K. Downes, President, Chief Executive Officer and None None
Trustee since 2005 Board Member of CRAFund Advisors, Inc.
Age: 66 (investment management company) (since
January 2004); President of The Community
Reinvestment Act Qualified Investment
Fund (investment management company)
(since January 2004); Independent
Chairman of the Board of Trustees of
Quaker Investment Trust (registered
investment company) (since January 2004);
Director of Internet Capital Group
(information technology company) (since
October 2003); Chief Operating Officer
and Chief Financial Officer of Lincoln
National Investment Companies, Inc.
(subsidiary of Lincoln National
Corporation, a publicly traded company)
and Delaware Investments U.S., Inc.
(investment management subsidiary of
Lincoln National Corporation)
(1995-2003); President, Chief Executive
Officer and Trustee of Delaware
Investment Family of Funds (1995-2003);
President and Board Member of Lincoln
National Convertible Securities Funds,
Inc. and the Lincoln National Income
Funds, TDC (1995-2003); Chairman and
Chief Executive Officer of Retirement
Financial Services, Inc. (registered
transfer agent and investment adviser and
subsidiary of Delaware Investments U.S.,
Inc.) (1995-2003); President and Chief
Executive Officer of Delaware Service
Company, Inc. (1995-2003); Chief
Administrative Officer, Chief Financial
Officer, Vice Chairman and Director of
Equitable Capital Management Corporation
(investment subsidiary of Equitable Life
Assurance Society) (1985-1992); Corporate
Controller of Merrill Lynch & Company
(financial services holding company)
(1977-1985); held the following positions
at the Colonial Penn Group, Inc.
(insurance company): Corporate Budget
Director (1974-1977), Assistant Treasurer
(1972-1974) and Director of Corporate
Taxes (1969-1972); held the following
positions at Price Waterhouse & Company
(financial services firm): Tax Manager
(1967-1969), Tax Senior (1965-1967) and
Staff Accountant (1963-1965); United
States Marine Corps (1957-1959). Oversees
10 portfolios in the OppenheimerFunds
complex.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Robert G. Galli, A director or trustee of other $0 Over $100,000
Trustee since 1998 Oppenheimer funds. Oversees 48 portfolios
Age: 72 in the OppenheimerFunds complex.*
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Lacy B. Herrmann, Founder and Chairman Emeritus of Aquila $0 $10,001-$50,000
Trustee since 1995 Group of Funds (open-end investment
Age: 76 company) (since December 2004); Chairman
of Aquila Management Corporation and
Aquila Investment Management LLC (since
August 1984); Chief Executive Officer and
President of Aquila Management
Corporation (August 1984-December 1994);
Vice President, Director and Secretary of
Aquila Distributors, Inc. (distributor of
Aquila Management Corporation); Treasurer
of Aquila Distributors, Inc.; President
and Chairman of the Board of Trustees of
Capital Cash Management Trust ("CCMT");
President and Director of STCM Management
Company, Inc. (sponsor and adviser to
CCMT); Chairman, President and Director
of InCap Management Corporation;
Sub-Advisor and Administrator of Prime
Cash Fund & Short Term Asset Reserves;
Director of OCC Cash Reserves, Inc.
(open-end investment company) (June
2003-December 2004); Trustee of Premier
VIT (formerly PIMCO Advisors VIT)
(investment company) (since 1994);
Trustee of OCC Accumulation Trust
(open-end investment company) (until
December 2004); Trustee Emeritus of Brown
University (since June 1983). Oversees 10
portfolios in the OppenheimerFunds
complex.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Brian Wruble, General Partner of Odyssey Partners, L.P. $0 Over $100,000
Trustee since 2001 (hedge fund) (since September 1995);
Age: 63 Director of Special Value Opportunities
Fund, LLC (registered investment company)
(since September 2004); Director, Zurich
Financial Investment Advisory Board
(insurance) (affiliate of the Manager's
parent company) (since October 2004);
Board of Governing Trustees of The
Jackson Laboratory (non-profit) (since
August 1990); Trustee of the Institute
for Advanced Study (non-profit
educational institute) (since May 1992);
Special Limited Partner of Odyssey
Investment Partners, LLC (private equity
investment) (January 1999-September
2004); Trustee of Research Foundation of
AIMR (2000-2002) (investment research,
non-profit); Governor, Jerome Levy
Economics Institute of Bard College
(August 1990-September 2001) (economics
research); Director of Ray & Berendtson,
Inc. (May 2000-April 2002) (executive
search firm); President and Chief
Executive Officer of the Delaware Group
of Mutual Funds (1992-1995); Chairman,
President and Chief Executive Officer of
Equitable Capital Management Corporation
(1985-1992); Executive Vice President and
Chief Investment Officer at The Equitable
Life Assurance Society of the U.S.
(1979-1992); Vice President and
Co-manager at Smith Barney, Harris Upham
and Company (1970-1979); Engineer, Sperry
Gyroscope Company (1966-1970); former
governor of the Association for
Investment Management and Research;
former chairman of the Institute of
Chartered Financial Analysts; Chartered
Financial Analyst. Oversees 48 portfolios
in the OppenheimerFunds complex.*
----------------------------------------------------------------------------------------
* In addition to serving as Trustee or Director of all of the Board III Funds, Messrs.
Galli and Wruble also serve as directors, managers or trustees of 38 other Oppenheimer
funds that are not Board III Funds.

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 is an
"Interested Trustee" because he is affiliated with the Manager by virtue of his positions
as an officer and director of the Manager, and as a shareholder of its parent company.

-------------------------------------------------------------------------------------------
Interested Trustee and Officer
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Name, Position(s) Principal Occupation(s) During the Past 5 Dollar Aggregate
Dollar Range
Range of Of Shares
Shares Beneficially
Held with Fund, Years; Other Trusteeships/Directorships Beneficially Owned in
Length of Held; Number of Portfolios in the Fund Owned in Supervised
Service, Age Complex Currently Overseen the Fund Funds
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
As of December 31, 2005
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
John V. Murphy, Chairman, Chief Executive Officer and $0 Over $100,000
Trustee since Director (since June 2001) and President
2005 and (since September 2000) of the Manager;
President and President and director or trustee of other
Principal Oppenheimer funds; President and Director
Executive Officer of Oppenheimer Acquisition Corp. ("OAC")
since 2001 (the Manager's parent holding company) and
Age: 56 of Oppenheimer Partnership Holdings, Inc.
(holding company subsidiary of the Manager)
(since July 2001); Director of
OppenheimerFunds Distributor, Inc.
(subsidiary of the Manager) (since November
2001); Chairman and Director of Shareholder
Services, Inc. and of Shareholder Financial
Services, Inc. (transfer agent subsidiaries
of the Manager) (since July 2001);
President and Director of OppenheimerFunds
Legacy Program (charitable trust program
established by the Manager) (since July
2001); Director of the following investment
advisory subsidiaries of the Manager: OFI
Institutional Asset Management, Inc.,
Centennial Asset Management Corporation,
Trinity Investment Management Corporation
and Tremont Capital Management, Inc. (since
November 2001), HarbourView Asset
Management Corporation and OFI Private
Investments, Inc. (since July 2001);
President (since November 1, 2001) and
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 the Manager (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 86 portfolios in
the OppenheimerFunds complex.
-------------------------------------------------------------------------------------------

The address of the Officers in the chart below is as follows: for Messrs. Fielding,
Loughran, Cottier, Willis, Zack and Gillespie and Ms. Bloomberg, Two World Financial
Center, 225 Liberty Street, New York, NY 10281-1008, for Messrs. Petersen, Szilagyi,
Vandehey, and Wixted and Ms. Ives, 6803 S. Tucson Way, Centennial, CO 80112-3924. Each
Officer serves for an indefinite term or until his or her resignation, retirement, death or
removal.

-------------------------------------------------------------------------------------
Officers of the Fund
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Name, Principal Occupation(s) During Past 5 Years
Position(s) Held with
Fund,
Length of Service,
Age
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Ronald H. Fielding, Senior Vice President of the Manager since January 1996;
Vice President and Chairman of the Rochester Division of the Manager since
Portfolio Manager January 1996; an officer of 10 portfolios in the
since 1996 OppenheimerFunds complex.
Age: 57
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Daniel G. Loughran, Vice President of the Manager since April 2001; an officer
Vice President since of 10 portfolios in the OppenheimerFunds complex.
2005 and Portfolio
Manager since 2002
Age: 42
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Scott Cottier, Vice President of the Manager since 2002; portfolio manager
Vice President since and trader at Victory Capital Management (1999-2002); an
2005 and Portfolio officer of 10 portfolios in the OppenheimerFunds complex.
Manager since 2002
Age: 34
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Troy Willis, Assistant Vice President of the Manager since July 2005;
Vice President since Associate Portfolio Manager of the Manager since 2003;
2005 and Portfolio corporate attorney for Southern Resource Group (1999-2003);
Manager since 2002 an officer of 10 portfolios in the OppenheimerFunds complex.
Age: 33
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Mark S. Vandehey, Senior Vice President and Chief Compliance Officer of the
Vice President and Manager (since March 2004); Vice President of
Chief Compliance OppenheimerFunds Distributor, Inc., Centennial Asset
Officer since 2004 Management Corporation and Shareholder Services, Inc.
Age: 55 (since June 1983). Former Vice President and Director of
Internal Audit of the Manager (1997-February 2004). An
officer of 86 portfolios in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer of the Manager (since
Treasurer and March 1999); Treasurer of the following: HarbourView Asset
Principal Financial & Management Corporation, Shareholder Financial Services,
Accounting Officer Inc., Shareholder Services, Inc., Oppenheimer Real Asset
since 1999 Management Corporation, and Oppenheimer Partnership
Age: 46 Holdings, Inc. (since March 1999), OFI Private Investments,
Inc. (since March 2000), OppenheimerFunds International
Ltd. (since May 2000), OppenheimerFunds plc (since May
2000), OFI Institutional Asset Management, Inc. (since
November 2000), and OppenheimerFunds Legacy Program
(charitable trust program established by the Manager)
(since June 2003); Treasurer and Chief Financial Officer of
OFI Trust Company (trust company subsidiary of the Manager)
(since May 2000); Assistant Treasurer of the following: OAC
(since March 1999),Centennial Asset Management Corporation
(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 86
portfolios in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Brian Petersen, Assistant Vice President of the Manager (since August
Assistant Treasurer 2002); Manager/Financial Product Accounting of the Manager
since 2004 (November 1998-July 2002). An officer of 86 portfolios in
Age: 35 the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Brian C. Szilagyi, Assistant Vice President of the Manager (since July 2004);
Assistant Treasurer Director of Financial Reporting and Compliance of First
since 2005 Data Corporation (April 2003-July 2004); Manager of
Age: 35 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 86
portfolios in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Robert G. Zack, Executive Vice President (since January 2004) and General
Secretary since 2001 Counsel (since March 2002) of the Manager; General Counsel
Age: 57 and Director of the Distributor (since December 2001);
General Counsel of Centennial Asset Management Corporation
(since December 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); Senior Vice
President, General Counsel and Director of Shareholder
Financial Services, Inc. and Shareholder Services, Inc.
(since December 2001); Senior Vice President, General
Counsel and Director of OFI Private Investments, Inc. and
OFI Trust Company (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 the Manager;
Assistant Secretary of the following: Shareholder Services,
Inc. (May 1985-November 2001), Shareholder Financial
Services, Inc. (November 1989-November 2001), and
OppenheimerFunds International Ltd. (September
1997-November 2001). An officer of 86 portfolios in the
OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Kathleen T. Ives, Vice President (since June 1998) and Senior Counsel and
Assistant Secretary Assistant Secretary (since October 2003) of the Manager;
since 2001 Vice President (since 1999) and Assistant Secretary (since
Age: 40 October 2003) of the Distributor; Assistant Secretary of
Centennial Asset Management Corporation (since October
2003); Vice President and Assistant Secretary of
Shareholder Services, Inc. (since 1999); Assistant
Secretary of OppenheimerFunds Legacy Program and
Shareholder Financial Services, Inc. (since December 2001);
Assistant Counsel of the Manager (August 1994-October
2003). An officer of 87 portfolios in the OppenheimerFunds
complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Lisa I. Bloomberg, Vice President and Associate Counsel of the Manager (since
Assistant Secretary May 2004); First Vice President (April 2001-April 2004),
since 2004 Associate General Counsel (December 2000-April 2004),
Age: 38 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 86 portfolios in the
OppenheimerFunds complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Phillip S. Gillespie, Senior Vice President and Deputy General Counsel of the
Assistant Secretary Manager (since September 2004); Mr. Gillespie held the
since 2004 following positions at Merrill Lynch Investment Management:
Age: 42 First Vice President (2001-September 2004); Director
(2000-September 2004) and Vice President (1998-2000). An
officer of 86 portfolios in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------

|X| Remuneration of the Officers and Trustees. The officers and the interested Trustee of
the Fund, who are affiliated with the Manager, receive no salary or fee from the Fund. The
Independent Trustees' compensation from the Fund, shown below, is for serving as a Trustee
and member of a committee (if applicable), with respect to the Fund's fiscal year ended
December 31, 2005. The total compensation from the Fund and fund complex represents
compensation, including accrued retirement benefits, for serving as a Trustee and member of
a committee (if applicable) of the Boards of the Fund and other funds in the
OppenheimerFunds complex during the calendar year ended December 31, 2005. The amounts
shown for Mr. Cannon relate solely to Bond Fund Series, Rochester Fund Municipals and
Rochester Portfolio Series as Mr. Cannon serves as Trustee of those Board III Funds only.

--------------------------------------------------------------------------------
Trustee Name and Aggregate Retirement Estimated Total
Benefits
Accrued as Annual Compensation
Other Fund Part of Benefits From the Fund
Position(s) (as Compensation Fund Upon and Fund
applicable) From Fund(1) Expenses Retirement(2) Complex(3)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Thomas W. Courtney $42,620 None $88,728 $207,746(4)
Board Chairman and
Audit Committee Member
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
John Cannon $27,085 None $29,891((5)) $45,178((5))
Audit Committee Member
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Paul Y. Clinton $39,965 None $85,662 $189,746((6))
Audit Committee
Chairman
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
David K. Downes((7)) $1,873 None None $6,860
Audit Committee Member
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Robert G. Galli $35,982 None $100,824((8)) $264,812((9))
Audit Committee Member
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Lacy B. Herrmann $34,101 None $81,676 $171,621((10))
Audit Committee Member
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Brian Wruble $35,982 None $31,332(11) $159,354((1)(2))
Audit Committee Member
--------------------------------------------------------------------------------
1. "Aggregate Compensation From the Fund" includes fees and deferred compensation, if any,
for a Trustee.
2. "Estimated Annual Benefits Upon Retirement" is based on a straight life payment plan
election with the assumption that a Trustee will retire at the age of 75 and is
eligible (after 7 years of service) to receive retirement plan benefits as described
below under "Retirement Plan for Trustees." Actual benefits upon retirement may vary
based on retirement age, years of service and benefit payment elections of the Trustee.
3. "Total Compensation From the Fund and Fund Complex" includes fees, deferred
compensation (if any) and accrued retirement benefits (if any). For purposes of this
section only, in accordance with the instructions for Form N-1A, "Fund Complex"
includes the Oppenheimer funds and one open-end investment company, PIMCO Advisors VIT
("PIMCO") for which the Fund's former Sub-Adviser acts as the investment adviser. The
Manager does not consider PIMCO to be part of the OppenheimerFunds "Fund Complex" as
that term may be otherwise interpreted.
4. Includes $47,246 ($34,646 compensation and $12,600 accrued retirement benefits) from
Premier VIT, with respect to Mr. Courtney's service as a trustee of that fund.
5. Estimated Annual Benefits upon Retirement and Total Compensation for Mr. Cannon are for
serving as a trustee of the Fund and two other funds in the Fund Complex.
6. Includes $46,246 ($33,646 compensation and $12,600 accrued retirement benefits) from
Premier VIT, with respect to Mr. Clinton's service as a trustee of that fund.
7. Mr. Downes was appointed as Trustee of the Board III Funds on December 16, 2005.
8. Includes $54,984 estimated benefits to be paid to Mr. Galli for serving as a director,
manager or trustee of 38 other Oppenheimer funds (at December 31, 2005) that are not
Board III funds.
9. Includes $129,312 for serving as a director or trustee of 38 other Oppenheimer funds
(at December 31, 2005) that are not Board III Funds.
10. Includes $43,121 ($30,521 compensation and $12,600 accrued retirement benefits) from
Premier VIT, with respect to Mr. Herrmann's service as a trustee of that fund.
11. Includes $23,854 for serving as a director, manager or trustee of 38 other Oppenheimer
funds (at December 31, 2005) that are not Board III Funds.
12. Does not include estimated benefits to be paid to Mr. Wruble for serving as a director,
manager or trustee of 38 other Oppenheimer funds (at December 31, 2005) that are not
Board III funds because Mr. Wruble has not met the eligibility requirements for payment
under those funds' retirement plan.

|X| Retirement Plan for Trustees. The Fund has adopted a retirement plan that provides
for payments to retired Independent Trustees. Payments are up to 80% of the average
compensation paid during a Trustee's five years of service in which the highest
compensation was received. A Trustee must serve as director or trustee for any of the Board
III Funds for at least seven years to be eligible for retirement plan benefits and must
serve for at least 15 years to be eligible for the maximum benefit. The amount of
retirement benefits a Trustee will receive depends on the amount of the Trustee's
compensation, including future compensation and the length of his or her service on the
Board.

|X| Deferred Compensation Plan for Trustees. The Board of Trustees has adopted a Deferred
Compensation Plan for Independent Directors that enables them to elect to defer receipt of
all or a portion of the annual fees they are entitled to receive from the Fund. Under the
plan, the compensation deferred by a Trustee is periodically adjusted as though an
equivalent amount had been invested in shares of one or more Oppenheimer funds selected by
the Trustee. The amount paid to the Trustee under 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 Fund's
assets, liabilities or net income per share. The plan will not obligate the Fund to retain
the services of any Trustee or to pay any particular level of compensation to any Trustee.
Pursuant to an Order issued by the SEC the Fund 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 Trustee's deferred compensation account.

|X| Major Shareholders. As of March 31, 2006, the only person who owned of record
or were known by the Fund to own beneficially 5% or more of any class of the Fund's
outstanding shares were:

Citigroup Global Markets, Inc., 109801250, Attn Cindy Tempesta, 7th. Floor, 333 West
34th Street, New York, NY 10001-2483, which owned 51,248,333.008Class A shares
(14.67% of the outstanding Class A shares).

Merrill Lynch Pierce Fenner & Smith, Inc. for the sole benefit of its customers, Attn
Fund Admin/975G2, 4800 Deer Lake Drive, E FL 3, Jacksonville, FL 32246-6484, which
owned 33,256,263.919 Class A shares (9.52% of the outstanding Class A shares).

Merrill Lynch Pierce Fenner & Smith, Inc. for the sole benefit of its customers, Attn
Fund Admin, 4800 Deer Lake Drive, E FL 3, Jacksonville, FL 32246-6484, which owned
5,663,510.278 Class B shares (11.09% of the outstanding Class B shares).

Citigroup Global Markets, Inc., 109801250, Attn Cindy Tempesta, 7th. Floor, 333 West
34th Street, New York, NY 10001-2483, which owned 5,168,905.009 Class B shares
(10.12% of the outstanding Class B shares).

Merrill Lynch Pierce Fenner & Smith, Inc. for the sole benefit of its customers, Attn
Fund Admin, 4800 Deer Lake Drive, E FL 3, Jacksonville, FL 32246-6484, which owned
10,018,420.317 Class C shares (21.89% of the outstanding Class C shares).

Citigroup Global Markets, Inc., 109801250, Attn Cindy Tempesta, 7th. Floor, 333 West
34th Street, New York, NY 10001-2483, which owned 6,705,888.466 Class C shares
(14.65% of the outstanding Class C shares).

Roger W. Kirby Trust, UW Gwenoline Hoguet Trust, FBO Geoffrey R. Hoguet, 580 Park
Ave. New York, NY 10021-7313, who owned 379,138.094 Class Y shares (49.22% of the
outstanding Class Y shares).

Charles Schwab & Co. Inc. Special Custody Acct for the Exclusive Benefit of
Customers, Attn. Mutual Funds, 101 Montgomery Street, San Francisco, CA 94104-4122,
who owned 162,817.563 Class Y shares (21.13% of the outstanding Class Y shares).

First & Co., CO Alliance Bank N.A., Attn: Trust OPS, 160 Main Street, Oneida, NY
13421-1629, who owned 146,001.994 Class Y shares (18.95% of the outstanding Class Y
shares).

Elizabeth N. Hoguet, 238 McLain Street, Mount Kisco, NY 10549-4931, who owed
74,864.545 Class Y shares (9.71% of the outstanding Class Y shares).

The Manager. The Manager is wholly-owned by Oppenheimer Acquisition Corp., a holding
company controlled by Massachusetts Mutual Life Insurance Company, a global, diversified
insurance and financial services organization.

|X| Code of Ethics. The Fund, the Manager and the Distributor have a Code of
Ethics. It is designed to detect and prevent improper personal trading by certain
employees, including portfolio managers, that would compete with or take advantage of the
Fund's portfolio transactions. Covered persons include persons with knowledge of the
investments and investment intentions of the Fund 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 Fund, subject to a number of
restrictions and controls. Compliance with the Code of Ethics is carefully monitored and
enforced by the Manager.

The Code of Ethics is an exhibit to the Fund'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 1.202.942.8090. The Code of Ethics can also be viewed as part of the
Fund's registration statement on the SEC's EDGAR database at the SEC's Internet website at
http://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| Portfolio Proxy Voting. The Fund has adopted Portfolio Proxy Voting Policies and
Procedures under which the Fund votes proxies relating to securities ("portfolio proxies")
held by the Fund. The Fund's primary consideration in voting portfolio proxies is the
financial interests of the Fund and its shareholders. The Fund has retained an unaffiliated
third-party as its agent to vote portfolio proxies in accordance with the Fund's Portfolio
Proxy Voting Guidelines and to maintain records of such portfolio proxy voting. The
Portfolio Proxy Voting Policies and Procedures include provisions to address conflicts of
interest that may arise between the Fund and the Manager or the Manager's affiliates or
business relationships. Such a conflict of interest may arise, for example, where the
Manager or an affiliate of the Manager manages or administers the assets of a pension plan
or other investment account of the portfolio company soliciting the proxy or seeks to serve
in that capacity. The Manager and its affiliates generally seek to avoid such conflicts by
maintaining separate investment decision making processes to prevent the sharing of
business objectives with respect to proposed or actual actions regarding portfolio proxy
voting decisions. Additionally, the Manager employs the following two procedures: (1) if
the proposal that gives rise to the conflict is specifically addressed in the Guidelines,
the Manager will vote the portfolio proxy in accordance with the Guidelines, provided that
they do not provide discretion to the Manager on how to vote on the matter; and (2) if such
proposal is not specifically addressed in the Guidelines or the Guidelines provide
discretion to the Manager on how to vote, the Manager will vote in accordance with the
third-party proxy voting agent's general recommended guidelines on the proposal provided
that the Manager has reasonably determined that there is no conflict of interest on the
part of the proxy voting agent. If neither of the previous two procedures provides an
appropriate voting recommendation, the Manager may retain an independent fiduciary to
advise the Manager on how to vote the proposal or may abstain from voting. The Guidelines'
provisions with respect to certain routine and non-routine proxy proposals are summarized
below:
o The Fund generally votes with the recommendation of the issuer's management on
routine matters, including ratification of the independent registered public
accounting firm, unless circumstances indicate otherwise.
o The Fund evaluates nominees for director nominated by management on a case-by-case
basis, examining the following factors, among others: Composition of the board and
key board committees, attendance at board meetings, corporate governance
provisions and takeover activity, long-term company performance and the nominee's
investment in the company.
o In general, the Fund opposes anti-takeover proposals and supports the elimination, or
the ability of shareholders to vote on the preservation or elimination, of
anti-takeover proposals, absent unusual circumstances.
o The Fund supports shareholder proposals to reduce a super-majority vote requirement,
and opposes management proposals to add a super-majority vote requirement.
o The Fund opposes proposals to classify the board of directors.
o The Fund supports proposals to eliminate cumulative voting.
o The Fund opposes re-pricing of stock options without shareholder approval.
o The Fund generally considers executive compensation questions such as stock option
plans and bonus plans to be ordinary business activity. The Fund analyzes stock
option plans, paying particular attention to their dilutive effect. While the Fund
generally supports management proposals, the Fund opposes plans it considers to be
excessive.

The Fund is required to file Form N-PX, with its complete proxy voting record for the
12 months ended June 30th, no later than August 31st of each year. The Fund's Form N-PX
filing is available (i) without charge, upon request, by calling the Fund toll-free at
1.800.525.7048 and (ii) on the SEC's website at www.sec.gov.

|X| The Investment Advisory Agreement. The Manager provides investment advisory and
management services to the Fund under an investment advisory agreement between the Manager
and the Fund. The Manager selects securities for the Fund's portfolio and handles its
day-to day business. That agreement requires the Manager, at its expense, to provide the
Fund 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 corporate administration for the Fund. Those responsibilities include
the compilation and maintenance of records with respect to the Fund's operations, the
preparation and filing of specified reports, and the composition of proxy materials and
registration statements for continuous public sale of shares of the Fund.

The Fund pays expenses not expressly assumed by the Manager under the advisory
agreement. The investment advisory agreement lists examples of expenses paid by the Fund.
The major categories relate to interest, taxes, fees to Independent Trustees, legal and
audit expenses, custodian and transfer agent expenses, share issuance costs, certain
printing and registration costs, brokerage commissions, and non-recurring expenses,
including litigation cost. The management fees paid by the Fund to the Manager are
calculated at the rates described in the Prospectus, which are applied to the assets of the
Fund as a whole. The fees are allocated to each class of shares based upon the relative
proportion of the Fund's net assets represented by that class. The management fees paid by
the Fund to the Manager during its last three fiscal years are listed below.

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 for its
obligations and duties under the investment advisory agreement, the Manager is not liable
for any loss the Fund sustains for any investment, adoption of any investment policy or the
purchase, sale or retention of any security.

The agreement permits the Manager to act as investment advisor for any other person,
firm or corporation and to use the name "Oppenheimer" in connection with other investment
companies for which it may act as investment advisor or general distributor. If the Manager
shall no longer act as investment advisor to the Fund, the Manager may withdraw the Fund's
right to use the name "Oppenheimer" as part of its name.

o Accounting and Administrative Services. The Manager provides accounting and
administrative services to the Fund pursuant to an Accounting and Administration Agreement
approved by the Board of Trustees. Under that agreement, the Manager maintains the general
ledger accounts and records relating to the Fund's business and calculates the daily net
asset values of the Fund's shares. The Accounting and Administrative Services fees paid by
the Fund to the Manager during its last three fiscal years are listed below.

-------------------------------------------------------------------------------
Fiscal Year Management Fee Paid to Accounting and Administrative
Services Fee Paid to
Ended 12/31 OppenheimerFunds, Inc. OppenheimerFunds, Inc.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2003 $26,976,540 $1,745,069
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2004 $27,768,032 $1,797,931
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2005 $32,070,175 $2,086,136
-------------------------------------------------------------------------------

Portfolio Managers. The Fund's portfolio is managed by Ronald H. Fielding and a team of
investment professionals including Daniel G. Loughran, Scott Cottier, Troy Willis, Mark
DeMitry, Marcus Franz and Michael Caramella (each is referred to as a "Portfolio Manager"
and collectively they are referred to as the "Portfolio Managers") who are responsible for
the day-to-day management of the Fund's investments.

Other Accounts Managed. In addition to managing the Fund's investment
portfolio, Messrs. Fielding, Loughran, Cottier, Willis, DeMitry, Franz and Camarella also
manage 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 Portfolio Managers as of December 31, 2005. No account has a
performance-based advisory fee:

----------------------------------------------------------------------------------
Portfolio Registered Total Other Total Other Total
Assets in
Assets in Other
Registered Pooled Pooled Assets
Investment Investment InvestmentInvestment in Other
Companies Companies Vehicles Vehicles AccountsAccounts
Manager Managed Managed* Managed Managed* Managed Managed*
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Ronald H. 9 14,269.4 None None None None
Fielding
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Daniel G. 9 14,269.4 None None None None
Loughran
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Scott Cottier 9 14,269.4 None None None None
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Troy Willis 9 14,269.4 None None None None
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Mark DeMitry 9 14,269.4 None None None None
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Marcus Franz 9 14,269.4 None None None None
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Michael 9 14,269.4 None None None None
Camarella
----------------------------------------------------------------------------------
* In millions.

As indicated above, the Portfolio Managers also manage other funds and accounts.
Potentially, at times, those responsibilities could conflict with the interests of the
Fund. That may occur whether the investment objectives and strategies of the other funds
and accounts are the same as, or different from, the Fund's investment objectives and
strategies. For example the Portfolio Managers may need to allocate investment
opportunities between the Fund and another fund or account having similar objectives or
strategies, or they may need to execute transactions for another fund or account that could
have a negative impact on the value of securities held by the Fund. 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 Fund, 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 obligation to treat all of its clients, including the Fund, fairly and
equitably, and are designed to preclude the Portfolio Managers 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 Fund's Portfolio
Managers may manage other funds or accounts with investment objectives and strategies
similar to those of the Fund, or he may manage funds or accounts with different investment
objectives and strategies.

Compensation of the Portfolio Managers. The Fund's Portfolio Managers are employed
and compensated by the Manager, not the Fund. 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 investors. 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 December 31, 2005, the Portfolio Managers' 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 benchmark selected by
management. The Lipper benchmark with respect to the Fund is Lipper New York Municipal
Debt Funds. Other factors include management quality (such as style consistency, risk
management, sector coverage, team leadership and coaching) and organizational development.
The Portfolio Managers' compensation is not based on the total value of the Fund's
portfolio assets, although the Fund'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 Fund and other funds managed by the Portfolio
Managers. The compensation structure of the other funds managed by the Portfolio Managers
is the same as the compensation structure of the Fund, described above.

Ownership of Fund Shares. As of December 31, 2005, the Portfolio Managers did
not beneficially own any shares of the Fund.

Brokerage Policies of the Fund

Brokerage Provisions of the Investment Advisory Agreement. One of the duties of the Manager
under the investment advisory agreement is to arrange the portfolio transactions for the
Fund. The advisory agreement contains provisions relating to the employment of
broker-dealers to effect the Fund's portfolio transactions. The Manager is authorized by
the advisory agreement to employ broker-dealers, including "affiliated brokers," as that
term is defined in the Investment Company Act, that the Manager thinks, in its best
judgment based on all relevant factors, will implement the policy of the Fund to obtain, at
reasonable expense, the "best execution" of the Fund's portfolio transactions. "Best
execution" means prompt and reliable execution at the most favorable price obtainable for
the services provided. The Manager need not seek competitive commission bidding. However,
it is expected to be aware of the current rates of eligible brokers and to minimize the
commissions paid to the extent consistent with the interests and policies of the Fund as
established by its Board of Trustees.

Under the investment advisory agreement, in choosing brokers to execute portfolio
transactions for the Fund, the Manager may select brokers (other than affiliates) that
provide both brokerage and research services to the Fund. The commissions paid to those
brokers may be higher than another qualified broker would charge, if the Manager makes a
good faith determination that the commission is fair and reasonable in relation to the
services provided.

Brokerage Practices Followed by the Manager. The Manager allocates brokerage for the Fund
subject to the provisions of the investment advisory agreement and other applicable rules
and procedures described below.

The Manager's portfolio traders allocate brokerage based upon recommendations from
the Manager's portfolio managers, together with the portfolio traders' judgment as to the
execution capability of the broker or dealer. In certain instances, portfolio managers may
directly place trades and allocate brokerage. In either case, the Manager's executive
officers supervise the allocation of brokerage.

Most securities purchases made by the Fund are in principal transactions at net
prices. The Fund usually 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. Therefore, the Fund does not incur substantial brokerage costs. Portfolio
securities purchased from underwriters include a commission or concession paid by the
issuer to the underwriter in the price of the security. Portfolio securities purchased from
dealers include a spread between the bid and asked price. In an option transaction, the
Fund ordinarily uses the same broker for the purchase or sale of the option and any
transaction in the investment to which the option relates.

Other accounts advised by the Manager have investment policies similar to those of
the Fund. Those other accounts may purchase or sell the same securities as the Fund at the
same time as the Fund, which could affect the supply and price of the securities. If two or
more accounts advised by the Manager purchase the same security on the same day from the
same dealer, the transactions under those combined orders are averaged as to price and
allocated in accordance with the purchase or sale orders actually placed for each account.
When possible, the Manager tries to combine concurrent orders to purchase or sell the same
security by more than one of the accounts managed by the Manager or its affiliates. The
transactions under those combined orders are averaged as to price and allocated in
accordance with the purchase or sale orders actually placed for each account.

Rule 12b-1 under the Investment Company Act prohibits any fund from compensating a
broker or dealer for promoting or selling the fund's shares by (1) directing to that broker
or dealer any of the fund's portfolio transactions, or (2) directing any other remuneration
to that broker or dealer, such as commissions, mark-ups, mark downs or other fees from the
fund's portfolio transactions, that were effected by another broker or dealer (these latter
arrangements are considered to be a type of "step-out" transaction). In other words, a fund
and its investment adviser cannot use the fund's brokerage for the purpose of rewarding
broker-dealers for selling the fund's shares.

However, the Rule permits funds to effect brokerage transactions through firms that
also sell fund shares, provided that certain procedures are adopted to prevent a quid pro
quo with respect to portfolio brokerage allocations. As permitted by the Rule, the Manager
has adopted procedures (and the Fund's Board of Trustees has approved those procedures)
that permit the Fund to direct portfolio securities transactions to brokers or dealers that
also promote or sell shares of the Fund, subject to the "best execution" considerations
discussed above. Those procedures are designed to prevent: (1) the Manager's personnel who
effect the Fund's portfolio transactions from taking into account a broker's or dealer's
promotion or sales of the Fund shares when allocating the Fund's portfolio transactions,
and (2) the Fund, the Manager and the Distributor from entering into agreements or
understandings under which the Manager directs or is expected to direct the Fund's
brokerage directly, or through a "step-out" arrangement, to any broker or dealer in
consideration of that broker's or dealer's promotion or sale of the Fund's shares or the
shares of any of the other Oppenheimer funds.

The investment advisory agreement permits the Manager to allocate brokerage for
research services. The research services provided by a particular broker may be useful both
to the Fund and to one or more of the other accounts advised by the Manager or its
affiliates. Investment research may be supplied to the Manager by the broker or by a third
party at the instance of a broker through which trades are placed.

Investment research services include information and analysis on particular companies
and industries as well as market or economic trends and portfolio strategy, market
quotations for portfolio evaluations, analytical software and similar products and
services. If a research service also assists the Manager in a non-research capacity (such
as bookkeeping or other administrative functions), then only the percentage or component
that provides assistance to the Manager in the investment decision-making process may be
paid in commission dollars.

Although the Manager currently does not do so, the Board of Trustees may permit the
Manager to use stated commissions on secondary fixed-income agency trades to obtain
research if the broker represents to the Manager that: (i) the trade is not from or for the
broker's own inventory, (ii) the trade was executed by the broker on an agency basis at the
stated commission, and (iii) the trade is not a riskless principal transaction. The Board
of Trustees may also permit the Manager to use commissions on fixed-price offerings to
obtain research, in the same manner as is permitted for agency transactions.

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 to obtain market information for the valuation of
securities that are either held in the Fund's portfolio or are being considered for
purchase. The Manager provides information to the Board about the commissions paid to
brokers furnishing such services, together with the Manager's representation that the
amount of such commissions was reasonably related to the value or benefit of such services.

During the fiscal year ended December 31, 2003, 2004 and 2005, the Fund executed no
transactions and paid no commissions to firms that provide research services.

Distribution and Service Plans

The Distributor. Under its General Distributor's Agreement with the Fund, the Distributor
acts as the Fund's principal underwriter in the continuous public offering of the Fund's
classes 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. The Distributor is not obligated to sell a specific
number of shares.

The sales charges and concessions paid to, or retained by, the Distributor from the
sale of shares and the contingent deferred sales charges retained by the Distributor on the
redemption of shares during the Fund's three most recent fiscal years are shown in the
tables below.

-------------------------------------------------------------------------------
Fiscal Aggregate Class A Concessions Concessions Concessions
Front-End Front-End
Year Sales Sales on Class A on Class B on Class C
Ended Charges Charges Shares Shares Shares
12/31: on Class A Retained by Advanced by Advanced by Advanced by
Shares Distributor Distributor(1) Distributor(2Distributor(2)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2003 $8,983,346 $1,256,842 $790,325 $4,732,115 $608,374
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2004 $13,168,741 $1,926,707 $1,784,635 $3,862,535 $1,090,378
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2005 $24,702,276 $3,371,458 $3,765,306 $3,516,461 $2,296,364
-------------------------------------------------------------------------------
1. Includes amounts retained by a broker-dealer that is an affiliate or a parent of the
Distributor.
2. The Distributor advances concession payments to dealers for certain sales of Class A
shares and for sales of Class B and Class C shares from its own resources at the time of
sale.

-------------------------------------------------------------------------------
Fiscal Year Class A Contingent Class B Contingent Class C Contingent
Deferred Sales Deferred Sales Deferred Sales
Charges Retained by Charges Retained by Charges Retained by
Ended 12/31: Distributor Distributor Distributor
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2003 $117,684 $3,574,383 $79,710
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2004 $63,952 $2,288,830 $46,687
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2005 $58,123 $1,445,156 $131,436
-------------------------------------------------------------------------------

Distribution and Service Plans. The Fund has adopted a Service Plan for Class A shares and
Distribution and Service Plans for Class B and Class C shares under Rule 12b-1 of the
Investment Company Act. Under those plans the Fund pays the Distributor for all or a
portion of its costs incurred in connection with the distribution and/or servicing of the
shares of the particular class. Each 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 Plans, 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 Fund, to compensate brokers, dealers, financial institutions and other
intermediaries for providing distribution assistance and/or administrative services or that
otherwise promote sales of the Fund's shares. These payments, some of which may be
referred to as "revenue sharing," may relate to the Fund'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 Fund'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. A 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 that class.

The Board of Trustees and the Independent Trustees must approve all material
amendments to a plan. An amendment to increase materially the amount of payments to be made
under a plan must be approved by shareholders of the class affected by the amendment.
Because Class B shares of the Fund automatically convert into Class A shares 72 months
after purchase, the Fund must obtain the approval of both Class A and Class B shareholders
for a proposed material amendment to the Class A plan that would materially increase
payments under the plan. That approval must be by a majority of the shares of each class,
voting separately by class.

While the plans are in effect, the Treasurer of the Fund shall provide separate
written reports on the plans to the Board of Trustees at least quarterly for its review.
The reports shall detail the amount of all payments made under a plan, and the purpose for
which the payments were made. Those reports are subject to the review and approval of the
Independent Trustees.

Each plan states that while it is in effect, the selection and nomination of those
Trustees of the Fund who are not "interested persons" of the Fund 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 plans for a class, no payment will be made to any recipient in any period
in which the aggregate net asset value of all Fund shares of that class 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
currently limits aggregate payments under the Class A plan to 0.15% of average annual net
assets.

|X| Class A Service Plan Fees. Under the Class A service plan, the Distributor currently
uses the fees it receives from the Fund to pay brokers, dealers and other financial
institutions (they are referred to as "recipients") for personal services and account
maintenance services they provide for their customers who hold Class A shares. The services
include, among others, answering customer inquiries about the Fund, assisting in
establishing and maintaining accounts in the Fund, making the Fund's investment plans
available and providing other services at the request of the Fund or the Distributor. The
Class A service plan permits reimbursements to the Distributor at a rate of up to 0.25% of
average annual net assets of Class A shares, however, the Board has set the rate at 0.15%.
The Distributor does not receive or retain the service fee on Class A shares in accounts
for which the Distributor has been listed as the broker-dealer of record. While the plan
permits the Board to authorize payments to the Distributor to reimburse itself for services
under the plan, the Board has not yet done so. The Distributor makes payments to plan
recipients periodically at an annual rate currently not to exceed 0.15% of the average
annual net assets consisting of Class A shares held in the accounts of the recipients or
their customers.

For the fiscal year ended December 31, 2005 payments under the Class A plan totaled
$7,869,652 of which $20,899 was retained by the Distributor under the arrangement described
above, and included $54,531 paid to an affiliate of the Distributor's parent company. Any
unreimbursed expenses the Distributor incurs with respect to Class A shares for any fiscal
year may not be recovered in subsequent years. The Distributor may not use payments
received under the Class A plan to pay any of its interest expenses, carrying charges,
other financial costs or allocation of overhead.

|X| Class B and Class C Distribution and Service Plan Fees. Under each plan,
distribution and service fees are computed on the average of the net asset value of shares
in the respective class, determined as of the close of each regular business day during the
period. Each plan provides for the Distributor to be compensated at a flat rate, whether
the Distributor's distribution expenses are more or less than the amounts paid by the Fund
under the plan during the period for which the fee is paid. The types of services that
recipients provide are similar to the services provided under the Class A service plan,
described above.

Each plan permits the Distributor to retain both the asset-based sales charges and
the service fee on shares or to pay recipients the service fee on a periodic basis, without
payment in advance. However, the Distributor currently intends to pay the service fee to
recipients in advance for the first year after Class B and Class C shares are purchased.
After the first year shares are outstanding, after their purchase, the Distributor makes
service fee payments periodically on those shares. The advance payment is based on the net
asset value of shares sold. Shares purchased by exchange do not qualify for the advance
service fee payment. If Class B or Class C shares are redeemed during the first year after
their purchase, the recipient of the service fees on those shares will be obligated to
repay the Distributor a pro rata portion of the advance payment made on those shares. Class
B or Class C shares may not be purchased by an investor directly from the Distributor
without the investor designating another registered broker-dealer. If the investor no
longer has another broker-dealer of record for an existing account, the Distributor is
automatically designated as the broker-dealer of record, but solely for the purpose of
acting as the investor's agent to purchase the shares. In those cases, the Distributor
retains the asset-based sales charge paid on Class B and Class C shares, but does not
retain any service fees as to the assets represented by that account.

The asset-based sales charge and service fees increase Class B and Class C expenses
by 1.00% of the net assets per year of the respective class.

The Distributor retains the asset-based sales charge on Class B shares. The
Distributor retains the asset-based sales charge on Class C shares during the first year
the shares are outstanding. It pays the asset-based sales charge as an ongoing concession
to the recipient on Class C shares outstanding for a year or more. If a dealer has a
special agreement with the Distributor, the Distributor will pay the Class B and/or Class C
service fee and the asset-based sales charge to the dealer periodically in lieu of paying
the sales concession and service fee in advance at the time of purchase.

The asset-based sales charge on Class B and Class C shares allows investors to buy
shares without a front-end sales charge while allowing the Distributor to compensate
dealers that sell those shares. The Fund pays the asset-based sales charge to the
Distributor for its services rendered in distributing Class B and Class C shares. The
payments are made to the Distributor in recognition that the Distributor:
o pays sales concessions to authorized brokers and dealers at the time of sale and pays
service fees as described above,
o may finance payment of sales concessions and/or the advance of the service fee
payment to recipients under the plans, or may provide such financing from its own
resources or from the resources of an affiliate,
o employs personnel to support distribution of Class B and Class C shares,
o bears the costs of sales literature, advertising and prospectuses (other than those
furnished to current shareholders) and state "blue sky" registration fees and
certain other distribution expenses,
o may not be able to adequately compensate dealers that sell Class B and Class C shares
without receiving payment under the plans and therefore may not be able to offer
such Classes for sale absent the plans,
o receives payments under the plans consistent with the service fees and asset-based
sales charges paid by other non-proprietary funds that charge 12b-1 fees,
o may use the payments under the plan to include the Fund in various third-party
distribution programs that may increase sales of Fund shares,
o may experience increased difficulty selling the Fund's shares if payments under the
plan are discontinued because most competitor funds have plans that pay dealers
for rendering distribution services as much or more than the amounts currently
being paid by the Fund, and
o may not be able to continue providing, at the same or at a lesser cost, the same
quality distribution sales efforts and services, or to obtain such services from
brokers and dealers, if the plan payments were to be discontinued.

The Distributor's actual expenses in selling Class B and Class C shares may be more
than the payments it receives from the contingent deferred sales charges collected on
redeemed shares and from the Fund under the plans. If either the Class B or the Class C
plan is terminated by the Fund, the Board of Trustees may allow the Fund to continue
payments of the asset-based sales charge to the Distributor for distributing shares before
the plan was terminated.

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

Distribution and Service Fees Paid to the Distributor for the Fiscal Year Ended
12/31/2005
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class: Total Amount Distributor's Distributor's
Unreimbursed
Aggregate Expenses as %
Payments Retained by Unreimbursed of Net Assets
Under Plan Distributor Expenses Under Plan of Class
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class B Plan $10,057,295 $7,264,850(1) $36,609,338 3.83%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class C Plan $5,986,043 $1,369,787(2) $13,884,446 1.95%
---------------------------------------------------------------------------------
1. Includes $11,139 paid to an affiliate of the Distributor's parent company.
2. Includes $23,346 paid to an affiliate of the Distributor's parent company.

All payments under the Class B and the Class C plans are subject to the limitations
imposed by the Conduct Rules of the NASD on payments of asset-based sales charges and
service fees.

Payments to Fund Intermediaries

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

o depending on the share class that the investor selects, contingent deferred sales
charges or initial front-end sales charges, all or a portion of which
front-end sales charges are payable by the Distributor to financial
intermediaries (see "About Your Account" in the Prospectus);
o ongoing asset-based payments attributable to the share class selected, including fees
payable under the Fund's distribution and/or service plans adopted under Rule
12b-1 under the Investment Company Act, which are paid from the Fund's assets
and allocated to the class of shares to which the plan relates (see "About
the Fund -- Distribution and Service Plans" 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 Fund as reimbursement to the
Manager or Distributor for expenses they incur on behalf of the Fund.

o Payments made by the Manager or Distributor out of their respective resources and
assets, which may include profits the Manager derives from investment advisory
fees paid by the Fund. These payments are made at the discretion of the Manager
and/or the Distributor. These payments, often referred to as "revenue sharing"
payments, may be in addition to the payments by the Fund listed above.

o These types of payments may reflect compensation for marketing support, support
provided in offering the Fund or other Oppenheimer funds through certain
trading platforms and programs, transaction processing or other services;
o The Manager and Distributor each may also pay other compensation to the extent the
payment is not prohibited by law or by any self-regulatory agency, such as
the NASD. Payments are made based on the guidelines established by the
Manager and Distributor, subject to applicable law.

These payments may provide an incentive to financial intermediaries to actively
market or promote the sale of shares of the Fund or other Oppenheimer funds, or to support
the marketing or promotional efforts of the Distributor in offering shares of the Fund or
other Oppenheimer funds. In addition, some types of payments may provide a financial
intermediary with an incentive to recommend the Fund or a particular share class. 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 Fund's Prospectus and this SAI. You should ask your financial
intermediary for information about any payments it receives from the Fund, the Manager or
the Distributor and any services it provides, as well as the fees and commissions it
charges.

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

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

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

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

For the year ended December 31, 2005, the following financial intermediaries that are
broker-dealers offering shares of the Oppenheimer funds, and/or their respective
affiliates, received revenue sharing or similar distribution-related payments from the
Manager or Distributor for marketing or program support:

===================================================================================
Advantage Capital Corp./Financial Services Advest, Inc.
Corp.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Aegon USA Aetna Retirement Services, Inc.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
A.G. Edwards & Sons, Inc. AIG Life
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Allianz Life Insurance Company Allmerica Financial Life Insurance
and Annuity Co.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Allstate Financial Advisors American Enterprise Life Insurance
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
American General Securities, Inc. American General Annuity
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Ameriprise Financial Services, Inc. American Portfolio Financial
Services, Inc.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Ameritas Life Insurance Corporation Annuity Investors Life
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Associated Securities AXA Advisors
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Banc One Securities Corp. BNY Investment Center, Inc.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Cadaret Grant & Co. Inc. Charles Schwab - Great West Life
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Chase Investment Services Corp. CitiCorp Investment Services, Inc.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Citigroup Global Markets, Inc. (SSB) CitiStreet
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Citizens Bank of Rhode Island CJM Planning Corp.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Columbus Life Insurance Company Commonwealth Financial Network
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
CUNA Brokerage Services, Inc. CUSO Financial Services, L.P.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Federal Kemper Life Assurance Company Financial Network (ING)
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
First Global Capital GE Financial Assurance - GE Life &
Annuity
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Glenbrook Life and Annuity Co. Hartford
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
HD Vest HSBC Brokerage (USA) Inc.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
ING Financial Advisers ING Financial Partners
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Jefferson Pilot Life Insurance Company Jefferson Pilot Securities Corp.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
John Hancock Life Insurance Co. Kemper Investors Life Insurance Co.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Legend Equities Corp. Legg Mason
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Lincoln Benefit Life Lincoln Financial
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Lincoln Investment Planning, Inc. Lincoln National Life
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Linsco Private Ledger MassMutual Financial Group and
affiliates
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
McDonald Investments, Inc. Merrill Lynch & Co. and affiliates
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
MetLife and affiliates Minnesota Life Insurance Company
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Mony Life Insurance Co. Morgan Stanley Dean Witter, Inc.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Multi-Financial (ING) Mutual Service Corporation
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
National Planning Holdings, Inc. Nationwide and affiliates
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
NFP New York Life Securities, Inc.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Park Avenue Securities LLC PFS Investments, Inc.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Prime Capital Services, Inc. Primevest Financial Services, Inc.
(ING)
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Protective Life Insurance Co. Prudential Investment Management
Services LLC
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Raymond James & Associates Raymond James Financial Services
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
RBC Dain Rauscher Inc. Royal Alliance
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Securities America Inc. Security Benefit Life Insurance Co.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Sentra Securities Signator Investments
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Sun Life Assurance Company of Canada SunAmerica Securities, Inc.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
SunTrust Securities Thrivent
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Travelers Life & Annuity Co., Inc. UBS Financial Services Inc.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Union Central Life Insurance Company United Planners
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Valic Financial Advisors, Inc. Wachovia Securities LLC
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Walnut Street Securities (Met Life Network) Waterstone Financial Group
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Wells Fargo Investments, LLC
===================================================================================

For the year ended December 31, 2005, the following firms, which in some cases are
broker-dealers, received payments from the Manager or Distributor for administrative or
other services provided (other than revenue sharing arrangements), as described above:

===============================================================================
ABN AMRO FINANCIAL SERVICES INC. ACS HR SOLUTIONS LLC
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Administrative Management Group ADP Broker/Dealer Inc.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Aetna Financial Services Alliance Benefit Group
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
American Stock Transfer & Trust Co Ameriprise Financial Services, Inc.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Baden Retirement Plan Services LLC Banc One Securities Corp.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
BCG Securities Benefit Administration Company LLC
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Benefit Administration Inc. Benefit Plans Administrative Services
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Benetech Inc. Bisys Retirement Services
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Boston Financial Data Services Inc. Ceridian Retirement Plan Services
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Charles Schwab & Co Inc. Charles Schwab Trust Company
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Circle Trust Company Citigroup Global Markets Inc.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
CitiStreet City National Bank
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Columbia Funds Distributor Inc. CPI Qualified Plan Consultants Inc.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Daily Access.Com Inc. Digital Retirement Solutions
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
DST Systems Inc. Dyatech LLC
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Edgewood/Federated Investments ERISA Administrative Services Inc.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Expert Plan Inc. FASCorp
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
FBD Consulting Inc. Fidelity Institutional Operations Co.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Fidelity Investments First National Bank of Omaha
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
First Trust Corp. First Trust-Datalynx
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Franklin Templeton Geller Group LTD
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
GoldK Inc. Great West Life & Annuity Ins Co.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Hartford Life Insurance Co Hewitt Associates LLC
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
ICMA-RC Services LLC Independent Plan Coordinators Inc.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
ING Ingham Group
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Interactive Retirement Systems Invesco Retirement Plans
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Invesmart InWest Pension Management
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
John Hancock Life Insurance Co. JPMorgan Chase & Co
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
JPMorgan Chase Bank July Business Services
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Kaufman & Goble Leggette & Company Inc.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Lincoln National Life MassMutual Financial Group and
affiliates
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Matrix Settlement & Clearance Services Mellon HR Solutions
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Mercer HR Services Merrill Lynch & Co., Inc.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Metavante 401(k) Services Metlife Securities Inc.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
MFS Investment Management Mid Atlantic Capital Corp.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Milliman Inc. Morgan Stanley Dean Witter Inc.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
National City Bank National Financial Services Corp.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Nationwide Investment Service Corp. New York Life Investment Management
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Northeast Retirement Services Northwest Plan Services Inc.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Pension Administration and Consulting PFPC Inc.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Plan Administrators Inc. PlanMember Services Corporation
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Princeton Retirement Group Inc. Principal Life Insurance Co
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Programs for Benefit Plans Inc. Prudential Retirement Insurance &
Annuity Co
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Prudential Retirement Services PSMI Group
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Putnam Investments Quads Trust Company
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
RSM McGladrey Retirement Resources SAFECO
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Standard Insurance Co Stanley Hunt DuPree Rhine
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Stanton Group Inc. State Street Bank & Trust
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Strong Capital Management Inc. Symetra Investment Services Inc.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
T Rowe Price Associates Taylor Perky & Parker LLC
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Texas Pension Consultants The 401(K) Company
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
The Chicago Trust Company The Retirement Plan Company LLC
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
The Vanguard Group TruSource
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Unified Fund Services Inc. Union Bank & Trust Co. (Nebraska)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
USI Consulting Group (CT) Valic Retirement Services Co
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Wachovia Bank NA Web401k.com
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Wells Fargo Bank NA Wilmington Trust Company
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
WySTAR Global Retirement Solutions
===============================================================================

Performance of the Fund

Explanation of Performance Terminology. The Fund uses a variety of terms to illustrate its
performance. These terms include "standardized yield," "tax-equivalent yield," "dividend
yield," "average annual total return," "cumulative total return," "average annual total
return at net asset value" and "total return at net asset value." An explanation of how
yields and total returns are calculated is set forth below. The charts below show the
Fund's performance as of the Fund's most recent fiscal year end. You can obtain current
performance information by calling the Fund's Transfer Agent at 1.800.225.5677 or by
visiting the OppenheimerFunds Internet website at www.oppenheimerfunds.com.

The Fund'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. In general, any advertisement by the Fund of its performance
data must include the average annual total returns for the advertised class of shares of
the Fund.

Use of standardized performance calculations enables an investor to compare the
Fund's performance to the performance of other funds for the same periods. However, a
number of factors should be considered before using the Fund's performance information as a
basis for comparison with other investments:
o Yields and total returns measure the performance of a hypothetical account in the
Fund 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 and price than the shares used in
the model.
o The Fund's performance returns may not reflect the effect of taxes on dividends and
capital gains distributions.
o An investment in the Fund is not insured by the FDIC or any other government agency.
o The principal value of the Fund's shares, and its yields and total returns are not
guaranteed and normally will fluctuate on a daily basis.
o When an investor's shares are redeemed, they may be worth more or less than their
original cost.
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.

The performance of each class of shares is shown separately, because the performance
of each class of shares will usually be different. That is because of the different kinds
of expenses each class bears. The yields and total returns of each class of shares of the
Fund are affected by market conditions, the quality of the Fund's investments, the maturity
of those investments, the types of investments the Fund holds, and its operating expenses
that are allocated to the particular class.

|X| Yields. The Fund uses a variety of different yields to illustrate its current
returns. Each class of shares calculates its yield separately because of the different
expenses that affect each class.
o Standardized Yield. The "standardized yield" (sometimes referred to just as "yield")
is shown for a class of shares for a stated 30-day period. It is not based on actual
distributions paid by the Fund to shareholders in the 30-day period, but is a hypothetical
yield based upon the net investment income from the Fund's portfolio investments for that
period. It may therefore differ from the "dividend yield" for the same class of shares,
described below.

Standardized yield is calculated using the following formula set forth in rules
adopted by the SEC, designed to assure uniformity in the way that all funds calculate their
yields:

Standardized Yield = 2a-b +1)(6) -1]
[(
cd

The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense assumptions).
c = the average daily number of shares of that class outstanding during the 30-day
period that were entitled to receive dividends.
d = the maximum offering price per share of that class on the last day of the
period, adjusted for undistributed net investment income.

The standardized yield for a particular 30-day period may differ from the yield for
other periods. The SEC formula assumes that the standardized yield for a 30-day period
occurs at a constant rate for a six-month period and is annualized at the end of the
six-month period. Additionally, because each class of shares is subject to different
expenses, it is likely that the standardized yields of the Fund's classes of shares will
differ for any 30-day period.

o Dividend Yield. The Fund may quote a "dividend yield" for each class of its shares.
Dividend yield is based on the dividends paid on a class of shares during the actual
dividend period. To calculate dividend yield, the dividends of a class declared during a
stated period are added together, and the sum is multiplied by 12 (to annualize the yield)
and divided by the maximum offering price on the last day of the dividend period. The
formula is shown below:

Dividend Yield = dividends paid x 12/maximum offering price (payment date)

The maximum offering price for Class A shares includes the current maximum initial
sales charge. The maximum offering price for Class B and Class C shares is the net asset
value per share, without considering the effect of contingent deferred sales charges. There
is no sales charge on Class Y shares. The Class A dividend yield may also be quoted without
deducting the maximum initial sales charge.

o Tax-Equivalent Yield. The "tax-equivalent yield" of a class of shares is the
equivalent yield that would have to be earned on a taxable investment to achieve the
after-tax results represented by the Fund's tax-equivalent yield. It adjusts the Fund's
standardized yield, as calculated above, by a stated tax rate. Using different tax rates
to show different tax equivalent yields shows investors in different tax brackets the tax
equivalent yield of the Fund based on their own tax bracket.

The tax-equivalent yield is based on a 30-day period, and is computed by dividing the
tax-exempt portion of the Fund's current yield (as calculated above) by one minus a stated
income tax rate. The result is added to the portion (if any) of the Fund's current yield
that is not tax-exempt.

The tax-equivalent yield may be used to compare the tax effects of income derived
from the Fund 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 Fund's Yields for the 30-Day Periods Ended 12/31/2005
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class of Standardized Yield Dividend Yield Tax-Equivalent Yield
(40.01%Combined
Federal/New York Tax
Shares Bracket)(1)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Without After Without After Without After
Sales Sales Sales Sales Sales
Charge Charge Charge Charge Sales Charge Charge
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class A 4.49% 4.27% 5.25% 5.01% 7.48% 7.12%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class B 3.60% N/A 4.13% N/A 6.01% N/A
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class C 3.62% N/A 4.15% N/A 6.03% N/A
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class Y 4.59% N/A 5.39% N/A 7.66% N/A
--------------------------------------------------------------------------------
1. The tax-equivalent yield calculation assumes that the investor is taxed just below the
highest federal income tax bracket (currently 35%) and also assumes the 2005 combined
federal and New York State rates (regardless of whether a switch to non-taxable
investments would cause a lower bracket to apply).

|X| Total Return Information. There are different types of "total returns" to
measure the Fund's performance. Total return is the change in value of a hypothetical
investment in the Fund 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. Because of differences in expenses for each class of shares, the
total returns for each class are separately measured. The cumulative total return measures
the change in value over the entire period (for example, 10 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 Fund uses standardized calculations for its
total returns as prescribed by the SEC. The methodology is discussed below.

In calculating total returns for Class A shares, the current maximum sales charge of
4.75% (as a percentage of the offering price) is deducted from the initial investment ("P"
in the formula below) (unless the return is shown without sales charge, as described
below). For Class B shares, payment of the applicable contingent deferred sales charge is
applied, depending on the period for which the return is shown: 5.0% in the first year,
4.0% in the second year, 3.0% in the third and fourth years, 2.0% in the fifth year, 1.0%
in the sixth year and none thereafter. For Class C shares, the 1.0% contingent deferred
sales charge is deducted for returns for the one-year period. There is no sales charge on
Class Y shares.

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" in the formula) to
achieve an Ending Redeemable Value ("ERV" in the formula) of that investment, according to
the following formula:

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

o Average Annual Total Return (After Taxes on Distributions). The "average annual total
return (after taxes on distributions)" of Class A shares is an average annual compounded
rate of return for each year in a specified number of years, adjusted to show the effect of
federal taxes (calculated using the highest individual marginal federal income tax rates in
effect on any reinvestment date) on any distributions made by the Fund during the specified
period. 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" in the
formula) to achieve an ending value ("ATVD" in the formula) of that investment, after
taking into account the effect of taxes on Fund distributions, but not on the redemption of
Fund shares, according to the following formula:

- 1 = Average Annual Total Return (After Taxes on
ATVD l/n Distributions)
P

o Average Annual Total Return (After Taxes on Distributions and Redemptions). The
"average annual total return (after taxes on distributions and redemptions)" of Class A
shares is an average annual compounded rate of return for each year in a specified number
of years, adjusted to show the effect of federal taxes (calculated using the highest
individual marginal federal income tax rates in effect on any reinvestment date) on any
distributions made by the Fund during the specified period and the effect of capital gains
taxes or capital loss tax benefits (each calculated using the highest federal individual
capital gains tax rate in effect on the redemption date) resulting from the redemption of
the shares at the end of the period. 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" in the formula) to achieve an ending value ("ATVDR" in the formula) of that
investment, after taking into account the effect of taxes on fund distributions and on the
redemption of Fund shares, according to the following formula:

ATVDR - 1 = Average Annual Total Return (After Taxes on Distributions
l/n and Redemptions)
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

o Total Returns at Net Asset Value. From time to time the Fund may also quote a
cumulative or an average annual total return "at net asset value" (without deducting sales
charges) for each class of shares. There is no sales charge on Class Y shares. Each is
based on the difference in net asset value per share at the beginning and the end of the
period for a hypothetical investment in that class of shares (without considering front-end
or contingent deferred sales charges) and takes into consideration the reinvestment of
dividends and capital gains distributions.

-----------------------------------------------------------------------------------
The Fund's Total Returns for the Periods Ended 12/31/2005
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Class of Cumulative Total Average Annual Total Returns
Returns
(10 Years or
life-of-class,
Shares if less)
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
1-Year 5-Year 10-Year
(or life of
class) (or life of class)
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
After Without After Without After Without After Without
Sales Sales Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge Charge Charge
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Class 74.23% 82.95% 3.60% 8.76% 5.90% 6.94% 5.71% 6.23%
A(1)
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Class B 63.98%(2)63.98%(2) 2.77% 7.77% 5.69% 6.01% 5.79%(2) 5.79%(2)
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Class C 59.97%(3)59.97%(3) 6.78% 7.78% 6.01% 6.01% 5.49%(3) 5.49%(3)
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Class Y 53.36%(4)53.36%(4) 8.93% 8.93% 7.07%(4) 7.07%(4) 7.83% 7.83%
-----------------------------------------------------------------------------------
1. Inception of Class A: 5/15/86
2. Inception of Class B: 3/17/97
3. Inception of Class C: 3/17/97
4. Inception of Class Y: 4/28/00

---------------------------------------------------------------------------
Average Annual Total Returns for Class A Shares (After Sales Charge)
For the Periods Ended 12/31/2005
---------------------------------------------------------------------------
---------------------------------------------------------------------------
1-Year 5-Year 10-Year
---------------------------------------------------------------------------
---------------------------------------------------------------------------
After Taxes on Distributions 3.60% 5.90% 5.71%
---------------------------------------------------------------------------
---------------------------------------------------------------------------
After Taxes on 4.27% 5.90% 5.73%
Distributions and
Redemption of Fund Shares
---------------------------------------------------------------------------

Other Performance Comparisons. The Fund compares its performance annually to that of an
appropriate broadly-based market index in its Annual Report to shareholders. You can obtain
that information by contacting the Transfer Agent at the addresses or telephone numbers
shown on the cover of this SAI. The Fund may also compare its performance to that of other
investments, including other mutual funds, or use rankings of its performance by
independent ranking entities. Examples of these performance comparisons are set forth below.

|X| Lipper Rankings. From time to time the Fund may publish the ranking of the
performance of its classes of shares by Lipper, Inc. ("Lipper"). Lipper is a
widely-recognized
independent mutual fund monitoring service. Lipper monitors the performance of regulated
investment companies, including the Fund, and ranks their performance for various periods
in categories based on investment styles. The Lipper performance rankings are based on
total returns that include the reinvestment of capital gain distributions and income
dividends but do not take sales charges or taxes into consideration. Lipper also publishes
"peer-group" indices of the performance of all mutual funds in a category that it monitors
and averages of the performance of the funds in particular categories.

|X| Morningstar Ratings. From time to time the Fund may publish the star rating of the
performance of its classes of shares by Morningstar, Inc., an independent mutual fund
monitoring service. Morningstar rates and ranks mutual funds in broad investment
categories: domestic stock funds, international stock funds, taxable bond funds and
municipal bond funds. The Fund is ranked among muni New York long-term funds.

Morningstar proprietary star ratings reflect historical risk-adjusted total
investment return. For each fund with at least a three-year history, Morningstar calculates
a Morningstar Rating(TM)based on a Morningstar Risk-Adjusted Return measure that accounts for
variation in a fund's monthly performance (including the effects of sales charges, loads,
and redemption fees), placing more emphasis on downward variations and rewarding consistent
performance. The top 10% of funds in each category receive 5 stars, the next 22.5%
receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the
bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within
this scale and rated separately, which may cause slight variations in the distribution
percentages.) The Overall Morningstar Rating for a fund is derived from a weighted average
of the performance figures associated with its three-, five-and ten-year (if applicable)
Morningstar Rating metrics.

|X| Performance Rankings and Comparisons by Other Entities and Publications. From
time to time the Fund may include in its advertisements and sales literature performance
information about the Fund cited in newspapers and other periodicals such as The New York
Times, The Wall Street Journal, Barron's, or similar publications. That information may
include performance quotations from other sources, including Lipper and Morningstar. The
performance of the Fund's classes of shares may be compared in publications to the
performance of various market indices or other investments, and averages, performance
rankings or other benchmarks prepared by recognized mutual fund statistical services.

Investors may also wish to compare the returns on the Fund's share classes to the
return on fixed-income investments available from banks and thrift institutions. Those
include certificates of deposit, ordinary interest-paying checking and savings accounts,
and other forms of fixed or variable time deposits, and various other instruments such as
Treasury bills. However, the Fund's returns and share price are not guaranteed or insured
by the FDIC or any other agency and will fluctuate daily, while bank depository obligations
may be insured by the FDIC and may provide fixed rates of return. Repayment of principal
and payment of interest on Treasury securities is backed by the full faith and credit of
the U.S. government.

From time to time, the Fund may publish rankings or ratings of the Manager or
Transfer Agent, and of the investor services provided by them to shareholders of the
Oppenheimer funds, other than performance rankings of the Oppenheimer funds themselves.
Those ratings or rankings of shareholder and investor services by third parties may include
comparisons of their services to those provided by other mutual fund families selected by
the rating or ranking services. They may be based upon the opinions of the rating or
ranking service itself, using its research or judgment, or based upon surveys of investors,
brokers, shareholders or others.

From time to time the Fund may include in its advertisements and sales literature the
total return performance of a hypothetical investment account that includes shares of the
Fund 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 Fund and the total return performance of other Oppenheimer funds
included in the account. Additionally, from time to time, the Fund'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 Fund.

ABOUT YOUR ACCOUNT

How to Buy Shares

Additional information is presented below about the methods that can be used to buy shares
of the Fund. Appendix C contains more information about the special sales charge
arrangements offered by the Fund, and the circumstances in which sales charges may be
reduced or waived for certain classes of investors.

When you purchase shares of the Fund, your ownership interest in the shares of the Fund
will be recorded as a book entry on the records of the Fund. The Fund will not issue or
re-register physical share certificates.

AccountLink. When shares are purchased through AccountLink, each purchase must be at least
$50 and shareholders must invest at least $500 before an Asset Builder Plan (described
below) can be established on a new account. Accounts established prior to November 1, 2002
will remain at $25 for additional purchases. Shares will be purchased on the regular
business day the Distributor is instructed to initiate the Automated Clearing House ("ACH")
transfer to buy the shares. Dividends will begin to accrue on shares purchased with the
proceeds of ACH transfers on the business day the Fund receives Federal Funds for the
purchase through the ACH system before the close of the New York Stock Exchange (the
"NYSE"). The NYSE normally closes at 4:00 p.m., but may close earlier on certain days. If
Federal Funds are received on a business day after the close of the NYSE, the shares will
be purchased and dividends will begin to accrue on the next regular business day. The
proceeds of ACH transfers are normally received by the Fund three days after the transfers
are initiated. If the proceeds of the ACH transfer are not received on a timely basis, the
Distributor reserves the right to cancel the purchase order. The Distributor and the Fund
are not responsible for any delays in purchasing shares resulting from delays in ACH
transmissions.

Reduced Sales Charges. As discussed in the Prospectus, a reduced sales charge rate may be
obtained for Class A shares under Right of Accumulation and Letters of Intent because of
the economies of sales efforts and reduction in expenses realized by the Distributor,
dealers and brokers making such sales. No sales charge is imposed in certain other
circumstances described in Appendix C to this SAI because the Distributor or dealer or
broker incurs little or no selling expenses.

|X| The Oppenheimer Funds. The Oppenheimer funds are those mutual funds for which the
Distributor acts as the distributor and currently include the following:

Oppenheimer AMT-Free Municipals Oppenheimer Limited Term Municipal Fund
Oppenheimer AMT-Free New York
Municipals Oppenheimer Main Street Fund
Oppenheimer Balanced Fund Oppenheimer Main Street Opportunity Fund
Oppenheimer Core Bond Fund Oppenheimer Main Street Small Cap Fund
Oppenheimer California Municipal
Fund Oppenheimer MidCap Fund
Oppenheimer Capital Appreciation Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Capital Income Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Principal Protected Main
Oppenheimer Champion Income Fund Street Fund
Oppenheimer Principal Protected Main
Oppenheimer Convertible Securities Fund Street Fund II
Oppenheimer Principal Protected Main
Oppenheimer Developing Markets Fund Street Fund III
Oppenheimer Disciplined Allocation Fund Oppenheimer Quest Balanced Fund
Oppenheimer Quest Capital Value Fund,
Oppenheimer Discovery Fund Inc.

Oppenheimer Dividend Growth Fund Oppenheimer Limited-Term Government Fund
Oppenheimer Quest International Value
Oppenheimer Emerging Growth Fund Fund, Inc.
Oppenheimer Emerging Technologies Fund Oppenheimer Quest Opportunity Value Fund
Oppenheimer Enterprise Fund Oppenheimer Quest Value Fund, Inc.
Oppenheimer Equity Fund, Inc. Oppenheimer Real Estate Fund
Oppenheimer Rochester National
Oppenheimer Global Fund Municipals
Oppenheimer Global Opportunities Fund Oppenheimer Select Value Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Growth Fund Oppenheimer Small- & Mid- Cap Value Fund
Oppenheimer High Yield Fund Oppenheimer Strategic Income Fund
Oppenheimer International Bond Fund Oppenheimer Total Return Bond Fund
Oppenheimer International Diversified Fund Oppenheimer U.S. Government Trust
Oppenheimer International Growth Fund Oppenheimer Value Fund
Oppenheimer International Small Company
Fund Limited-Term New York Municipal Fund
Oppenheimer International Value Fund Rochester Fund Municipals
Oppenheimer Limited Term California
Municipal Fund Oppenheimer Portfolio Series:
Active Allocation Fund
Aggressive Investor Fund
Conservative Investor Fund
Moderate Investor Fund
And the following money market funds:

Oppenheimer Cash Reserves Centennial Money Market Trust
Oppenheimer Money Market Fund, Inc. Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust Centennial Tax Exempt Trust
Centennial Government Trust

There is an initial sales charge on the purchase of Class A shares of each of the
Oppenheimer funds described above except the money market funds. Under certain
circumstances described in this SAI, redemption proceeds of certain money market fund
shares may be subject to a contingent deferred sales charge.

Letters of Intent. Under a Letter of Intent ("Letter"), you can reduce the sales charge
rate that applies to your purchases of Class A shares if you purchase Class A, Class B
or Class C shares of the Fund or other Oppenheimer funds during a 13-month period. The
total amount of your purchases of Class A, Class B and Class C shares will determine the
sales charge rate that applies to your Class A share purchases during that period. You
can choose to include purchases that you made up to 90 days before the date of the
Letter. Class A shares of Oppenheimer Money Market Fund, Inc. and Oppenheimer Cash
Reserves on which you have not paid a sales charge and any Class N shares you purchase,
or may have purchased, will not be counted towards satisfying the purchases specified in
a Letter.

A Letter is an investor's statement in writing to the Distributor of his or her
intention to purchase a specified value of Class A, Class B and Class C shares of the
Fund and other Oppenheimer funds during a 13-month period (the "Letter period"). At the
investor's request, this may include purchases made up to 90 days prior to the date of
the Letter. The Letter states the investor's intention to make the aggregate amount of
purchases of shares which will equal or exceed the amount specified in the Letter.
Purchases made by reinvestment of dividends or capital gains distributions and purchases
made at net asset value (i.e. without paying a front-end or contingent deferred sales
charge) do not count toward satisfying the amount of the Letter.

Each purchase of Class A shares under the Letter will be made at the offering price
(including the sales charge) that would apply to a single lump-sum purchase of shares in
the amount intended to be purchased under the Letter.

In submitting a Letter, the investor makes no commitment to purchase shares. However,
if the investor's purchases of shares within the Letter period, when added to the value (at
offering price) of the investor's holdings of shares on the last day of that period, do not
equal or exceed the intended purchase amount, the investor agrees to pay the additional
amount of sales charge applicable to such purchases. That amount is described in "Terms of
Escrow," below (those terms may be amended by the Distributor from time to time). The
investor agrees that shares equal in value to 5% of the intended purchase amount will be
held in escrow by the Transfer Agent subject to the Terms of Escrow. Also, the investor
agrees to be bound by the terms of the Prospectus, this SAI and the application used for a
Letter. If those terms are amended, as they may be from time to time by the Fund, the
investor agrees to be bound by the amended terms and that those amendments will apply
automatically to existing Letters.

If the total eligible purchases made during the Letter period do not equal or exceed
the intended purchase amount, the concessions previously paid to the dealer of record for
the account and the amount of sales charge retained by the Distributor will be adjusted to
the rates applicable to actual total purchases. If total eligible purchases during the
Letter period exceed the intended purchase amount and exceed the amount needed to qualify
for the next sales charge rate reduction set forth in the Prospectus, the sales charges
paid will be adjusted to the lower rate. That adjustment will be made only if and when the
dealer returns to the Distributor the excess of the amount of concessions allowed or paid
to the dealer over the amount of concessions that apply to the actual amount of purchases.
The excess concessions returned to the Distributor will be used to purchase additional
shares for the investor's account at the net asset value per share in effect on the date of
such purchase, promptly after the Distributor's receipt thereof.

The Transfer Agent will not hold shares in escrow for purchases of shares of the Fund
and other Oppenheimer funds by OppenheimerFunds prototype 401(k) plans under a Letter. If
the intended purchase amount under a Letter entered into by an OppenheimerFunds prototype
401(k) plan is not purchased by the plan by the end of the Letter period, there will be no
adjustment of concessions paid to the broker-dealer or financial institution of record for
accounts held in the name of that plan.

In determining the total amount of purchases made under a Letter, shares redeemed by
the investor prior to the termination of the Letter period will be deducted. It is the
responsibility of the dealer of record and/or the investor to advise the Distributor about
the Letter when placing any purchase orders for the investor during the Letter period. All
of such purchases must be made through the Distributor.

|X| Terms of Escrow That Apply to Letters of Intent.

1. Out of the initial purchase (or subsequent purchases if necessary) made pursuant
to a Letter, shares of the Fund equal in value up to 5% of the intended purchase amount
specified in the Letter shall be held in escrow by the Transfer Agent. For example, if the
intended purchase amount is $50,000, the escrow shall be shares valued in the amount of
$2,500 (computed at the offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited to the investor's
account.

2. If the total minimum investment specified under the Letter is completed within the
13-month Letter period, the escrowed shares will be promptly released to the investor.

3. If, at the end of the 13-month Letter period the total purchases pursuant to the
Letter are less than the intended purchase amount specified in the Letter, the investor
must remit to the Distributor an amount equal to the difference between the dollar amount
of sales charges actually paid and the amount of sales charges which would have been paid
if the total amount purchased had been made at a single time. That sales charge adjustment
will apply to any shares redeemed prior to the completion of the Letter. If the difference
in sales charges is not paid within twenty days after a request from the Distributor or the
dealer, the Distributor will, within sixty days of the expiration of the Letter, redeem the
number of escrowed shares necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released from escrow. If a
request is received to redeem escrowed shares prior to the payment of such additional sales
charge, the sales charge will be withheld from the redemption proceeds.

4. By signing the Letter, the investor irrevocably constitutes and appoints the
Transfer Agent as attorney-in-fact to surrender for redemption any or all escrowed shares.

5. The shares eligible for purchase under the Letter (or the holding of which may be
counted toward completion of a Letter) include:
(a) Class A shares sold with a front-end sales charge or subject to a Class A contingent
deferred sales charge,
(b) Class B and Class C shares of other Oppenheimer funds acquired subject to a
contingent deferred sales charge, and
(c) Class A , Class B or Class C shares acquired by exchange of either (1) Class A shares
of one of the other Oppenheimer funds that were acquired subject to a Class A
initial or contingent deferred sales charge or (2) Class B or Class C shares of
one of the other Oppenheimer funds that were acquired subject to a contingent
deferred sales charge.

6. Shares held in escrow hereunder will automatically be exchanged for shares of
another fund to which an exchange is requested, as described in the section of the
Prospectus entitled "How to Exchange Shares" and the escrow will be transferred to that
other fund.

Asset Builder Plans. As explained in the Prospectus, you must initially establish your
account with $500. Subsequently, you can establish an Asset Builder Plan to automatically
purchase additional shares directly from a bank account for as little as $50. For those
accounts established prior to November 1, 2002 and which have previously established Asset
Builder Plans, additional purchases will remain at $25. Shares purchased by Asset Builder
Plan payments from bank accounts are subject to the redemption restrictions for recent
purchases described in the Prospectus. Asset Builder Plans are available only if your bank
is an ACH member. Asset Builder Plans may not be used to buy shares for OppenheimerFunds
employer-sponsored qualified retirement accounts.

If you make payments from your bank account to purchase shares of the Fund, your bank
account will be debited automatically. Normally the debit will be made two business days
prior to the investment dates you selected on your application. Neither the Distributor,
the Transfer Agent or the Fund shall be responsible for any delays in purchasing shares
that result from delays in ACH transmissions.

Before you establish Asset Builder payments, you should obtain a prospectus of the
selected fund(s) from your financial advisor (or the Distributor) and request an
application from the Distributor. Complete the application and return it. You may change
the amount of your Asset Builder payment or you can terminate these automatic investments
at any time by writing to the Transfer Agent. The Transfer Agent requires a reasonable
period (approximately 10 days) after receipt of your instructions to implement them. The
Fund reserves the right to amend, suspend or discontinue offering Asset Builder plans at
any time without prior notice.

Cancellation of Purchase Orders. Cancellation of purchase orders for the Fund's shares (for
example, when a purchase check is returned to the Fund unpaid) causes a loss to be incurred
when the net asset values of the Fund's shares on the cancellation date is less than on the
purchase date. That loss is equal to the amount of the decline in the net asset value per
share multiplied by the number of shares in the purchase order. The investor is responsible
for that loss. If the investor fails to compensate the Fund for the loss, the Distributor
will do so. The Fund may reimburse the Distributor for that amount by redeeming shares from
any account registered in that investor's name, or the Fund or the Distributor may seek
other redress.

Classes of Shares. Each class of shares of the Fund represents an interest in the same
portfolio of investments of the Fund. However, each class has different shareholder
privileges and features. The net income attributable to Class B or Class C shares and the
dividends payable on Class B or Class C shares will be reduced by incremental expenses
borne solely by that class. Those expenses include the asset-based sales charges to which
Class B and Class C are subject.

The availability of different classes of shares permits an investor to choose the
method of purchasing shares that is more appropriate for the investor. That may depend on
the amount of the purchase, the length of time the investor expects to hold shares, and
other relevant circumstances. Class A shares normally are sold subject to an initial sales
charge. While Class B and Class C shares have no initial sales charge, the purpose of the
deferred sales charge and asset-based sales charge on Class B and Class C shares is the
same as that of the initial sales charge on Class A shares - to compensate the Distributor
and brokers, dealers and financial institutions that sell shares of the Fund. A salesperson
who is entitled to receive compensation from his or her firm for selling Fund shares may
receive different levels of compensation for selling one class of shares rather than
another.

The Distributor will not accept a purchase order of more than $100,000 for Class B shares
or a purchase order of $1 million or more to purchase Class C shares on behalf of a single
investor (not including dealer "street name" or omnibus accounts).

Class B or Class C shares may not be purchased by a new investor directly from the
Distributor without the investor designating another registered broker-dealer.

|X| Class B Conversion. Under current interpretations of applicable federal income
tax law by the Internal Revenue Service, the conversion of Class B shares to Class A shares
72 months after purchase is not treated as a taxable event for the shareholder. If those
laws or the IRS interpretation of those laws should change, the automatic conversion
feature may be suspended. In that event, no further conversions of Class B shares would
occur while that suspension remained in effect. Although Class B shares could then be
exchanged for Class A shares on the basis of relative net asset value of the two classes,
without the imposition of a sales charge or fee, such exchange could constitute a taxable
event for the shareholder, and absent such exchange, Class B shares might continue to be
subject to the asset-based sales charge for longer than six years. Investors should consult
their tax advisers regarding the state and local tax consequences of the conversion or
exchange of shares.

|X| Allocation of Expenses. The Fund pays expenses related to its daily operations,
such as custodian fees, Trustees' fees, transfer agency fees, legal fees and auditing
costs. Those expenses are paid out of the Fund's assets and are not paid directly by
shareholders. However, those expenses reduce the net asset values of shares, and therefore
are indirectly borne by shareholders through their investment.

The methodology for calculating the net asset value, dividends and distributions of
the Fund's share classes recognizes two types of expenses. General expenses that do not
pertain specifically to any one class are allocated pro rata to the shares of all classes.
The allocation is based on the percentage of the Fund's total assets that is represented by
the assets of each class, and then equally to each outstanding share within a given class.
Such general expenses include management fees, legal, bookkeeping and audit fees, printing
and mailing costs of shareholder reports, Prospectuses, SAI and other materials for current
shareholders, fees to unaffiliated Trustees, custodian expenses, share issuance costs,
organization and start-up costs, interest, taxes and brokerage commissions, and
non-recurring expenses, such as litigation costs.

Other expenses that are directly attributable to a particular class are allocated
equally to each outstanding share within that class. Examples of such expenses include
distribution and service plan (12b-1) fees, transfer and shareholder servicing agent fees
and expenses and shareholder meeting expenses (to the extent that such expenses pertain
only to a specific class).

Fund Account Fees. As stated in the Prospectus, a $12 annual "Minimum Balance Fee" is
assessed on each Fund account with a share balance valued under $500. The Minimum Balance
Fee is automatically deducted from each such Fund account in September.

Listed below are certain cases in which the Fund has elected, in its discretion, not to
assess the Fund Account Fees. These exceptions are subject to change:
o A fund account whose shares were acquired after September 30th of the prior year;
o A fund account that has a balance below $500 due to the automatic conversion of
shares from Class B to Class A shares. However, once all Class B shares held in the
account have been converted to Class A shares the new account balance may become
subject to the Minimum Balance Fee;
o Accounts of shareholders who elect to access their account documents electronically
via eDoc Direct;
o A fund account that has only certificated shares and, has a balance below $500 and is
being escheated;
o Accounts of shareholders that are held by broker-dealers under the NSCC Fund/SERV
system;
o Accounts held under the Oppenheimer Legacy Program and/or holding certain Oppenheimer
Variable Account Funds;
o Omnibus accounts holding shares pursuant to the Pinnacle, Ascender, Custom Plus,
Recordkeeper Pro and Pension Alliance Retirement Plan programs; and
o A fund account that falls below the $500 minimum solely due to market fluctuations
within the 12-month period preceding the date the fee is deducted.

To access account documents electronically via eDocs Direct, please visit the Service
Center on our website at www.oppenheimerfunds.com or call 1.888.470.0862 for instructions.

The Fund reserves the authority to modify Fund Account Fees in its discretion.

Determination of Net Asset Values Per Share. The net asset values per share of each class
of shares of the Fund are determined as of the close of business of the NYSE on each day
that the NYSE is open. The calculation is done by dividing the value of the Fund's net
assets attributable to a class by the number of shares of that class that are outstanding.
The NYSE normally closes at 4:00 p.m., Eastern time, but may close earlier on some other
days (for example, in case of weather emergencies or on days falling before a U.S.
holiday). All references to time in this SAI mean "Eastern time." The NYSE's most recent
annual announcement regarding holidays and days when the market may close early is
available on the NYSE's website at www.nyse.com.

Dealers other than NYSE members may conduct trading in municipal securities on days
on which the NYSE is closed (including weekends and holidays) or after 4:00 p.m. on a
regular business day. Because the Fund's net asset values will not be calculated on those
days, the Fund's net asset values per share may be significantly affected on such days when
shareholders may not purchase or redeem shares.

|X| Securities Valuation. The Fund's Board of Trustees has established procedures
for the valuation of the Fund's securities. In general those procedures are as follows:

o Long-term debt securities having a remaining maturity in excess of 60 days are valued
based on the mean between the "bid" and "asked" prices determined by a portfolio pricing
service approved by the Fund's Board of Trustees or obtained by the Manager from two active
market makers in the security on the basis of reasonable inquiry.
o The following securities are valued at the mean between the "bid" and "asked" prices
determined by a pricing service approved by the Fund's Board of Trustees or obtained by the
Manager from two active market makers in the security on the basis of reasonable inquiry:
(1) debt instruments that have a maturity of more than 397 days when issued,
(2) debt instruments that had a maturity of 397 days or less when issued and have a
remaining maturity of more than 60 days, and
(3) non-money market debt instruments that had a maturity of 397 days or less when issued
and which have a remaining maturity of 60 days or less.
o The following securities are valued at cost, adjusted for amortization of premiums
and accretion of discounts:
(1) money market debt securities held by a non-money market fund that had a maturity of
less than 397 days when issued that have a remaining maturity of 60 days or
less, and
(2) debt instruments held by a money market fund that have a remaining maturity of 397
days or less.

Securities (including restricted securities) not having readily-available market
quotations are valued at fair value determined under the Board's procedures. If the Manager
is unable to locate two market makers willing to give quotes, a security may be priced at
the mean between the "bid" and "asked" prices provided by a single active market maker
(which in certain cases may be the "bid" price if no "asked" price is available).

In the case of municipal securities, when last sale information is not generally
available, the Manager may use pricing services approved by the Board of Trustees. The
pricing service may use "matrix" comparisons to the prices for comparable instruments on
the basis of quality, yield and maturity. Other special factors may be involved (such as
the tax-exempt status of the interest paid by municipal securities). The Manager will
monitor the accuracy of the pricing services. That monitoring may include comparing prices
used for portfolio valuation to actual sales prices of selected securities.

Puts, calls, futures and municipal bond index futures are valued at the last sale
price on the principal exchange on which they are traded or on NASDAQ(R), as applicable, as
determined by a pricing service approved by the Board of Trustees or by the Manager. If
there were no sales that day, they shall be valued at the last sale price on the preceding
trading day if it is within the spread of the closing "bid" and "asked" prices on the
principal exchange or on NASDAQ(R)on the valuation date. If not, the value shall be the
closing bid price on the principal exchange or on NASDAQ(R)on the valuation date. If the
put, call or future is not traded on an exchange or on NASDAQ(R), it shall be valued by the
mean between "bid" and "asked" prices obtained by the Manager from two active market
makers. In certain cases that may be at the "bid" price if no "asked" price is available.

When the Fund writes an option, an amount equal to the premium received is included
in the Fund's Statement of Assets and Liabilities as an asset. An equivalent credit is
included in the liability section. The credit is adjusted ("marked-to-market") to reflect
the current market value of the option. In determining the Fund's gain on investments, if a
call written by the Fund is exercised, the proceeds are increased by the premium received.
If a call written by the Fund expires, the Fund has a gain in the amount of the premium. If
the Fund enters into a closing purchase transaction, it will have a gain or loss, depending
on whether the premium received was more or less than the cost of the closing transaction.
If the Fund exercises a put it holds, the amount the Fund receives on its sale of the
underlying investment is reduced by the amount of premium paid by the Fund.

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 Fund 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 Fund.
Checks may not be presented for payment at the offices of the Bank or the Fund's custodian.
This limitation does not affect the use of checks for the payment of bills or to obtain
cash at other banks. The Fund reserves the right to amend, suspend or discontinue offering
checkwriting privileges at any time. The Fund 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 Fund 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 Fund, its Transfer Agent and any bank through which the Fund's drafts
(checks) are payable to pay all checks drawn on the Fund 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 Fund and/or the Fund's bank; and
(6) acknowledges and agrees that neither the Fund nor its bank shall incur any liability
for that amendment or termination of checkwriting privileges or for redeeming
shares to pay checks reasonably believed by them to be genuine, or for returning
or not paying checks that have not been accepted for any reason.

Sending Redemption Proceeds by Federal Funds Wire. The Federal Funds wire of redemption
proceeds may be delayed if the Fund's custodian bank is not open for business on a day when
the Fund would normally authorize the wire to be made, which is usually the Fund'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 Fund is open for business. No
dividends will be paid on the proceeds of redeemed shares awaiting transfer by Federal
Funds wire.

Reinvestment Privilege. Within six months of a redemption, a shareholder may reinvest all
or part of the redemption proceeds of:
o Class A shares purchased subject to an initial sales charge or Class A shares on
which a contingent deferred sales charge was paid, or
o Class B shares that were subject to the Class B contingent deferred sales charge when
redeemed.

The reinvestment may be made without sales charge only in Class A shares of the Fund
or any of the other Oppenheimer funds into which shares of the Fund are exchangeable as
described in "How to Exchange Shares" below. Reinvestment will be at the net asset value
next computed after the Transfer Agent receives the reinvestment order. The shareholder
must ask the Transfer Agent for that privilege at the time of reinvestment. This privilege
does not apply to Class C or Class Y shares. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation.

Any capital gain that was realized when the shares were redeemed is taxable, and
reinvestment will not alter any capital gains tax payable on that gain. If there has been a
capital loss on the redemption, some or all of the loss may not be tax deductible,
depending on the timing and amount of the reinvestment. Under the Internal Revenue Code, if
the redemption proceeds of Fund shares on which a sales charge was paid are reinvested in
shares of the Fund or another of the Oppenheimer funds within 90 days of payment of the
sales charge, the shareholder's basis in the shares of the Fund that were redeemed may not
include the amount of the sales charge paid. That would reduce the loss or increase the
gain recognized from the redemption. However, in that case the sales charge would be added
to the basis of the shares acquired by the reinvestment of the redemption proceeds.

Payments "In Kind". The Prospectus states that payment for shares tendered for redemption
is ordinarily made in cash. However, under certain circumstances, the Board of Trustees of
the Fund may determine that it would be detrimental to the best interests of the remaining
shareholders of the Fund to make payment of a redemption order wholly or partly in cash. In
that case, the Fund may pay the redemption proceeds in whole or in part by a distribution
"in kind" of liquid securities from the portfolio of the Fund, in lieu of cash.

The Fund has elected to be governed by Rule 18f-1 under the Investment Company Act.
Under that rule, the Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day period for any one
shareholder. If shares are redeemed in kind, the redeeming shareholder might incur
brokerage or other costs in selling the securities for cash. The Fund will value securities
used to pay redemptions in kind using the same method the Fund uses to value its portfolio
securities described above under "Determination of Net Asset Values Per Share." That
valuation will be made as of the time the redemption price is determined.

Involuntary Redemptions. The Fund's Board of Trustees has the right to cause the
involuntary redemption of the shares held in any account if the aggregate net asset value
of those shares is less than $200 or such lesser amount as the Board may fix. The Board of
Trustees will not cause the involuntary redemption of shares in an account if the aggregate
net asset value of such shares has fallen below the stated minimum solely as a result of
market fluctuations. If the Board exercises this right, it may also fix the requirements
for any notice to be given to the shareholders in question (not less than 30 days). The
Board may alternatively set requirements for the shareholder to increase the investment, or
set other terms and conditions so that the shares would not be involuntarily redeemed.

Transfers of Shares. A transfer of shares to a different registration is not an event that
triggers the payment of sales charges. Therefore, shares are not subject to the payment of
a contingent deferred sales charge of any class at the time of transfer to the name of
another person or entity. It does not matter whether the transfer occurs by absolute
assignment, gift or bequest, as long as it does not involve, directly or indirectly, a
public sale of the shares. When shares subject to a contingent deferred sales charge are
transferred, the transferred shares will remain subject to the contingent deferred sales
charge. It will be calculated as if the transferee shareholder had acquired the transferred
shares in the same manner and at the same time as the transferring shareholder.

If less than all shares held in an account are transferred, and some but not all
shares in the account would be subject to a contingent deferred sales charge if redeemed at
the time of transfer, the priorities described in the Prospectus under "How to Buy Shares"
for the imposition of the Class B or Class C contingent deferred sales charge will be
followed in determining the order in which shares are transferred.

Special Arrangements for Repurchase of Shares from Dealers and Brokers. The Distributor is
the Fund's agent to repurchase its shares from authorized dealers or brokers on behalf of
their customers. Shareholders should contact their broker or dealer to arrange this type of
redemption. The repurchase price per share will be the net asset value next computed after
the Distributor receives an order placed by the dealer or broker. However, if the
Distributor receives a repurchase order from a dealer or broker after the close of the NYSE
on a regular business day, it will be processed at that day's net asset value if the order
was received by the dealer or broker from its customers prior to the time the NYSE closes.
Normally, the NYSE closes at 4:00 p.m., but may do so earlier on some days. Additionally,
the order must have been transmitted to and received by the Distributor prior to its close
of business that day (normally 5:00 p.m.).

Ordinarily, for accounts redeemed by a broker-dealer under this procedure, payment
will be made within three business days after the shares have been redeemed upon the
Distributor's receipt of the required redemption documents in proper form. The signature(s)
of the registered owners on the redemption documents must be guaranteed as described in the
Prospectus

Automatic Withdrawal and Exchange Plans. Investors owning shares of the Fund valued at
$5,000 or more can authorize the Transfer Agent to redeem shares (having a value of at
least $50) automatically on a monthly, quarterly, semi-annual or annual basis under an
Automatic Withdrawal Plan. Shares will be redeemed three business days prior to the date
requested by the shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made by check payable
to all shareholders of record. Payments must also be sent to the address of record for the
account and the address must not have been changed within the prior 30 days. Required
minimum distributions from OppenheimerFunds-sponsored retirement plans may not be arranged
on this basis.

Payments are normally made by check, but shareholders having AccountLink privileges
(see "How To Buy Shares") may arrange to have Automatic Withdrawal Plan payments
transferred to the bank account designated on the account application or by
signature-guaranteed instructions sent to the Transfer Agent. Shares are normally redeemed
pursuant to an Automatic Withdrawal Plan three business days before the payment transmittal
date you select in the account application. If a contingent deferred sales charge applies
to the redemption, the amount of the check or payment will be reduced accordingly.

The Fund cannot guarantee receipt of a payment on the date requested. The Fund
reserves the right to amend, suspend or discontinue offering these plans at any time
without prior notice. Because of the sales charge assessed on Class A share purchases,
shareholders should not make regular additional Class A share purchases while participating
in an Automatic Withdrawal Plan. Class B and Class C shareholders should not establish
automatic withdrawal plans, because of the potential imposition of the contingent deferred
sales charge on such withdrawals (except where the contingent deferred sales charge is
waived as described in Appendix C to this SAI).

By requesting an Automatic Withdrawal or Exchange Plan, the shareholder agrees to the
terms and conditions that apply to such plans, as stated below. These provisions may be
amended from time to time by the Fund and/or the Distributor. When adopted, any amendments
will automatically apply to existing Plans.

|X| Automatic Exchange Plans. Shareholders can authorize the Transfer Agent to
exchange a pre-determined amount of shares of the Fund for shares (of the same class) of
other Oppenheimer funds automatically on a monthly, quarterly, semi-annual or annual basis
under an Automatic Exchange Plan. The minimum amount that may be exchanged to each other
fund account is $50. Instructions should be provided on the OppenheimerFunds application or
signature-guaranteed instructions. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to Exchange Shares" in the
Prospectus and below in this SAI.

|X| Automatic Withdrawal Plans. Fund shares will be redeemed as necessary to meet
withdrawal payments. Shares acquired without a sales charge will be redeemed first. Shares
acquired with reinvested dividends and capital gains distributions will be redeemed next,
followed by shares acquired with a sales charge, to the extent necessary to make withdrawal
payments. Depending upon the amount withdrawn, the investor's principal may be depleted.
Payments made under these plans should not be considered as a yield or income on your
investment.

The Transfer Agent will administer the investor's Automatic Withdrawal Plan as agent
for the shareholder(s) (the "Planholder") who executed the plan authorization and
application submitted to the Transfer Agent. Neither the Fund nor the Transfer Agent shall
incur any liability to the Planholder for any action taken or not taken by the Transfer
Agent in good faith to administer the plan. Share certificates will not be issued for
shares of the Fund purchased for and held under the plan, but the Transfer Agent will
credit all such shares to the account of the Planholder on the records of the Fund. Any
share certificates held by a Planholder may be surrendered unendorsed to the Transfer Agent
with the plan application so that the shares represented by the certificate may be held
under the plan.

For accounts subject to Automatic Withdrawal Plans, distributions of capital gains
must be reinvested in shares of the Fund, which will be done at net asset value without a
sales charge. Dividends on shares held in the account may be paid in cash or reinvested.

Shares will be redeemed to make withdrawal payments at the net asset value per share
determined on the redemption date. Checks or AccountLink payments representing the proceeds
of Plan withdrawals will normally be transmitted three business days prior to the date
selected for receipt of the payment, according to the choice specified in writing by the
Planholder. Receipt of payment on the date selected cannot be guaranteed.

The amount and the interval of disbursement payments and the address to which checks
are to be mailed or AccountLink payments are to be sent may be changed at any time by the
Planholder by writing to the Transfer Agent. The Planholder should allow at least two
weeks' time after mailing such notification for the requested change to be put in effect.
The Planholder may, at any time, instruct the Transfer Agent by written notice to redeem
all, or any part of, the shares held under the plan. That notice must be in proper form in
accordance with the requirements of the then-current Prospectus of the Fund. In that case,
the Transfer Agent will redeem the number of shares requested at the net asset value per
share in effect and will mail a check for the proceeds to the Planholder.

The Planholder may terminate a Plan at any time by writing to the Transfer Agent. The
Fund may also give directions to the Transfer Agent to terminate a Plan. The Transfer Agent
will also terminate a Plan upon its receipt of evidence satisfactory to it that the
Planholder has died or is legally incapacitated. Upon termination of a Plan by the Transfer
Agent or the Fund, shares that have not been redeemed will be held in uncertificated form
in the name of the Planholder. The account will continue as a dividend-reinvestment,
uncertificated account unless and until proper instructions are received from the
Planholder, his or her executor or guardian, or another authorized person.

If the Transfer Agent ceases to act as transfer agent for the Fund, the Planholder
will be deemed to have appointed any successor transfer agent to act as agent in
administering the plan.

How to Exchange Shares

As stated in the Prospectus, shares of a particular class of Oppenheimer funds having more
than one class of shares may be exchanged only for shares of the same class of other
Oppenheimer funds. Shares of Oppenheimer funds that have a single class without a class
designation are deemed "Class A" shares for this purpose. You can obtain a current list
showing which funds offer which classes of shares by calling the Distributor.

o All of the Oppenheimer funds currently offer Class A, B, C, N and Y shares with the
following exceptions:

The following funds only offer Class A shares:
Centennial California Tax Exempt Trust Centennial New York Tax Exempt
Trust
Centennial Government Trust Centennial Tax Exempt Trust
Centennial Money Market Trust

The following funds do not offer Class N shares:
Limited Term New York Municipal Fund Oppenheimer Money Market Fund, Inc.
Oppenheimer AMT-Free Municipals Oppenheimer New Jersey Municipal Fund
Oppenheimer AMT-Free New York Municipals Oppenheimer Principal Protected Main
Street Fund II
Oppenheimer California Municipal Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer International Value Fund Oppenheimer Rochester National
Municipals
Oppenheimer Limited Term California Oppenheimer Senior Floating Rate Fund
Municipal Fund
Oppenheimer Limited Term Municipal Fund Rochester Fund Municipals

The following funds do not offer Class Y shares:
Limited Term New York Municipal Fund Oppenheimer Gold & Special Minerals Fund
Oppenheimer AMT-Free Municipals Oppenheimer Limited Term California
Municipal Fund
Oppenheimer AMT-Free New York Municipals Oppenheimer Limited Term Municipal Fund
Oppenheimer Balanced Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer California Municipal Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Capital Income Fund Oppenheimer Principal Protected Main
Street Fund
Oppenheimer Cash Reserves Oppenheimer Principal Protected Main
Street Fund II
Oppenheimer Champion Income Fund Oppenheimer Principal Protected Main
Street Fund III
Oppenheimer Convertible Securities Fund Oppenheimer Quest Capital Value Fund,
Inc.
Oppenheimer Disciplined Allocation Fund Oppenheimer Quest International Value
Fund, Inc.
Oppenheimer Dividend Growth Fund Oppenheimer Rochester National Municipals

o Oppenheimer Money Market Fund, Inc. only offers Class A and Class Y shares.
o Class B and Class C shares of Oppenheimer Cash Reserves are generally available only
by exchange from the same class of shares of other Oppenheimer funds or through
OppenheimerFunds-sponsored 401(k) plans.
o Class M shares of Oppenheimer Convertible Securities Fund may be exchanged only for
Class A shares of other Oppenheimer funds. They may not be acquired by exchange of
shares of any class of any other Oppenheimer funds except Class A shares of
Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves acquired by exchange
of Class M shares.
o Class A shares of Oppenheimer funds may be exchanged at net asset value for shares of
any money market fund offered by the Distributor. Shares of any money market fund
purchased without a sales charge may be exchanged for shares of Oppenheimer funds
offered with a sales charge upon payment of the sales charge. They may also be used
to purchase shares of Oppenheimer funds subject to an early withdrawal charge or
contingent deferred sales charge.
o Shares of the Fund acquired by reinvestment of dividends or distributions from any of
the other Oppenheimer funds 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 the same class of any of the other Oppenheimer funds into which you may
exchange shares.
o Shares of Oppenheimer Principal Protected Main Street Fund may be exchanged at net
asset value for shares of the same class of any of the other Oppenheimer funds into
which you may exchange shares. However, shareholders are not permitted to exchange
shares of other Oppenheimer funds for shares of Oppenheimer Principal Protected Main
Street Fund until after the expiration of the warranty period (8/5/2010).
o Shares of Oppenheimer Principal Protected Main Street Fund II may be exchanged at net
asset value for shares of the same class of any of the other Oppenheimer funds into
which you may exchange shares. However, shareholders are not permitted to exchange
shares of other Oppenheimer funds for shares of Oppenheimer Principal Protected Main
Street Fund II until after the expiration of the warranty period (3/3/2011).
o Shares of Oppenheimer Principal Protected Main Street Fund III may be exchanged at
net asset value for shares of the same class of any of the other Oppenheimer funds
into which you may exchange shares. However, shareholders are not permitted to
exchange shares of other Oppenheimer funds for shares of Oppenheimer Principal
Protected Main Street Fund III until after the expiration of the warranty period
(12/16/2011).

The Fund may amend, suspend or terminate the exchange privilege at any time. Although
the Fund 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.

|X| How Exchanges Affect Contingent Deferred Sales Charges. No contingent deferred
sales charge is imposed on exchanges of shares of any class purchased subject to a
contingent deferred sales charge, with the following exceptions:

o When Class A shares of any Oppenheimer fund (other than Oppenheimer Rochester
National Municipals and Rochester Fund Municipals) acquired by exchange of Class A shares
of any Oppenheimer fund purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months measured from the beginning of the calendar month of the initial
purchase of the exchanged Class A shares, the Class A contingent deferred sales charge is
imposed on the redeemed shares.

o When Class A shares of Oppenheimer Rochester National Municipals and Rochester Fund
Municipals acquired by exchange of Class A shares of any Oppenheimer fund purchased subject
to a Class A contingent deferred sales charge are redeemed within 24 months of the
beginning of the calendar month of the initial purchase of the exchanged Class A shares,
the Class A contingent deferred sales charge is imposed on the redeemed shares.

o If any Class A shares of another Oppenheimer fund that are exchanged for Class A
shares of Oppenheimer Senior Floating Rate Fund are subject to the Class A contingent
deferred sales charge of the other Oppenheimer fund at the time of exchange, the holding
period for that Class A contingent deferred sales charge will carry over to the Class A
shares of Oppenheimer Senior Floating Rate Fund acquired in the exchange. The Class A
shares of Oppenheimer Senior Floating Rate Fund acquired in that exchange will be subject
to the Class A Early Withdrawal Charge of Oppenheimer Senior Floating Rate Fund if they are
repurchased before the expiration of the holding period.

o When Class A shares of Oppenheimer Cash Reserves and Oppenheimer Money Market Fund,
Inc. acquired by exchange of Class A shares of any Oppenheimer fund purchased subject to a
Class A contingent deferred sales charge are redeemed within the Class A holding period of
the fund from which the shares were exchanged, the Class A contingent deferred sales charge
of the fund from which the shares were exchanged is imposed on the redeemed shares.

o Except with respect to the Class B shares described in the next two paragraphs, the
contingent deferred sales charge is imposed on Class B shares acquired by exchange if they
are redeemed within six years of the initial purchase of the exchanged Class B shares.

o With respect to Class B shares of Oppenheimer Limited Term California Municipal Fund,
Oppenheimer Limited-Term Government Fund, Oppenheimer Limited Term Municipal Fund, Limited
Term New York Municipal Fund and Oppenheimer Senior Floating Rate Fund, the Class B
contingent deferred sales charge is imposed on the acquired shares if they are redeemed
within five years of the initial purchase of the exchanged Class B shares.

o With respect to Class B shares of Oppenheimer Cash Reserves that were acquired
through the exchange of Class B shares initially purchased in the Oppenheimer Capital
Preservation Fund, the Class B contingent deferred sales charge is imposed on the acquired
shares if they are redeemed within five years of that initial purchase.

o With respect to Class C shares, the Class C contingent deferred sales charge is
imposed on Class C shares acquired by exchange if they are redeemed within 12 months of the
initial purchase of the exchanged Class C shares.

o When Class B or Class C shares are redeemed to effect an exchange, the priorities
described in "How To Buy Shares" in the Prospectus for the imposition of the Class B or
Class C contingent deferred sales charge will be followed in determining the order in which
the shares are exchanged. Before exchanging shares, shareholders should take into account
how the exchange may affect any contingent deferred sales charge that might be imposed in
the subsequent redemption of remaining shares.

Shareholders owning shares of more than one class must specify which class of shares
they wish to exchange.

|X| Limits on Multiple Exchange Orders. The Fund 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 shareholder
must have an existing account in the fund to which the exchange is to be made. Otherwise,
the investors 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 Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it. For example, if the receipt of multiple exchange requests from a
dealer might require the disposition of portfolio securities at a time or at a price that
might be disadvantageous to the Fund, the Fund may refuse the request.

When you exchange some or all of your shares from one fund to another, any special
account feature such as an Asset Builder Plan or Automatic Withdrawal Plan will be switched
to the new fund account unless you tell the Transfer Agent not to do so. However, special
redemption and exchange features such as Automatic Exchange Plans and Automatic Withdrawal
Plans cannot be switched to an account in Oppenheimer Senior Floating Rate Fund.

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 Oppenheimer 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. "Reinvestment
Privilege," above, discusses some of the tax consequences of reinvestment of redemption
proceeds in such cases. The Fund, the 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.

Dividends, Capital Gains and Taxes

Dividends and Distributions. Dividends will be payable on shares held of record at the time
of the previous determination of net asset value, or as otherwise described in "How to Buy
Shares." Daily dividends will not be declared or paid on newly purchased shares until such
time as Federal Funds (funds credited to a member bank's account at the Federal Reserve
Bank) are available from the purchase payment for such shares. Normally, purchase checks
received from investors are converted to Federal Funds on the next business day. Shares
purchased through dealers or brokers normally are paid for by the third business day
following the placement of the purchase order.

Shares redeemed through the regular redemption procedure will be paid dividends
through and including the day on which the redemption request is received by the Transfer
Agent in proper form. Dividends will be declared on shares repurchased by a dealer or
broker for three business days following the trade date (that is, up to and including the
day prior to settlement of the repurchase). If all shares in an account are redeemed, all
dividends accrued on shares of the same class in the account will be paid together with the
redemption proceeds.

The Fund's practice of attempting to pay dividends on Class A shares at a constant
level requires the Manager to monitor the Fund's portfolio and, if necessary, to select
higher-yielding securities when it is deemed appropriate to seek income at the level needed
to meet the target. Those securities must be within the Fund's investment parameters,
however. The Fund expects to pay dividends at a targeted level from its net investment
income and other distributable income without any impact on the net asset values per share.

Dividends, distributions and proceeds of the redemption of Fund shares represented by
checks returned to the Transfer Agent by the Postal Service as undeliverable will be
invested in shares of Oppenheimer Money Market Fund, Inc. Reinvestment will be made as
promptly as possible after the return of such checks to the Transfer Agent, to enable the
investor to earn a return on otherwise idle funds. Unclaimed accounts may be subject to
state escheatment laws, and the Fund and the Transfer Agent will not be liable to
shareholders or their representatives for compliance with those laws in good faith.

The amount of a distribution paid on a class of shares may vary from time to time
depending on market conditions, the composition of the Fund's portfolio, and expenses borne
by the Fund or borne separately by a class. Dividends are calculated in the same manner, at
the same time and on the same day for shares of each class. However, dividends on Class B
and Class C shares are expected to be lower than dividends on Class A shares. That is due
to the effect of the asset-based sales charge on Class B and Class C shares. Those
dividends will also differ in amount as a consequence of any difference in net asset value
among the different classes of shares.

Tax Status of the Fund's Dividends, Distributions and Redemptions of Shares. The federal
tax treatment of the Fund's distributions is briefly highlighted in the Prospectus. The
following is only a summary of certain additional tax considerations generally affecting
the Fund 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 Fund 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 Fund.

|X| Qualification as a Regulated Investment Company. The Fund 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 Fund 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 Fund 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 Fund to "pass through" its income and
realized capital gains to shareholders without having to pay tax on them. The Fund
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 Fund qualifies. The Fund might not meet
those tests in a particular year. If it does not qualify, the Fund 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
Fund's dividends would be taxable to shareholders.

To qualify as a regulated investment company, the Fund 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 Fund must also satisfy certain other
requirements of the Internal Revenue Code, some of which are described below.
Distributions by the Fund made during the taxable year or, under specified circumstances,
within 12 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 Fund 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 Fund 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 Fund's taxable year, at least 50% of the
value of the Fund'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 Fund must not have invested
more than 5% of the value of the Fund's total assets in securities of each such issuer and
the Fund 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 Fund controls and which are
engaged in the same or similar trades or businesses. For purposes of this test, obligations
issued or guaranteed by certain agencies or instrumentalities of the U.S. government are
treated as U.S. government securities.

|X| Excise Tax on Regulated Investment Companies. Under the Internal Revenue Code, by
December 31 each year, the Fund 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 Fund must pay an excise tax on the amounts not distributed. It is presently
anticipated that the Fund will meet those requirements. To meet this requirement, in
certain circumstances the Fund 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 Fund not to make such distributions at the required levels and to pay
the excise tax on the undistributed amounts. That would reduce the amount of income or
capital gains available for distribution to shareholders.

|X| Taxation of Fund Distributions. The Fund 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 Fund'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 Fund on municipal
securities will be excludable from gross income of shareholders for federal income tax
purposes. To the extent the Fund 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 Fund'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 Fund'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
Fund's income that was tax-exempt for a given period.

A portion of the exempt-interest dividends paid by the Fund 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 Fund.

A shareholder receiving a dividend from income earned by the Fund 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 Fund's dividends will not be eligible for the dividends-received deduction for
corporations. Shareholders receiving Social Security or railroad retirement 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 Fund qualifies as a regulated investment company under the
Internal Revenue Code, the Fund will also be exempt from New York corporate income and
franchise taxes. It will also be qualified under New York law to pay exempt-interest
dividends that will be exempt from New York State and New York City personal income taxes.
That exemption applies to the extent that the Fund's distributions are attributable to
interest on New York municipal securities. Distributions from the Fund attributable to
income from sources other than New York municipal securities and U.S. government
obligations will generally be subject to New York State and New York City personal income
taxes as ordinary income.

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

The Fund may either retain or distribute to shareholders its net capital gain for
each taxable year. The Fund 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 Fund before the shareholder acquired his or her shares.

If the Fund elects to retain its net capital gain, the Fund will be subject to tax on
it at the 35% corporate tax rate. If the Fund elects to retain its net capital gain, the
Fund 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 Fund 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 Fund will be treated in the manner described above regardless of
whether the distributions are paid in cash or reinvested in additional shares of the Fund
(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 Fund will be required in certain cases to withhold 28% of ordinary income
dividends (not including "exempt-interest dividends"), capital gains distributions 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 Fund that the shareholder
is not subject to backup withholding or is an "exempt recipient" (such as a corporation).
Any tax withheld by the Fund is remitted by the Fund to the U.S. Treasury and all income
and any tax withheld is identified in reports mailed to shareholders in January of each
year with a copy sent to the IRS.

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

In general, any gain or loss arising from the redemption of shares of the Fund will
be considered capital gain or loss, if the shares were held as a capital asset. It will be
long-term capital gain or loss if the shares were held for more than one year. However,
any capital loss arising from the redemption of shares held for six months or less will be
treated as a long-term capital loss to the extent of the amount of capital gain dividends
received on those shares. Special holding period rules under the Internal Revenue Code
apply in this case to determine the holding period of shares and there are limits on the
deductibility of capital losses in any year.

|X| Foreign Shareholders. Under U.S. tax law, taxation of a shareholder who is a foreign
person (to include, 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 Fund 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 Fund) from a mutual fund are not considered
"effectively connected" income.

Ordinary income dividends that are paid by the Fund (and are deemed not "effectively
connected income") to foreign persons will be subject to a U.S. tax withheld by the Fund at
a rate of 30%, provided the Fund 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 Fund. Any tax withheld by the Fund is remitted by the Fund 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 Fund 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 Fund 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 Fund 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 by the Fund is remitted by the Fund 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 Fund, including
the applicability of the U.S. withholding taxes described above.

Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect to reinvest all
dividends and/or capital gains distributions in shares of the same class of any of the
other Oppenheimer funds into which you may exchange shares. Reinvestment will be made
without sales charge at the net asset value per share in effect at the close of business on
the payable date of the dividend or distribution. 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. Dividends and/or
distributions from shares of certain other Oppenheimer funds may be invested in shares of
this Fund on the same basis.

Additional Information About the Fund

The Distributor. The Fund's shares are sold through dealers, brokers and other financial
institutions that have a sales agreement with OppenheimerFunds Distributor, Inc., a
subsidiary of the Manager that acts as the Fund's Distributor. The Distributor also
distributes shares of the other Oppenheimer funds and is sub-distributor for funds managed
by a subsidiary of the Manager.

The Transfer Agent. OppenheimerFunds Services, the Fund's Transfer Agent, is a division of
the Manager. It is responsible for maintaining the Fund's shareholder registry and
shareholder accounting records, and for paying dividends and distributions to shareholders.
It also handles shareholder servicing and administrative functions. It serves as the
Transfer Agent for an annual per account fee. It also acts as shareholder servicing agent
for the other Oppenheimer funds. Shareholders should direct inquiries about their accounts
to the Transfer Agent at the address and toll-free numbers shown on the back cover.

The Custodian Bank. Citibank, N.A. is the custodian of the Fund's assets. The custodian's
responsibilities include safeguarding and controlling the Fund's portfolio securities and
handling the delivery of such securities to and from the Fund. It is the practice of the
Fund to deal with the custodian in a manner uninfluenced by any banking relationship the
custodian may have with the Manager and its affiliates. The Fund'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. KPMG LLP serves as the Independent
Registered Public Accounting Firm for the Fund. KPMG LLP audits the Fund's financial
statements and performs other related audit services. KPMG LLP also acts as the
independent registered public accounting firm for the Manager and certain other funds
advised by the Manager and its affiliates. Audit and non-audit services provided by KPMG
LLP to the Fund must be pre-approved by the Audit Committee.


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

--------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF ROCHESTER FUND MUNICIPALS:

We have audited the accompanying statement of assets and liabilities of
Rochester Fund Municipals, including the statement of investments, as of
December 31, 2005, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the years in the
two-year period then ended, and the financial highlights for each of the years
in the five-year period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.

      We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 2005, by correspondence with
the custodian and brokers, or other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

      In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Rochester Fund Municipals as of December 31, 2005, the results of its operations
for the year then ended, the changes in its net assets for each of the years in
the two-year period then ended, and the financial highlights for each of the
years in the five-year period then ended, in conformity with U.S. generally
accepted accounting principles.


KPMG LLP

Denver, Colorado
February 14, 2006






STATEMENT OF INVESTMENTS  December 31,2005
--------------------------------------------------------------------------------

       PRINCIPAL                                                                                                       VALUE
          AMOUNT                                                                 COUPON            MATURITY       SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--99.3%
----------------------------------------------------------------------------------------------------------------------------
NEW YORK--86.9%
$        125,000  Albany County Airport Authority                                 5.500%         12/15/2019   $      131,188
----------------------------------------------------------------------------------------------------------------------------
       1,035,000  Albany County IDA (Albany College of Pharmacy)                  5.375          12/01/2024        1,076,586
----------------------------------------------------------------------------------------------------------------------------
       1,700,000  Albany County IDA (Albany College of Pharmacy)                  5.625          12/01/2034        1,788,128
----------------------------------------------------------------------------------------------------------------------------
         885,000  Albany Hsg. Authority (Lark Drive)                              5.500          12/01/2028          914,311
----------------------------------------------------------------------------------------------------------------------------
       1,420,000  Albany IDA (Albany Medical Center)                              6.000          05/01/2019        1,458,766
----------------------------------------------------------------------------------------------------------------------------
       2,460,000  Albany IDA (Albany Medical Center)                              6.000          05/01/2029        2,514,514
----------------------------------------------------------------------------------------------------------------------------
         400,000  Albany IDA (Albany Municipal Golf Course Clubhouse)             7.500          05/01/2012          405,224
----------------------------------------------------------------------------------------------------------------------------
         895,000  Albany IDA (Albany Rehab.)                                      8.375          06/01/2023          938,175
----------------------------------------------------------------------------------------------------------------------------
       4,005,000  Albany IDA (Charitable Leadership)                              5.750          07/01/2026        4,160,554
----------------------------------------------------------------------------------------------------------------------------
       3,730,000  Albany IDA (Daughters of Sarah Nursing Home)                    5.375          10/20/2030        3,991,175
----------------------------------------------------------------------------------------------------------------------------
       2,620,000  Albany IDA (Hampton Plaza)                                      6.250          03/15/2018        2,656,235
----------------------------------------------------------------------------------------------------------------------------
         900,000  Albany IDA (New Covenant Charter School)                        7.000          05/01/2025          884,466
----------------------------------------------------------------------------------------------------------------------------
       1,285,000  Albany IDA (Sage Colleges)                                      5.250          04/01/2019        1,312,962
----------------------------------------------------------------------------------------------------------------------------
       1,760,000  Albany IDA (Sage Colleges)                                      5.300          04/01/2029        1,795,464
----------------------------------------------------------------------------------------------------------------------------
       2,510,000  Albany Parking Authority                                        5.625          07/15/2020        2,686,453
----------------------------------------------------------------------------------------------------------------------------
       2,000,000  Albany Parking Authority                                        5.625          07/15/2025        2,132,460
----------------------------------------------------------------------------------------------------------------------------
       1,770,000  Albany Parking Authority                                        7.050 1        11/01/2017          980,191
----------------------------------------------------------------------------------------------------------------------------
       5,700,000  Allegany County IDA (Houghton College)                          5.250          01/15/2024        5,821,581
----------------------------------------------------------------------------------------------------------------------------
         920,000  Amherst IDA (Asbury Pointe)                                     5.800          02/01/2015          920,405
----------------------------------------------------------------------------------------------------------------------------
          10,000  Amherst IDA (Asbury Pointe)                                     6.000          02/01/2023           10,003
----------------------------------------------------------------------------------------------------------------------------
       3,000,000  Amherst IDA (Asbury Pointe)                                     6.000          02/01/2029        3,064,920
----------------------------------------------------------------------------------------------------------------------------
       2,880,000  Amherst IDA (Daemen College)                                    6.000          10/01/2021        3,046,838
----------------------------------------------------------------------------------------------------------------------------
      10,055,000  Amherst IDA (Daemen College)                                    6.125          10/01/2031       10,598,674
----------------------------------------------------------------------------------------------------------------------------
          25,000  Amherst IDA (UBF Faculty-Student Hsg. Corp.)                    5.250          08/01/2031           26,904
----------------------------------------------------------------------------------------------------------------------------
       3,000,000  Appleridge Retirement Community                                 5.750          09/01/2041        3,260,940
----------------------------------------------------------------------------------------------------------------------------
         650,000  Babylon IDA (WWH Ambulance)                                     7.375          09/15/2008          656,130
----------------------------------------------------------------------------------------------------------------------------
         150,000  Bethany Retirement Home 2                                       7.450          02/01/2024          152,007
----------------------------------------------------------------------------------------------------------------------------
         810,000  Bethlehem Water System                                          5.250          03/01/2018          867,389
----------------------------------------------------------------------------------------------------------------------------
         855,000  Bethlehem Water System                                          5.375          03/01/2019          925,845
----------------------------------------------------------------------------------------------------------------------------
         905,000  Bethlehem Water System                                          5.375          03/01/2020          979,337
----------------------------------------------------------------------------------------------------------------------------
         955,000  Bethlehem Water System                                          5.500          03/01/2021        1,041,771
----------------------------------------------------------------------------------------------------------------------------
         505,000  Bethlehem Water System                                          5.500          03/01/2022          549,425
----------------------------------------------------------------------------------------------------------------------------
       1,065,000  Blauvelt Volunteer Fire Company                                 6.250          10/15/2017        1,089,516
----------------------------------------------------------------------------------------------------------------------------
         900,000  Bleeker Terrace HDC                                             8.750          07/01/2007          912,591
----------------------------------------------------------------------------------------------------------------------------
         580,000  Brookhaven IDA (Brookhaven Memorial Hospital)                   8.250          11/15/2030          627,769
----------------------------------------------------------------------------------------------------------------------------
       6,645,000  Brookhaven IDA (Dowling College)                                6.750          03/01/2023        6,649,386
----------------------------------------------------------------------------------------------------------------------------
       1,250,000  Brookhaven IDA (St. Joseph's College)                           6.000          12/01/2020        1,296,825
----------------------------------------------------------------------------------------------------------------------------
       2,425,000  Brookhaven IDA (Stony Brook Foundation)                         6.500          11/01/2020        2,540,454
----------------------------------------------------------------------------------------------------------------------------
          65,000  Broome County IDA (University Plaza)                            5.000          08/01/2025           66,570
----------------------------------------------------------------------------------------------------------------------------
       3,030,000  Broome County IDA (University Plaza)                            5.000          08/01/2036        3,084,055


                         23 | ROCHESTER FUND MUNICIPALS

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

       PRINCIPAL                                                                                                       VALUE
          AMOUNT                                                                  COUPON           MATURITY       SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$      1,000,000  Broome County IDA (University Plaza)                             5.100%        08/01/2030   $    1,025,750
----------------------------------------------------------------------------------------------------------------------------
       1,250,000  Broome County IDA (University Plaza)                             5.100         08/01/2036        1,283,163
----------------------------------------------------------------------------------------------------------------------------
       3,000,000  Broome County IDA (University Plaza)                             5.200         08/01/2030        3,103,350
----------------------------------------------------------------------------------------------------------------------------
       4,450,000  Broome County IDA (University Plaza)                             5.200         08/01/2036        4,579,540
----------------------------------------------------------------------------------------------------------------------------
       3,000,000  Bushnell Basin Fire Assoc. (Volunteer Fire Department)           5.750         11/01/2030        3,027,150
----------------------------------------------------------------------------------------------------------------------------
         915,000  Canton Human Services Initiatives                                5.700         09/01/2024          979,608
----------------------------------------------------------------------------------------------------------------------------
       1,155,000  Canton Human Services Initiatives                                5.750         09/01/2032        1,235,099
----------------------------------------------------------------------------------------------------------------------------
         600,000  Capital District Youth Center                                    6.000         02/01/2017          622,956
----------------------------------------------------------------------------------------------------------------------------
         500,000  Carnegie Redevelopment Corp. 2                                   7.000         09/01/2021          503,440
----------------------------------------------------------------------------------------------------------------------------
       4,295,000  Cattaraugus County IDA (Olean General Hospital)                  5.250         08/01/2023        4,440,472
----------------------------------------------------------------------------------------------------------------------------
       1,465,000  Cattaraugus County IDA (St. Bonaventure University)              5.450         09/15/2019        1,514,766
----------------------------------------------------------------------------------------------------------------------------
       2,900,000  Chautauqua County IDA
                  (Jamestown Community College)                                    5.250         08/01/2028        2,999,412
----------------------------------------------------------------------------------------------------------------------------
         640,000  Chautauqua County IDA (Jamestown Devel. Corp.)                   7.125         11/01/2008          661,984
----------------------------------------------------------------------------------------------------------------------------
       3,395,000  Chautauqua County IDA (Jamestown Devel. Corp.)                   7.125         11/01/2018        3,548,115
----------------------------------------------------------------------------------------------------------------------------
       1,900,000  Chautauqua County IDA
                  (Woman's Christian Association of Jamestown)                     6.400         11/15/2029        1,987,704
----------------------------------------------------------------------------------------------------------------------------
       2,500,000  Chemung County IDA (Arnot Ogden Medical Center)                  5.000         11/01/2029        2,565,850
----------------------------------------------------------------------------------------------------------------------------
         915,000  Chemung County IDA (Arnot Ogden Medical Center)                  5.000         11/01/2029          939,101
----------------------------------------------------------------------------------------------------------------------------
       1,000,000  Chemung County IDA (Arnot Ogden Medical Center)                  5.000         11/01/2034        1,021,060
----------------------------------------------------------------------------------------------------------------------------
       1,455,000  Chemung County IDA (Arnot Ogden Medical Center)                  5.000         11/01/2034        1,485,642
----------------------------------------------------------------------------------------------------------------------------
       1,245,000  Chemung County IDA (Hathorn Redevel. Company)                    4.850         07/01/2023        1,264,335
----------------------------------------------------------------------------------------------------------------------------
       1,515,000  Chemung County IDA (Hathorn Redevel. Company)                    5.000         07/01/2033        1,549,224
----------------------------------------------------------------------------------------------------------------------------
       6,160,000  Chemung County IDA (St. Joseph's Hospital)                       6.000         01/01/2013        6,029,408
----------------------------------------------------------------------------------------------------------------------------
       6,395,000  Chemung County IDA (St. Joseph's Hospital)                       6.350         01/01/2013        6,382,850
----------------------------------------------------------------------------------------------------------------------------
       4,910,000  Chemung County IDA (St. Joseph's Hospital)                       6.500         01/01/2019        4,880,245
----------------------------------------------------------------------------------------------------------------------------
       1,700,000  Clifton Springs Hospital & Clinic                                7.650         01/01/2012        1,759,908
----------------------------------------------------------------------------------------------------------------------------
       2,905,000  Clifton Springs Hospital & Clinic                                8.000         01/01/2020        2,909,096
----------------------------------------------------------------------------------------------------------------------------
          35,000  Cohoes GO                                                        6.200         03/15/2012           36,225
----------------------------------------------------------------------------------------------------------------------------
          25,000  Cohoes GO                                                        6.200         03/15/2013           25,848
----------------------------------------------------------------------------------------------------------------------------
          25,000  Cohoes GO                                                        6.250         03/15/2014           25,844
----------------------------------------------------------------------------------------------------------------------------
          25,000  Cohoes GO                                                        6.250         03/15/2015           25,835
----------------------------------------------------------------------------------------------------------------------------
          25,000  Cohoes GO                                                        6.250         03/15/2016           25,811
----------------------------------------------------------------------------------------------------------------------------
       1,725,000  Columbia County IDA (Berkshire Farms)                            7.500         12/15/2014        1,769,108
----------------------------------------------------------------------------------------------------------------------------
       3,300,000  Corinth IDA (International Paper Company)                        5.750         02/01/2022        3,443,979
----------------------------------------------------------------------------------------------------------------------------
       5,370,000  Cortland County IDA (Cortland Memorial Hospital)                 5.250         07/01/2032        5,636,245
----------------------------------------------------------------------------------------------------------------------------
         155,000  Dutchess County IDA
                  (Astor Learning Center Civic Facility)                           5.150         11/01/2024          160,963
----------------------------------------------------------------------------------------------------------------------------
         120,000  Dutchess County IDA (Bard College)                               5.750         08/01/2030          129,220
----------------------------------------------------------------------------------------------------------------------------
       3,500,000  Dutchess County IDA (Bard College)                               7.000         11/01/2017        3,510,570
----------------------------------------------------------------------------------------------------------------------------
       1,000,000  Dutchess County IDA (St. Francis Hospital)                       7.500         03/01/2029        1,094,550
----------------------------------------------------------------------------------------------------------------------------
       2,410,000  Dutchess County IDA (Vassar Brothers Hospital)                   6.500         04/01/2020        2,598,390


                         24 | ROCHESTER FUND MUNICIPALS

       PRINCIPAL                                                                                                    VALUE
          AMOUNT                                                               COUPON            MATURITY      SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$      5,635,000  Dutchess County IDA (Vassar Brothers Hospital)                6.500%         04/01/2030   $   6,057,005
-------------------------------------------------------------------------------------------------------------------------
          25,000  Dutchess County IDA (Vassar College)                          5.350          09/01/2040          26,674
-------------------------------------------------------------------------------------------------------------------------
       1,000,000  Dutchess County Water & Wastewater Authority                  5.400 1        06/01/2027         372,810
-------------------------------------------------------------------------------------------------------------------------
       3,315,000  East Rochester Hsg. Authority (Episcopal Senior Hsg.)         7.750          10/01/2032       3,341,222
-------------------------------------------------------------------------------------------------------------------------
       1,355,000  East Rochester Hsg. Authority (Gates Senior Hsg.)             6.125          04/20/2043       1,495,256
-------------------------------------------------------------------------------------------------------------------------
       1,400,000  East Rochester Hsg. Authority
                  (Genesee Valley Nursing Home)                                 5.200          12/20/2024       1,481,662
-------------------------------------------------------------------------------------------------------------------------
       2,620,000  East Rochester Hsg. Authority
                  (Jefferson Park Apartments)                                   6.750          03/01/2030       2,507,157
-------------------------------------------------------------------------------------------------------------------------
       2,000,000  East Rochester Hsg. Authority (Linden Knoll)                  5.350          02/01/2038       2,027,480
-------------------------------------------------------------------------------------------------------------------------
       4,095,000  East Rochester Hsg. Authority (St. John's Meadows)            5.950          08/01/2027       4,260,233
-------------------------------------------------------------------------------------------------------------------------
         365,000  Erie County IDA (Air Cargo)                                   8.250          10/01/2007         366,686
-------------------------------------------------------------------------------------------------------------------------
       2,380,000  Erie County IDA (Air Cargo)                                   8.500          10/01/2015       2,392,352
-------------------------------------------------------------------------------------------------------------------------
       4,000,000  Erie County IDA (Charter School Applied Tech)                 6.750          06/01/2025       3,896,440
-------------------------------------------------------------------------------------------------------------------------
       7,000,000  Erie County IDA (Charter School Applied Tech)                 6.875          06/01/2035       6,768,440
-------------------------------------------------------------------------------------------------------------------------
       1,860,000  Erie County IDA (DePaul Properties)                           5.750          09/01/2028       1,518,988
-------------------------------------------------------------------------------------------------------------------------
       2,915,000  Erie County IDA (DePaul Properties)                           6.500          09/01/2018       2,759,601
-------------------------------------------------------------------------------------------------------------------------
      35,000,000  Erie County IDA (Great Lakes)                                 7.500          12/01/2025      34,860,700
-------------------------------------------------------------------------------------------------------------------------
      11,310,000  Erie County IDA (Medaille College)                            7.625          04/01/2035      11,740,798
-------------------------------------------------------------------------------------------------------------------------
       3,515,000  Erie County IDA (Medaille College)                            8.250          11/01/2026       3,687,587
-------------------------------------------------------------------------------------------------------------------------
          75,000  Erie County IDA (The Episcopal Church Home)                   5.875          02/01/2018          77,658
-------------------------------------------------------------------------------------------------------------------------
       9,600,000  Erie County IDA (The Episcopal Church Home)                   6.000          02/01/2028       9,953,952
-------------------------------------------------------------------------------------------------------------------------
       3,170,000  Erie County Sewer District                                    5.000          06/01/2029       3,343,621
-------------------------------------------------------------------------------------------------------------------------
       2,630,000  Erie County Sewer District                                    5.000          12/01/2030       2,773,835
-------------------------------------------------------------------------------------------------------------------------
       1,360,000  Erie County Sewer District                                    5.000          12/01/2035       1,426,640
-------------------------------------------------------------------------------------------------------------------------
      21,250,000  Erie County Tobacco Asset Securitization Corp. 2              5.880 3        06/01/2045      18,781,813
-------------------------------------------------------------------------------------------------------------------------
      54,000,000  Erie County Tobacco Asset Securitization Corp.                5.880 1        06/01/2047       4,491,180
-------------------------------------------------------------------------------------------------------------------------
      80,000,000  Erie County Tobacco Asset Securitization Corp.                6.380 1        06/01/2050       4,883,200
-------------------------------------------------------------------------------------------------------------------------
          90,000  Erie County Tobacco Asset Securitization Corp.                6.500          07/15/2032         102,107
-------------------------------------------------------------------------------------------------------------------------
     180,000,000  Erie County Tobacco Asset Securitization Corp.                6.750 1        06/01/2055       6,809,400
-------------------------------------------------------------------------------------------------------------------------
   1,024,000,000  Erie County Tobacco Asset Securitization Corp. 4              7.650 1        06/01/2060      17,315,840
-------------------------------------------------------------------------------------------------------------------------
       3,340,000  Erie County Tobacco Asset Securitization Corp.
                  RITES 2                                                       5.880 3        06/01/2038       2,986,528
-------------------------------------------------------------------------------------------------------------------------
       4,440,000  Essex County IDA (International Paper Company)                5.200          03/01/2028       4,444,040
-------------------------------------------------------------------------------------------------------------------------
       1,850,000  Essex County IDA (International Paper Company)                5.500          08/15/2022       1,886,889
-------------------------------------------------------------------------------------------------------------------------
       1,625,000  Essex County IDA (International Paper Company)                5.500          10/01/2026       1,658,621
-------------------------------------------------------------------------------------------------------------------------
         335,000  Essex County IDA (International Paper Company)                5.800          12/01/2019         342,568
-------------------------------------------------------------------------------------------------------------------------
       2,300,000  Essex County IDA (International Paper Company)                6.450          11/15/2023       2,446,694
-------------------------------------------------------------------------------------------------------------------------
          45,000  Essex County IDA (Moses Ludington Nursing Home)               6.200          02/01/2030          49,441
-------------------------------------------------------------------------------------------------------------------------
       5,000,000  Essex County IDA (Moses Ludington Nursing Home)               6.375          02/01/2050       5,496,200
-------------------------------------------------------------------------------------------------------------------------
         170,000  Essex County IDA (Moses Ludington Nursing Home)               9.000          02/01/2008         174,328
-------------------------------------------------------------------------------------------------------------------------
         975,000  Essex County IDA
                  (North Country Community College Foundation)                  5.000          06/01/2020         973,469


                         25 | ROCHESTER FUND MUNICIPALS

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

       PRINCIPAL                                                                                                       VALUE
          AMOUNT                                                                  COUPON           MATURITY       SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$        320,000  Essex County IDA (North Country
                  Community College Foundation)                                    5.000%        06/01/2020   $      319,498
----------------------------------------------------------------------------------------------------------------------------
       1,235,000  Essex County IDA (North Country
                  Community College Foundation)                                    5.200         06/01/2025        1,240,879
----------------------------------------------------------------------------------------------------------------------------
         410,000  Essex County IDA (North Country
                  Community College Foundation)                                    5.200         06/01/2025          411,952
----------------------------------------------------------------------------------------------------------------------------
       1,100,000  Essex County IDA (North Country
                  Community College Foundation)                                    5.300         06/01/2035        1,106,347
----------------------------------------------------------------------------------------------------------------------------
       3,750,000  Essex County IDA Solid Waste Disposal
                  (International Paper Company)                                    5.200         12/01/2023        3,791,850
----------------------------------------------------------------------------------------------------------------------------
       5,680,000  Franklin County IDA (Adirondack Medical Center)                  5.500         12/01/2029        6,016,199
----------------------------------------------------------------------------------------------------------------------------
         900,000  Franklin County IDA (North Country
                  Community College Foundation)                                    5.200         06/01/2025          904,284
----------------------------------------------------------------------------------------------------------------------------
          50,000  Freeport Union Free School District                              5.250         03/15/2032           52,657
----------------------------------------------------------------------------------------------------------------------------
         320,000  Glen Cove IDA (SLCD)                                             6.875         07/01/2008          322,464
----------------------------------------------------------------------------------------------------------------------------
       3,775,000  Glen Cove IDA (SLCD)                                             7.375         07/01/2023        3,941,893
----------------------------------------------------------------------------------------------------------------------------
       1,315,000  Green Island Power Authority                                     5.125         12/15/2024        1,337,552
----------------------------------------------------------------------------------------------------------------------------
       2,795,000  Green Island Power Authority                                     6.000         12/15/2020        2,954,958
----------------------------------------------------------------------------------------------------------------------------
       1,695,000  Green Island Power Authority                                     6.000         12/15/2025        1,776,801
----------------------------------------------------------------------------------------------------------------------------
         840,000  Hempstead GO                                                     5.000         07/01/2020          861,344
----------------------------------------------------------------------------------------------------------------------------
       1,025,000  Hempstead GO                                                     5.000         07/01/2021        1,047,786
----------------------------------------------------------------------------------------------------------------------------
       1,270,000  Hempstead GO                                                     5.000         07/01/2022        1,296,899
----------------------------------------------------------------------------------------------------------------------------
       2,500,000  Hempstead IDA (Adelphi University)                               5.500         06/01/2032        2,680,400
----------------------------------------------------------------------------------------------------------------------------
         310,000  Hempstead IDA (Dentaco Corp.)                                    7.250         11/01/2012          332,996
----------------------------------------------------------------------------------------------------------------------------
       1,270,000  Hempstead IDA (Dentaco Corp.)                                    8.250         11/01/2025        1,385,265
----------------------------------------------------------------------------------------------------------------------------
       3,550,000  Hempstead IDA (Engel Burman Senior Hsg.)                         6.250         11/01/2010        3,594,091
----------------------------------------------------------------------------------------------------------------------------
      18,825,000  Hempstead IDA (Engel Burman Senior Hsg.)                         6.750         11/01/2024       19,374,878
----------------------------------------------------------------------------------------------------------------------------
       1,875,000  Hempstead IDA (Franklin Hospital Medical Center)                 5.750         11/01/2008        1,862,756
----------------------------------------------------------------------------------------------------------------------------
       9,375,000  Hempstead IDA (Franklin Hospital Medical Center)                 6.375         11/01/2018        9,193,219
----------------------------------------------------------------------------------------------------------------------------
       9,415,000  Hempstead IDA (Franklin Hospital Medical Center)                 7.750         11/01/2022       10,089,396
----------------------------------------------------------------------------------------------------------------------------
       2,495,000  Hempstead IDA (Hungry Harbor Associates)                         8.000         05/01/2044        2,551,412
----------------------------------------------------------------------------------------------------------------------------
       5,690,000  Hempstead IDA (Hungry Harbor Associates)                         8.000         05/01/2044        5,691,081
----------------------------------------------------------------------------------------------------------------------------
       4,760,000  Hempstead IDA (Hungry Harbor Associates)                         8.000         05/01/2044        4,867,624
----------------------------------------------------------------------------------------------------------------------------
      12,505,000  Hempstead IDA (Hungry Harbor Associates)                         8.000         05/01/2044       12,787,738
----------------------------------------------------------------------------------------------------------------------------
       6,355,000  Hempstead IDA (South Shore Y JCC)                                6.750         11/01/2024        6,451,787
----------------------------------------------------------------------------------------------------------------------------
       6,270,000  Herkimer County IDA (Burrows Paper) 2                            8.000         01/01/2009        6,225,295
----------------------------------------------------------------------------------------------------------------------------
       1,285,000  Herkimer County IDA (College Foundation)                         6.400         11/01/2020        1,365,865
----------------------------------------------------------------------------------------------------------------------------
       2,000,000  Herkimer County IDA (College Foundation)                         6.500         11/01/2030        2,113,080
----------------------------------------------------------------------------------------------------------------------------
       3,000,000  Herkimer County IDA (Folts Adult Home)                           5.500         03/20/2040        3,280,950
----------------------------------------------------------------------------------------------------------------------------
       1,000,000  Herkimer County IDA
                  (Herkimer County College Foundation)                             6.250         08/01/2034        1,054,500
----------------------------------------------------------------------------------------------------------------------------
         265,000  Herkimer Hsg. Authority                                          7.150         03/01/2011          270,411


                         26 | ROCHESTER FUND MUNICIPALS

       PRINCIPAL                                                                                                       VALUE
          AMOUNT                                                                  COUPON            MATURITY      SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$        990,000     Hudson IDA (Have, Inc.)                                       8.125%         12/01/2017   $   1,000,375
----------------------------------------------------------------------------------------------------------------------------
       1,255,000     Hudson IDA (Hudson Fabrics)                                   6.750          11/01/2024       1,284,078
----------------------------------------------------------------------------------------------------------------------------
         145,000     Huntington Hsg. Authority (GJSR)                              5.875          05/01/2019         146,340
----------------------------------------------------------------------------------------------------------------------------
       1,000,000     Huntington Hsg. Authority (GJSR)                              6.000          05/01/2029       1,010,660
----------------------------------------------------------------------------------------------------------------------------
       8,500,000     Huntington Hsg. Authority (GJSR)                              6.000          05/01/2039       8,511,815
----------------------------------------------------------------------------------------------------------------------------
         820,000     Islip IDA (Leeway School)                                     9.000          08/01/2021         822,452
----------------------------------------------------------------------------------------------------------------------------
      18,545,000     Islip IDA (Southside Hospital Civic Facilities)               7.750          12/01/2022      19,642,308
----------------------------------------------------------------------------------------------------------------------------
       1,315,000     Islip Res Rec, Series E                                       5.750          07/01/2021       1,459,256
----------------------------------------------------------------------------------------------------------------------------
       1,000,000     Islip Res Rec, Series E                                       5.750          07/01/2023       1,106,680
----------------------------------------------------------------------------------------------------------------------------
       3,000,000     Kenmore Hsg. Authority (SUNY at Buffalo)                      5.500          08/01/2024       3,178,620
----------------------------------------------------------------------------------------------------------------------------
       8,000,000     L.I. Power Authority                                          5.750          12/01/2024       8,492,000
----------------------------------------------------------------------------------------------------------------------------
       7,905,000     L.I. Power Authority RITES 2                                  7.415 3        12/01/2022       9,421,970
----------------------------------------------------------------------------------------------------------------------------
      21,000,000     L.I. Power Authority RITES 2                                  7.451 3        12/01/2022      25,029,900
----------------------------------------------------------------------------------------------------------------------------
       3,750,000     L.I. Power Authority RITES 2                                  7.915 3        12/01/2026       4,473,525
----------------------------------------------------------------------------------------------------------------------------
       2,915,000     L.I. Power Authority RITES 2                                  8.004 3        09/01/2028       3,708,113
----------------------------------------------------------------------------------------------------------------------------
         250,000     L.I. Power Authority, Series A                                5.000          09/01/2027         259,153
----------------------------------------------------------------------------------------------------------------------------
      24,130,000     L.I. Power Authority, Series A                                5.125          09/01/2029      24,906,262
----------------------------------------------------------------------------------------------------------------------------
          60,000     L.I. Power Authority, Series A                                5.125          09/01/2029          63,325
----------------------------------------------------------------------------------------------------------------------------
      44,530,000     L.I. Power Authority, Series A                                5.375          09/01/2025      47,547,798
----------------------------------------------------------------------------------------------------------------------------
      86,300,000     L.I. Power Authority, Series L                                5.375          05/01/2033      91,839,597
----------------------------------------------------------------------------------------------------------------------------
         100,000     Lowville GO                                                   7.200          09/15/2012         119,293
----------------------------------------------------------------------------------------------------------------------------
         100,000     Lowville GO                                                   7.200          09/15/2013         121,053
----------------------------------------------------------------------------------------------------------------------------
         100,000     Lowville GO                                                   7.200          09/15/2014         123,112
----------------------------------------------------------------------------------------------------------------------------
       3,830,000     Lyons Community Health Initiatives Corp.                      5.550          09/01/2024       4,076,231
----------------------------------------------------------------------------------------------------------------------------
       4,360,000     Macleay Hsg. Corp. (Larchmont Woods)                          8.500          01/01/2031       4,445,282
----------------------------------------------------------------------------------------------------------------------------
         750,000     Madison County IDA
                     (Morrisville State College Foundation)                        5.000          06/01/2028         789,503
----------------------------------------------------------------------------------------------------------------------------
       1,100,000     Madison County IDA
                     (Morrisville State College Foundation)                        5.000          06/01/2032       1,153,240
----------------------------------------------------------------------------------------------------------------------------
       1,290,000     Madison County IDA (Oneida Healthcare Center)                 5.300          02/01/2021       1,358,886
----------------------------------------------------------------------------------------------------------------------------
       5,500,000     Madison County IDA (Oneida Healthcare Center)                 5.350          02/01/2031       5,778,905
----------------------------------------------------------------------------------------------------------------------------
          30,000     Middleton IDA (Flanagan Design & Display)                     7.000          11/01/2006          30,362
----------------------------------------------------------------------------------------------------------------------------
         690,000     Middleton IDA (Flanagan Design & Display)                     7.500          11/01/2018         726,701
----------------------------------------------------------------------------------------------------------------------------
       3,955,000     Middletown IDA (Southwinds Retirement Home)                   6.375          03/01/2018       3,952,904
----------------------------------------------------------------------------------------------------------------------------
         310,000     Middletown IDA (YMCA)                                         6.250          11/01/2009         300,449
----------------------------------------------------------------------------------------------------------------------------
       1,255,000     Middletown IDA (YMCA)                                         7.000          11/01/2019       1,164,615
----------------------------------------------------------------------------------------------------------------------------
         230,000     Monroe County COP                                             8.050          01/01/2011         238,717
----------------------------------------------------------------------------------------------------------------------------
         715,000     Monroe County IDA (Canal Ponds)                               7.000          06/15/2013         743,686
----------------------------------------------------------------------------------------------------------------------------
          50,000     Monroe County IDA (Cloverwood Senior Living)                  6.750          05/01/2023          40,681
----------------------------------------------------------------------------------------------------------------------------
       1,214,193     Monroe County IDA (Cottrone Devel.)                           9.500          12/01/2010       1,228,715
----------------------------------------------------------------------------------------------------------------------------
         950,000     Monroe County IDA (Dayton Rogers Manufacturing)               6.100          12/01/2009         925,120
----------------------------------------------------------------------------------------------------------------------------
       2,495,000     Monroe County IDA (DePaul Community Facilities)               5.875          02/01/2028       2,076,888


                        27 | ROCHESTER FUND MUNICIPALS

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

       PRINCIPAL                                                                                                       VALUE
          AMOUNT                                                                  COUPON           MATURITY       SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$      5,435,000  Monroe County IDA (DePaul Community Facilities)                  5.950%        08/01/2028   $    4,570,726
----------------------------------------------------------------------------------------------------------------------------
         880,000  Monroe County IDA (DePaul Community Facilities)                  6.450         02/01/2014          882,209
----------------------------------------------------------------------------------------------------------------------------
       1,285,000  Monroe County IDA (DePaul Community Facilities)                  6.500         02/01/2024        1,287,891
----------------------------------------------------------------------------------------------------------------------------
       4,485,000  Monroe County IDA (DePaul Properties)                            6.150         09/01/2021        4,162,125
----------------------------------------------------------------------------------------------------------------------------
       1,000,000  Monroe County IDA (Highland Hospital of Rochester)               5.000         08/01/2022        1,020,960
----------------------------------------------------------------------------------------------------------------------------
       1,250,000  Monroe County IDA (Highland Hospital of Rochester)               5.000         08/01/2025        1,264,663
----------------------------------------------------------------------------------------------------------------------------
       1,000,000  Monroe County IDA
                  (Jewish Home of Rochester Senior Hsg.)                           6.875         04/01/2017        1,031,800
----------------------------------------------------------------------------------------------------------------------------
       5,005,000  Monroe County IDA
                  (Jewish Home of Rochester Senior Hsg.)                           6.875         04/01/2027        5,152,848
----------------------------------------------------------------------------------------------------------------------------
         100,000  Monroe County IDA (Machine Tool Research)                        7.750         12/01/2006           99,798
----------------------------------------------------------------------------------------------------------------------------
         600,000  Monroe County IDA (Machine Tool Research)                        8.000         12/01/2011          595,866
----------------------------------------------------------------------------------------------------------------------------
         300,000  Monroe County IDA (Machine Tool Research)                        8.500         12/01/2013          296,544
----------------------------------------------------------------------------------------------------------------------------
         685,000  Monroe County IDA (Melles Griot)                                 9.500         12/01/2009          694,727
----------------------------------------------------------------------------------------------------------------------------
         875,000  Monroe County IDA (Morrell/Morrell)                              7.000         12/01/2007          875,315
----------------------------------------------------------------------------------------------------------------------------
       2,525,000  Monroe County IDA (Parma Senior Hsg. Assoc.)                     6.500         12/01/2042        2,538,332
----------------------------------------------------------------------------------------------------------------------------
       4,330,000  Monroe County IDA (Piano Works)                                  7.625         11/01/2016        4,461,632
----------------------------------------------------------------------------------------------------------------------------
       2,890,000  Monroe County IDA
                  (Rochester Institute of Technology)                              5.375         04/01/2029        2,855,725
----------------------------------------------------------------------------------------------------------------------------
       1,000,000  Monroe County IDA (Southview Towers)                             6.125         02/01/2020        1,085,280
----------------------------------------------------------------------------------------------------------------------------
       1,465,000  Monroe County IDA (St. John Fisher College)                      5.200         06/01/2019        1,554,350
----------------------------------------------------------------------------------------------------------------------------
       2,190,000  Monroe County IDA (St. John Fisher College)                      5.250         06/01/2026        2,320,174
----------------------------------------------------------------------------------------------------------------------------
       3,075,000  Monroe County IDA (St. John Fisher College)                      5.375         06/01/2024        3,237,668
----------------------------------------------------------------------------------------------------------------------------
         935,000  Monroe County IDA (Volunteers of America)                        5.700         08/01/2018          948,483
----------------------------------------------------------------------------------------------------------------------------
       2,720,000  Monroe County IDA (Volunteers of America)                        5.750         08/01/2028        2,695,411
----------------------------------------------------------------------------------------------------------------------------
      12,000,000  Monroe County IDA (Woodlawn Village)                             8.550         11/15/2032       13,651,560
----------------------------------------------------------------------------------------------------------------------------
       2,165,000  Monroe Newpower Corp.                                            5.500         01/01/2034        2,272,319
----------------------------------------------------------------------------------------------------------------------------
         580,000  Monroe Newpower Corp.                                            5.625         01/01/2026          613,779
----------------------------------------------------------------------------------------------------------------------------
       5,860,000  Montgomery County IDA (ASMF)(2,5)                                7.250         01/15/2019          879,000
----------------------------------------------------------------------------------------------------------------------------
         500,000  Mount Vernon IDA (Kings Court)                                   5.200         12/01/2033          505,270
----------------------------------------------------------------------------------------------------------------------------
       3,275,000  Mount Vernon IDA (Macedonia Towers)                              5.200         12/01/2033        3,309,519
----------------------------------------------------------------------------------------------------------------------------
       2,295,000  Mount Vernon IDA (Meadowview)                                    6.150         06/01/2019        2,366,145
----------------------------------------------------------------------------------------------------------------------------
       2,600,000  Mount Vernon IDA (Meadowview)                                    6.200         06/01/2029        2,664,948
----------------------------------------------------------------------------------------------------------------------------
       2,100,000  MTA DRIVERS 2                                                    6.521 3       05/15/2013        2,090,466
----------------------------------------------------------------------------------------------------------------------------
      14,200,000  MTA RITES 2                                                      6.915 3       11/15/2025       17,198,188
----------------------------------------------------------------------------------------------------------------------------
       1,910,000  MTA RITES 2                                                      6.915 3       11/15/2028        2,222,743
----------------------------------------------------------------------------------------------------------------------------
      10,000,000  MTA RITES 2                                                      6.915 3       11/15/2030       11,538,400
----------------------------------------------------------------------------------------------------------------------------
       5,000,000  MTA RITES 2                                                      6.915 3       11/15/2030        5,769,200
----------------------------------------------------------------------------------------------------------------------------
       2,890,000  MTA RITES 2                                                      6.915 3       11/15/2030        3,334,598
----------------------------------------------------------------------------------------------------------------------------
       7,500,000  MTA RITES 2                                                      6.915 3       11/15/2031        8,673,750
----------------------------------------------------------------------------------------------------------------------------
       2,125,000  MTA RITES 2                                                      6.915 3       11/15/2032        2,447,320
----------------------------------------------------------------------------------------------------------------------------
       2,220,000  MTA Service Contract RITES 2                                     7.415 3       01/01/2024        2,776,643


                        28 | ROCHESTER FUND MUNICIPALS

       PRINCIPAL                                                                                                   VALUE
          AMOUNT                                                              COUPON            MATURITY       SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$     15,895,000  MTA Service Contract, Series A                               5.125%         01/01/2024   $   16,891,299
-------------------------------------------------------------------------------------------------------------------------
     132,950,000  MTA Service Contract, Series A                               5.125          01/01/2029      140,194,446
-------------------------------------------------------------------------------------------------------------------------
      20,000,000  MTA Service Contract, Series A                               5.750          07/01/2031       22,058,800
-------------------------------------------------------------------------------------------------------------------------
      33,275,000  MTA Service Contract, Series B                               5.250          01/01/2031       35,061,202
-------------------------------------------------------------------------------------------------------------------------
       3,775,000  MTA, Series A                                                5.000          11/15/2030        3,920,187
-------------------------------------------------------------------------------------------------------------------------
          20,000  MTA, Series A                                                5.000          11/15/2032           20,838
-------------------------------------------------------------------------------------------------------------------------
      42,295,000  MTA, Series A                                                5.125          11/15/2031       44,626,300
-------------------------------------------------------------------------------------------------------------------------
          25,000  MTA, Series B                                                5.000          01/01/2031           25,933
-------------------------------------------------------------------------------------------------------------------------
      26,990,000  MTA, Series B                                                5.000          11/15/2031       28,000,506
-------------------------------------------------------------------------------------------------------------------------
       4,600,000  MTA, Series B                                                5.000          11/15/2035        4,824,526
-------------------------------------------------------------------------------------------------------------------------
      20,080,000  MTA, Series B                                                5.250          11/15/2032       21,266,326
-------------------------------------------------------------------------------------------------------------------------
      34,770,000  MTA, Series E                                                5.250          11/15/2031       36,536,664
-------------------------------------------------------------------------------------------------------------------------
      23,500,000  MTA, Series F                                                5.000          11/15/2030       24,417,910
-------------------------------------------------------------------------------------------------------------------------
         802,824  Municipal Assistance Corp. for Troy, NY                      5.730 1        07/15/2021          413,181
-------------------------------------------------------------------------------------------------------------------------
       1,218,573  Municipal Assistance Corp. for Troy, NY                      5.740 1        01/15/2022          612,735
-------------------------------------------------------------------------------------------------------------------------
       1,090,000  Nassau County IDA (ALIA-ACDS)                                7.500          06/01/2015        1,188,732
-------------------------------------------------------------------------------------------------------------------------
       2,975,000  Nassau County IDA (ALIA-ACLD)                                6.250          09/01/2022        3,075,704
-------------------------------------------------------------------------------------------------------------------------
         240,000  Nassau County IDA (ALIA-ACLD)                                7.125          06/01/2017          258,662
-------------------------------------------------------------------------------------------------------------------------
         375,000  Nassau County IDA (ALIA-ACLD)                                7.500          06/01/2015          408,968
-------------------------------------------------------------------------------------------------------------------------
       5,830,000  Nassau County IDA (ALIA-CSMR)                                7.000          11/01/2016        6,295,234
-------------------------------------------------------------------------------------------------------------------------
       3,520,000  Nassau County IDA (ALIA-CSMR)                                7.125          06/01/2017        3,797,658
-------------------------------------------------------------------------------------------------------------------------
       1,870,000  Nassau County IDA (ALIA-CSMR)                                7.500          06/01/2015        2,039,385
-------------------------------------------------------------------------------------------------------------------------
         330,000  Nassau County IDA (ALIA-FREE)                                7.125          06/01/2012          359,297
-------------------------------------------------------------------------------------------------------------------------
       2,310,000  Nassau County IDA (ALIA-FREE)                                7.500          06/01/2015        2,519,240
-------------------------------------------------------------------------------------------------------------------------
       4,030,000  Nassau County IDA (ALIA-FREE)                                8.150          06/01/2030        4,355,463
-------------------------------------------------------------------------------------------------------------------------
       6,485,000  Nassau County IDA (ALIA-FREE)                                8.250          06/01/2032        6,961,777
-------------------------------------------------------------------------------------------------------------------------
         945,000  Nassau County IDA (ALIA-HH)                                  7.125          06/01/2017        1,019,542
-------------------------------------------------------------------------------------------------------------------------
         725,000  Nassau County IDA (ALIA-HHS)                                 7.125          06/01/2017          782,188
-------------------------------------------------------------------------------------------------------------------------
         240,000  Nassau County IDA (ALIA-LVH)                                 7.500          06/01/2015          261,739
-------------------------------------------------------------------------------------------------------------------------
         565,000  Nassau County IDA (CNGCS)                                    7.500          06/01/2030          616,178
-------------------------------------------------------------------------------------------------------------------------
       2,245,000  Nassau County IDA (CNGCS)                                    8.150          06/01/2030        2,441,123
-------------------------------------------------------------------------------------------------------------------------
       5,240,000  Nassau County IDA (Engel Burman Senior Hsg.)                 7.750          05/01/2047        5,434,404
-------------------------------------------------------------------------------------------------------------------------
       3,410,000  Nassau County IDA (Engel Burman Senior Hsg.)                 7.750          05/01/2047        3,536,511
-------------------------------------------------------------------------------------------------------------------------
       5,875,000  Nassau County IDA (Engel Burman Senior Hsg.)                 7.750          05/01/2047        6,092,963
-------------------------------------------------------------------------------------------------------------------------
       6,450,000  Nassau County IDA (Engel Burman Senior Hsg.)                 7.750          05/01/2047        6,689,295
-------------------------------------------------------------------------------------------------------------------------
       9,155,000  Nassau County IDA (Engel Burman Senior Hsg.) 4               7.750          05/01/2047        9,494,651
-------------------------------------------------------------------------------------------------------------------------
       3,860,000  Nassau County IDA (Little Village School)                    7.500          12/01/2031        4,115,802
-------------------------------------------------------------------------------------------------------------------------
       2,290,000  Nassau County IDA (North Shore CFGA)                         6.750          05/01/2024        2,323,640
-------------------------------------------------------------------------------------------------------------------------
       2,759,599  Nassau County IDA (Sharp International) 2,5                  7.375          12/01/2007          356,816
-------------------------------------------------------------------------------------------------------------------------
       1,752,588  Nassau County IDA (Sharp International) 2,5                  7.375          12/01/2007          226,610
-------------------------------------------------------------------------------------------------------------------------
       2,527,212  Nassau County IDA (Sharp International) 2,5                  7.875          12/01/2012          326,768


                              29 | ROCHESTER FUND MUNICIPALS

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

       PRINCIPAL                                                                                                       VALUE
          AMOUNT                                                                  COUPON           MATURITY       SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$      1,597,663  Nassau County IDA (Sharp International) 2,5                      7.875%        12/01/2012   $      206,578
----------------------------------------------------------------------------------------------------------------------------
       2,050,000  Nassau County IDA (United Cerebral Palsy)                        6.250         11/01/2014        2,061,111
----------------------------------------------------------------------------------------------------------------------------
      24,125,000  Nassau County IDA (Westbury Senior Living)                       7.900         11/01/2031       24,335,129
----------------------------------------------------------------------------------------------------------------------------
       4,375,000  Nassau County Interim Finance Authority RITES 2                  7.508 3       11/15/2021        4,846,013
----------------------------------------------------------------------------------------------------------------------------
      17,730,000  Nassau County Tobacco Settlement Corp. RITES 2                   8.093 3       07/15/2033       19,555,126
----------------------------------------------------------------------------------------------------------------------------
      10,535,000  Nassau County Tobacco Settlement Corp. RITES 2                   8.293 3       07/15/2027       11,757,060
----------------------------------------------------------------------------------------------------------------------------
      17,590,000  Nassau County Tobacco Settlement Corp. RITES 2                   8.493 3       07/15/2039       19,626,218
----------------------------------------------------------------------------------------------------------------------------
       7,155,000  Nassau IDA (EBS North Hills LLC)                                 7.800         05/01/2045        7,564,481
----------------------------------------------------------------------------------------------------------------------------
       3,340,000  Nassau IDA (EBS North Hills LLC)                                 7.800         05/01/2045        3,358,370
----------------------------------------------------------------------------------------------------------------------------
       4,290,000  Nassau IDA (EBS North Hills LLC)                                 7.800         05/01/2045        4,313,595
----------------------------------------------------------------------------------------------------------------------------
       6,195,000  Nassau IDA (EBS North Hills LLC)                                 7.800         05/01/2045        6,263,641
----------------------------------------------------------------------------------------------------------------------------
       4,775,000  Nassau IDA (EBS North Hills LLC)                                 7.800         05/01/2045        4,801,263
----------------------------------------------------------------------------------------------------------------------------
       4,775,000  Nassau IDA (EBS North Hills LLC)                                 7.800         05/01/2045        4,824,326
----------------------------------------------------------------------------------------------------------------------------
       2,000,000  New Hartford-Sunset Wood Funding Corp.                           5.500         02/01/2029        2,092,800
----------------------------------------------------------------------------------------------------------------------------
      13,010,000  New Rochelle IDA (College of New Rochelle)                       5.250         07/01/2027       13,496,964
----------------------------------------------------------------------------------------------------------------------------
       6,500,000  New Rochelle IDA (College of New Rochelle)                       5.500         07/01/2019        6,838,130
----------------------------------------------------------------------------------------------------------------------------
       3,670,000  New Rochelle IDA (Soundview Apartments)                          5.375         04/01/2036        3,793,459
----------------------------------------------------------------------------------------------------------------------------
       4,885,000  Newark-Wayne Community Hospital                                  5.875         01/15/2033        4,894,428
----------------------------------------------------------------------------------------------------------------------------
       2,360,000  Newark-Wayne Community Hospital                                  7.600         09/01/2015        2,359,976
----------------------------------------------------------------------------------------------------------------------------
       3,300,000  Niagara County IDA (American Ref-Fuel Company)                   5.550         11/15/2024        3,461,997
----------------------------------------------------------------------------------------------------------------------------
       1,500,000  Niagara County IDA (Niagara University)                          5.350         11/01/2023        1,618,485
----------------------------------------------------------------------------------------------------------------------------
       5,400,000  Niagara County IDA (Niagara University)                          5.400         11/01/2031        5,687,172
----------------------------------------------------------------------------------------------------------------------------
       1,200,000  Niagara County IDA (Sevenson Hotel)                              6.600         05/01/2007        1,200,696
----------------------------------------------------------------------------------------------------------------------------
       6,500,000  Niagara County IDA (Solid Waste Disposal)                        5.625         11/15/2024        6,863,025
----------------------------------------------------------------------------------------------------------------------------
          20,000  Niagara County Tobacco Asset Securitization Corp.                5.750         05/15/2022           20,755
----------------------------------------------------------------------------------------------------------------------------
       1,370,000  Niagara County Tobacco Asset Securitization Corp.                6.250         05/15/2034        1,445,556
----------------------------------------------------------------------------------------------------------------------------
       6,255,000  Niagara County Tobacco Asset Securitization Corp.                6.250         05/15/2040        6,599,963
----------------------------------------------------------------------------------------------------------------------------
          90,000  Niagara Frontier Transportation Authority
                  (Buffalo Niagara International Airport)                          5.000         04/01/2028           91,110
----------------------------------------------------------------------------------------------------------------------------
          25,000  Niagara Frontier Transportation Authority
                  (Buffalo Niagara International Airport)                          5.625         04/01/2029           26,489
----------------------------------------------------------------------------------------------------------------------------
         715,000  North Babylon Volunteer Fire Company                             5.750         08/01/2022          760,381
----------------------------------------------------------------------------------------------------------------------------
       1,555,000  North Country Devel. Authority (Clarkson University)             5.500         07/01/2019        1,627,696
----------------------------------------------------------------------------------------------------------------------------
       3,145,000  North Country Devel. Authority (Clarkson University)             5.500         07/01/2029        3,278,505
----------------------------------------------------------------------------------------------------------------------------
         260,000  North Tonawanda HDC (Bishop Gibbons Associates)                  6.800         12/15/2007          266,022
----------------------------------------------------------------------------------------------------------------------------
       3,295,000  North Tonawanda HDC (Bishop Gibbons Associates)                  7.375         12/15/2021        3,689,346
----------------------------------------------------------------------------------------------------------------------------
          25,000  Nunda GO                                                         8.000         05/01/2010           28,744
----------------------------------------------------------------------------------------------------------------------------
         315,000  NY Counties Tobacco Trust I                                      6.500         06/01/2035          335,595
----------------------------------------------------------------------------------------------------------------------------
       3,975,000  NY Counties Tobacco Trust I (TASC) Fixed Receipts                6.225         06/01/2028        4,212,149
----------------------------------------------------------------------------------------------------------------------------
      11,915,000  NY Counties Tobacco Trust I (TASC) RITES 2                       9.680 3       06/01/2028       14,047,547
----------------------------------------------------------------------------------------------------------------------------
      29,525,000  NY Counties Tobacco Trust I RITES 2                              8.256 3       06/01/2042       33,917,434
----------------------------------------------------------------------------------------------------------------------------
       9,105,000  NY Counties Tobacco Trust I RITES 2                              8.293 3       06/01/2035       10,295,479


                         30 | ROCHESTER FUND MUNICIPALS

       PRINCIPAL                                                                                                    VALUE
          AMOUNT                                                               COUPON            MATURITY      SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$     29,805,000  NY Counties Tobacco Trust II (TASC)                           5.625%         06/01/2035   $  30,349,239
-------------------------------------------------------------------------------------------------------------------------
      38,855,000  NY Counties Tobacco Trust II (TASC)                           5.750          06/01/2043      39,740,894
-------------------------------------------------------------------------------------------------------------------------
       5,000,000  NY Counties Tobacco Trust II RITES 2,4                       10.114(3)       06/01/2043       5,342,150
-------------------------------------------------------------------------------------------------------------------------
         245,000  NY Counties Tobacco Trust III                                 6.000          06/01/2043         257,772
-------------------------------------------------------------------------------------------------------------------------
       9,600,000  NY Counties Tobacco Trust IV 4                                5.000          06/01/2042       9,056,064
-------------------------------------------------------------------------------------------------------------------------
     117,975,000  NY Counties Tobacco Trust IV                                  5.880 1        06/01/2050       8,055,333
-------------------------------------------------------------------------------------------------------------------------
     279,690,000  NY Counties Tobacco Trust IV                                  6.370 1        06/01/2055      12,462,986
-------------------------------------------------------------------------------------------------------------------------
     561,950,000  NY Counties Tobacco Trust IV                                  6.800 1        06/01/2060      14,936,631
-------------------------------------------------------------------------------------------------------------------------
      82,500,000  NY Counties Tobacco Trust IV (TASC)                           0.000          06/01/2041      63,587,700
-------------------------------------------------------------------------------------------------------------------------
      82,500,000  NY Counties Tobacco Trust IV (TASC)                           6.650          06/01/2041      17,670,675
-------------------------------------------------------------------------------------------------------------------------
       5,725,000  NY Counties Tobacco Trust IV RITES 2,4                        6.425 3        06/01/2045       5,060,099
-------------------------------------------------------------------------------------------------------------------------
     158,835,000  NY Counties Tobacco Trust V                                   6.000 1        06/01/2038      23,771,246
-------------------------------------------------------------------------------------------------------------------------
     398,010,000  NY Counties Tobacco Trust V                                   6.090 1        06/01/2050      28,218,909
-------------------------------------------------------------------------------------------------------------------------
     643,195,000  NY Counties Tobacco Trust V                                   6.850 1        06/01/2055      23,708,168
-------------------------------------------------------------------------------------------------------------------------
   3,845,000,000  NY Counties Tobacco Trust V                                   7.850 1        06/01/2060      59,482,150
-------------------------------------------------------------------------------------------------------------------------
           5,000  NYC GO                                                        5.000          03/15/2021           5,142
-------------------------------------------------------------------------------------------------------------------------
       4,150,000  NYC GO                                                        5.000          03/01/2024       4,324,840
-------------------------------------------------------------------------------------------------------------------------
      14,305,000  NYC GO                                                        5.000          08/01/2024      14,956,021
-------------------------------------------------------------------------------------------------------------------------
       9,000,000  NYC GO                                                        5.000          09/01/2024       9,395,820
-------------------------------------------------------------------------------------------------------------------------
          25,000  NYC GO                                                        5.000          03/01/2025          25,842
-------------------------------------------------------------------------------------------------------------------------
       7,500,000  NYC GO                                                        5.000          08/01/2025       7,835,100
-------------------------------------------------------------------------------------------------------------------------
       8,000,000  NYC GO                                                        5.000          04/01/2026       8,327,120
-------------------------------------------------------------------------------------------------------------------------
       8,300,000  NYC GO                                                        5.000          08/01/2026       8,663,955
-------------------------------------------------------------------------------------------------------------------------
       6,000,000  NYC GO                                                        5.000          09/01/2026       6,254,280
-------------------------------------------------------------------------------------------------------------------------
       3,600,000  NYC GO                                                        5.000          08/01/2027       3,751,920
-------------------------------------------------------------------------------------------------------------------------
       2,500,000  NYC GO                                                        5.000          08/01/2028       2,599,325
-------------------------------------------------------------------------------------------------------------------------
          60,000  NYC GO                                                        5.000          08/15/2028          61,225
-------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYC GO                                                        5.000          11/01/2028       1,035,690
-------------------------------------------------------------------------------------------------------------------------
         395,000  NYC GO                                                        5.000          03/15/2029         403,591
-------------------------------------------------------------------------------------------------------------------------
          20,000  NYC GO                                                        5.000          03/15/2029          20,561
-------------------------------------------------------------------------------------------------------------------------
      16,760,000  NYC GO                                                        5.000          03/01/2030      17,338,388
-------------------------------------------------------------------------------------------------------------------------
      10,455,000  NYC GO                                                        5.000          06/01/2030      10,823,957
-------------------------------------------------------------------------------------------------------------------------
      23,250,000  NYC GO                                                        5.000          08/01/2030      24,082,118
-------------------------------------------------------------------------------------------------------------------------
       2,000,000  NYC GO                                                        5.000          08/01/2030       2,074,540
-------------------------------------------------------------------------------------------------------------------------
          60,000  NYC GO                                                        5.000          03/01/2033          61,614
-------------------------------------------------------------------------------------------------------------------------
      38,000,000  NYC GO                                                        5.000          06/01/2033      39,282,120
-------------------------------------------------------------------------------------------------------------------------
      12,455,000  NYC GO                                                        5.000          12/01/2033      12,857,047
-------------------------------------------------------------------------------------------------------------------------
      46,550,000  NYC GO                                                        5.000          11/01/2034      48,040,066
-------------------------------------------------------------------------------------------------------------------------
      30,000,000  NYC GO                                                        5.000          03/01/2035      30,989,700
-------------------------------------------------------------------------------------------------------------------------
       5,400,000  NYC GO                                                        5.000          08/01/2035       5,584,734
-------------------------------------------------------------------------------------------------------------------------
          60,000  NYC GO                                                        5.100          11/01/2019          62,890


                         31 | ROCHESTER FUND MUNICIPALS

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

       PRINCIPAL                                                                                                    VALUE
          AMOUNT                                                               COUPON           MATURITY       SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$      5,285,000  NYC GO                                                        5.100%        08/15/2027   $    5,525,098
-------------------------------------------------------------------------------------------------------------------------
       3,710,000  NYC GO                                                        5.250         10/15/2021        3,962,540
-------------------------------------------------------------------------------------------------------------------------
         265,000  NYC GO                                                        5.250         08/15/2023          278,017
-------------------------------------------------------------------------------------------------------------------------
         535,000  NYC GO                                                        5.250         08/01/2024          557,438
-------------------------------------------------------------------------------------------------------------------------
      33,485,000  NYC GO                                                        5.250         06/01/2027       35,280,466
-------------------------------------------------------------------------------------------------------------------------
       4,460,000  NYC GO                                                        5.250         06/01/2028        4,722,203
-------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYC GO                                                        5.250         09/15/2033        1,057,330
-------------------------------------------------------------------------------------------------------------------------
      20,105,000  NYC GO                                                        5.375         12/01/2026       21,521,196
-------------------------------------------------------------------------------------------------------------------------
          20,000  NYC GO                                                        5.375         03/01/2027           21,370
-------------------------------------------------------------------------------------------------------------------------
         515,000  NYC GO                                                        5.375         08/01/2027          540,961
-------------------------------------------------------------------------------------------------------------------------
       1,115,000  NYC GO                                                        5.375         03/15/2028        1,180,562
-------------------------------------------------------------------------------------------------------------------------
      55,790,000  NYC GO                                                        5.375         06/01/2032       59,073,242
-------------------------------------------------------------------------------------------------------------------------
      11,500,000  NYC GO                                                        5.500         08/01/2020       12,504,985
-------------------------------------------------------------------------------------------------------------------------
      11,860,000  NYC GO                                                        5.500         08/01/2021       12,880,434
-------------------------------------------------------------------------------------------------------------------------
       1,255,000  NYC GO                                                        5.500         06/01/2028        1,342,210
-------------------------------------------------------------------------------------------------------------------------
       6,910,000  NYC GO                                                        5.500         12/01/2031        7,475,860
-------------------------------------------------------------------------------------------------------------------------
       6,745,000  NYC GO                                                        5.500         11/15/2037        7,033,753
-------------------------------------------------------------------------------------------------------------------------
           5,000  NYC GO                                                        5.750         02/01/2020            5,084
-------------------------------------------------------------------------------------------------------------------------
       1,500,000  NYC GO                                                        5.750         03/01/2020        1,649,370
-------------------------------------------------------------------------------------------------------------------------
           5,000  NYC GO                                                        5.950         08/01/2014            5,323
-------------------------------------------------------------------------------------------------------------------------
      12,880,000  NYC GO                                                        6.000         01/15/2021       14,392,627
-------------------------------------------------------------------------------------------------------------------------
          40,000  NYC GO                                                        6.150 1       10/01/2012           30,674
------------------------------------------------------------------------------------------------------------------------
         200,000  NYC GO                                                        6.340 1       05/15/2012          155,860
-------------------------------------------------------------------------------------------------------------------------
         335,000  NYC GO                                                        6.350         05/15/2014          358,296
-------------------------------------------------------------------------------------------------------------------------
          20,000  NYC GO                                                        7.000         02/01/2010           20,060
-------------------------------------------------------------------------------------------------------------------------
          15,000  NYC GO                                                        7.250         08/15/2024           15,046
-------------------------------------------------------------------------------------------------------------------------
           5,000  NYC GO                                                        7.750         08/15/2028            5,026
-------------------------------------------------------------------------------------------------------------------------
         100,000  NYC GO DIAMONDS                                               0.000 6       08/01/2025           93,564
-------------------------------------------------------------------------------------------------------------------------
         837,000  NYC GO RIBS                                                   8.770 3       08/12/2010          840,942
-------------------------------------------------------------------------------------------------------------------------
         837,000  NYC GO RIBS                                                   8.770 3       09/01/2011          841,001
-------------------------------------------------------------------------------------------------------------------------
       1,045,000  NYC HDC (Barclay Avenue)                                      6.450         04/01/2017        1,068,931
-------------------------------------------------------------------------------------------------------------------------
       4,055,000  NYC HDC (Barclay Avenue)                                      6.600         04/01/2033        4,147,657
-------------------------------------------------------------------------------------------------------------------------
         290,442  NYC HDC (Bay Towers)                                          6.500         08/15/2017          305,548
-------------------------------------------------------------------------------------------------------------------------
         368,432  NYC HDC (Bridgeview III)                                      6.500         12/15/2017          387,590
-------------------------------------------------------------------------------------------------------------------------
       1,035,203  NYC HDC (Cadman Towers)                                       6.500         11/15/2018        1,089,044
-------------------------------------------------------------------------------------------------------------------------
         147,660  NYC HDC (Candia House)                                        6.500         06/15/2018          155,321
-------------------------------------------------------------------------------------------------------------------------
         244,597  NYC HDC (Contello III)                                        7.000         12/15/2018          257,368
-------------------------------------------------------------------------------------------------------------------------
         873,380  NYC HDC (Court Plaza)                                         6.500         08/15/2017          918,804
-------------------------------------------------------------------------------------------------------------------------
       2,867,439  NYC HDC (East Midtown Plaza)                                  6.500         11/15/2018        3,016,574
-------------------------------------------------------------------------------------------------------------------------
          66,565  NYC HDC (Essex Terrace)                                       6.500         07/15/2018           70,018
-------------------------------------------------------------------------------------------------------------------------
         395,556  NYC HDC (Forest Park Crescent)                                6.500         12/15/2017          416,069


                         32 | ROCHESTER FUND MUNICIPALS

       PRINCIPAL                                                                                                    VALUE
          AMOUNT                                                               COUPON            MATURITY      SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$        909,837  NYC HDC (Janel Towers)                                        6.500%         09/15/2017   $     957,148
-------------------------------------------------------------------------------------------------------------------------
         318,525  NYC HDC (Kingsbridge Arms)                                    6.500          08/15/2017         335,092
-------------------------------------------------------------------------------------------------------------------------
       1,412,114  NYC HDC (Lincoln-Amsterdam)                                   7.250          11/15/2018       1,484,640
-------------------------------------------------------------------------------------------------------------------------
       9,690,000  NYC HDC (Multifamily Hsg.)                                    4.650          11/01/2025       9,974,886
-------------------------------------------------------------------------------------------------------------------------
       6,470,000  NYC HDC (Multifamily Hsg.)                                    4.750          11/01/2035       6,515,161
-------------------------------------------------------------------------------------------------------------------------
       8,500,000  NYC HDC (Multifamily Hsg.)                                    5.250          11/01/2030       8,914,460
-------------------------------------------------------------------------------------------------------------------------
       3,000,000  NYC HDC (Multifamily Hsg.), Series A                          5.500          11/01/2034       3,096,000
-------------------------------------------------------------------------------------------------------------------------
      10,470,000  NYC HDC (Multifamily Hsg.), Series A                          5.600          11/01/2042      10,879,377
-------------------------------------------------------------------------------------------------------------------------
         330,000  NYC HDC (Multifamily Hsg.), Series C                          5.700          05/01/2031         341,349
-------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYC HDC (Multifamily Hsg.), Series E                          5.200          11/01/2033       1,017,590
-------------------------------------------------------------------------------------------------------------------------
      11,000,000  NYC HDC (Multifamily Hsg.), Series E-1                        4.950          11/01/2033      11,381,260
-------------------------------------------------------------------------------------------------------------------------
       2,155,000  NYC HDC (Multifamily Hsg.), Series F                          5.200          11/01/2032       2,194,156
-------------------------------------------------------------------------------------------------------------------------
       1,345,000  NYC HDC (Multifamily Hsg.), Series H-2                        5.200          11/01/2038       1,356,755
-------------------------------------------------------------------------------------------------------------------------
       3,400,000  NYC HDC (Multifamily Hsg.), Series H-2                        5.250          05/01/2046       3,427,234
-------------------------------------------------------------------------------------------------------------------------
      15,510,000  NYC HDC (Multifamily Hsg.), Series I-2                        5.200          11/01/2038      15,667,582
-------------------------------------------------------------------------------------------------------------------------
       3,380,000  NYC HDC (Multifamily)                                         4.850          11/01/2025       3,388,957
-------------------------------------------------------------------------------------------------------------------------
       2,685,000  NYC HDC (Multifamily) 4                                       5.000          11/01/2037       2,710,803
-------------------------------------------------------------------------------------------------------------------------
       3,185,000  NYC HDC (Multifamily) 4                                       5.050          11/01/2039       3,220,481
-------------------------------------------------------------------------------------------------------------------------
      15,000,000  NYC HDC (Progress of Peoples Devel.) 4                        4.950          05/15/2036      15,125,100
-------------------------------------------------------------------------------------------------------------------------
         530,835  NYC HDC (Robert Fulton Terrace)                               6.500          12/15/2017         558,438
-------------------------------------------------------------------------------------------------------------------------
         197,469  NYC HDC (Rosalie Manning Apartments)                          7.034          11/15/2018         207,787
-------------------------------------------------------------------------------------------------------------------------
         718,247  NYC HDC (Seaview Towers)                                      6.500          01/15/2018         755,517
-------------------------------------------------------------------------------------------------------------------------
         297,179  NYC HDC (St. Martin Tower)                                    6.500          11/15/2018         312,635
-------------------------------------------------------------------------------------------------------------------------
       1,375,408  NYC HDC (Stevenson Commons)                                   6.500          05/15/2018       1,446,778
-------------------------------------------------------------------------------------------------------------------------
       1,367,085  NYC HDC (Tivoli Towers)                                       6.500          01/15/2018       1,437,298
-------------------------------------------------------------------------------------------------------------------------
         185,706  NYC HDC (Town House West)                                     6.500          01/15/2018         195,225
-------------------------------------------------------------------------------------------------------------------------
         205,171  NYC HDC (Westview Apartments)                                 6.500          10/15/2017         215,840
-------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYC Health & Hospital Corp.                                   5.375          02/15/2026       1,041,170
-------------------------------------------------------------------------------------------------------------------------
       5,875,000  NYC Health & Hospital Corp. RITES 2                           6.951 3        02/15/2020       6,942,605
-------------------------------------------------------------------------------------------------------------------------
       1,165,000  NYC IDA (A Very Special Place)                                5.750          01/01/2029       1,146,034
-------------------------------------------------------------------------------------------------------------------------
         330,000  NYC IDA (A-Lite Vertical Products)                            6.750          11/01/2009         329,195
-------------------------------------------------------------------------------------------------------------------------
       1,330,000  NYC IDA (A-Lite Vertical Products)                            7.500          11/01/2019       1,334,456
-------------------------------------------------------------------------------------------------------------------------
       3,600,000  NYC IDA (Acme Architectural Products)                         6.375          11/01/2019       3,339,576
-------------------------------------------------------------------------------------------------------------------------
      29,825,000  NYC IDA (Airis JFK I/JFK International Airport)               5.500          07/01/2028      30,042,723
-------------------------------------------------------------------------------------------------------------------------
      20,745,000  NYC IDA (Airis JFK I/JFK International Airport)               6.000          07/01/2027      21,113,639
-------------------------------------------------------------------------------------------------------------------------
       1,035,000  NYC IDA (ALA Realty)                                          7.500          12/01/2010       1,063,649
-------------------------------------------------------------------------------------------------------------------------
       1,450,000  NYC IDA (ALA Realty)                                          8.375          12/01/2015       1,499,851
-------------------------------------------------------------------------------------------------------------------------
         305,000  NYC IDA (Allied Metal)                                        6.375          12/01/2014         310,578
-------------------------------------------------------------------------------------------------------------------------
         940,000  NYC IDA (Allied Metal)                                        7.125          12/01/2027         967,260
-------------------------------------------------------------------------------------------------------------------------
       3,325,000  NYC IDA (Amboy Properties)                                    6.750          06/01/2020       3,264,651
-------------------------------------------------------------------------------------------------------------------------
       2,595,000  NYC IDA (American Airlines)                                   5.400          07/01/2019       1,895,933


                         33 | ROCHESTER FUND MUNICIPALS

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

       PRINCIPAL                                                                                                    VALUE
          AMOUNT                                                                COUPON          MATURITY       SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$     29,935,000  NYC IDA (American Airlines)                                    5.400%       07/01/2020   $   21,569,664
-------------------------------------------------------------------------------------------------------------------------
      38,410,000  NYC IDA (American Airlines)                                    6.900        08/01/2024       31,455,485
-------------------------------------------------------------------------------------------------------------------------
     331,800,000  NYC IDA (American Airlines)                                    8.500        08/01/2028      354,183,228
-------------------------------------------------------------------------------------------------------------------------
         485,000  NYC IDA (Atlantic Paste & Glue Company)                        6.000        11/01/2007          486,455
-------------------------------------------------------------------------------------------------------------------------
       4,620,000  NYC IDA (Atlantic Paste & Glue Company)                        6.625        11/01/2019        4,710,136
-------------------------------------------------------------------------------------------------------------------------
       1,160,000  NYC IDA (Atlantic Veal & Lamb)                                 8.375        12/01/2016        1,212,281
-------------------------------------------------------------------------------------------------------------------------
         535,000  NYC IDA (Baco Enterprises)                                     7.500        11/01/2011          556,170
-------------------------------------------------------------------------------------------------------------------------
       1,685,000  NYC IDA (Baco Enterprises)                                     8.500        11/01/2021        1,791,812
-------------------------------------------------------------------------------------------------------------------------
         155,000  NYC IDA (Bark Frameworks)                                      6.000        11/01/2007          152,621
-------------------------------------------------------------------------------------------------------------------------
       1,500,000  NYC IDA (Bark Frameworks)                                      6.750        11/01/2019        1,426,815
-------------------------------------------------------------------------------------------------------------------------
      10,705,000  NYC IDA (Berkeley Carroll School)                              6.100        11/01/2028       10,537,039
-------------------------------------------------------------------------------------------------------------------------
       5,500,000  NYC IDA (Beth Abraham Health Services)                         6.500        02/15/2022        5,893,360
-------------------------------------------------------------------------------------------------------------------------
       1,035,000  NYC IDA (Beth Abraham Health Services)                         6.500        11/15/2027        1,105,038
-------------------------------------------------------------------------------------------------------------------------
       4,220,000  NYC IDA (Beth Abraham Health Services)                         6.500        11/15/2034        4,477,336
-------------------------------------------------------------------------------------------------------------------------
      31,815,000  NYC IDA (British Airways)                                      5.250        12/01/2032       27,917,981
-------------------------------------------------------------------------------------------------------------------------
      21,470,000  NYC IDA (British Airways)                                      7.625        12/01/2032       23,208,855
-------------------------------------------------------------------------------------------------------------------------
      85,175,000  NYC IDA (Brooklyn Navy Yard Cogeneration Partners)             5.650        10/01/2028       85,486,741
-------------------------------------------------------------------------------------------------------------------------
     143,510,000  NYC IDA (Brooklyn Navy Yard Cogeneration Partners)             5.750        10/01/2036      144,495,914
-------------------------------------------------------------------------------------------------------------------------
      21,050,000  NYC IDA (Brooklyn Navy Yard Cogeneration Partners)             6.200        10/01/2022       22,437,406
-------------------------------------------------------------------------------------------------------------------------
      16,000,000  NYC IDA (Calhoun School)                                       6.625        12/01/2034       16,960,800
-------------------------------------------------------------------------------------------------------------------------
       2,235,000  NYC IDA (Chardan Corp.)                                        7.750        11/01/2020        2,238,554
-------------------------------------------------------------------------------------------------------------------------
       2,500,000  NYC IDA (College of Aeronautics)                               5.450        05/01/2018        2,562,850
-------------------------------------------------------------------------------------------------------------------------
       9,600,000  NYC IDA (College of Aeronautics)                               5.500        05/01/2028        9,722,784
-------------------------------------------------------------------------------------------------------------------------
       2,505,000  NYC IDA (College of New Rochelle)                              5.750        09/01/2017        2,612,515
-------------------------------------------------------------------------------------------------------------------------
       2,900,000  NYC IDA (College of New Rochelle)                              5.800        09/01/2026        3,028,412
-------------------------------------------------------------------------------------------------------------------------
       2,040,000  NYC IDA (Community Hospital of Brooklyn)                       6.875        11/01/2010        2,056,055
-------------------------------------------------------------------------------------------------------------------------
       1,490,000  NYC IDA (Comprehensive Care Management)                        6.000        05/01/2026        1,506,807
-------------------------------------------------------------------------------------------------------------------------
       3,145,000  NYC IDA (Comprehensive Care Management)                        6.125        11/01/2035        3,181,702
-------------------------------------------------------------------------------------------------------------------------
       3,975,000  NYC IDA (Comprehensive Care Management)                        6.375        11/01/2028        4,054,739
-------------------------------------------------------------------------------------------------------------------------
       1,575,000  NYC IDA (Comprehensive Care Management)                        6.375        11/01/2028        1,590,451
-------------------------------------------------------------------------------------------------------------------------
       1,770,000  NYC IDA (Comprehensive Care Management)                        7.875        12/01/2016        1,854,606
-------------------------------------------------------------------------------------------------------------------------
       1,110,000  NYC IDA (Comprehensive Care Management)                        8.000        12/01/2011        1,123,220
-------------------------------------------------------------------------------------------------------------------------
       1,500,000  NYC IDA (Continental Airlines)                                 7.250        11/01/2008        1,491,855
-------------------------------------------------------------------------------------------------------------------------
       4,685,000  NYC IDA (Continental Airlines)                                 8.375        11/01/2016        4,797,534
-------------------------------------------------------------------------------------------------------------------------
         380,000  NYC IDA (Dioni)                                                6.000        11/01/2007          383,587
-------------------------------------------------------------------------------------------------------------------------
       3,600,000  NYC IDA (Dioni)                                                6.625        11/01/2019        3,715,380
-------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYC IDA (Eger Harbor House)                                    5.875        05/20/2044        1,107,050
-------------------------------------------------------------------------------------------------------------------------
       5,500,000  NYC IDA (Family Support Systems)                               7.500        11/01/2034        5,627,380
-------------------------------------------------------------------------------------------------------------------------
       7,315,000  NYC IDA (Friends Seminary School)                              7.125        09/15/2031        7,882,425
-------------------------------------------------------------------------------------------------------------------------
       3,280,000  NYC IDA (Gabrielli Truck Sales)                                8.125        12/01/2017        3,457,678
-------------------------------------------------------------------------------------------------------------------------
       2,265,000  NYC IDA (Gateway School of NY)                                 6.500        11/01/2019        2,414,037


                         34 | ROCHESTER FUND MUNICIPALS

       PRINCIPAL                                                                                                    VALUE
          AMOUNT                                                               COUPON            MATURITY      SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$     14,350,000  NYC IDA (General Motors Corp.)                                5.125%         12/30/2023   $   9,457,081
-------------------------------------------------------------------------------------------------------------------------
       1,900,000  NYC IDA (Global Country World Peace)                          7.250          11/01/2025       1,898,727
-------------------------------------------------------------------------------------------------------------------------
       1,800,000  NYC IDA (Global Country World Peace)                          7.250          11/01/2025       1,798,794
-------------------------------------------------------------------------------------------------------------------------
       2,175,000  NYC IDA (Good Shepherd Services)                              5.875          06/01/2014       2,234,987
-------------------------------------------------------------------------------------------------------------------------
         335,000  NYC IDA (Herbert G. Birch Childhood Project)                  7.375          02/01/2009         338,293
-------------------------------------------------------------------------------------------------------------------------
       2,195,000  NYC IDA (Herbert G. Birch Childhood Project)                  8.375          02/01/2022       2,283,305
-------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYC IDA (Independent Living Assoc.)                           6.200          07/01/2020       1,001,630
-------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYC IDA (Institute of International Education)                5.250          09/01/2021       1,051,650
-------------------------------------------------------------------------------------------------------------------------
       3,000,000  NYC IDA (Institute of International Education)                5.250          09/01/2031       3,134,940
-------------------------------------------------------------------------------------------------------------------------
       1,605,000  NYC IDA (Julia Gray)                                          7.500          11/01/2020       1,645,879
-------------------------------------------------------------------------------------------------------------------------
         830,000  NYC IDA (Just Bagels Manufacturing)                           8.500          11/01/2016         892,200
-------------------------------------------------------------------------------------------------------------------------
       1,030,000  NYC IDA (Just Bagels Manufacturing)                           8.750          11/01/2026       1,110,834
-------------------------------------------------------------------------------------------------------------------------
       1,675,000  NYC IDA (Koenig Iron Works)                                   8.375          12/01/2025       1,747,544
-------------------------------------------------------------------------------------------------------------------------
       1,150,000  NYC IDA (L&M Optical Disc)                                    7.125          11/01/2010       1,154,600
-------------------------------------------------------------------------------------------------------------------------
       4,500,000  NYC IDA (Liberty-7 World Trade Center) 2                      6.750          03/01/2015       4,728,105
-------------------------------------------------------------------------------------------------------------------------
      16,600,000  NYC IDA (Liberty-IAC/Interactive Corp.)                       5.000          09/01/2035      16,451,762
-------------------------------------------------------------------------------------------------------------------------
       3,025,000  NYC IDA (Little Red Schoolhouse)                              6.750          11/01/2018       3,160,097
-------------------------------------------------------------------------------------------------------------------------
         390,000  NYC IDA
                  (Lucky Polyethylene Manufacturing Company)                    7.000          11/01/2009         382,649
-------------------------------------------------------------------------------------------------------------------------
       2,995,000  NYC IDA
                  (Lucky Polyethylene Manufacturing Company)                    7.800          11/01/2024       2,921,652
-------------------------------------------------------------------------------------------------------------------------
       2,000,000  NYC IDA (Lycee Francais De New York)                          5.375          06/01/2023       2,086,680
-------------------------------------------------------------------------------------------------------------------------
      23,000,000  NYC IDA (Magen David Yeshivah)                                5.700          06/15/2027      24,657,610
-------------------------------------------------------------------------------------------------------------------------
         680,000  NYC IDA (Marymount School of NY)                              5.125          09/01/2021         702,590
-------------------------------------------------------------------------------------------------------------------------
       3,960,000  NYC IDA (Marymount School of NY)                              5.250          09/01/2031       4,155,545
-------------------------------------------------------------------------------------------------------------------------
      19,335,000  NYC IDA (MediSys Health Network)                              6.250          03/15/2024      18,043,035
-------------------------------------------------------------------------------------------------------------------------
       1,690,000  NYC IDA (Mesorah Publications)                                6.450          02/01/2011       1,715,130
-------------------------------------------------------------------------------------------------------------------------
       4,790,000  NYC IDA (Mesorah Publications)                                6.950          02/01/2021       4,801,831
-------------------------------------------------------------------------------------------------------------------------
       3,400,000  NYC IDA (Metropolitan College of New York)                    5.750          03/01/2020       3,336,794
-------------------------------------------------------------------------------------------------------------------------
       2,275,000  NYC IDA (Morrisons Pastry)                                    6.500          11/01/2019       2,282,712
-------------------------------------------------------------------------------------------------------------------------
          25,000  NYC IDA (New York University)                                 5.000          07/01/2041          25,634
-------------------------------------------------------------------------------------------------------------------------
       3,945,000  NYC IDA (NY Hostel Company)                                   7.600          01/01/2017       4,000,388
-------------------------------------------------------------------------------------------------------------------------
         475,000  NYC IDA (NYC Outward Bound Center)                            7.250          11/01/2010         477,570
-------------------------------------------------------------------------------------------------------------------------
         290,000  NYC IDA (Paradise Products)                                   7.125          11/01/2007         294,385
-------------------------------------------------------------------------------------------------------------------------
       4,475,000  NYC IDA (Paradise Products)                                   8.250          11/01/2022       4,693,291
-------------------------------------------------------------------------------------------------------------------------
         470,000  NYC IDA (Petrocelli Electric)                                 7.250          11/01/2007         479,560
-------------------------------------------------------------------------------------------------------------------------
         170,000  NYC IDA (Petrocelli Electric)                                 7.250          11/01/2008         174,248
-------------------------------------------------------------------------------------------------------------------------
       3,780,000  NYC IDA (Petrocelli Electric)                                 8.000          11/01/2017       3,938,836
-------------------------------------------------------------------------------------------------------------------------
         940,000  NYC IDA (Petrocelli Electric)                                 8.000          11/01/2018         988,184
-------------------------------------------------------------------------------------------------------------------------
       6,360,000  NYC IDA (Polytechnic University)                              6.000          11/01/2020       6,343,909
-------------------------------------------------------------------------------------------------------------------------
      34,050,000  NYC IDA (Polytechnic University)                              6.125          11/01/2030      34,046,595
-------------------------------------------------------------------------------------------------------------------------
       2,455,000  NYC IDA (Pop Display)                                         7.900          12/30/2014       2,482,373


                         35 | ROCHESTER FUND MUNICIPALS

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

       PRINCIPAL                                                                                                    VALUE
          AMOUNT                                                               COUPON           MATURITY       SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$      2,240,000  NYC IDA (Precision Gear)                                      6.375%        11/01/2024   $    2,269,994
-------------------------------------------------------------------------------------------------------------------------
       1,910,000  NYC IDA (Precision Gear)                                      6.375         11/01/2024        1,935,575
-------------------------------------------------------------------------------------------------------------------------
         930,000  NYC IDA (Precision Gear)                                      7.625         11/01/2024        1,000,271
-------------------------------------------------------------------------------------------------------------------------
       4,100,000  NYC IDA (PSCH)                                                6.375         07/01/2033        4,381,219
-------------------------------------------------------------------------------------------------------------------------
       6,800,000  NYC IDA (Reece School)                                        7.500         12/01/2037        6,836,244
-------------------------------------------------------------------------------------------------------------------------
       2,300,000  NYC IDA (Reece School)                                        7.500         12/01/2037        2,301,219
-------------------------------------------------------------------------------------------------------------------------
       2,615,000  NYC IDA (Riverdale Terrace Hsg. Devel. Fund)                  6.250         11/01/2014        2,504,856
-------------------------------------------------------------------------------------------------------------------------
       8,595,000  NYC IDA (Riverdale Terrace Hsg. Devel. Fund)                  6.750         11/01/2028        8,035,036
-------------------------------------------------------------------------------------------------------------------------
       1,030,000  NYC IDA (Sahadi Fine Foods)                                   6.250         11/01/2009        1,035,006
-------------------------------------------------------------------------------------------------------------------------
       4,085,000  NYC IDA (Sahadi Fine Foods)                                   6.750         11/01/2019        4,058,284
-------------------------------------------------------------------------------------------------------------------------
       4,380,000  NYC IDA (Showman Fabricators)                                 7.500         11/01/2028        4,431,334
-------------------------------------------------------------------------------------------------------------------------
       3,420,000  NYC IDA (South Bronx Overall Economic Devel.)                 8.625         12/01/2025        3,522,463
-------------------------------------------------------------------------------------------------------------------------
       1,625,000  NYC IDA (Special Needs Facilities Pooled Program)             4.750         07/01/2020        1,642,973
-------------------------------------------------------------------------------------------------------------------------
       4,255,000  NYC IDA (Special Needs Facilities Pooled Program)             6.650         07/01/2023        4,145,732
-------------------------------------------------------------------------------------------------------------------------
         345,000  NYC IDA (Special Needs Facilities Pooled Program)             7.125         08/01/2006          348,177
-------------------------------------------------------------------------------------------------------------------------
       7,010,000  NYC IDA (Special Needs Facilities Pooled Program)             7.875         08/01/2025        7,530,773
-------------------------------------------------------------------------------------------------------------------------
       5,115,000  NYC IDA (St. Bernard's School)                                7.000         12/01/2021        5,333,411
-------------------------------------------------------------------------------------------------------------------------
       1,550,000  NYC IDA (St. Francis College)                                 5.000         10/01/2034        1,587,975
-------------------------------------------------------------------------------------------------------------------------
          10,000  NYC IDA (Staten Island University Hospital)                   6.375         07/01/2031           10,183
-------------------------------------------------------------------------------------------------------------------------
       4,530,000  NYC IDA (Staten Island University Hospital)                   6.375         07/01/2031        4,613,035
-------------------------------------------------------------------------------------------------------------------------
       1,490,000  NYC IDA (Staten Island University Hospital)                   6.450         07/01/2032        1,536,145
-------------------------------------------------------------------------------------------------------------------------
         585,000  NYC IDA (Streamline Plastics)                                 7.750         12/01/2015          592,798
-------------------------------------------------------------------------------------------------------------------------
       1,275,000  NYC IDA (Streamline Plastics)                                 8.125         12/01/2025        1,301,877
-------------------------------------------------------------------------------------------------------------------------
         523,350  NYC IDA (Summit School)                                       8.250         12/01/2024          534,168
-------------------------------------------------------------------------------------------------------------------------
         955,000  NYC IDA (Surprise Plastics)                                   7.500         11/01/2013          917,545
-------------------------------------------------------------------------------------------------------------------------
       2,480,000  NYC IDA (Surprise Plastics)                                   8.500         11/01/2023        2,395,035
-------------------------------------------------------------------------------------------------------------------------
       5,245,000  NYC IDA (Terminal One Group Assoc.)                           5.500         01/01/2020        5,622,220
-------------------------------------------------------------------------------------------------------------------------
       7,750,000  NYC IDA (Terminal One Group Assoc.)                           5.500         01/01/2021        8,300,948
-------------------------------------------------------------------------------------------------------------------------
      11,390,000  NYC IDA (Terminal One Group Assoc.)                           5.500         01/01/2024       12,171,468
-------------------------------------------------------------------------------------------------------------------------
       4,050,000  NYC IDA (Terminal One Group Assoc.)                           6.000         01/01/2015        4,055,792
-------------------------------------------------------------------------------------------------------------------------
      26,105,000  NYC IDA (Terminal One Group Assoc.)                           6.000         01/01/2019       26,142,330
-------------------------------------------------------------------------------------------------------------------------
         210,000  NYC IDA (Terminal One Group Assoc.)                           6.100         01/01/2009          210,315
-------------------------------------------------------------------------------------------------------------------------
      11,265,000  NYC IDA (Terminal One Group Assoc.)                           6.125         01/01/2024       11,282,010
-------------------------------------------------------------------------------------------------------------------------
         380,000  NYC IDA (The Bank Street College)                             5.250         12/01/2021          404,920
-------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYC IDA (The Bank Street College)                             5.250         12/01/2030        1,054,570
-------------------------------------------------------------------------------------------------------------------------
      10,000,000  NYC IDA (The Child School)                                    7.550         06/01/2033       10,593,400
-------------------------------------------------------------------------------------------------------------------------
         375,000  NYC IDA (Therapy & Learning Center)                           7.500         10/01/2011          401,051
-------------------------------------------------------------------------------------------------------------------------
       3,735,000  NYC IDA (Therapy & Learning Center)                           8.250         10/01/2031        4,045,304
-------------------------------------------------------------------------------------------------------------------------
         300,000  NYC IDA (THR Products Corp.)                                  7.250         11/01/2010          307,131
-------------------------------------------------------------------------------------------------------------------------
       1,085,000  NYC IDA (THR Products Corp.)                                  8.250         11/01/2020        1,138,100
-------------------------------------------------------------------------------------------------------------------------
       4,325,000  NYC IDA (Touro College)                                       6.350         06/01/2029        4,461,238


                         36 | ROCHESTER FUND MUNICIPALS

       PRINCIPAL                                                                                                      VALUE
          AMOUNT                                                               COUPON             MATURITY       SEE NOTE 1
---------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$      4,485,000  NYC IDA (Ulano)                                               6.900%          11/01/2019    $   4,444,904
---------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYC IDA (United Nations School)                               6.350           12/01/2015        1,031,370
---------------------------------------------------------------------------------------------------------------------------
         950,000  NYC IDA (Urban Health Plan)                                   6.250           09/15/2009          970,853
---------------------------------------------------------------------------------------------------------------------------
       9,830,000  NYC IDA (Urban Health Plan)                                   7.050           09/15/2026       10,181,521
---------------------------------------------------------------------------------------------------------------------------
       3,640,000  NYC IDA (Urban Resource Institute)                            7.375           11/01/2033        3,852,576
---------------------------------------------------------------------------------------------------------------------------
          40,000  NYC IDA (Utleys)                                              6.625           11/01/2006           39,866
---------------------------------------------------------------------------------------------------------------------------
       1,335,000  NYC IDA (Utleys)                                              7.375           11/01/2023        1,316,670
---------------------------------------------------------------------------------------------------------------------------
         365,000  NYC IDA (Van Blarcom Closures)                                7.125           11/01/2007          373,771
---------------------------------------------------------------------------------------------------------------------------
       2,965,000  NYC IDA (Van Blarcom Closures)                                8.000           11/01/2017        3,134,272
---------------------------------------------------------------------------------------------------------------------------
      20,800,000  NYC IDA (Visy Paper)                                          7.800           01/01/2016       21,299,408
---------------------------------------------------------------------------------------------------------------------------
      70,500,000  NYC IDA (Visy Paper)                                          7.950           01/01/2028       72,825,795
---------------------------------------------------------------------------------------------------------------------------
       1,930,000  NYC IDA (Vocational Instruction)                              7.750           02/01/2033        1,886,286
---------------------------------------------------------------------------------------------------------------------------
         505,000  NYC IDA (W & W Jewelers)                                      7.250           02/01/2011          522,271
---------------------------------------------------------------------------------------------------------------------------
       1,555,000  NYC IDA (W & W Jewelers)                                      8.250           02/01/2021        1,646,605
---------------------------------------------------------------------------------------------------------------------------
       5,930,000  NYC IDA (Weizmann Institute)                                  5.900           11/01/2034        6,073,980
---------------------------------------------------------------------------------------------------------------------------
       2,900,000  NYC IDA (Weizmann Institute)                                  5.900           11/01/2034        2,912,586
---------------------------------------------------------------------------------------------------------------------------
       3,370,000  NYC IDA (Westchester Square Medical Center)                   8.000           11/01/2010        3,469,415
---------------------------------------------------------------------------------------------------------------------------
       6,160,000  NYC IDA (Westchester Square Medical Center)                   8.375           11/01/2015        6,402,026
---------------------------------------------------------------------------------------------------------------------------
       1,660,000  NYC IDA (World Casing Corp.)                                  6.700           11/01/2019        1,543,501
---------------------------------------------------------------------------------------------------------------------------
       9,000,000  NYC IDA Special Facilities (JFK International
                  Airport)                                                      8.000           08/01/2012        9,414,630
---------------------------------------------------------------------------------------------------------------------------
          65,000  NYC Municipal Water Finance Authority                         5.000           06/15/2029           67,144
---------------------------------------------------------------------------------------------------------------------------
          50,000  NYC Municipal Water Finance Authority                         5.000           06/15/2029           51,649
---------------------------------------------------------------------------------------------------------------------------
       5,000,000  NYC Municipal Water Finance Authority                         5.000           06/15/2031        5,231,950
---------------------------------------------------------------------------------------------------------------------------
      39,985,000  NYC Municipal Water Finance Authority                         5.000           06/15/2034       41,392,872
---------------------------------------------------------------------------------------------------------------------------
      11,565,000  NYC Municipal Water Finance Authority                         5.000           06/15/2035       12,013,144
---------------------------------------------------------------------------------------------------------------------------
       3,000,000  NYC Municipal Water Finance Authority                         5.000           06/15/2035        3,116,220
---------------------------------------------------------------------------------------------------------------------------
         200,000  NYC Municipal Water Finance Authority                         5.000           06/15/2035          206,976
---------------------------------------------------------------------------------------------------------------------------
         850,000  NYC Municipal Water Finance Authority                         5.000           06/15/2038          884,757
---------------------------------------------------------------------------------------------------------------------------
         820,000  NYC Municipal Water Finance Authority                         5.125           06/15/2031          852,341
---------------------------------------------------------------------------------------------------------------------------
          30,000  NYC Municipal Water Finance Authority                         5.125           06/15/2032           31,298
---------------------------------------------------------------------------------------------------------------------------
          30,000  NYC Municipal Water Finance Authority                         5.125           06/15/2033           31,560
---------------------------------------------------------------------------------------------------------------------------
          25,000  NYC Municipal Water Finance Authority                         5.125           06/15/2033           25,911
---------------------------------------------------------------------------------------------------------------------------
      20,545,000  NYC Municipal Water Finance Authority                         5.125           06/15/2034       21,435,009
---------------------------------------------------------------------------------------------------------------------------
         650,000  NYC Municipal Water Finance Authority                         5.250           06/15/2034          685,464
---------------------------------------------------------------------------------------------------------------------------
         530,000  NYC Municipal Water Finance Authority                         5.400 1         06/15/2019          275,971
---------------------------------------------------------------------------------------------------------------------------
         335,000  NYC Municipal Water Finance Authority                         5.500           06/15/2033          360,138
---------------------------------------------------------------------------------------------------------------------------
      12,750,000  NYC Municipal Water Finance Authority DRIVERS 2               8.519 3         06/15/2013       14,739,510
---------------------------------------------------------------------------------------------------------------------------
       2,930,000  NYC Municipal Water Finance Authority RITES 2                 6.846 3         06/15/2032        3,259,098
---------------------------------------------------------------------------------------------------------------------------
       2,500,000  NYC Municipal Water Finance Authority RITES 2                 6.915 3         06/15/2029        2,800,350
---------------------------------------------------------------------------------------------------------------------------
       7,850,000  NYC Municipal Water Finance Authority RITES 2                 6.915 3         06/15/2034        8,785,563
---------------------------------------------------------------------------------------------------------------------------
      14,425,000  NYC Municipal Water Finance Authority RITES 2                 6.939 3         06/15/2026       16,356,219


                         37 | ROCHESTER FUND MUNICIPALS

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

       PRINCIPAL                                                                                                       VALUE
          AMOUNT                                                              COUPON               MATURITY       SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$      2,805,000  NYC Municipal Water Finance Authority RITES 2                 6.962% 3         06/15/2027   $    3,194,839
----------------------------------------------------------------------------------------------------------------------------
      11,210,000  NYC Municipal Water Finance Authority RITES 2                 7.346 3          06/15/2032       12,875,133
----------------------------------------------------------------------------------------------------------------------------
       3,555,000  NYC Municipal Water Finance Authority RITES 2                 7.415 3          06/15/2021        4,047,865
----------------------------------------------------------------------------------------------------------------------------
       5,000,000  NYC Municipal Water Finance Authority RITES 2                 7.415 3          06/15/2030        5,626,800
----------------------------------------------------------------------------------------------------------------------------
      18,240,000  NYC Municipal Water Finance Authority RITES 2                 7.451 3          06/15/2030       20,526,566
----------------------------------------------------------------------------------------------------------------------------
       4,030,000  NYC Municipal Water Finance Authority RITES 2                 7.462 3          06/15/2030        4,535,201
----------------------------------------------------------------------------------------------------------------------------
       5,000,000  NYC Municipal Water Finance Authority RITES 2                 7.462 3          06/15/2030        5,626,800
----------------------------------------------------------------------------------------------------------------------------
      17,300,000  NYC Municipal Water Finance Authority RITES 2                 8.915 3          06/15/2033       22,492,768
----------------------------------------------------------------------------------------------------------------------------
      11,860,000  NYC Municipal Water Finance Authority RITES 2                 8.980 3          06/15/2034       13,530,125
----------------------------------------------------------------------------------------------------------------------------
       4,500,000  NYC Municipal Water Finance Authority RITES 2                 8.980 3          06/15/2038        5,104,800
----------------------------------------------------------------------------------------------------------------------------
       6,875,000  NYC Municipal Water Finance Authority ROLs 2                  8.968 3          06/15/2031        8,150,725
----------------------------------------------------------------------------------------------------------------------------
      16,675,000  NYC Municipal Water Finance Authority ROLs 2                  8.968 3          06/15/2036       19,360,009
----------------------------------------------------------------------------------------------------------------------------
      10,025,000  NYC Municipal Water Finance Authority ROLs 2                  8.968 3          06/15/2037       11,680,529
----------------------------------------------------------------------------------------------------------------------------
       7,875,000  NYC Municipal Water Finance Authority ROLs 2                  8.968 3          06/15/2039        9,014,828
----------------------------------------------------------------------------------------------------------------------------
       4,935,000  NYC Municipal Water Finance Authority ROLs 2                  8.968 3          06/15/2039        5,733,977
----------------------------------------------------------------------------------------------------------------------------
       4,500,000  NYC Municipal Water Finance Authority ROLs 2                  8.988 3          06/15/2039        5,213,430
----------------------------------------------------------------------------------------------------------------------------
       2,150,000  NYC Transitional Finance Authority RITES 2                    6.951 3          08/15/2027        2,468,329
----------------------------------------------------------------------------------------------------------------------------
          50,000  NYC Trust for Cultural Resources
                  (Museum of American Folk Art)                                 6.125            07/01/2030           54,209
----------------------------------------------------------------------------------------------------------------------------
      18,233,061  NYS Certificate of Lease 2                                    5.875            01/02/2023       18,850,980
----------------------------------------------------------------------------------------------------------------------------
       1,690,000  NYS DA (4201 Schools Program)                                 6.250            07/01/2020        1,874,142
----------------------------------------------------------------------------------------------------------------------------
         350,000  NYS DA (Augustana Lutheran Home)                              5.400            02/01/2031          373,559
----------------------------------------------------------------------------------------------------------------------------
       1,500,000  NYS DA (Augustana Lutheran Home)                              5.500            02/01/2041        1,595,820
----------------------------------------------------------------------------------------------------------------------------
         195,000  NYS DA (Bishop Henry B. Hucles Nursing Home)                  6.000            07/01/2024          201,057
----------------------------------------------------------------------------------------------------------------------------
      14,360,000  NYS DA (Buena Vida Nursing Home)                              5.250            07/01/2028       14,904,100
----------------------------------------------------------------------------------------------------------------------------
       8,435,000  NYS DA (Center for Nursing)                                   5.550            08/01/2037        8,993,819
----------------------------------------------------------------------------------------------------------------------------
       2,905,000  NYS DA (Chapel Oaks)                                          5.450            07/01/2026        3,030,264
----------------------------------------------------------------------------------------------------------------------------
           5,000  NYS DA (City University)                                      5.000            07/01/2023            5,225
----------------------------------------------------------------------------------------------------------------------------
       1,895,000  NYS DA (City University)                                      5.250            07/01/2031        2,062,158
----------------------------------------------------------------------------------------------------------------------------
       2,500,000  NYS DA (Concord Nursing Home)                                 6.500            07/01/2029        2,713,700
----------------------------------------------------------------------------------------------------------------------------
       1,250,000  NYS DA (D'Youville College)                                   5.250            07/01/2025        1,330,413
----------------------------------------------------------------------------------------------------------------------------
         525,000  NYS DA (Dept. of Health)                                      5.500            07/01/2021          545,522
----------------------------------------------------------------------------------------------------------------------------
          20,000  NYS DA (Ellis Hospital)                                       5.600            08/01/2025           20,435
----------------------------------------------------------------------------------------------------------------------------
       6,480,000  NYS DA (Frances Schervier Home
                  & Hospital Obligated Group)                                   5.500            07/01/2027        6,780,866
----------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYS DA (Grace Manor Health Care Facility)                     6.150            07/01/2018        1,033,690
----------------------------------------------------------------------------------------------------------------------------
       3,970,000  NYS DA (Hospital Special Surgery)                             5.000            08/15/2033        4,145,712
----------------------------------------------------------------------------------------------------------------------------
     140,915,000  NYS DA (Insured Hospital)                                     5.530 1          08/15/2036       27,639,068
----------------------------------------------------------------------------------------------------------------------------
      38,650,000  NYS DA (Interfaith Medical Center)                            5.400            02/15/2028       40,068,069
----------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYS DA (Jones Memorial Hospital)                              5.375            08/01/2034        1,054,330
----------------------------------------------------------------------------------------------------------------------------
      10,300,000  NYS DA (Kaleida Health)                                       5.050            02/15/2025       10,776,375
----------------------------------------------------------------------------------------------------------------------------
       3,450,000  NYS DA (L.I. University)                                      5.125            09/01/2023        3,585,482


                         38 | ROCHESTER FUND MUNICIPALS

       PRINCIPAL                                                                                                       VALUE
          AMOUNT                                                               COUPON             MATURITY        SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$      1,410,000  NYS DA (L.I. University)                                      5.250%          09/01/2028     $   1,475,593
----------------------------------------------------------------------------------------------------------------------------
         235,000  NYS DA (L.I. University)                                      5.250           09/01/2028           247,556
----------------------------------------------------------------------------------------------------------------------------
       1,585,000  NYS DA (L.I. University)                                      5.500           09/01/2020         1,705,904
----------------------------------------------------------------------------------------------------------------------------
          20,000  NYS DA (Lakeside Memorial Hospital)                           6.000           02/01/2021            20,241
----------------------------------------------------------------------------------------------------------------------------
       1,700,000  NYS DA (Lenox Hill Hospital Obligated Group)                  5.375           07/01/2020         1,717,170
----------------------------------------------------------------------------------------------------------------------------
       9,415,000  NYS DA (Lutheran Social Services of Upstate NY)
                  RITES 2                                                       6.238 3         02/01/2038        10,369,775
----------------------------------------------------------------------------------------------------------------------------
       3,115,000  NYS DA (Menorah Home & Hospital) RITES 2                      7.328 3         08/01/2038         3,698,377
----------------------------------------------------------------------------------------------------------------------------
       5,825,000  NYS DA (Menorah Home) RITES 2                                 7.515 3         08/01/2038         6,748,263
----------------------------------------------------------------------------------------------------------------------------
       3,660,000  NYS DA (Mental Health)                                        5.000           02/15/2033         3,776,900
----------------------------------------------------------------------------------------------------------------------------
       2,750,000  NYS DA (Mental Health)                                        5.000           02/15/2035         2,869,625
----------------------------------------------------------------------------------------------------------------------------
      14,400,000  NYS DA (Mental Health)                                        5.000           02/15/2035        14,960,592
----------------------------------------------------------------------------------------------------------------------------
       4,625,000  NYS DA (Mental Health) RITES 2                                6.962 3         02/15/2023         5,488,118
----------------------------------------------------------------------------------------------------------------------------
       3,770,000  NYS DA (Millard Fillmore Hospital)                            5.375           02/01/2032         3,926,267
----------------------------------------------------------------------------------------------------------------------------
       6,860,000  NYS DA (Miriam Osborn Memorial Home Assoc,)                   6.875           07/01/2025         7,699,938
----------------------------------------------------------------------------------------------------------------------------
       4,125,000  NYS DA (Miriam Osborn Memorial Home Assoc.)                   6.375           07/01/2029         4,511,678
----------------------------------------------------------------------------------------------------------------------------
       2,430,000  NYS DA (Miriam Osborn Memorial Home Assoc.)                   6.875           07/01/2019         2,727,529
----------------------------------------------------------------------------------------------------------------------------
       5,000,000  NYS DA (Montefiore Medical Center)                            5.000           02/01/2028         5,228,200
----------------------------------------------------------------------------------------------------------------------------
       8,600,000  NYS DA (Montefiore Medical Center)                            5.000           08/01/2033         8,959,824
----------------------------------------------------------------------------------------------------------------------------
       2,375,000  NYS DA (Montefiore Medical) RITES 2                           8.915 3         08/01/2038         3,010,788
----------------------------------------------------------------------------------------------------------------------------
       6,400,000  NYS DA (MSH/NYU Hospital Center/
                  HJDOI Obligated Group)                                        5.500           07/01/2026         6,482,624
----------------------------------------------------------------------------------------------------------------------------
       6,800,000  NYS DA (MSH/NYU Hospital Center/
                  HJDOI Obligated Group)                                        6.000           07/01/2014         7,207,320
----------------------------------------------------------------------------------------------------------------------------
       3,000,000  NYS DA (MSH/NYU Hospital Center/
                  HJDOI Obligated Group)                                        6.500           07/01/2017         3,228,570
----------------------------------------------------------------------------------------------------------------------------
      27,420,000  NYS DA (MSH/NYU Hospital Center/
                  HJDOI Obligated Group)                                        6.500           07/01/2025        29,205,590
----------------------------------------------------------------------------------------------------------------------------
       8,820,000  NYS DA (MSH/NYU Hospital Center/
                  HJDOI Obligated Group)                                        6.625           07/01/2019         9,523,130
----------------------------------------------------------------------------------------------------------------------------
      15,000,000  NYS DA (MSH/NYU Hospital Center/
                  HJDOI Obligated Group)                                        6.750           07/01/2020        16,270,800
----------------------------------------------------------------------------------------------------------------------------
       5,000,000  NYS DA (Mt. Sinai/NYU Health)                                 5.500           07/01/2026         5,064,550
----------------------------------------------------------------------------------------------------------------------------
       2,850,000  NYS DA (Municipal Health Facilities) RITES 2                  6.962 3         01/15/2023         3,414,756
----------------------------------------------------------------------------------------------------------------------------
       4,665,000  NYS DA (North Shore Long Island Jewish Group)                 5.500           05/01/2033         4,925,074
----------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYS DA (Norwegian Christian Home & Health Center)             5.200           08/01/2036         1,047,450
----------------------------------------------------------------------------------------------------------------------------
       2,000,000  NYS DA (Norwegian Christian Home & Health Center)             6.100           08/01/2041         2,245,640
----------------------------------------------------------------------------------------------------------------------------
       6,200,000  NYS DA (Nursing Home)                                         4.900           02/15/2041         6,291,264
----------------------------------------------------------------------------------------------------------------------------
       7,600,000  NYS DA (Nursing Home)                                         4.950           02/15/2045         7,751,164
----------------------------------------------------------------------------------------------------------------------------
       4,215,000  NYS DA (Nursing Homes)                                        5.200           02/01/2032         4,466,130
----------------------------------------------------------------------------------------------------------------------------
         390,000  NYS DA (NY & Presbyterian Hospital)                           5.000           08/01/2032           403,291


                         39 | ROCHESTER FUND MUNICIPALS

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

       PRINCIPAL                                                                                                         VALUE
          AMOUNT                                                                  COUPON           MATURITY         SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$      6,950,000  NYS DA (NY Hospital Medical Center)                              5.600%        02/15/2039     $    7,472,779
------------------------------------------------------------------------------------------------------------------------------
       1,727,525  NYS DA (Our Lady of Mercy Medical Center)
                  Computer Lease 2                                                 6.200         08/15/2006          1,721,634
------------------------------------------------------------------------------------------------------------------------------
       6,035,000  NYS DA (Providence Rest)                                         5.000         07/01/2035          6,155,760
------------------------------------------------------------------------------------------------------------------------------
       2,700,000  NYS DA (Providence Rest)                                         5.125         07/01/2030          2,798,658
------------------------------------------------------------------------------------------------------------------------------
       3,100,000  NYS DA (Providence Rest)                                         5.250         07/01/2025          3,272,019
------------------------------------------------------------------------------------------------------------------------------
         580,000  NYS DA (Sarah Neuman Home)                                       5.450         08/01/2027            608,362
------------------------------------------------------------------------------------------------------------------------------
          50,000  NYS DA (School Districts Financing Program),
------------------------------------------------------------------------------------------------------------------------------
          25,000  NYS DA (School Districts Financing Program),
                  Series B                                                         6.000         10/01/2029             28,042
------------------------------------------------------------------------------------------------------------------------------
      20,400,000  NYS DA (SCSMC/SV/CHSLI Obligated Group)                          6.000         07/01/2030         21,673,164
------------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYS DA
                  (SFH/GSHMC/MMC/SCHRC Obligated Group)                            5.100         07/01/2034          1,016,060
------------------------------------------------------------------------------------------------------------------------------
       2,470,000  NYS DA (St. Barnabas Hospital)                                   5.450         08/01/2035          2,568,973
------------------------------------------------------------------------------------------------------------------------------
         905,000  NYS DA (St. Catherine of Siena Medical Center)                   6.000         07/01/2030            963,373
------------------------------------------------------------------------------------------------------------------------------
       1,750,000  NYS DA (St. Clare's Hospital)                                    5.300         02/15/2019          1,815,923
------------------------------------------------------------------------------------------------------------------------------
       2,970,000  NYS DA (St. Clare's Hospital)                                    5.400         02/15/2025          3,084,404
------------------------------------------------------------------------------------------------------------------------------
       2,580,000  NYS DA (St. James Mercy Hospital)                                5.400         02/01/2038          2,718,211
------------------------------------------------------------------------------------------------------------------------------
       5,000,000  NYS DA (St. Lukes Roosevelt Hospital)                            4.800         08/15/2025          5,121,750
------------------------------------------------------------------------------------------------------------------------------
     101,800,000  NYS DA (St. Lukes Roosevelt Hospital)                            4.900         08/15/2031        104,236,074
------------------------------------------------------------------------------------------------------------------------------
       1,505,000  NYS DA (St. Thomas Aquinas College)                              5.250         07/01/2028          1,547,953
------------------------------------------------------------------------------------------------------------------------------
       3,885,000  NYS DA (St. Vincent DePaul Residence)                            5.300         07/01/2018          4,061,146
------------------------------------------------------------------------------------------------------------------------------
         230,000  NYS DA (St. Vincent's Hospital & Medical Center)                 7.400         08/01/2030            231,419
------------------------------------------------------------------------------------------------------------------------------
       3,200,000  NYS DA (Various School Districts)                                5.000         04/01/2035          3,348,160
------------------------------------------------------------------------------------------------------------------------------
       1,700,000  NYS DA (Vassar Brothers)                                         5.375         07/01/2025          1,791,154
------------------------------------------------------------------------------------------------------------------------------
       7,030,000  NYS DA (White Plains Hospital)                                   5.375         02/15/2043          7,446,738
------------------------------------------------------------------------------------------------------------------------------
       2,500,000  NYS DA (Willow Towers)                                           5.400         02/01/2034          2,675,525
------------------------------------------------------------------------------------------------------------------------------
      26,070,000  NYS DA (Wyckoff Heights Medical Center)                          5.300         08/15/2021         27,040,065
------------------------------------------------------------------------------------------------------------------------------
       3,310,000  NYS DA P-Floats 2                                                8.980 3       02/01/2028          3,914,340
------------------------------------------------------------------------------------------------------------------------------
       1,565,000  NYS DA RITES 2                                                   8.920 3       12/01/2025          1,838,499
------------------------------------------------------------------------------------------------------------------------------
       4,415,000  NYS DA RITES 2                                                   8.920 3       12/01/2035          5,014,645
------------------------------------------------------------------------------------------------------------------------------
       5,000,000  NYS DA RITES 2                                                  11.900 3       02/01/2012          7,452,000
------------------------------------------------------------------------------------------------------------------------------
         100,000  NYS EFC (Clean Water & Drinking Revolving Funds)                 5.125         06/15/2031            104,636
------------------------------------------------------------------------------------------------------------------------------
       4,095,000  NYS EFC (Clean Water & Drinking Revolving Funds)                 5.400         07/15/2021          4,444,549
------------------------------------------------------------------------------------------------------------------------------
         448,000  NYS EFC (Consolidated Water Company)                             7.150         11/01/2014            450,012
------------------------------------------------------------------------------------------------------------------------------
       7,500,000  NYS EFC (NYS Water Services)                                     5.950         01/15/2020          8,125,200
------------------------------------------------------------------------------------------------------------------------------
       2,365,000  NYS EFC (NYS Water Services)                                     6.000         01/15/2031          2,541,476
------------------------------------------------------------------------------------------------------------------------------
          20,000  NYS EFC (NYS Water Services)                                     7.500         03/15/2011             20,070
------------------------------------------------------------------------------------------------------------------------------
       7,000,000  NYS ERDA (Brooklyn Union Gas) RIBS                               9.156 3       04/01/2020          8,079,540
------------------------------------------------------------------------------------------------------------------------------
      16,300,000  NYS ERDA (Brooklyn Union Gas) RIBS                              10.375 3       07/01/2026         17,445,890
------------------------------------------------------------------------------------------------------------------------------
         210,000  NYS ERDA (Central Hudson Gas & Electric)                         5.450         08/01/2027            224,288


                         40 | ROCHESTER FUND MUNICIPALS

       PRINCIPAL                                                                                                      VALUE
          AMOUNT                                                               COUPON            MATURITY        SEE NOTE 1
---------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$         60,000  NYS ERDA (Corning Natural Gas)                                8.250%         12/01/2018     $      61,308
---------------------------------------------------------------------------------------------------------------------------
       5,000,000  NYS ERDA (LILCO)                                              5.150          03/01/2016         5,071,150
---------------------------------------------------------------------------------------------------------------------------
      23,000,000  NYS ERDA (LILCO)                                              5.300          11/01/2023        23,820,410
---------------------------------------------------------------------------------------------------------------------------
         315,000  NYS ERDA (LILCO)                                              5.300          10/01/2024           326,151
---------------------------------------------------------------------------------------------------------------------------
       3,485,000  NYS ERDA (NIMO) RITES 2                                       7.562 3        11/01/2025         4,248,773
---------------------------------------------------------------------------------------------------------------------------
       3,625,000  NYS ERDA (RG&E) Residual Certificates 2                      12.280 3        09/01/2033         4,672,625
---------------------------------------------------------------------------------------------------------------------------
       3,030,000  NYS HFA (Children's Rescue)                                   7.625          05/01/2018         3,032,454
---------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYS HFA (Friendship)                                          5.100          08/15/2041         1,016,370
---------------------------------------------------------------------------------------------------------------------------
          15,000  NYS HFA (General Hsg.)                                        6.600          11/01/2008            15,483
---------------------------------------------------------------------------------------------------------------------------
         200,000  NYS HFA (Hospital & Nursing Home)                             7.000          11/01/2017           238,782
---------------------------------------------------------------------------------------------------------------------------
           5,000  NYS HFA (Meadow Manor)                                        7.750          11/01/2019             5,016
---------------------------------------------------------------------------------------------------------------------------
         745,000  NYS HFA (Multifamily Hsg.)                                    5.250          11/15/2028           760,839
---------------------------------------------------------------------------------------------------------------------------
       1,340,000  NYS HFA (Multifamily Hsg.)                                    5.300          08/15/2024         1,377,895
---------------------------------------------------------------------------------------------------------------------------
       1,700,000  NYS HFA (Multifamily Hsg.)                                    5.300          11/15/2039         1,731,943
---------------------------------------------------------------------------------------------------------------------------
       1,070,000  NYS HFA (Multifamily Hsg.)                                    5.350          08/15/2020         1,116,331
---------------------------------------------------------------------------------------------------------------------------
       2,860,000  NYS HFA (Multifamily Hsg.)                                    5.350          08/15/2031         2,930,556
---------------------------------------------------------------------------------------------------------------------------
       2,080,000  NYS HFA (Multifamily Hsg.)                                    5.375          02/15/2035         2,140,466
---------------------------------------------------------------------------------------------------------------------------
       3,250,000  NYS HFA (Multifamily Hsg.)                                    5.450          08/15/2032         3,368,300
---------------------------------------------------------------------------------------------------------------------------
       2,075,000  NYS HFA (Multifamily Hsg.)                                    5.500          08/15/2030         2,123,721
---------------------------------------------------------------------------------------------------------------------------
       1,215,000  NYS HFA (Multifamily Hsg.)                                    5.550          08/15/2019         1,264,572
---------------------------------------------------------------------------------------------------------------------------
       1,385,000  NYS HFA (Multifamily Hsg.)                                    5.600          08/15/2019         1,443,032
---------------------------------------------------------------------------------------------------------------------------
       1,240,000  NYS HFA (Multifamily Hsg.)                                    5.600          02/15/2026         1,279,804
---------------------------------------------------------------------------------------------------------------------------
       1,730,000  NYS HFA (Multifamily Hsg.)                                    5.600          08/15/2033         1,807,798
---------------------------------------------------------------------------------------------------------------------------
       1,170,000  NYS HFA (Multifamily Hsg.)                                    5.650          08/15/2030         1,214,600
---------------------------------------------------------------------------------------------------------------------------
       3,200,000  NYS HFA (Multifamily Hsg.)                                    5.650          08/15/2030         3,311,200
---------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYS HFA (Multifamily Hsg.)                                    5.650          08/15/2031         1,037,790
---------------------------------------------------------------------------------------------------------------------------
       1,710,000  NYS HFA (Multifamily Hsg.)                                    5.650          02/15/2034         1,760,616
---------------------------------------------------------------------------------------------------------------------------
       2,120,000  NYS HFA (Multifamily Hsg.)                                    5.700          08/15/2033         2,208,616
---------------------------------------------------------------------------------------------------------------------------
          95,000  NYS HFA (Multifamily Hsg.)                                    5.950          08/15/2024            95,115
---------------------------------------------------------------------------------------------------------------------------
       1,285,000  NYS HFA (Multifamily Hsg.)                                    6.100          11/15/2036         1,332,185
---------------------------------------------------------------------------------------------------------------------------
       4,700,000  NYS HFA (Multifamily Hsg.)                                    6.125          08/15/2038         4,850,165
---------------------------------------------------------------------------------------------------------------------------
          40,000  NYS HFA (Multifamily Hsg.)                                    6.200          08/15/2012            40,058
---------------------------------------------------------------------------------------------------------------------------
          25,000  NYS HFA (Multifamily Hsg.)                                    6.200          08/15/2016            25,702
---------------------------------------------------------------------------------------------------------------------------
         735,000  NYS HFA (Multifamily Hsg.)                                    6.250          02/15/2031           761,467
---------------------------------------------------------------------------------------------------------------------------
       1,255,000  NYS HFA (Multifamily Hsg.)                                    6.400          11/15/2027         1,295,524
---------------------------------------------------------------------------------------------------------------------------
       1,005,000  NYS HFA (Multifamily Hsg.)                                    6.500          08/15/2024         1,014,055
---------------------------------------------------------------------------------------------------------------------------
       2,735,000  NYS HFA (Multifamily Hsg.)                                    6.700          08/15/2025         2,738,829
---------------------------------------------------------------------------------------------------------------------------
       5,600,000  NYS HFA (Multifamily Hsg.)                                    6.750          11/15/2036         5,857,600
---------------------------------------------------------------------------------------------------------------------------
          15,000  NYS HFA (Multifamily Hsg.)                                    6.950          08/15/2012            15,042
---------------------------------------------------------------------------------------------------------------------------
       5,400,000  NYS HFA (Multifamily Hsg.)                                    7.050          08/15/2024         5,517,288
---------------------------------------------------------------------------------------------------------------------------
         315,000  NYS HFA (Multifamily Hsg.)                                    7.550          11/01/2029           318,689


                         41 | ROCHESTER FUND MUNICIPALS

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

       PRINCIPAL                                                                                                       VALUE
          AMOUNT                                                                  COUPON           MATURITY       SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$      2,805,000  NYS HFA (NH&HC) RITES 2                                          7.561% 3      11/01/2016     $  2,889,992
----------------------------------------------------------------------------------------------------------------------------
           5,000  NYS HFA (Nonprofit Hsg.)                                         6.400         11/01/2010            5,039
----------------------------------------------------------------------------------------------------------------------------
         480,000  NYS HFA (Nonprofit Hsg.)                                         8.400         11/01/2009          487,853
----------------------------------------------------------------------------------------------------------------------------
         525,000  NYS HFA (Nonprofit Hsg.)                                         8.400         11/01/2010          533,589
----------------------------------------------------------------------------------------------------------------------------
         565,000  NYS HFA (Nonprofit Hsg.)                                         8.400         11/01/2011          574,243
----------------------------------------------------------------------------------------------------------------------------
         605,000  NYS HFA (Nonprofit Hsg.)                                         8.400         11/01/2012          614,898
----------------------------------------------------------------------------------------------------------------------------
         655,000  NYS HFA (Nonprofit Hsg.)                                         8.400         11/01/2013          665,716
----------------------------------------------------------------------------------------------------------------------------
         780,000  NYS HFA (Nonprofit Hsg.)                                         8.400         11/01/2014          792,761
----------------------------------------------------------------------------------------------------------------------------
         835,000  NYS HFA (Nonprofit Hsg.)                                         8.400         11/01/2015          848,661
----------------------------------------------------------------------------------------------------------------------------
         900,000  NYS HFA (Nonprofit Hsg.)                                         8.400         11/01/2016          914,724
----------------------------------------------------------------------------------------------------------------------------
         990,000  NYS HFA (Nonprofit Hsg.)                                         8.400         11/01/2017        1,006,196
----------------------------------------------------------------------------------------------------------------------------
       1,060,000  NYS HFA (Nonprofit Hsg.)                                         8.400         11/01/2018        1,077,342
----------------------------------------------------------------------------------------------------------------------------
         460,000  NYS HFA (Nonprofit Hsg.)                                         8.400         11/01/2019          467,526
----------------------------------------------------------------------------------------------------------------------------
       5,000,000  NYS HFA (Phillips Village)                                       7.750         08/15/2017        5,117,950
----------------------------------------------------------------------------------------------------------------------------
          70,000  NYS HFA (Service Contract)                                       5.375         03/15/2023           70,113
----------------------------------------------------------------------------------------------------------------------------
       5,600,000  NYS HFA (Service Contract)                                       5.500         09/15/2022        5,888,792
----------------------------------------------------------------------------------------------------------------------------
       5,525,000  NYS HFA (Service Contract)                                       5.500         03/15/2025        5,796,664
----------------------------------------------------------------------------------------------------------------------------
         255,000  NYS HFA (Service Contract)                                       6.500         03/15/2025          260,383
----------------------------------------------------------------------------------------------------------------------------
         345,000  NYS HFA (Shorehill Hsg.)                                         7.500         05/01/2008          345,400
----------------------------------------------------------------------------------------------------------------------------
       1,540,000  NYS HFA (Tiffany Gardens)                                        4.900         08/15/2025        1,567,720
----------------------------------------------------------------------------------------------------------------------------
       3,210,000  NYS HFA (Tiffany Gardens)                                        5.125         08/15/2037        3,259,787
----------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYS HFA (Watergate II)                                           4.750         02/15/2034          989,990
----------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYS HFA (Watergate II)                                           4.900         02/15/2045          951,430
----------------------------------------------------------------------------------------------------------------------------
         320,000  NYS LGSC (SCSB) 2                                                7.250         12/15/2011          330,746
----------------------------------------------------------------------------------------------------------------------------
         810,000  NYS LGSC (SCSB) 2                                                7.375         12/15/2016          841,371
----------------------------------------------------------------------------------------------------------------------------
         980,000  NYS LGSC (SCSB) 2                                                7.750         12/15/2021        1,040,025
----------------------------------------------------------------------------------------------------------------------------
       1,045,000  NYS Medcare (Central Suffolk Hospital)                           6.125         11/01/2016        1,007,746
----------------------------------------------------------------------------------------------------------------------------
       1,200,000  NYS Medcare (Hospital & Nursing Home)                            6.300         08/15/2023        1,206,156
----------------------------------------------------------------------------------------------------------------------------
       1,000,000  NYS Medcare (Hospital & Nursing Home)                            6.375         08/15/2033        1,002,330
----------------------------------------------------------------------------------------------------------------------------
       1,080,000  NYS Medcare (Hospital & Nursing Home)                            7.400         11/01/2016        1,099,408
----------------------------------------------------------------------------------------------------------------------------
         990,000  NYS Medcare (Hospital & Nursing Home)                            9.375         11/01/2016        1,031,976
----------------------------------------------------------------------------------------------------------------------------
         230,000  NYS Medcare (Hospital & Nursing Home)                           10.000         11/01/2006          236,711
----------------------------------------------------------------------------------------------------------------------------
       1,670,000  NYS Medcare (M.G. Nursing Home)                                  6.375         02/15/2035        1,706,974
----------------------------------------------------------------------------------------------------------------------------
         350,000  NYS Medcare (Montefiore Medical Center)                          5.750         02/15/2025          355,873
----------------------------------------------------------------------------------------------------------------------------
       7,140,000  NYS Thruway Authority RITES 2                                    6.951 3       01/01/2025        7,823,441
----------------------------------------------------------------------------------------------------------------------------
      20,000,000  NYS Thruway Authority, Series G                                  4.750         01/01/2030       20,453,000
----------------------------------------------------------------------------------------------------------------------------
           5,000  NYS UDC (Correctional Facilities)                                6.310 1       01/01/2013            3,595
----------------------------------------------------------------------------------------------------------------------------
      15,000,000  NYS UDC (State Personal Income Tax)                              5.000         03/15/2035       15,634,050
----------------------------------------------------------------------------------------------------------------------------
       5,480,000  Oneida County IDA (Bonide Products)                              6.250         11/01/2018        5,475,506
----------------------------------------------------------------------------------------------------------------------------
         500,000  Oneida County IDA (Civic Facilities-Mohawk Valley)               4.625         09/15/2030          483,520
----------------------------------------------------------------------------------------------------------------------------
         830,000  Oneida County IDA (Civic Facilities-Mohawk Valley)               5.000         09/15/2035          841,545


                         42 | ROCHESTER FUND MUNICIPALS

       PRINCIPAL                                                                                                      VALUE
          AMOUNT                                                               COUPON             MATURITY       SEE NOTE 1
---------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$        450,000  Oneida County IDA
                  (Mohawk Valley Handicapped Services)                          5.300%          03/15/2019    $     467,303
---------------------------------------------------------------------------------------------------------------------------
         740,000  Oneida County IDA
                  (Mohawk Valley Handicapped Services)                          5.350           03/15/2029          763,835
---------------------------------------------------------------------------------------------------------------------------
       1,190,000  Oneida County IDA (Presbyterian Home)                         5.250           03/01/2019        1,222,332
---------------------------------------------------------------------------------------------------------------------------
       1,015,000  Oneida County IDA (Presbyterian Home)                         6.100           06/01/2020        1,096,403
---------------------------------------------------------------------------------------------------------------------------
       4,000,000  Onondaga County IDA (Air Cargo)                               6.125           01/01/2032        4,115,600
---------------------------------------------------------------------------------------------------------------------------
       2,000,000  Onondaga County IDA (Air Cargo)                               7.250           01/01/2032        2,125,000
---------------------------------------------------------------------------------------------------------------------------
         295,000  Onondaga County IDA (Central New York
                  Charter School for Math & Science) 5                          8.500           01/01/2032          112,377
---------------------------------------------------------------------------------------------------------------------------
         510,000  Onondaga County IDA (Coltec Industries)                       7.250           06/01/2008          519,180
---------------------------------------------------------------------------------------------------------------------------
         770,000  Onondaga County IDA (Coltec Industries)                       9.875           10/01/2010          795,857
---------------------------------------------------------------------------------------------------------------------------
       1,390,000  Onondaga County IDA
                  (Community General Hospital)                                  5.500           11/01/2018        1,402,302
---------------------------------------------------------------------------------------------------------------------------
       7,280,000  Onondaga County IDA
                  (Community General Hospital)                                  6.625           01/01/2018        7,332,780
---------------------------------------------------------------------------------------------------------------------------
       4,710,000  Onondaga County IDA (Le Moyne College)                        5.625           12/01/2021        5,035,131
---------------------------------------------------------------------------------------------------------------------------
      11,500,000  Onondaga County IDA (Solvay Paperboard)                       6.800           11/01/2014       12,032,680
---------------------------------------------------------------------------------------------------------------------------
      67,200,000  Onondaga County IDA (Solvay Paperboard)                       7.000           11/01/2030       70,454,496
---------------------------------------------------------------------------------------------------------------------------
         750,000  Onondaga County IDA (Syracuse Home)                           5.200           12/01/2018          775,815
---------------------------------------------------------------------------------------------------------------------------
         500,000  Onondaga County IDA Sewage Waste Facilities
                  (Anheuser-Busch Companies)                                    6.250           12/01/2034          537,695
---------------------------------------------------------------------------------------------------------------------------
      59,474,598  Onondaga County Res Rec                                       0.000 6         05/01/2022       31,310,402
---------------------------------------------------------------------------------------------------------------------------
      41,580,000  Onondaga County Res Rec                                       5.000           05/01/2015       39,883,952
---------------------------------------------------------------------------------------------------------------------------
         430,000  Orange County IDA (Adult Homes at Erie Station)               7.000           08/01/2021          460,754
---------------------------------------------------------------------------------------------------------------------------
       2,500,000  Orange County IDA (Arden Hill Life Care Center)               7.000           08/01/2021        2,678,800
---------------------------------------------------------------------------------------------------------------------------
       2,310,000  Orange County IDA (Arden Hill Life Care Center)               7.000           08/01/2031        2,451,857
---------------------------------------------------------------------------------------------------------------------------
       2,090,000  Orange County IDA (Arden Hill Life Care Center)               7.000           08/01/2031        2,218,347
---------------------------------------------------------------------------------------------------------------------------
       2,705,000  Orange County IDA (Glen Arden)                                5.625           01/01/2018        2,628,070
---------------------------------------------------------------------------------------------------------------------------
       5,590,000  Orange County IDA (Glen Arden)                                5.700           01/01/2028        5,223,799
---------------------------------------------------------------------------------------------------------------------------
       2,685,000  Orange County IDA (Kingston Manufacturing) 2                  8.000           11/01/2017        1,306,440
---------------------------------------------------------------------------------------------------------------------------
         340,000  Orange County IDA
                  (Orange Mental Retardation Properties)                        7.800           07/01/2011          341,873
---------------------------------------------------------------------------------------------------------------------------
       1,715,000  Orange County IDA
                  (St. Luke's Cornwall Hospital Obligated Group)                5.375           12/01/2021        1,820,953
---------------------------------------------------------------------------------------------------------------------------
       6,330,000  Orange County IDA
                  (St. Luke's Cornwall Hospital Obligated Group)                5.375           12/01/2026        6,682,898
---------------------------------------------------------------------------------------------------------------------------
       2,235,000  Orange County IDA
                  (St. Luke's Cornwall Hospital Obligated Group)                5.375           12/01/2026        2,359,601
---------------------------------------------------------------------------------------------------------------------------
       7,650,000  Orange County IDA (Tuxedo Place) 2                            7.000           08/01/2032        5,807,804
---------------------------------------------------------------------------------------------------------------------------
       2,500,000  Orange County IDA (Tuxedo Place) 2                            7.000           08/01/2033        1,897,275
---------------------------------------------------------------------------------------------------------------------------
       2,755,000  Oswego County IDA (Bishop's Common)                           5.375           02/01/2049        2,910,024
---------------------------------------------------------------------------------------------------------------------------
       3,260,000  Oswego County IDA (Seneca Hill Manor)                         5.650           08/01/2037        3,423,228


                         43 | ROCHESTER FUND MUNICIPALS

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

       PRINCIPAL                                                                                                       VALUE
          AMOUNT                                                                  COUPON           MATURITY       SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$      6,680,000  Otsego County IDA (Hartwick College)                             5.900%        07/01/2022     $  6,365,506
----------------------------------------------------------------------------------------------------------------------------
       2,970,000  Otsego County IDA (Mary Imogene Bassett Hospital)                5.350         11/01/2020        3,148,853
----------------------------------------------------------------------------------------------------------------------------
      10,890,000  Peekskill IDA (Drum Hill)                                        6.375         10/01/2028       10,645,955
----------------------------------------------------------------------------------------------------------------------------
         537,716  Peekskill IDA (Karta)                                            9.000         07/01/2010          546,029
----------------------------------------------------------------------------------------------------------------------------
       1,515,000  Port Authority NY/NJ (Continental Airlines)                      9.000         12/01/2006        1,520,772
----------------------------------------------------------------------------------------------------------------------------
       1,770,000  Port Authority NY/NJ (Continental Airlines)                      9.000         12/01/2010        1,776,744
----------------------------------------------------------------------------------------------------------------------------
      53,290,000  Port Authority NY/NJ (Continental Airlines)                      9.125         12/01/2015       53,493,035
----------------------------------------------------------------------------------------------------------------------------
       2,795,000  Port Authority NY/NJ (Delta Air Lines)                           6.950         06/01/2008        2,764,143
----------------------------------------------------------------------------------------------------------------------------
       6,385,000  Port Authority NY/NJ (KIAC)                                      6.750         10/01/2011        6,388,193
----------------------------------------------------------------------------------------------------------------------------
      42,140,000  Port Authority NY/NJ (KIAC) 4                                    6.750         10/01/2019       42,172,869
----------------------------------------------------------------------------------------------------------------------------
       6,400,000  Port Authority NY/NJ (KIAC) 4                                    7.000         10/01/2007        6,397,248
----------------------------------------------------------------------------------------------------------------------------
      20,000,000  Port Authority NY/NJ RITES 2                                     8.810 3       09/15/2013       23,200,000
----------------------------------------------------------------------------------------------------------------------------
      50,660,000  Port Authority NY/NJ, 37th Series                                5.250         07/15/2034       53,682,376
----------------------------------------------------------------------------------------------------------------------------
          35,000  Port Authority NY/NJ, 111th Series                               5.000         10/01/2032           35,630
----------------------------------------------------------------------------------------------------------------------------
       1,000,000  Port Authority NY/NJ, 120th Series                               5.750         10/15/2026        1,045,220
----------------------------------------------------------------------------------------------------------------------------
          30,000  Port Authority NY/NJ, 122nd Series                               5.000         07/15/2026           30,542
----------------------------------------------------------------------------------------------------------------------------
          45,000  Port Authority NY/NJ, 122nd Series                               5.125         01/15/2036           45,956
----------------------------------------------------------------------------------------------------------------------------
       9,500,000  Port Authority NY/NJ, 124th Series                               5.000         08/01/2036        9,659,885
----------------------------------------------------------------------------------------------------------------------------
         120,000  Port Authority NY/NJ, 126th Series                               5.125         11/15/2028          125,108
----------------------------------------------------------------------------------------------------------------------------
         210,000  Port Authority NY/NJ, 126th Series                               5.125         11/15/2030          218,585
----------------------------------------------------------------------------------------------------------------------------
          25,000  Port Authority NY/NJ, 127th Series                               5.200         12/15/2027           26,302
----------------------------------------------------------------------------------------------------------------------------
       7,015,000  Port Authority NY/NJ, 127th Series                               5.250         12/15/2032        7,361,962
----------------------------------------------------------------------------------------------------------------------------
      10,000,000  Port Authority NY/NJ, 132nd Series                               5.000         09/01/2033       10,407,800
----------------------------------------------------------------------------------------------------------------------------
      35,100,000  Port Authority NY/NJ, 132nd Series                               5.000         09/01/2038       36,447,489
----------------------------------------------------------------------------------------------------------------------------
       6,000,000  Port Authority NY/NJ, 136th Series                               5.125         05/01/2034        6,278,400
----------------------------------------------------------------------------------------------------------------------------
      19,175,000  Port Authority NY/NJ, 136th Series                               5.375         11/01/2028       20,521,085
----------------------------------------------------------------------------------------------------------------------------
      22,855,000  Port Authority NY/NJ, 136th Series                               5.500         11/01/2029       24,742,823
----------------------------------------------------------------------------------------------------------------------------
      10,000,000  Port Authority NY/NJ, 140th Series                               5.000         12/01/2034       10,489,100
----------------------------------------------------------------------------------------------------------------------------
      13,745,000  Port Authority NY/NJ, 141st Series                               5.000         09/01/2021       14,415,619
----------------------------------------------------------------------------------------------------------------------------
      16,455,000  Port Authority NY/NJ, 141st Series                               5.000         09/01/2025       17,139,199
----------------------------------------------------------------------------------------------------------------------------
      18,040,000  Port Authority NY/NJ, 141st Series                               5.000         09/01/2027       18,718,304
----------------------------------------------------------------------------------------------------------------------------
       2,755,000  Poughkeepsie IDA
                  (Eastman & Bixby Redevelopment Corp.)                            6.000         08/01/2032        2,951,845
----------------------------------------------------------------------------------------------------------------------------
       1,990,000  Putnam County IDA (Brewster Plastics)                            8.500         12/01/2016        2,055,391
----------------------------------------------------------------------------------------------------------------------------
       1,500,000  Rensselaer County IDA (Franciscan Heights)                       5.375         12/01/2036        1,575,585
----------------------------------------------------------------------------------------------------------------------------
       2,125,000  Rensselaer County Tobacco Asset
                  Securitization Corp. RITES 2,4                                  10.124 3       06/01/2035        2,241,408
----------------------------------------------------------------------------------------------------------------------------
       2,430,000  Rensselaer County Tobacco Asset
                  Securitization Corp. RITES 2,4                                  10.124 3       06/01/2043        2,596,285
----------------------------------------------------------------------------------------------------------------------------
           5,000  Rensselaer Hsg. Authority (Renwyck)                              7.650         01/01/2011            5,132
----------------------------------------------------------------------------------------------------------------------------
      19,505,000  Rensselaer Municipal Leasing Corp.
                  (Rensselaer County Nursing Home)                                 6.900         06/01/2024       19,687,567


                         44 | ROCHESTER FUND MUNICIPALS

       PRINCIPAL                                                                                                      VALUE
          AMOUNT                                                               COUPON             MATURITY       SEE NOTE 1
---------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$      1,580,000  Riverhead IDA (Michael Reilly Design)                         8.875%          08/01/2021    $   1,534,907
---------------------------------------------------------------------------------------------------------------------------
      15,550,000  Rochester Hsg. Authority (Crossroads Apartments)              7.700           01/01/2017       15,955,700
---------------------------------------------------------------------------------------------------------------------------
       6,790,000  Rochester Museum & Science Center                             6.125           12/01/2015        6,865,301
---------------------------------------------------------------------------------------------------------------------------
     131,000,000  Rockland County Tobacco Asset Securitization Corp.            5.880 1         08/15/2045       13,210,040
---------------------------------------------------------------------------------------------------------------------------
      53,000,000  Rockland County Tobacco Asset Securitization Corp.            6.630 1         08/15/2050        2,937,260
---------------------------------------------------------------------------------------------------------------------------
     441,000,000  Rockland County Tobacco Asset Securitization Corp.            7.620 1         08/15/2060        7,280,910
---------------------------------------------------------------------------------------------------------------------------
       3,075,000  Rockland County Tobacco Asset Securitization
                  Corp. RITES 2,4                                               9.719 3         08/15/2035        3,247,784
---------------------------------------------------------------------------------------------------------------------------
       3,360,000  Rockland County Tobacco Asset Securitization
                  Corp. RITES 2,4                                               9.719 3         08/15/2043        3,595,872
---------------------------------------------------------------------------------------------------------------------------
       1,070,000  Saratoga County IDA (ARC)                                     8.400           03/01/2013        1,073,563
---------------------------------------------------------------------------------------------------------------------------
       3,000,000  Saratoga County IDA (Saratoga Hospital)                       5.125           12/01/2033        3,126,690
---------------------------------------------------------------------------------------------------------------------------
       2,000,000  Schenectady Bond Anticipation Notes                           5.250           05/26/2006        1,996,240
---------------------------------------------------------------------------------------------------------------------------
       1,635,000  Schenectady IDA (Schaffer Heights Hsg.)                       6.000           11/01/2030        1,780,204
---------------------------------------------------------------------------------------------------------------------------
       3,335,000  Schenectady Metroplex Devel. Authority, Series A              5.375           12/15/2021        3,531,098
---------------------------------------------------------------------------------------------------------------------------
         242,000  Schroon Lake Fire District 2                                  7.250           03/01/2009          242,721
---------------------------------------------------------------------------------------------------------------------------
         175,000  Scotia Hsg. Authority (Holyrood House)                        7.000           06/01/2009          177,508
---------------------------------------------------------------------------------------------------------------------------
       8,600,000  SONYMA RITES 2                                                8.720 3         10/01/2034        8,850,776
---------------------------------------------------------------------------------------------------------------------------
       2,475,000  SONYMA, Series 29                                             5.450           04/01/2031        2,543,186
---------------------------------------------------------------------------------------------------------------------------
      22,180,000  SONYMA, Series 29                                             5.450           10/01/2031       22,838,524
---------------------------------------------------------------------------------------------------------------------------
       6,485,000  SONYMA, Series 65                                             5.850           10/01/2028        6,708,797
---------------------------------------------------------------------------------------------------------------------------
          20,000  SONYMA, Series 66                                             5.700           10/01/2027           20,698
---------------------------------------------------------------------------------------------------------------------------
      18,750,000  SONYMA, Series 67                                             5.800           10/01/2028       18,885,375
---------------------------------------------------------------------------------------------------------------------------
       3,495,000  SONYMA, Series 69                                             5.400           10/01/2019        3,591,043
---------------------------------------------------------------------------------------------------------------------------
       4,395,000  SONYMA, Series 69                                             5.500           10/01/2028        4,495,382
---------------------------------------------------------------------------------------------------------------------------
       3,250,000  SONYMA, Series 69 RITES 2                                     6.615 3         10/01/2028        3,398,395
---------------------------------------------------------------------------------------------------------------------------
      12,910,000  SONYMA, Series 71                                             5.400           04/01/2029       13,237,269
---------------------------------------------------------------------------------------------------------------------------
          35,000  SONYMA, Series 71                                             5.400           04/01/2029           35,887
---------------------------------------------------------------------------------------------------------------------------
      10,000,000  SONYMA, Series 71 RITES 2                                     6.415 3         04/01/2029       10,507,100
---------------------------------------------------------------------------------------------------------------------------
       5,500,000  SONYMA, Series 73 RITES 2                                     8.093 3         10/01/2028        5,986,420
---------------------------------------------------------------------------------------------------------------------------
       1,725,000  SONYMA, Series 73-A                                           5.300           10/01/2028        1,763,312
---------------------------------------------------------------------------------------------------------------------------
         100,000  SONYMA, Series 77                                             5.150           04/01/2029          101,640
---------------------------------------------------------------------------------------------------------------------------
      10,175,000  SONYMA, Series 79                                             5.300           04/01/2029       10,514,235
---------------------------------------------------------------------------------------------------------------------------
         465,000  SONYMA, Series 82                                             5.650           04/01/2030          470,761
---------------------------------------------------------------------------------------------------------------------------
       5,945,000  SONYMA, Series 97                                             5.500           04/01/2031        6,137,083
---------------------------------------------------------------------------------------------------------------------------
       2,480,000  SONYMA, Series 106                                            5.100           04/01/2023        2,546,687
---------------------------------------------------------------------------------------------------------------------------
         300,000  St. Lawrence County IDA (Clarkson University)                 5.125           07/01/2021          306,939
---------------------------------------------------------------------------------------------------------------------------
       1,315,000  St. Lawrence County IDA (Clarkson University)                 5.250           07/01/2031        1,349,414
---------------------------------------------------------------------------------------------------------------------------
       2,370,000  St. Lawrence County IDA (Clarkson University)                 5.500           07/01/2029        2,472,171
---------------------------------------------------------------------------------------------------------------------------
       2,805,000  St. Lawrence County IDA (Hepburn Medical Center)              5.375           12/01/2019        2,943,062
---------------------------------------------------------------------------------------------------------------------------
       3,595,000  St. Lawrence County IDA (Hepburn Medical Center)              5.500           12/01/2024        3,786,685
---------------------------------------------------------------------------------------------------------------------------
       1,295,000  Suffolk County IDA (ACLD)                                     6.000           12/01/2019        1,321,858


                         45 | ROCHESTER FUND MUNICIPALS

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

       PRINCIPAL                                                                                                       VALUE
          AMOUNT                                                                  COUPON           MATURITY       SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$        560,000  Suffolk County IDA (ALIA-ACDS)                                   7.125%        06/01/2017   $      604,173
----------------------------------------------------------------------------------------------------------------------------
         345,000  Suffolk County IDA (ALIA-ACLD)                                   6.375         06/01/2014          351,010
----------------------------------------------------------------------------------------------------------------------------
       1,310,000  Suffolk County IDA (ALIA-ACLD)                                   6.500         03/01/2018        1,353,636
----------------------------------------------------------------------------------------------------------------------------
         745,000  Suffolk County IDA (ALIA-ACLD)                                   7.500         09/01/2015          809,331
----------------------------------------------------------------------------------------------------------------------------
         305,000  Suffolk County IDA (ALIA-ADD)                                    6.950         12/01/2014          327,594
----------------------------------------------------------------------------------------------------------------------------
         510,000  Suffolk County IDA (ALIA-ADD)                                    7.125         06/01/2017          550,229
----------------------------------------------------------------------------------------------------------------------------
         440,000  Suffolk County IDA (ALIA-ADD)                                    7.500         09/01/2015          477,994
----------------------------------------------------------------------------------------------------------------------------
       1,370,000  Suffolk County IDA (ALIA-DDI)                                    6.375         06/01/2014        1,432,541
----------------------------------------------------------------------------------------------------------------------------
         100,000  Suffolk County IDA (ALIA-DDI)                                    7.500         09/01/2015          108,635
----------------------------------------------------------------------------------------------------------------------------
         765,000  Suffolk County IDA (ALIA-FREE)                                   6.375         06/01/2014          799,922
----------------------------------------------------------------------------------------------------------------------------
       1,750,000  Suffolk County IDA (ALIA-FREE)                                   6.950         12/01/2014        1,890,011
----------------------------------------------------------------------------------------------------------------------------
       4,285,000  Suffolk County IDA (ALIA-FREE)                                   7.125         06/01/2017        4,623,001
----------------------------------------------------------------------------------------------------------------------------
         615,000  Suffolk County IDA (ALIA-IGHL)                                   6.375         06/01/2014          625,713
----------------------------------------------------------------------------------------------------------------------------
         645,000  Suffolk County IDA (ALIA-IGHL)                                   6.950         12/01/2014          692,782
----------------------------------------------------------------------------------------------------------------------------
       1,175,000  Suffolk County IDA (ALIA-IGHL)                                   7.125         06/01/2017        1,267,684
----------------------------------------------------------------------------------------------------------------------------
       1,945,000  Suffolk County IDA (ALIA-IGHL)                                   7.250         12/01/2033        2,053,550
----------------------------------------------------------------------------------------------------------------------------
         265,000  Suffolk County IDA (ALIA-IGHL)                                   7.500         09/01/2015          287,883
----------------------------------------------------------------------------------------------------------------------------
         360,000  Suffolk County IDA
                  (ALIA-L.I. Head Injury Association)                              6.375         06/01/2014          367,236
----------------------------------------------------------------------------------------------------------------------------
         715,000  Suffolk County IDA
                  (ALIA-L.I. Head Injury Association)                              6.950         12/01/2014          767,967
----------------------------------------------------------------------------------------------------------------------------
         275,000  Suffolk County IDA
                  (ALIA-L.I. Head Injury Association)                              7.500         09/01/2015          298,746
----------------------------------------------------------------------------------------------------------------------------
         600,000  Suffolk County IDA (ALIA-MCH)                                    6.375         06/01/2014          610,452
----------------------------------------------------------------------------------------------------------------------------
       1,685,000  Suffolk County IDA (ALIA-MCH)                                    6.950         12/01/2014        1,809,825
----------------------------------------------------------------------------------------------------------------------------
       1,435,000  Suffolk County IDA (ALIA-MCH)                                    7.125         06/01/2017        1,548,193
----------------------------------------------------------------------------------------------------------------------------
         745,000  Suffolk County IDA (ALIA-NYS ARC)                                7.500         09/01/2015          809,331
----------------------------------------------------------------------------------------------------------------------------
         435,000  Suffolk County IDA (ALIA-Pederson-Krag Center)                   8.375         06/01/2016          476,547
----------------------------------------------------------------------------------------------------------------------------
         595,000  Suffolk County IDA (ALIA-SMCFS)                                  7.500         09/01/2015          646,378
----------------------------------------------------------------------------------------------------------------------------
         710,000  Suffolk County IDA (ALIA-Suffolk Hostels)                        7.500         09/01/2015          771,309
----------------------------------------------------------------------------------------------------------------------------
         255,000  Suffolk County IDA (ALIA-UCPAGS)                                 6.375         06/01/2014          259,442
----------------------------------------------------------------------------------------------------------------------------
       1,120,000  Suffolk County IDA (ALIA-UCPAGS)                                 6.950         12/01/2014        1,202,970
----------------------------------------------------------------------------------------------------------------------------
         840,000  Suffolk County IDA (ALIA-UCPAGS)                                 7.000         06/01/2016          903,966
----------------------------------------------------------------------------------------------------------------------------
         500,000  Suffolk County IDA (ALIA-UCPAGS)                                 7.500         09/01/2015          543,175
----------------------------------------------------------------------------------------------------------------------------
         400,000  Suffolk County IDA (ALIA-WORCA)                                  6.950         12/01/2014          429,632
----------------------------------------------------------------------------------------------------------------------------
         900,000  Suffolk County IDA (ALIA-WORCA)                                  7.125         06/01/2017          970,992
----------------------------------------------------------------------------------------------------------------------------
         590,000  Suffolk County IDA (ALIA-WORCA)                                  7.500         09/01/2015          640,947
----------------------------------------------------------------------------------------------------------------------------
       7,293,119  Suffolk County IDA (Camelot Village) 2,5                         7.900         11/01/2031           61,992
----------------------------------------------------------------------------------------------------------------------------
         720,000  Suffolk County IDA (Catholic Charities)                          6.000         10/01/2020          725,904
----------------------------------------------------------------------------------------------------------------------------
         235,000  Suffolk County IDA (CCSSVD)                                      7.000         04/01/2010          246,510
----------------------------------------------------------------------------------------------------------------------------
       2,595,000  Suffolk County IDA (CCSSVD)                                      8.000         04/01/2030        2,758,563
----------------------------------------------------------------------------------------------------------------------------
         245,000  Suffolk County IDA (DDI)                                         6.000         12/01/2019          250,081


                         46 | ROCHESTER FUND MUNICIPALS

       PRINCIPAL                                                                                                    VALUE
          AMOUNT                                                               COUPON            MATURITY      SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$        670,000  Suffolk County IDA (DDI)                                      6.250%         03/01/2009     $   671,320
-------------------------------------------------------------------------------------------------------------------------
       5,025,000  Suffolk County IDA (DDI)                                      7.250          03/01/2024       5,086,506
-------------------------------------------------------------------------------------------------------------------------
       9,070,000  Suffolk County IDA (DDI)                                      8.750          03/01/2023       9,208,227
-------------------------------------------------------------------------------------------------------------------------
         650,000  Suffolk County IDA
                  (Developmental Disabilities Institute)                        6.000          10/01/2020         655,330
-------------------------------------------------------------------------------------------------------------------------
         670,000  Suffolk County IDA
                  (Developmental Disabilities Institute)                        6.000          10/01/2020         675,494
-------------------------------------------------------------------------------------------------------------------------
       2,540,000  Suffolk County IDA (Dowling College)                          6.625          06/01/2024       2,544,953
-------------------------------------------------------------------------------------------------------------------------
       3,240,000  Suffolk County IDA (Dowling College)                          6.700          12/01/2020       3,294,238
-------------------------------------------------------------------------------------------------------------------------
       1,835,000  Suffolk County IDA (Family Residences)                        6.000          12/01/2019       1,873,058
-------------------------------------------------------------------------------------------------------------------------
       1,345,000  Suffolk County IDA (Family Services League)                   5.000          11/01/2027       1,396,984
-------------------------------------------------------------------------------------------------------------------------
         830,000  Suffolk County IDA (Family Services League)                   5.000          11/01/2034         857,183
-------------------------------------------------------------------------------------------------------------------------
         195,000  Suffolk County IDA (Federation of Organizations)              7.625          04/01/2010         203,087
-------------------------------------------------------------------------------------------------------------------------
       2,195,000  Suffolk County IDA (Federation of Organizations)              8.125          04/01/2030       2,309,557
-------------------------------------------------------------------------------------------------------------------------
       2,600,000  Suffolk County IDA (Gurwin Jewish-Phase II)                   6.700          05/01/2039       2,750,930
-------------------------------------------------------------------------------------------------------------------------
       3,860,000  Suffolk County IDA (Huntington First Aid Squad)               6.650          11/01/2017       4,026,212
-------------------------------------------------------------------------------------------------------------------------
         285,000  Suffolk County IDA
                  (Independent Group Home Living)                               6.000          12/01/2019         290,911
-------------------------------------------------------------------------------------------------------------------------
       1,460,000  Suffolk County IDA
                  (Independent Group Home Living)                               6.000          10/01/2020       1,471,972
-------------------------------------------------------------------------------------------------------------------------
       6,700,000  Suffolk County IDA (Jefferson's Ferry)                        7.200          11/01/2019       7,271,242
-------------------------------------------------------------------------------------------------------------------------
      10,000,000  Suffolk County IDA (Jefferson's Ferry)                        7.250          11/01/2028      10,834,400
-------------------------------------------------------------------------------------------------------------------------
      13,760,000  Suffolk County IDA (Keyspan-Port Jefferson Center)            5.250          06/01/2027      14,308,474
-------------------------------------------------------------------------------------------------------------------------
       4,065,000  Suffolk County IDA
                  (L.I. Network Community Services)                             7.550          02/01/2034       4,244,185
-------------------------------------------------------------------------------------------------------------------------
       1,020,000  Suffolk County IDA (Lifes WORC)                               6.000          10/01/2020       1,028,364
-------------------------------------------------------------------------------------------------------------------------
       8,000,000  Suffolk County IDA (Medford Hamlet Assisted Living)           6.375          01/01/2039       8,035,280
-------------------------------------------------------------------------------------------------------------------------
       3,225,000  Suffolk County IDA (New Interdisciplinary School)             6.750          12/01/2019       3,306,109
-------------------------------------------------------------------------------------------------------------------------
       3,500,000  Suffolk County IDA
                  (Nissequogue Cogeneration Partners)                           5.300          01/01/2013       3,335,045
-------------------------------------------------------------------------------------------------------------------------
      18,825,000  Suffolk County IDA
                  (Nissequogue Cogeneration Partners)                           5.500          01/01/2023      17,602,128
-------------------------------------------------------------------------------------------------------------------------
         680,000  Suffolk County IDA (OBPWC)                                    7.500          11/01/2022         680,381
-------------------------------------------------------------------------------------------------------------------------
       1,000,000  Suffolk County IDA
                  (Peconic Landing Retirement Home)                             8.000          10/01/2020       1,127,600
-------------------------------------------------------------------------------------------------------------------------
       2,850,000  Suffolk County IDA
                  (Peconic Landing Retirement Home)                             8.000          10/01/2030       3,198,299
-------------------------------------------------------------------------------------------------------------------------
       4,800,000  Suffolk County IDA (Pederson-Krager Center)                   7.200          02/01/2035       4,910,784
-------------------------------------------------------------------------------------------------------------------------
         225,000  Suffolk County IDA (Pederson-Krager Center)                   7.625          04/01/2010         240,028
-------------------------------------------------------------------------------------------------------------------------
       2,545,000  Suffolk County IDA (Pederson-Krager Center)                   8.125          04/01/2030       2,718,569
-------------------------------------------------------------------------------------------------------------------------
       1,400,000  Suffolk County IDA (Rimland Facilities) 2                     4.875 7        12/01/2009       1,389,668
-------------------------------------------------------------------------------------------------------------------------
         550,000  Suffolk County IDA (Suffolk Hotels)                           6.000          10/01/2020         554,510
-------------------------------------------------------------------------------------------------------------------------
       2,245,000  Suffolk County IDA (United Cerebral Palsy Assoc.)             6.000          12/01/2019       2,291,561


                         47 | ROCHESTER FUND MUNICIPALS

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

       PRINCIPAL                                                                                                       VALUE
          AMOUNT                                                                  COUPON           MATURITY       SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$      5,635,000  Suffolk County IDA (United Cerebral Palsy Assoc.)                7.875%        09/01/2041     $  5,875,615
----------------------------------------------------------------------------------------------------------------------------
       1,620,000  Suffolk County IDA (Windmill Village)                            5.700         12/01/2026        1,725,511
----------------------------------------------------------------------------------------------------------------------------
       1,305,000  Suffolk County IDA (Windmill Village)                            5.750         12/01/2031        1,388,651
----------------------------------------------------------------------------------------------------------------------------
         825,000  Suffolk County IDA (Wireless Boulevard Realty)                   7.875         12/01/2012          862,983
----------------------------------------------------------------------------------------------------------------------------
       4,005,000  Suffolk County IDA (Wireless Boulevard Realty)                   8.625         12/01/2026        4,201,205
----------------------------------------------------------------------------------------------------------------------------
          50,000  Suffolk County Water Authority                                   5.125         06/01/2026           52,664
----------------------------------------------------------------------------------------------------------------------------
       4,700,000  Sullivan County IDA (Center for Discovery)                       6.950         02/01/2035        4,721,244
----------------------------------------------------------------------------------------------------------------------------
       2,515,000  Sullivan County IDA (Center for Discovery)                       7.250         02/01/2012        2,657,123
----------------------------------------------------------------------------------------------------------------------------
       9,965,000  Sullivan County IDA (Center for Discovery)                       7.750         02/01/2027       10,530,613
----------------------------------------------------------------------------------------------------------------------------
       8,655,000  Sullivan County IDA
                  (SCCC Dorm Corp. Civic Facility)                                 7.250         06/01/2027        8,891,108
----------------------------------------------------------------------------------------------------------------------------
         275,000  Syracuse Hsg. Authority
                  (Loretto Sedgwick Heights Corp.)                                 7.375         11/01/2008          271,697
----------------------------------------------------------------------------------------------------------------------------
       6,995,000  Syracuse Hsg. Authority
                  (Loretto Sedgwick Heights Corp.)                                 8.500         11/01/2031        6,972,826
----------------------------------------------------------------------------------------------------------------------------
       6,590,000  Syracuse Hsg. Authority (LRRHCF)                                 5.800         08/01/2037        6,973,802
----------------------------------------------------------------------------------------------------------------------------
         315,000  Syracuse Hsg. Authority (LRRHCF)                                 7.500         08/01/2010          318,597
----------------------------------------------------------------------------------------------------------------------------
       2,435,000  Syracuse Hsg. Authority (Pavilion on James)                      7.500         11/01/2042        2,326,789
----------------------------------------------------------------------------------------------------------------------------
         145,000  Syracuse IDA (Anoplate Corp.)                                    7.250         11/01/2007          149,163
----------------------------------------------------------------------------------------------------------------------------
       2,195,000  Syracuse IDA (Anoplate Corp.)                                    8.000         11/01/2022        2,306,747
----------------------------------------------------------------------------------------------------------------------------
       1,000,000  Syracuse IDA (Crouse Irving Health Hospital)                     5.375         01/01/2023          759,090
----------------------------------------------------------------------------------------------------------------------------
      17,795,000  Syracuse IDA (James Square)                                      7.200 1       08/01/2025        4,778,313
----------------------------------------------------------------------------------------------------------------------------
         725,000  Syracuse IDA (Jewish Home of Central NY)                         7.375         03/01/2021          780,716
----------------------------------------------------------------------------------------------------------------------------
       2,050,000  Syracuse IDA (Jewish Home of Central NY)                         7.375         03/01/2031        2,199,015
----------------------------------------------------------------------------------------------------------------------------
          75,000  Taconic Hills Central School District at Craryville              5.000         06/15/2026           78,168
----------------------------------------------------------------------------------------------------------------------------
       7,500,000  Tobacco Settlement Financing Corp. (TASC)                        5.500         06/01/2019        8,238,525
----------------------------------------------------------------------------------------------------------------------------
      13,825,000  Tobacco Settlement Financing Corp. (TASC)                        5.500         06/01/2021       15,084,181
----------------------------------------------------------------------------------------------------------------------------
      13,555,000  Tobacco Settlement Financing Corp. (TASC)                        5.500         06/01/2022       14,735,369
----------------------------------------------------------------------------------------------------------------------------
       3,750,000  Tompkins County IDA (Ithacare Center)                            6.200         02/01/2037        3,927,338
----------------------------------------------------------------------------------------------------------------------------
          60,000  Tompkins Health Care Corp.
                  (Reconstruction Home)                                           10.800         02/01/2007           62,033
----------------------------------------------------------------------------------------------------------------------------
          60,000  Tompkins Health Care Corp.
                  (Reconstruction Home)                                           10.800         02/01/2028           66,308
----------------------------------------------------------------------------------------------------------------------------
         555,000  Tonawanda Senior Citizen Hsg. Corp.                              6.500         12/01/2010          563,985
----------------------------------------------------------------------------------------------------------------------------
          25,000  Triborough Bridge & Tunnel Authority                             5.000         01/01/2032           25,724
----------------------------------------------------------------------------------------------------------------------------
       8,265,000  Triborough Bridge & Tunnel Authority RITES 2                     6.915 3       01/01/2027        9,398,297
----------------------------------------------------------------------------------------------------------------------------
       4,190,000  Triborough Bridge & Tunnel Authority RITES 2                     6.915 3       01/01/2032        4,755,650
----------------------------------------------------------------------------------------------------------------------------
         105,000  TSASC, Inc. (TFABs)                                              5.500         07/15/2024          107,573
----------------------------------------------------------------------------------------------------------------------------
      16,160,000  TSASC, Inc. (TFABs)                                              5.750         07/15/2032       16,651,587
----------------------------------------------------------------------------------------------------------------------------
         840,000  TSASC, Inc. (TFABs)                                              6.250         07/15/2027          882,260
----------------------------------------------------------------------------------------------------------------------------
      68,740,000  TSASC, Inc. (TFABs)                                              6.250         07/15/2034       72,106,885
----------------------------------------------------------------------------------------------------------------------------
     130,450,000  TSASC, Inc. (TFABs)                                              6.375         07/15/2039      137,362,546


                         48 | ROCHESTER FUND MUNICIPALS

       PRINCIPAL                                                                                                       VALUE
          AMOUNT                                                                  COUPON           MATURITY       SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$        995,000  UCP/HCA of Chemung County                                     6.600%          08/01/2022     $   1,042,342
----------------------------------------------------------------------------------------------------------------------------
       1,805,000  Ulster County IDA (Brooklyn Bottling)                         8.600           06/30/2022         1,821,498
----------------------------------------------------------------------------------------------------------------------------
       4,000,000  Ulster County IDA (Kingston Hospital)                         5.650           11/15/2024         4,161,880
----------------------------------------------------------------------------------------------------------------------------
       1,465,000  Ulster County IDA
                  (Mid-Hudson Family Health Services)                           5.350           07/01/2023         1,515,894
----------------------------------------------------------------------------------------------------------------------------
       2,815,000  Ulster County Tobacco Asset Securitization Corp.              6.000           06/01/2040         2,952,851
----------------------------------------------------------------------------------------------------------------------------
       2,175,000  Ulster County Tobacco Asset Securitization Corp. 2            6.250           06/01/2025         2,325,619
----------------------------------------------------------------------------------------------------------------------------
       3,005,000  Ulster County Tobacco Asset Securitization Corp.              6.450 6         06/01/2040         2,417,282
----------------------------------------------------------------------------------------------------------------------------
       2,000,000  United Nations Devel. Corp., Series A                         5.250           07/01/2026         2,062,620
----------------------------------------------------------------------------------------------------------------------------
          25,000  Upper Mohawk Valley Regional Water
                  Finance Authority                                             5.125           10/01/2026            25,916
----------------------------------------------------------------------------------------------------------------------------
         500,000  Utica GO                                                      6.100           01/15/2013           539,425
----------------------------------------------------------------------------------------------------------------------------
       3,550,000  Utica IDA (Utica College Civic Facility)                      6.850           12/01/2031         3,736,624
----------------------------------------------------------------------------------------------------------------------------
         340,000  Watervliet Hsg. Authority
                  (Colonie Senior Service Center)                               5.875           06/01/2018           325,825
----------------------------------------------------------------------------------------------------------------------------
      10,800,000  Watervliet Hsg. Authority
                  (Colonie Senior Service Center)                               6.125           06/01/2038        10,028,664
----------------------------------------------------------------------------------------------------------------------------
       2,710,000  Wayne County IDA (ARC)                                        8.375           03/01/2018         2,714,526
----------------------------------------------------------------------------------------------------------------------------
         300,000  Westchester County Healthcare Corp., Series A                 5.875           11/01/2025           302,922
----------------------------------------------------------------------------------------------------------------------------
       7,165,000  Westchester County IDA (Ardsley Hsg.)                         7.900           11/01/2044         7,125,163
----------------------------------------------------------------------------------------------------------------------------
       3,135,000  Westchester County IDA (Ardsley Hsg.)                         7.900           11/01/2044         3,117,569
----------------------------------------------------------------------------------------------------------------------------
       6,310,000  Westchester County IDA (Ardsley Hsg.)                         7.900           11/01/2044         6,274,916
----------------------------------------------------------------------------------------------------------------------------
       3,580,000  Westchester County IDA (Ardsley Hsg.)                         7.900           11/01/2044         3,560,238
----------------------------------------------------------------------------------------------------------------------------
       8,440,000  Westchester County IDA (Ardsley Hsg.)                         7.900           11/01/2044         8,393,411
----------------------------------------------------------------------------------------------------------------------------
       8,085,000  Westchester County IDA (Ardsley Hsg.)                         7.900           11/01/2044         8,040,047
----------------------------------------------------------------------------------------------------------------------------
       6,270,000  Westchester County IDA (Ardsley Hsg.)                         7.900           11/01/2044         6,235,139
----------------------------------------------------------------------------------------------------------------------------
       6,835,000  Westchester County IDA (Ardsley Hsg.)                         7.900           11/01/2044         6,796,997
----------------------------------------------------------------------------------------------------------------------------
       1,870,000  Westchester County IDA (Beth Abraham Hospital)                8.375           12/01/2025         1,941,471
----------------------------------------------------------------------------------------------------------------------------
          90,000  Westchester County IDA (Children's Village)                   5.375           03/15/2019            91,420
----------------------------------------------------------------------------------------------------------------------------
       4,450,000  Westchester County IDA (Children's Village)                   6.000           06/01/2022         4,561,962
----------------------------------------------------------------------------------------------------------------------------
       1,215,000  Westchester County IDA (Clearview School)                     7.250           01/01/2035         1,242,617
----------------------------------------------------------------------------------------------------------------------------
       1,300,000  Westchester County IDA (Guiding Eyes for the Blind)           5.375           08/01/2024         1,353,196
----------------------------------------------------------------------------------------------------------------------------
       2,000,000  Westchester County IDA
                  (Hebrew Hospital Senior Hsg.)                                 7.375           07/01/2030         2,150,980
----------------------------------------------------------------------------------------------------------------------------
       1,560,000  Westchester County IDA (JDAM)                                 6.750           04/01/2016         1,597,861
----------------------------------------------------------------------------------------------------------------------------
       3,315,000  Westchester County IDA (Lawrence Hospital)                    5.000           01/01/2028         3,340,492
----------------------------------------------------------------------------------------------------------------------------
         800,000  Westchester County IDA (Lawrence Hospital)                    5.125           01/01/2018           819,456
----------------------------------------------------------------------------------------------------------------------------
       1,275,000  Westchester County IDA
                  (Living Independently for the Elderly)                        5.375           08/20/2021         1,367,629
----------------------------------------------------------------------------------------------------------------------------
       3,035,000  Westchester County IDA
                  (Living Independently for the Elderly)                        5.400           08/20/2032         3,221,622
----------------------------------------------------------------------------------------------------------------------------
       1,610,000  Westchester County IDA (Rippowam-Cisqua School)               5.750           06/01/2029         1,655,096


                         49 | ROCHESTER FUND MUNICIPALS

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

       PRINCIPAL                                                                                                       VALUE
          AMOUNT                                                                  COUPON           MATURITY       SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$      1,000,000  Westchester County IDA (Schnurmacher Center)                     6.500%        11/01/2013    $   1,065,590
----------------------------------------------------------------------------------------------------------------------------
       1,710,000  Westchester County IDA (Schnurmacher Center)                     6.500         11/01/2033        1,813,438
----------------------------------------------------------------------------------------------------------------------------
         130,000  Westchester County IDA
                  (Westchester Airport Assoc.)                                     5.950         08/01/2024          130,237
----------------------------------------------------------------------------------------------------------------------------
       2,000,000  Westchester County IDA
                  (Westhab Community Revitalization)                               4.850         06/01/2032        1,943,900
----------------------------------------------------------------------------------------------------------------------------
       2,590,000  Westchester County IDA (Winward School)                          5.250         10/01/2031        2,702,639
----------------------------------------------------------------------------------------------------------------------------
      76,375,000  Westchester County Tobacco Asset
                  Securitization Corp.                                             0.000 6       07/15/2039       79,297,871
----------------------------------------------------------------------------------------------------------------------------
      21,325,000  Westchester County Tobacco Asset
                  Securitization Corp. RITES 2                                     6.130 3       06/01/2038       19,885,136
----------------------------------------------------------------------------------------------------------------------------
       6,325,000  Westchester County Tobacco Asset
                  Securitization Corp. RITES 2                                     6.130 3       06/01/2045        5,848,854
----------------------------------------------------------------------------------------------------------------------------
      13,340,000  Westchester County Tobacco Asset
                  Securitization Corp. RITES 2                                     7.430 3       06/01/2045       11,833,647
----------------------------------------------------------------------------------------------------------------------------
       1,400,000  Yates County IDA (Keuka College)                                 8.750         08/01/2015        1,544,494
----------------------------------------------------------------------------------------------------------------------------
       3,825,000  Yates County IDA (SSMH)                                          5.650         02/01/2039        4,100,630
----------------------------------------------------------------------------------------------------------------------------
       6,000,000  Yonkers GO                                                       5.000         08/01/2030        6,293,700
----------------------------------------------------------------------------------------------------------------------------
       4,500,000  Yonkers GO                                                       5.000         08/01/2035        4,696,605
----------------------------------------------------------------------------------------------------------------------------
       4,685,000  Yonkers IDA (Hudson Scenic Studio)                               6.625         11/01/2019        4,765,160
----------------------------------------------------------------------------------------------------------------------------
       4,445,000  Yonkers IDA (Monastery Manor Associates)                         5.250         04/01/2037        4,646,447
----------------------------------------------------------------------------------------------------------------------------
       1,590,000  Yonkers IDA (Philipsburgh Hall Associates)                       7.500         11/01/2030        1,591,018
----------------------------------------------------------------------------------------------------------------------------
       2,515,000  Yonkers IDA (St. John's Riverside Hospital)                      7.125         07/01/2031        2,619,423
----------------------------------------------------------------------------------------------------------------------------
       2,500,000  Yonkers IDA (St. Joseph's Hospital)                              5.900         03/01/2008        2,442,075
----------------------------------------------------------------------------------------------------------------------------
       2,810,000  Yonkers IDA (St. Joseph's Hospital)                              8.500         12/30/2013        2,845,996
----------------------------------------------------------------------------------------------------------------------------
       3,225,000  Yonkers IDA (Westchester School)                                 8.750         12/30/2023        3,325,427
----------------------------------------------------------------------------------------------------------------------------
         800,000  Yonkers Parking Authority                                        6.000         06/15/2018          842,632
----------------------------------------------------------------------------------------------------------------------------
       1,215,000  Yonkers Parking Authority                                        6.000         06/15/2024        1,260,648
                                                                                                              --------------
                                                                                                               6,617,525,780
----------------------------------------------------------------------------------------------------------------------------
OTHER STATES--0.1%
       5,000,000  NJ EDA (Continental Airlines)                                    6.400         09/15/2023        4,760,700
----------------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--12.3%
       2,995,000  Guam EDA (Harmon Village Apartments) 2,5                         9.375         11/01/2018               --
----------------------------------------------------------------------------------------------------------------------------
       2,435,000  Guam EDA (Royal Socio Apartments) 5                              9.500         11/01/2018        1,210,365
----------------------------------------------------------------------------------------------------------------------------
       3,000,000  Guam Government Waterworks Authority
                  & Wastewater System                                              5.875         07/01/2035        3,160,680
----------------------------------------------------------------------------------------------------------------------------
         290,000  Guam Power Authority, Series A                                   5.250         10/01/2023          285,534
----------------------------------------------------------------------------------------------------------------------------
      20,000,000  Guam Power Authority, Series A                                   5.250         10/01/2034       19,238,200
----------------------------------------------------------------------------------------------------------------------------
      18,980,000  Northern Mariana Islands Ports Authority, Series A               6.600         03/15/2028       21,256,271
----------------------------------------------------------------------------------------------------------------------------
       1,000,000  Northern Mariana Islands, Series A                               6.000         06/01/2020        1,056,800
----------------------------------------------------------------------------------------------------------------------------
       7,855,000  Northern Mariana Islands, Series A                               6.250         03/15/2028        8,220,493
----------------------------------------------------------------------------------------------------------------------------
      10,000,000  Northern Mariana Islands, Series A                               7.375         06/01/2030       10,801,300


                         50 | ROCHESTER FUND MUNICIPALS

       PRINCIPAL                                                                                                       VALUE
          AMOUNT                                                               COUPON           MATURITY          SEE NOTE 1
----------------------------------------------------------------------------------------------------------------------------
      U.S. POSSESSIONS Continued
$     17,000,000  Puerto Rico Children's Trust Fund (TASC)                      6.380% 1      05/15/2050      $    1,067,260
----------------------------------------------------------------------------------------------------------------------------
      10,500,000  Puerto Rico Commonwealth GO                                   5.000         07/01/2027          10,664,010
----------------------------------------------------------------------------------------------------------------------------
      11,400,000  Puerto Rico Commonwealth GO                                   5.000         07/01/2029          11,517,990
----------------------------------------------------------------------------------------------------------------------------
      17,675,000  Puerto Rico Commonwealth GO                                   5.000         07/01/2033          17,718,834
----------------------------------------------------------------------------------------------------------------------------
      35,455,000  Puerto Rico Commonwealth GO                                   5.000         07/01/2034          35,552,501
----------------------------------------------------------------------------------------------------------------------------
       5,605,000  Puerto Rico Commonwealth GO                                   5.125         07/01/2031           5,659,817
----------------------------------------------------------------------------------------------------------------------------
       5,000,000  Puerto Rico Commonwealth GO                                   5.250         07/01/2019           5,306,050
----------------------------------------------------------------------------------------------------------------------------
       5,000,000  Puerto Rico Commonwealth GO                                   5.250         07/01/2021           5,285,450
----------------------------------------------------------------------------------------------------------------------------
       5,000,000  Puerto Rico Commonwealth GO                                   5.250         07/01/2024           5,243,050
----------------------------------------------------------------------------------------------------------------------------
          50,000  Puerto Rico Electric Power Authority                          5.250         07/01/2029              53,375
----------------------------------------------------------------------------------------------------------------------------
          70,000  Puerto Rico Electric Power Authority, Series II               5.125         07/01/2026              74,264
----------------------------------------------------------------------------------------------------------------------------
          30,000  Puerto Rico Electric Power Authority, Series NN               5.125         07/01/2029              31,102
----------------------------------------------------------------------------------------------------------------------------
         750,000  Puerto Rico HBFA                                              6.250         04/01/2029             762,203
----------------------------------------------------------------------------------------------------------------------------
          85,000  Puerto Rico HFC                                               5.100         12/01/2018              86,737
----------------------------------------------------------------------------------------------------------------------------
       1,925,000  Puerto Rico HFC                                               5.500         12/01/2023           2,013,300
----------------------------------------------------------------------------------------------------------------------------
          65,000  Puerto Rico HFC                                               7.500         10/01/2015              65,104
----------------------------------------------------------------------------------------------------------------------------
       1,960,000  Puerto Rico HFC                                               7.500         04/01/2022           1,993,790
----------------------------------------------------------------------------------------------------------------------------
       7,365,000  Puerto Rico Highway & Transportation Authority                5.000         07/01/2028           7,452,275
----------------------------------------------------------------------------------------------------------------------------
       6,595,000  Puerto Rico Highway & Transportation Authority,
                  Series G                                                      5.000         07/01/2033           6,611,356
----------------------------------------------------------------------------------------------------------------------------
      63,585,000  Puerto Rico Highway & Transportation Authority,
                  Series G                                                      5.000         07/01/2042          63,624,423
----------------------------------------------------------------------------------------------------------------------------
         165,000  Puerto Rico Highway & Transportation Authority,
                  Series J                                                      5.000         07/01/2034             165,454
----------------------------------------------------------------------------------------------------------------------------
      16,750,000  Puerto Rico Highway & Transportation Authority,
                  Series J                                                      5.125         07/01/2039          16,870,433
----------------------------------------------------------------------------------------------------------------------------
         100,000  Puerto Rico Highway & Transportation Authority,
                  Series J                                                      5.125         07/01/2043             100,926
----------------------------------------------------------------------------------------------------------------------------
       5,000,000  Puerto Rico Highway & Transportation Authority,
                  Series K                                                      5.000         07/01/2023           5,152,550
----------------------------------------------------------------------------------------------------------------------------
      10,000,000  Puerto Rico Highway & Transportation Authority,
                  Series K                                                      5.000         07/01/2025          10,250,900
----------------------------------------------------------------------------------------------------------------------------
       8,000,000  Puerto Rico Highway & Transportation Authority,
                  Series K                                                      5.000         07/01/2026           8,169,920
----------------------------------------------------------------------------------------------------------------------------
      20,840,000  Puerto Rico Highway & Transportation Authority,
                  Series K                                                      5.000         07/01/2035          20,902,520
----------------------------------------------------------------------------------------------------------------------------
       8,615,000  Puerto Rico Highway & Transportation Authority,
                  Series K                                                      5.000         07/01/2040           8,621,461
----------------------------------------------------------------------------------------------------------------------------
      59,870,000  Puerto Rico Highway & Transportation Authority,
                  Series K                                                      5.000         07/01/2045          59,914,903
----------------------------------------------------------------------------------------------------------------------------
       5,000,000  Puerto Rico Infrastructure                                    5.000         07/01/2037           5,006,750
----------------------------------------------------------------------------------------------------------------------------
     145,000,000  Puerto Rico Infrastructure                                    5.000         07/01/2041         145,108,750
----------------------------------------------------------------------------------------------------------------------------
       1,080,000  Puerto Rico ITEMECF (Ana G. Mendez University)                5.375         02/01/2019           1,109,084


                         51 | ROCHESTER FUND MUNICIPALS

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

       PRINCIPAL                                                                                                         VALUE
          AMOUNT                                                                  COUPON           MATURITY         SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS Continued
$      1,575,000  Puerto Rico ITEMECF (Ana G. Mendez University)                   5.375%        12/01/2021     $    1,643,497
------------------------------------------------------------------------------------------------------------------------------
       5,750,000  Puerto Rico ITEMECF (Ana G. Mendez University)                   5.375         02/01/2029          5,819,805
------------------------------------------------------------------------------------------------------------------------------
       6,315,000  Puerto Rico ITEMECF (Ana G. Mendez University)                   5.500         12/01/2031          6,494,157
------------------------------------------------------------------------------------------------------------------------------
      42,400,000  Puerto Rico ITEMECF (Cogeneration Facilities)                    6.625         06/01/2026         46,285,536
------------------------------------------------------------------------------------------------------------------------------
       3,160,000  Puerto Rico ITEMECF (Mennonite General Hospital)                 5.625         07/01/2017          2,957,855
------------------------------------------------------------------------------------------------------------------------------
         985,000  Puerto Rico ITEMECF (Mennonite General Hospital)                 5.625         07/01/2027            883,821
------------------------------------------------------------------------------------------------------------------------------
       8,735,000  Puerto Rico ITEMECF (Mennonite General Hospital)                 6.500         07/01/2018          8,750,898
------------------------------------------------------------------------------------------------------------------------------
      12,380,000  Puerto Rico ITEMECF (Mennonite General Hospital)                 6.500         07/01/2026         12,352,145
------------------------------------------------------------------------------------------------------------------------------
         615,000  Puerto Rico ITEMECF (Ryder Memorial Hospital)                    6.400         05/01/2009            616,255
------------------------------------------------------------------------------------------------------------------------------
       2,450,000  Puerto Rico ITEMECF (Ryder Memorial Hospital)                    6.600         05/01/2014          2,451,323
------------------------------------------------------------------------------------------------------------------------------
       5,250,000  Puerto Rico ITEMECF (Ryder Memorial Hospital)                    6.700         05/01/2024          5,253,938
------------------------------------------------------------------------------------------------------------------------------
       7,000,000  Puerto Rico ITEMECF
                  (San Lucas & Cristo Redentor Hospitals)                          5.750         06/01/2029          5,851,860
------------------------------------------------------------------------------------------------------------------------------
         500,000  Puerto Rico ITEMECF
                  (University of the Sacred Heart)                                 5.250         09/01/2021            518,170
------------------------------------------------------------------------------------------------------------------------------
       8,000,000  Puerto Rico ITEMECF
                  (University of the Sacred Heart)                                 5.250         09/01/2031          8,210,240
------------------------------------------------------------------------------------------------------------------------------
       5,000,000  Puerto Rico Municipal Finance Agency, Series A                   5.250         08/01/2024          5,273,250
------------------------------------------------------------------------------------------------------------------------------
       1,000,000  Puerto Rico Port Authority (American Airlines),
                  Series A                                                         6.250         06/01/2026            755,490
------------------------------------------------------------------------------------------------------------------------------
      12,470,000  Puerto Rico Port Authority (American Airlines),
                  Series A                                                         6.300         06/01/2023          9,661,631
------------------------------------------------------------------------------------------------------------------------------
      52,715,000  Puerto Rico Public Buildings Authority                           5.000         07/01/2036         52,830,973
------------------------------------------------------------------------------------------------------------------------------
      57,935,000  Puerto Rico Public Buildings Authority                           5.250         07/01/2033         59,696,803
------------------------------------------------------------------------------------------------------------------------------
         120,000  Puerto Rico Public Buildings Authority                           5.375         07/01/2033            123,950
------------------------------------------------------------------------------------------------------------------------------
      47,020,000  Puerto Rico Public Finance Corp., Series E                       5.500         08/01/2029         49,191,384
------------------------------------------------------------------------------------------------------------------------------
       9,230,000  University of V.I. , Series A                                    5.375         06/01/2034          9,728,143
------------------------------------------------------------------------------------------------------------------------------
       2,040,000  University of V.I. , Series A                                    6.250         12/01/2029          2,216,909
------------------------------------------------------------------------------------------------------------------------------
       1,250,000  V.I. Government Refinery Facilities (Hovensa Coker)              6.500         07/01/2021          1,418,413
------------------------------------------------------------------------------------------------------------------------------
          25,000  V.I. Hsg. Finance Authority, Series A                            6.450         03/01/2016             25,315
------------------------------------------------------------------------------------------------------------------------------
      18,720,000  V.I. Public Finance Authority
                  (Gross Receipts Taxes Loan)                                      5.000         10/01/2031         19,178,640
------------------------------------------------------------------------------------------------------------------------------
         550,000  V.I. Public Finance Authority
                  (Gross Receipts Taxes Loan)                                      5.000         10/01/2033            570,081
------------------------------------------------------------------------------------------------------------------------------
      27,733,000  V.I. Public Finance Authority (Hovensa Coker)                    6.500         07/01/2021         31,469,467
------------------------------------------------------------------------------------------------------------------------------
       8,000,000  V.I. Public Finance Authority (Hovensa Refinery)                 6.125         07/01/2022          8,806,320
------------------------------------------------------------------------------------------------------------------------------
      11,700,000  V.I. Public Finance Authority (Hovensa)                          5.875         07/01/2022         12,692,862
------------------------------------------------------------------------------------------------------------------------------
       1,000,000  V.I. Public Finance Authority, Series A                          5.250         10/01/2023          1,067,490
------------------------------------------------------------------------------------------------------------------------------
         750,000  V.I. Public Finance Authority, Series A                          5.250         10/01/2024            800,055
------------------------------------------------------------------------------------------------------------------------------
       1,000,000  V.I. Public Finance Authority, Series A                          5.500         10/01/2018          1,043,510
------------------------------------------------------------------------------------------------------------------------------
      16,220,000  V.I. Public Finance Authority, Series A                          5.500         10/01/2022         16,842,848
------------------------------------------------------------------------------------------------------------------------------
       7,500,000  V.I. Public Finance Authority, Series A                          5.625         10/01/2025          7,838,100
------------------------------------------------------------------------------------------------------------------------------
          50,000  V.I. Public Finance Authority, Series A                          5.625         10/01/2025             52,204


                         52 | ROCHESTER FUND MUNICIPALS

      PRINCIPAL                                                                                                         VALUE
         AMOUNT                                                                 COUPON           MATURITY          SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS Continued
$     3,830,000   V.I. Public Finance Authority, Series E                        6.000%        10/01/2022      $    4,031,611
-----------------------------------------------------------------------------------------------------------------------------
      1,575,000   V.I. Water & Power Authority                                   5.300         07/01/2018           1,609,178
-----------------------------------------------------------------------------------------------------------------------------
      3,515,000   V.I. Water & Power Authority                                   5.300         07/01/2021           3,558,305
-----------------------------------------------------------------------------------------------------------------------------
      2,500,000   V.I. Water & Power Authority                                   5.500         07/01/2017           2,561,425
                                                                                                               --------------
                                                                                                                  938,520,042

-----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $7,271,151,641)--99.3%                                                        7,560,806,522
-----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES--0.7                                                                               54,450,655
                                                                                                               --------------
NET ASSETS--100.0%                                                                                             $7,615,257,177
                                                                                                               ==============

FOOTNOTES TO STATEMENT OF INVESTMENTS

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

2. Illiquid security. The aggregate value of illiquid securities as of December
31, 2005 was $692,317,262, which represents 9.09% of the Fund's net assets. See
Note 5 of Notes to Financial Statements.

3. Represents the current interest rate for a variable rate bond known as an
"inverse floater." See Note 1 of Notes to Financial Statements.

4. When-issued security or forward commitment to be delivered and settled after
December 31, 2005. See Note 1 of Notes to Financial Statements.

5. Issue is in default. Non-income producing. See Note 1 of Notes to Financial
Statements.

6. Denotes a step bond: a zero coupon bond that converts to a fixed or variable
interest rate at a designated future date.

7. Represents the current interest rate for a variable or increasing rate
security.


                         53 | ROCHESTER FUND MUNICIPALS

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

--------------------------------------------------------------------------------
PORTFOLIO ABBREVIATIONS  December 31, 2005
--------------------------------------------------------------------------------

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

ACDS           Association for Children with Down                LILCO           Long Island Lighting Corporation
               Syndrome                                          LRRHCF          Loretto Rest Residential Health Care
ACLD           Adults and Children with Learning and                             Facility
               Developmental Disabilities                        LVH             Little Village House
ADD            Aid to the Developmentally Disabled               MCH             Maryhaven Center of Hope
ALIA           Alliance of Long Island Agencies                  MMC             Mercy Medical Center
ARC            Association of Retarded Citizens                  MSH/NYU         Mount Sinai Hospital/New York
ASMF           Amsterdam Sludge Management                                       University
               Facility                                          MTA             Metropolitan Transportation Authority
CCSSVD         Central Council of the Society of St.             NH&HC           Nursing Home and Health Care
               Vincent dePaul                                    NIMO            Niagara Mohawk Power Corporation
CFGA           Child and Family Guidance Association             NY/NJ           New York/New Jersey
CHSLI          Catholic Health Services of Long Island           NYC             New York City
CNGCS          Central Nassau Guidance and                       NYS             New York State
               Counseling Services                               NYU             New York University
COP            Certificates of Participation                     OBPWC           Ocean Bay Park Water Corporation
CSMR           Community Services for the Mentally               P-Floats        Puttable Floats
               Retarded                                          PSCH            Professional Services for the
DA             Dormitory Authority                                               Handicapped, Inc.
DDI            Developmental Disabilities Institute              Res Rec         Resource Recovery Facility
DIAMONDS       Direct Investment of Accrued                      RG&E            Rochester Gas and Electric
               Municipals                                        RIBS            Residual Interest Bonds
DRIVERS        Derivative Inverse Tax Exempt Receipts            RITES           Residual Interest Tax Exempt Security
EDA            Economic Development Authority                    ROLs            Residual Option Longs
EFC            Environmental Facilities Corp.                    SCCC            Sullivan County Community College
ERDA           Energy Research and Development                   SCHRC           St. Charles Hospital and Rehabilitation
               Authority                                                         Center
FREE           Family Residences and Essential                   SCSB            Schuyler Community Services Board
               Enterprises                                       SCSMC           St. Catherine of Sienna Medical Center
GJSR           Gurwin Jewish Senior Residences                   SFH             St. Francis Hospital
GO             General Obligation                                SLCD            School for Language and
GSHMC          Good Samaritan Hospital Medical                                   Communication Development
               Center                                            SMCFS           St. Mary's Children and Family Services
HBFA           Housing Bank and Finance Agency                   SONYMA          State of New York Mortgage Agency
HDC            Housing Development Corp.                         SSMH            Soldiers and Sailors Memorial Hospital
HFA            Housing Finance Agency/Authority                  SUNY            State University of New York
HFC            Housing Finance Corp.                             SV              Sienna Village
HH             Harmony Heights, Inc.                             TASC            Tobacco Settlement Asset-Backed
HHS            Harmony Heights School                                            Bonds
HJDOI          Hospital for Joint Diseases Orthopedic            TFABs           Tobacco Flexible Amortization Bonds
               Institute                                         UBF             University of Buffalo Foundation
IDA            Industrial Development Agency                     UCP/HCA         United Cerebral Palsy and Handicapped
IGHL           Independent Group Home for Living                                 Children's Association
ITEMECF        Industrial, Tourist, Educational, Medical         UCPAGS          United Cerebral Palsy Association of
               and Environmental Community                                       Greater Suffolk
               Facilities                                        UDC             Urban Development Corp.
JCC            Jewish Community Center                           V.I.            United States Virgin Islands
JDAM           Julia Dyckman Andrus Memorial                     WORCA           Working Organization for Retarded
JFK            John Fitzgerald Kennedy                                           Children and Adults
L.I.           Long Island                                       WWH             Wyandach/Wheatley Heights
LGSC           Local Government Services Corporation             YMCA            Young Men's Christian Association


                         54 | ROCHESTER FUND MUNICIPALS

--------------------------------------------------------------------------------
INDUSTRY CONCENTRATIONS  December 31, 2005
--------------------------------------------------------------------------------

DISTRIBUTION OF INVESTMENTS BY INDUSTRY OF ISSUE, AS A PERCENTAGE OF TOTAL
INVESTMENTS AT VALUE, IS AS FOLLOWS:

INDUSTRY                                                   VALUE        PERCENT
--------------------------------------------------------------------------------
Tobacco Settlement Payments                       $  906,731,896           12.0%
Hospital/Health Care                                 784,414,153           10.4
Highways/Railways                                    684,189,478            9.0
Electric Utilities                                   662,511,487            8.8
Airlines                                             592,358,127            7.8
General Obligation                                   590,558,090            7.8
Adult Living Facilities                              375,967,488            5.0
Marine/Aviation Facilities                           370,697,809            4.9
Multifamily Housing                                  327,859,300            4.3
Water Utilities                                      318,877,360            4.2
Higher Education                                     287,658,452            3.8
Not-for-Profit Organization                          283,727,953            3.8
Paper, Containers & Packaging                        200,852,315            2.7
Municipal Leases                                     193,269,061            2.6
Special Tax                                          165,749,550            2.2
Single Family Housing                                125,520,125            1.7
Education                                            121,312,950            1.6
Sales Tax Revenue                                    108,956,181            1.4
Manufacturing, Non-Durable Goods                     107,064,444            1.4
Resource Recovery                                     98,931,481            1.3
Manufacturing, Durable Goods                          79,531,865            1.1
Pollution Control                                     54,933,091            0.7
Special Assessment                                    40,120,695            0.5
Parking Fee Revenue                                   28,229,879            0.4
Gas Utilities                                         25,586,738            0.3
Hotels, Restaurants & Leisure                         17,652,458            0.2
Sewer Utilities                                        7,544,096            0.1
                                                  ------------------------------
Total                                             $7,560,806,522          100.0%
                                                  ------------------------------


                         55 | ROCHESTER FUND MUNICIPALS

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

--------------------------------------------------------------------------------
SUMMARY OF RATINGS  December 31, 2005 / Unaudited
--------------------------------------------------------------------------------

DISTRIBUTION OF INVESTMENTS BY RATINGS CATEGORY, AS A PERCENTAGE OF TOTAL
INVESTMENTS AT VALUE, IS AS FOLLOWS:

RATINGS                                                                 PERCENT
--------------------------------------------------------------------------------
AAA                                                                        10.9%
AA                                                                         17.4
A                                                                          15.4
BBB                                                                        31.8
BB                                                                          3.9
B                                                                           5.4
CCC                                                                         1.7
Not Rated                                                                  13.5
                                                                          ------
Total                                                                     100.0%
                                                                          ======

Bonds rated by any nationally recognized statistical rating organization are
included in the equivalent Standard & Poor's rating category. As a general
matter, unrated bonds may be backed by mortgage liens or equipment liens on the
underlying property, and also may be guaranteed. Bonds which are backed by a
letter of credit or by other financial institutions or agencies may be assigned
an investment-grade rating by the Manager, which reflects the quality of the
guarantor, institution or agency. Unrated bonds may also be assigned a rating
when the issuer has rated bonds outstanding with comparable credit
characteristics, or when, in the opinion of the Manager, the bond itself
possesses credit characteristics which allow for rating. The unrated bonds in
the portfolio are predominantly smaller issuers which have not applied for a
bond rating. Only those unrated bonds which subsequent to purchase have not been
designated investment grade by the Manager are included in the "Not Rated"
category.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                         56 | ROCHESTER FUND MUNICIPALS

STATEMENT OF ASSETS AND LIABILITIES  December 31, 2005
--------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------
ASSETS
------------------------------------------------------------------------------------------------------------
Investments, at value (cost $7,271,151,641)--see accompanying statement of investments      $ 7,560,806,522
------------------------------------------------------------------------------------------------------------
Cash                                                                                              1,779,953
------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest                                                                                        119,864,582
Investments sold                                                                                 66,787,904
Shares of beneficial interest sold                                                               23,534,174
Other                                                                                                77,974
                                                                                            ----------------
Total assets                                                                                  7,772,851,109

------------------------------------------------------------------------------------------------------------
LIABILITIES
------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $103,502,549 purchased on a when-issued basis
or forward commitment)                                                                          119,923,069
Payable on borrowings (See Note 6)                                                               24,600,000
Shares of beneficial interest redeemed                                                            7,872,153
Distribution and service plan fees                                                                3,168,494
Trustees' compensation                                                                              944,069
Shareholder communications                                                                          275,141
Transfer and shareholder servicing agent fees                                                       246,323
Interest expense                                                                                    151,353
Other                                                                                               413,330
                                                                                            ---------------
Total liabilities                                                                               157,593,932

------------------------------------------------------------------------------------------------------------
NET ASSETS                                                                                  $ 7,615,257,177
                                                                                            ================

------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
------------------------------------------------------------------------------------------------------------
Paid-in capital                                                                             $ 7,486,547,258
------------------------------------------------------------------------------------------------------------
Accumulated net investment income                                                                   173,851
------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments                                                   (161,118,813)
------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments                                                      289,654,881
                                                                                            ----------------
NET ASSETS                                                                                  $ 7,615,257,177
                                                                                            ================


                         57 | ROCHESTER FUND MUNICIPALS

STATEMENT OF ASSETS AND LIABILITIES Continued
--------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
-----------------------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $5,937,282,906 and
324,816,583 shares of beneficial interest outstanding)                                                          $18.28
Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price)                 $19.19
-----------------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $954,703,091 and 52,274,775 shares
of beneficial interest outstanding)                                                                             $18.26
-----------------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $711,816,377 and 38,993,411 shares
of beneficial interest outstanding)                                                                             $18.25
-----------------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets of
$11,454,803 and 626,793 shares of beneficial interest outstanding)                                              $18.28

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                         58 | ROCHESTER FUND MUNICIPALS

STATEMENT OF OPERATIONS For the Year Ended  December 31, 2005
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
INVESTMENT INCOME
--------------------------------------------------------------------------------
Interest                                                          $ 428,538,241
--------------------------------------------------------------------------------
Other income                                                              3,717
                                                                  --------------
Total investment income                                             428,541,958

--------------------------------------------------------------------------------
EXPENSES
--------------------------------------------------------------------------------
Management fees                                                      32,070,175
--------------------------------------------------------------------------------
Distribution and service plan fees:
Class A                                                               7,869,652
Class B                                                              10,057,295
Class C                                                               5,986,043
--------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A                                                               1,731,428
Class B                                                                 513,607
Class C                                                                 270,263
Class Y                                                                   3,205
--------------------------------------------------------------------------------
Shareholder communications:
Class A                                                                 334,459
Class B                                                                  92,137
Class C                                                                  48,342
--------------------------------------------------------------------------------
Accounting service fees                                               2,084,636
--------------------------------------------------------------------------------
Interest expense                                                      2,084,615
--------------------------------------------------------------------------------
Trustees' compensation                                                  216,313
--------------------------------------------------------------------------------
Custodian fees and expenses                                             216,257
--------------------------------------------------------------------------------
Administration service fees                                               1,500
--------------------------------------------------------------------------------
Other                                                                 1,085,669
                                                                  --------------
Total expenses                                                       64,665,596
Less reduction to custodian expenses                                    (27,807)
                                                                  --------------
Net expenses                                                         64,637,789

--------------------------------------------------------------------------------
NET INVESTMENT INCOME                                               363,904,169

--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
--------------------------------------------------------------------------------
Net realized gain on investments                                     46,938,624
--------------------------------------------------------------------------------
Net change in unrealized appreciation on investments                144,752,085

--------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS              $ 555,594,878
                                                                  ==============

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                         59 | ROCHESTER FUND MUNICIPALS

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

YEAR ENDED DECEMBER 31,                                                   2005               2004
--------------------------------------------------------------------------------------------------
OPERATIONS
--------------------------------------------------------------------------------------------------
Net investment income                                          $   363,904,169    $   350,857,637
--------------------------------------------------------------------------------------------------
Net realized gain (loss)                                            46,938,624        (38,366,025)
--------------------------------------------------------------------------------------------------
Net change in unrealized appreciation                              144,752,085         94,781,929
                                                               -----------------------------------
Net increase in net assets resulting from operations               555,594,878        407,273,541

--------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
--------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A                                                           (291,978,951)      (272,651,228)
Class B                                                            (47,112,396)       (60,767,414)
Class C                                                            (27,548,812)       (24,573,155)
Class Y                                                               (536,002)          (542,368)

--------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
--------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A                                                          1,095,376,031        431,796,391
Class B                                                           (148,156,262)      (164,466,975)
Class C                                                            198,527,019         51,246,009
Class Y                                                              3,090,108         (1,008,130)

--------------------------------------------------------------------------------------------------
NET ASSETS
--------------------------------------------------------------------------------------------------
Total increase                                                   1,337,255,613        366,306,671
--------------------------------------------------------------------------------------------------
Beginning of period                                              6,278,001,564      5,911,694,893
                                                               -----------------------------------
End of period (including accumulated net investment income
of $173,851 and $5,510,090, respectively)                      $ 7,615,257,177    $ 6,278,001,564
                                                               ===================================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                         60 | ROCHESTER FUND MUNICIPALS

FINANCIAL HIGHLIGHTS

CLASS A     YEAR ENDED DECEMBER 31,                       2005        2004        2003        2002        2001
---------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                   $ 17.76      $17.62      $17.38      $17.52      $17.67
---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                      .99 1      1.07 1      1.11        1.08        1.06
Net realized and unrealized gain (loss)                    .53         .16         .23        (.15)       (.17)
                                                       --------------------------------------------------------
Total from investment operations                          1.52        1.23        1.34         .93         .89
---------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                     (1.00)      (1.09)      (1.10)      (1.07)      (1.04)
---------------------------------------------------------------------------------------------------------------
Net asset value, end of period                         $ 18.28      $17.76      $17.62      $17.38      $17.52
                                                       ========================================================

---------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                        8.76%       7.25%       8.12%       5.46%       5.14%
---------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions)                $ 5,937      $4,699      $4,228      $4,299      $4,073
---------------------------------------------------------------------------------------------------------------
Average net assets (in millions)                       $ 5,327      $4,387      $4,100      $4,292      $3,893
---------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                     5.44%       6.09%       6.49%       6.18%       5.97%
Total expenses                                            0.73%       0.72%       0.71%       0.72%       0.72%
Expenses after payments and waivers and
reduction to custodian expenses                           0.73%       0.72%       0.71%       0.71%       0.70%
---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                     29%         14%         18%         29%         11%

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

2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. 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 Fund distributions or the redemption of Fund shares.

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                         61 | ROCHESTER FUND MUNICIPALS

FINANCIAL HIGHLIGHTS  Continued
--------------------------------------------------------------------------------

CLASS B          YEAR ENDED DECEMBER 31,              2005          2004         2003         2002        2001
---------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                 $17.75       $17.60       $17.36       $17.51      $17.66
---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                   .83 1        .91 1        .96          .93         .91
Net realized and unrealized gain (loss)                 .52          .18          .23         (.16)       (.17)
                                                     ----------------------------------------------------------
Total from investment operations                       1.35         1.09         1.19          .77         .74
---------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                   (.84)        (.94)        (.95)        (.92)       (.89)
---------------------------------------------------------------------------------------------------------------
Net asset value, end of period                       $18.26       $17.75       $17.60       $17.36      $17.51
                                                     ==========================================================

---------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                     7.77%        6.40%        7.19%        4.50%       4.25%
---------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions)              $  955       $1,073       $1,231       $1,342      $1,157
---------------------------------------------------------------------------------------------------------------
Average net assets (in millions)                     $1,006       $1,130       $1,259       $1,275      $  997
---------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                  4.60%        5.23%        5.62%        5.32%       5.10%
Total expenses                                         1.60%        1.59%        1.58%        1.58%       1.58%
Expenses after payments and waivers and
reduction to custodian expenses                        1.60%        1.59%        1.58%        1.57%       1.56%
---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  29%          14%          18%          29%         11%

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

2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. 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 Fund distributions or the redemption of Fund shares.

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                         62 | ROCHESTER FUND MUNICIPALS

CLASS C          YEAR ENDED DECEMBER 31,             2005           2004           2003         2002         2001
------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period               $17.74         $17.59         $17.36       $17.50       $17.66
------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                 .82 1          .91 1          .96          .93          .91
Net realized and unrealized gain (loss)               .53            .18            .22         (.15)        (.18)
                                                   ---------------------------------------------------------------
Total from investment operations                     1.35           1.09           1.18          .78          .73
------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                 (.84)          (.94)          (.95)        (.92)        (.89)
------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                     $18.25         $17.74         $17.59       $17.36       $17.50
                                                   ===============================================================

------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                   7.78%          6.40%          7.14%        4.57%        4.19%
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions)            $  712         $  498         $  443       $  471       $  429
------------------------------------------------------------------------------------------------------------------
Average net assets (in millions)                   $  600         $  459         $  436       $  460       $  356
------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                4.56%          5.22%          5.62%        5.32%        5.09%
Total expenses                                       1.59%          1.59%          1.58%        1.58%        1.57%
Expenses after payments and waivers and
reduction to custodian expenses                      1.59%          1.59%          1.58%        1.57%        1.55%
------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                29%            14%            18%          29%          11%

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

2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. 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 Fund distributions or the redemption of Fund shares.

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                         63 | ROCHESTER FUND MUNICIPALS

FINANCIAL HIGHLIGHTS  Continued
--------------------------------------------------------------------------------

CLASS Y           YEAR ENDED DECEMBER 31,           2005             2004            2003             2002           2001
------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                 $ 17.76           $17.61        $17.38        $17.52        $17.67
------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                   1.01 1           1.10 1        1.14          1.10          1.08
Net realized and unrealized gain (loss)                  .54              .17           .21          (.15)         (.17)
                                                     -------------------------------------------------------------------
Total from investment operations                        1.55             1.27          1.35           .95           .91
------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                   (1.03)           (1.12)        (1.12)        (1.09)        (1.06)
------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                       $ 18.28           $17.76        $17.61        $17.38        $17.52
                                                     ===================================================================

------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                      8.93%            7.50%         8.16%         5.57%         5.25%
------------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in millions)              $    11           $    8        $    9        $   12        $   12
------------------------------------------------------------------------------------------------------------------------
Average net assets (in millions)                     $    10           $    8        $   11        $   12        $   12
------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                   5.59%            6.27%         6.79%         6.30%         6.08%
Total expenses                                          0.58%            0.55%         0.61%         0.62%         0.62%
Expenses after payments and waivers and
reduction to custodian expenses                         0.58%            0.55%         0.61%         0.61%         0.60%
------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                   29%              14%           18%           29%           11%

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

2. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. Sales charges are not reflected in the
total returns. 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 Fund distributions or the redemption of Fund shares.

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                         64 | ROCHESTER FUND MUNICIPALS

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

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

Rochester Fund Municipals (the Fund) is registered under the Investment Company
Act of 1940, as amended, as a diversified, open-end management investment
company. The Fund's investment objective is to seek to provide as high a level
of income exempt from federal income tax and New York State and New York City
personal income taxes as is consistent with its investment policies and prudent
investment management while seeking preservation of shareholders' capital. The
Fund's investment advisor is OppenheimerFunds, Inc. (the Manager).

      The Fund offers Class A, Class B, Class C and Class Y shares. Class A
shares are sold at their offering price, which is normally net asset value plus
a front-end sales charge. Class B and Class C shares are sold without a
front-end sales charge but may be subject to a contingent deferred sales charge
(CDSC). Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC, however, the institutional investor
may impose charges on those accounts. All classes of shares have identical
rights and voting privileges with respect to the Fund in general and exclusive
voting rights on matters that affect that class alone. Earnings, net assets and
net asset value per share may differ due to each class having its own expenses,
such as transfer and shareholder servicing agent fees and shareholder
communications, directly attributable to that class. Class A, B and C have
separate distribution and/or service plans. No such plan has been adopted for
Class Y shares. Class B shares will automatically convert to Class A shares six
years after the date of purchase.

      The following is a summary of significant accounting policies consistently
followed by the Fund.

--------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of The New York Stock Exchange (the Exchange), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. Securities listed or traded on National
Stock Exchanges or other domestic exchanges are valued based on the last sale
price of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ are valued based on the closing
price provided by NASDAQ prior to the time when the Fund's assets are valued. In
the absence of a sale, the security is valued at the last sale price on the
prior trading day, if it is within the spread of the closing "bid" and "asked"
prices, and if not, at the closing bid price. Securities traded on foreign
exchanges are valued based on the last sale price on the principal exchange on
which the security is traded, in the country that is identified by the portfolio
pricing service, prior to the time when the Fund's assets are valued. In the
absence of a sale, the security is valued at the official closing price on the
principal exchange. Corporate, government and municipal debt instruments having
a remaining maturity in excess of sixty days and all mortgage-backed securities
will be valued at the mean between the "bid" and "asked" prices.


                         65 | ROCHESTER FUND MUNICIPALS

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

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

Futures contracts traded on a commodities or futures exchange will be valued at
the final settlement price or official closing price on the principal exchange
as reported by such principal exchange at its trading session ending at, or most
recently prior to, the time when the Fund's assets are valued. Securities
(including restricted securities) for which market quotations are not readily
available are valued at their fair value. Foreign and domestic securities whose
values have been materially affected by what the Manager identifies as a
significant event occurring before the Fund's assets are valued but after the
close of their respective exchanges will be fair valued. Fair value is
determined in good faith using consistently applied procedures under the
supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).

--------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment can take place up to ten days or more after the trade date.
Normally the settlement date occurs within six months after the trade date;
however, the Fund may, from time to time, purchase securities whose settlement
date extends six months or more beyond trade date. During this period, such
securities do not earn interest, are subject to market fluctuation and may
increase or decrease in value prior to their delivery. The Fund maintains
internally designated assets with a market value equal to or greater than the
amount of its purchase commitments. The purchase of securities on a when-issued
basis or forward commitment may increase the volatility of the Fund's net asset
value to the extent the Fund executes such transactions while remaining
substantially fully invested. The Fund may also sell securities that it
purchased on a when-issued basis or forward commitment prior to settlement of
the original purchase. As of December 31, 2005, the Fund had purchased
$103,502,549 of securities issued on a when-issued basis or forward commitment.

--------------------------------------------------------------------------------
INVERSE FLOATING RATE SECURITIES. The Fund invests in inverse floating rate
securities that pay interest at a rate that varies inversely with short-term
interest rates. Certain of these securities may be leveraged, whereby the
interest rate varies inversely at a multiple of the change in short-term rates.
As interest rates rise, inverse floaters produce less current income. The price
of such securities is more volatile than comparable fixed rate securities. The
Fund will not invest more than 20% of its total assets in inverse floaters.
Inverse floaters amount to $670,103,741 as of December 31, 2005, which
represents 8.62% of the Fund's total assets.

--------------------------------------------------------------------------------
SECURITY CREDIT RISK. The Fund invests in high-yield securities, which may be
subject to a greater degree of credit risk, market fluctuations and loss of
income and principal, and may be more sensitive to economic conditions than
lower-yielding, higher-rated fixed-income securities. The Fund may acquire
securities in default, and is not obligated to dispose of securities whose
issuers subsequently default. As of December 31, 2005,


                         66 | ROCHESTER FUND MUNICIPALS

securities with an aggregate market value of $3,380,506, representing 0.04% of
the Fund's net assets, were in default.

      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.

--------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to each class of shares based upon the relative proportion of net
assets represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.

--------------------------------------------------------------------------------
FEDERAL TAXES. The Fund 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, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
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 Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.

                                                                                   NET UNREALIZED
                                                                                     APPRECIATION
                                                                                 BASED ON COST OF
                                                                                   SECURITIES AND
       UNDISTRIBUTED       UNDISTRIBUTED               ACCUMULATED              OTHER INVESTMENTS
       NET INVESTMENT          LONG-TERM                      LOSS             FOR FEDERAL INCOME
       INCOME                       GAIN        CARRYFORWARD 1,2,3                   TAX PURPOSES
       ------------------------------------------------------------------------------------------
       $1,946,336                    $--              $152,265,159                   $280,801,229

1. As of December 31, 2005, the Fund had $152,265,159 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of December 31, 2005,
details of the capital loss carryforwards were as follows:

                                  EXPIRING
                                  ------------------------
                                  2007        $  4,715,388
                                  2008          48,591,026
                                  2011          68,625,845
                                  2012          30,332,900
                                              ------------
                                  Total       $152,265,159
                                              ============

2. During the fiscal year ended December 31, 2005, the Fund utilized $46,836,026
of capital loss carryforward to offset capital gains realized in that fiscal
year.

3. During the fiscal year ended December 31, 2004, the Fund did not utilize any
capital loss carryforward.


                         67 | ROCHESTER FUND MUNICIPALS

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

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

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 Fund. Accordingly, the
following amounts have been reclassified for December 31, 2005. Net assets of
the Fund were unaffected by the reclassifications.

                                                     REDUCTION TO
            INCREASE TO PAID-IN                   ACCUMULATED NET
            CAPITAL                           INVESTMENT INCOME 4
            -----------------------------------------------------
            $2,064,247                                 $2,064,247

4. $2,064,247 was distributed in connection with Fund share redemptions.

The tax character of distributions paid during the years ended December 31, 2005
and December 31, 2004 was as follows:

                                                YEAR ENDED          YEAR ENDED
                                         DECEMBER 31, 2005   DECEMBER 31, 2004
            ------------------------------------------------------------------
            Distributions paid from:
            Exempt-interest dividends         $367,176,161        $358,534,165

The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of December 31, 2005 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.

            Federal tax cost of securities      $7,280,005,293
                                                ---------------
            Gross unrealized appreciation       $  360,424,850
            Gross unrealized depreciation          (79,623,621)
                                                ---------------
            Net unrealized appreciation         $  280,801,229
                                                ===============

--------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the
Fund's independent trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service. During the year ended December
31, 2005, the Fund's projected benefit obligations were decreased by $16,507 and
payments of $15,897 were made to retired trustees, resulting in an accumulated
liability of $797,673 as of December 31, 2005.

In January 1995, the then existing Board of Trustees of the Fund adopted an
unfunded retirement plan for its independent trustees. The retirement plan, as
amended and restated in October 1995, provides that no independent trustee of
the Fund who is


                         68 | ROCHESTER FUND MUNICIPALS

elected after September 1995 may be eligible to receive benefits there under.
Upon retirement, eligible trustees receive annual payments based upon their
years of service. In connection with the sale of certain assets of Rochester
Capital Advisors, L.P. (the Fund's former investment advisor) to the Manager,
all but one of the existing independent trustees retired effective January 4,
1996. During the year ended December 31, 2005, payments of $54,000 were made to
retired trustees. As of December 31, 2005, the Fund had recognized an
accumulated liability of $64,125.

      The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of the annual compensation they are entitled to receive from the Fund.
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 Fund or in other Oppenheimer funds selected by the Trustee. The
Fund purchases shares of the funds selected for deferral by the Trustee in
amounts equal to his or her deemed investment, resulting in a Fund 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
Fund, and will not materially affect the Fund's assets, liabilities or net
investment income per share. Amounts will be deferred until distributed in
accordance to the Plan.

--------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income distributions, if any, are declared
daily and paid monthly. Capital gain distributions, if any, are declared and
paid annually.

--------------------------------------------------------------------------------
INVESTMENT INCOME. Interest income, which includes accretion of discount and
amortization of premium, is accrued as earned.

--------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund 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 Fund pays
interest to its custodian on such cash overdrafts to the extent they are not
offset by cash balances maintained by the Fund. The Reduction to Custodian
Expenses line item, if applicable, represents earnings on cash balances
maintained by the Fund during the period. Such interest expense and other
custodian fees may be paid with these earnings.

--------------------------------------------------------------------------------
SECURITY TRANSACTIONS. Security transactions are recorded on the trade date.
Realized gains and losses on securities sold are determined on the basis of
identified cost.

--------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets


                         69 | ROCHESTER FUND MUNICIPALS

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

1. SIGNIFICANT ACCOUNTING POLICIES Continued

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 Fund has authorized an unlimited number of no par value shares of beneficial
interest of each class. Transactions in shares of beneficial interest were as
follows:

                                   YEAR ENDED DECEMBER 31, 2005          YEAR ENDED DECEMBER 31, 2004
                                   SHARES                AMOUNT            SHARES              AMOUNT
------------------------------------------------------------------------------------------------------
CLASS A
Sold                           81,186,227       $ 1,474,103,085        46,521,892       $ 815,106,857
Dividends and/or
distributions reinvested        9,259,591           167,949,635         8,491,183         148,621,535
Redeemed                      (30,153,301)         (546,676,689)      (30,527,851)       (531,932,001)
                             -------------------------------------------------------------------------
Net increase                   60,292,517       $ 1,095,376,031        24,485,224       $ 431,796,391
                             =========================================================================

------------------------------------------------------------------------------------------------------
CLASS B
Sold                            5,442,524       $    98,607,100         5,986,622       $ 104,928,366
Dividends and/or
distributions reinvested        1,539,288            27,866,258         1,972,158          34,491,896
Redeemed                      (15,183,742)         (274,629,620)      (17,438,391)       (303,887,237)
                             -------------------------------------------------------------------------
Net decrease                   (8,201,930)      $  (148,156,262)       (9,479,611)      $(164,466,975)
                             =========================================================================

------------------------------------------------------------------------------------------------------
CLASS C
Sold                           13,663,235       $   247,879,967         6,761,505       $ 118,507,396
Dividends and/or
distributions reinvested          976,736            17,694,309           805,567          14,083,421
Redeemed                       (3,702,752)          (67,047,257)       (4,677,791)        (81,344,808)
                             -------------------------------------------------------------------------
Net increase                   10,937,219       $   198,527,019         2,889,281       $  51,246,009
                             =========================================================================

------------------------------------------------------------------------------------------------------
CLASS Y
Sold                              192,164       $     3,496,989                --       $          --
Dividends and/or
distributions reinvested            1,476                26,918                --                  --
Redeemed                          (23,944)             (433,799)          (58,749)         (1,008,130)
                             -------------------------------------------------------------------------
Net increase (decrease)           169,696       $     3,090,108           (58,749)      $  (1,008,130)
                             =========================================================================

--------------------------------------------------------------------------------
3. PURCHASES AND SALES OF SECURITIES

The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended December 31, 2005, were as
follows:

                                             PURCHASES                  SALES
-----------------------------------------------------------------------------
Investment securities                   $2,705,306,252          1,809,291,555


                         70 | ROCHESTER FUND MUNICIPALS

--------------------------------------------------------------------------------
4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES

MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of 0.54% of the first $100 million of average daily net assets,
0.52% on the next $150 million, 0.47% on the next $1.75 billion, 0.46% on the
next $3 billion, 0.45% on the next $3 billion and 0.44% of average daily net
assets over $8 billion.

--------------------------------------------------------------------------------
ADMINISTRATION SERVICE FEES. The Fund pays the Manager a fee of $1,500 per year
for preparing and filing the Fund's tax returns.

--------------------------------------------------------------------------------
ACCOUNTING FEES. Accounting fees paid to the Manager were in accordance with the
accounting services agreement with the Fund which provides for an annual fee of
$12,000 for the first $30 million of average daily net assets and $9,000 for
each additional $30 million of average daily net assets. During the year ended
December 31, 2005, the Fund paid $2,084,636 to the Manager for accounting and
pricing services.

--------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended December 31, 2005, the Fund paid
$2,489,051 to OFS for services to the Fund.

      Additionally, Class Y shares are subject to minimum fees of $10,000 per
annum for assets of $10 million or more. The Class Y shares are subject to the
minimum fees in the event that the per account fee does not equal or exceed the
applicable minimum fees. OFS may voluntarily waive the minimum fees.

--------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN (12B-1) FEES. Under its General Distributor's
Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor)
acts as the Fund's principal underwriter in the continuous public offering of
the Fund's classes of shares.

--------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
periodically at an annual rate of up to 0.15% of the average annual net assets
of Class A shares of the Fund. 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 Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years. Fees incurred by the Fund under the plan are detailed in the Statement of
Operations.

--------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B AND CLASS C SHARES. The Fund has
adopted Distribution and Service Plans for Class B and Class C shares to
compensate the Distributor for its services in connection with the distribution
of those shares and servicing accounts. Under the plans, the Fund pays the
Distributor an annual asset-based sales charge of 0.75% on Class B and Class C
shares. The Distributor also receives a service fee of up to 0.25% under each
plan. If either the Class B or Class C plan is terminated by the


                         71 | ROCHESTER FUND MUNICIPALS

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

4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued

Fund or by the shareholders of a class, the Board of Trustees and its
independent trustees must determine whether the Distributor shall be entitled to
payment from the Fund of all or a portion of the service fee and/or asset-based
sales charge in respect to shares sold prior to the effective date of such
termination. The Distributor's aggregate uncompensated expenses under the plan
at December 31, 2005 for Class B and Class C shares were $36,609,338 and
$13,884,446, respectively. Fees incurred by the Fund under the plans are
detailed in the Statement of Operations.

--------------------------------------------------------------------------------
SALES CHARGES. Front-end sales charges and contingent deferred sales charges
(CDSC) do not represent expenses of the Fund. They are deducted from the
proceeds of sales of Fund shares prior to investment or from redemption proceeds
prior to remittance, as applicable. The sales charges retained by the
Distributor from the sale of shares and the CDSC retained by the Distributor on
the redemption of shares is shown in the table below for the period indicated.

                                                            CLASS A              CLASS B           CLASS C
                                      CLASS A            CONTINGENT           CONTINGENT        CONTINGENT
                                    FRONT-END              DEFERRED             DEFERRED          DEFERRED
                                SALES CHARGES         SALES CHARGES        SALES CHARGES     SALES CHARGES
                                  RETAINED BY           RETAINED BY          RETAINED BY       RETAINED BY
YEAR ENDED                        DISTRIBUTOR           DISTRIBUTOR          DISTRIBUTOR       DISTRIBUTOR
----------------------------------------------------------------------------------------------------------
December 31, 2005                  $3,371,458               $58,123           $1,445,156          $131,436
----------------------------------------------------------------------------------------------------------

WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees for all classes to 0.35% of
average annual net assets per class. This undertaking may be amended or
withdrawn at any time.

--------------------------------------------------------------------------------
5. ILLIQUID SECURITIES

As of December 31, 2005, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily available
market or if its valuation has not changed for a certain period of time. The
Fund will not invest more than 15% of its net assets (determined at the time of
purchase and reviewed periodically) in illiquid securities. Securities that are
illiquid are marked with the applicable footnote on the Statement of
Investments.

--------------------------------------------------------------------------------
6. BANK BORROWINGS

The Fund can borrow money from banks in amounts up to 5% of its total assets
(including the amount borrowed) less all liabilities and indebtedness other than
borrowings to purchase portfolio securities, to meet redemption obligations or
for temporary and emergency purposes. The purchase of securities with borrowed
funds creates leverage in the Fund. Until terminated on January 21, 2005, the
Fund had entered into an agreement which enabled it to participate with certain
other Oppenheimer funds in a committed, unsecured line of credit with a bank,
which permitted borrowings up to


                         72 | ROCHESTER FUND MUNICIPALS

$540 million, collectively. Interest was charged to each fund, based on its
borrowings, at a rate equal to the Federal Funds Rate plus 0.75%. The Fund also
paid a commitment fee equal to its pro rata share of the average unutilized
amount of the credit facility at a rate of 0.09% per annum.

      Effective January 21, 2005, the Fund entered into a Revolving Credit and
Security Agreement with a conduit lender and a bank which enables it to
participate with a certain other Oppenheimer fund in a committed, unsecured
borrowing facility that permits borrowings of up to $300 million, collectively.
Interest is charged to the Fund, based on its borrowings, at current commercial
paper issuance rates (4.2703% as of December 31, 2005). The Fund pays additional
fees of 0.30% per annum to the lender on its outstanding borrowings to manage
and administer the facility and is allocated its pro-rata share of a 0.13% per
annum commitment fee for a liquidity backstop facility with respect to the $300
million facility size.

      For the year ended December 31, 2005, the average daily loan balance was
$62,025,479 at an average daily interest rate of 3.292%. The Fund had borrowings
outstanding of $24,600,000 at December 31, 2005 at an interest rate of 4.2703%.
The Fund had gross borrowings and gross loan repayments of $1,315,100,000 and
$1,395,400,000, respectively, during the year ended December 31, 2005. The
maximum amount of borrowings outstanding at any month-end during the year ended
December 31, 2005 was $182,600,000. The Fund paid $478,887 in fees and
$2,093,010 in interest during the year ended December 31, 2005.

--------------------------------------------------------------------------------
7. LITIGATION

A consolidated amended complaint has been filed as putative derivative and class
actions against the Manager, OFS and the Distributor, as well as 51 of the
Oppenheimer funds (as "Nominal Defendants") including the Fund, 30 present and
former Directors or Trustees and 8 present and former officers of the funds.
This complaint, initially filed in the U.S. District Court for the Southern
District of New York on January 10, 2005 and amended on March 4, 2005,
consolidates into a single action and amends six individual previously-filed
putative derivative and class action complaints. Like those prior complaints,
the complaint alleges that the Manager charged excessive fees for distribution
and other costs, improperly used assets of the funds in the form of directed
brokerage commissions and 12b-1 fees to pay brokers to promote sales of the
funds, and failed to properly disclose the use of assets of the funds to make
those payments in violation of the Investment Company Act of 1940 and the
Investment Advisers Act of 1940. Also, like those prior complaints, the
complaint further alleges that by permitting and/or participating in those
actions, the Directors/Trustees and the Officers breached their fiduciary duties
to shareholders of the funds under the Investment Company Act of 1940 and at
common law. The complaint seeks unspecified compensatory and punitive damages,
rescission of the funds' investment advisory agreements, an accounting of all
fees paid, and an award of attorneys' fees and litigation expenses.


                         73 | ROCHESTER FUND MUNICIPALS

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

--------------------------------------------------------------------------------
7. LITIGATION Continued

The defendants believe that the allegations contained in the Complaints are
without merit and that they have meritorious defenses against the claims
asserted. The defendants intend to defend these lawsuits vigorously and to
contest any claimed liability. The defendants believe that it is premature to
render any opinion as to the likelihood of an outcome unfavorable to them and
that no estimate can yet be made with any degree of certainty as to the amount
or range of any potential loss.

A-7
Appendix A

MUNICIPAL BOND RATINGS DEFINITIONS

Below are summaries of the rating definitions used by the nationally-recognized rating
agencies listed below for municipal securities. Those ratings represent the opinion of the
agency as to the credit quality of issues that they rate. The summaries below are based
upon publicly available information provided by the rating organizations.

Moody's Investors Service, Inc. ("Moody's")
Municipal Ratings are opinions of the investment quality of issuers and issues in the U.S.
municipal and tax-exempt markets. As such, these ratings incorporate Moody's assessment of
the default probability and loss severity of these issuers and issues.

Municipal Ratings are based upon the analysis of four primary factors relating to municipal
finance: economy, debt, finances, and administration/management strategies. Each of the
factors is evaluated individually and for its effect on the other factors in the context of
the municipality's ability to repay its debt.

MUNICIPAL LONG-TERM RATING DEFINITIONS

Aaa: Issuers or issues rated Aaa demonstrate the strongest creditworthiness relative to
other US municipal or tax-exempt issuers or issues.

Aa: Issuers or issues rated Aa demonstrate very strong creditworthiness relative to other
US municipal or tax-exempt issuers or issues.

A: Issuers or issues rated A present above-average creditworthiness relative to other US
municipal or tax-exempt issuers or issues.

Baa: Issuers or issues rated Baa represent average creditworthiness relative to other US
municipal or tax- exempt issuers or issues.

Ba: Issuers or issues rated Ba demonstrate below-average creditworthiness relative to
other US municipal or tax-exempt issuers or issues.

B: Issuers or issues rated B demonstrate weak creditworthiness relative to other US
municipal or tax- exempt issuers or issues.

Caa: Issuers or issues rated Caa demonstrate very weak creditworthiness relative to other
US municipal or tax-exempt issuers or issues.

Ca: Issuers or issues rated Ca demonstrate extremely weak creditworthiness relative to
other US municipal or tax-exempt issuers or issues.

C: Issuers or issues rated C demonstrate the weakest creditworthiness relative to other US
municipal or tax-exempt issuers or issues.

Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from
Aa through Caa. 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.

MIG/VMIG RATINGS: U.S. SHORT-TERM RATINGS
In municipal debt issuance, there are three rating categories for short-term obligations
that are considered investment grade. These ratings are designated as Moody's Investment
Grade (MIG) and are divided into three levels -- MIG 1 through MIG 3.
In addition, those short-term obligations that are of speculative quality are designated
SG, or speculative grade.

In the case of variable rate demand obligations (VRDOs), a two-component rating is
assigned. The first element represents Moody's evaluation of the degree of risk associated
with scheduled principal and interest payments. The second element represents Moody's
evaluation of the degree of risk associated with the demand feature, using the MIG rating
scale.

The short-term rating assigned to the demand feature of VRDOs is designated as VMIG. When
either the long- or short-term aspect of a VRDO is not rated, that piece is designated NR,
e.g., Aaa/NR or NR/VMIG 1.

MIG ratings expire at note maturity. By contrast, VMIG rating expirations will be a
function of each issue's specific structural or credit features.

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.

MIG 3/VMIG 3: Denotes acceptable credit quality. Liquidity and cash-flow protection may be
narrow, and market access for refinancing is likely to be less well established.

SG: Denotes speculative-grade credit quality. Debt instruments in this category may lack
margins of protection.

Standard & Poor's Ratings Services ("Standard & Poor's"), a division of The McGraw-Hill
Companies, Inc.

LONG-TERM ISSUE CREDIT RATINGS
Issue credit ratings are based in varying degrees, on the following considerations:
o Likelihood of payment-capacity and willingness of the obligor to meet its financial
commitment on an obligation in accordance with the terms of the obligation;
o Nature of and provisions of the obligation; and
o Protection afforded by, and relative position of, the obligation in the event of
bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and
other laws affecting creditors' rights.
The issue ratings definitions are expressed in terms of default risk. As such, they
pertain to senior obligations of an entity. Junior obligations are typically rated lower
than senior obligations, to reflect the lower priority in bankruptcy, as noted above.

AAA: An obligation rated `AAA' has the highest rating assigned by Standard & Poor's. The
obligor's capacity to meet its financial commitment on the obligation is extremely strong.

AA: An obligation rated `AA' differs from the highest-rated obligations only in small
degree. The obligor's capacity to meet its financial commitment on the obligation is very
strong.

A: An obligation rated `A' are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than obligations in higher-rated categories.
However, the obligor's capacity to meet its financial commitment on the obligation is still
strong.

BBB: An obligation rated `BBB' exhibits adequate protection parameters. However, adverse
economic conditions or changing circumstances are more likely to lead to a weakened
capacity of the obligor to meet its financial commitment on the obligation.

BB, B, CCC, CC, and C

An obligation rated `BB', `B', `CCC', `CC', and `C' are regarded as having significant
speculative characteristics. `BB' indicates the least degree of speculation and `C' the
highest. While such obligations will likely have some quality and protective
characteristics, these may be outweighed by large uncertainties or major exposures to
adverse conditions.

BB: An obligation rated `BB' are less vulnerable to nonpayment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse business,
financial, or economic conditions, which could lead to the obligor's inadequate capacity to
meet its financial commitment on the obligation.

B: An obligation rated `B' are more vulnerable to nonpayment than obligations rated `BB',
but the obligor currently has the capacity to meet its financial commitment on the
obligation. Adverse business, financial, or economic conditions will likely impair the
obligor's capacity or willingness to meet its financial commitment on the obligation.

CCC: An obligation rated `CCC' are currently vulnerable to nonpayment and are dependent
upon favorable business, financial, and economic conditions for the obligor to meet its
financial commitment on the obligation. In the event of adverse business, financial, or
economic conditions, the obligor is not likely to have the capacity to meet its financial
commitment on the obligation.

CC: An obligation rated `CC' are currently highly vulnerable to nonpayment.

C: The `C' rating may be used to cover a situation where a bankruptcy petition has been
filed or similar action has been taken, but payments on this obligation are being continued.

D: An obligation rated `D' are in payment default. The `D' rating category is used when
payments on an obligation are not made on the date due even if the applicable grace period
has not expired, unless Standard & Poor's believes that such payments will be made during
such grace period. The `D' rating also will be used upon the filing of a bankruptcy
petition or the taking of a similar action if payments on an obligation are jeopardized.

The ratings from "AA" to "CCC" may be modified by the addition of a plus (+) or minus (-)
sign to show relative standing within the major rating categories.

c: The `c' subscript is used to provide additional information to investors that the bank
may terminate its obligation to purchase tendered bonds if the long-term credit rating of
the issuer is below an investment-grade level and/or the issuer's bonds are deemed
taxable.

p: The letter `p' indicates that the rating is provisional. A provisional rating assumes
the successful completion of the project financed by the debt being rated and indicates
that payment of debt service requirements is largely or entirely dependent upon the
successful, timely completion of the project. This rating, however, while addressing credit
quality subsequent to completion of the project, makes no comment on the likelihood of or
the risk of default upon failure of such completion. The investor should exercise his own
judgment with respect to such likelihood and risk.

Continuance of the ratings is contingent upon Standard & Poor's receipt of an executed copy
of the escrow agreement or closing documentation confirming investments and cash flows.

r: The `r' highlights derivative, hybrid, and certain other obligations that Standard &
Poor's believes may experience high volatility or high variability in expected returns as a
result of noncredit risks. Examples of such obligations are securities with principal or
interest return indexed to equities, commodities, or currencies; certain swaps and options;
and interest-only and principal-only mortgage securities. The absence of an `r' symbol
should not be taken as an indication that an obligation will exhibit no volatility or
variability in total return.

N.R. Not rated.

Debt obligations of issuers outside the United States and its territories are rated on the
same basis as domestic corporate and municipal issues. The ratings measure the
creditworthiness of the obligor but do not take into account currency exchange and related
uncertainties.

Bond Investment Quality Standards

Under present commercial bank regulations issued by the Comptroller of the Currency, bonds
rated in the top four categories (`AAA', `AA', `A', `BBB', commonly known as
investment-grade ratings) generally are regarded as eligible for bank investment. Also, the
laws of various states governing legal investments impose certain rating or other standards
for obligations eligible for investment by savings banks, trust companies, insurance
companies, and fiduciaries in general.

SHORT-TERM ISSUE CREDIT RATINGS
Short-term ratings are generally assigned to those obligations considered short-term in the
relevant market. In the U.S., for example, that means obligations with an original maturity
of no more than 365 days-including commercial paper.

A-1: A short-term obligation rated "A-1" is rated in the highest category by Standard &
Poor's. The obligor's capacity to meet its financial commitment on the obligation is
strong. Within this category, certain obligations are designated with a plus sign (+). This
indicates that the obligor's capacity to meet its financial commitment on these obligations
is extremely strong.

A-2: A short-term obligation rated "A-2" 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.

A-3: A short-term obligation rated "A-3" exhibits adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to a weakened
capacity of the obligor to meet its financial commitment on the obligation.

B: A short-term obligation rated "B" is regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial commitment on
the obligation; however, it faces major ongoing uncertainties which could lead to the
obligor's inadequate capacity to meet its financial commitment on the obligation.

C: A short-term obligation rated "C" is currently vulnerable to nonpayment and is dependent
upon favorable business, financial, and economic conditions for the obligor to meet its
financial commitment on the obligation.

D: A short-term obligation rated "D" is in payment default. The "D" rating category is used
when payments on an obligation are not made on the date due even if the applicable grace
period has not expired, unless Standard & Poor's believes that such payments will be made
during such grace period. The "D" rating also will be used upon the filing of a bankruptcy
petition or the taking of a similar action if payments on an obligation are jeopardized.

Notes. A Standard & Poor's note rating reflects the liquidity factors and market access
risks unique to notes. Notes due in three years or less will likely receive a note rating.
Notes maturing beyond three years will most likely receive a long-term debt rating. The
following criteria will be used in making that assessment:
o.....Amortization schedule-the larger the final maturity relative to other maturities, the
more likely it will
be treated as a note; and
o Source of payment-the more dependent the issue is on the market for its refinancing,
the more likely
it will be treated as a note.

SP-1: Strong capacity to pay principal and interest. An issue with 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.

SP-3: Speculative capacity to pay principal and interest.

Fitch, Inc.
International credit ratings assess the capacity to meet foreign currency or local currency
commitments. Both "foreign currency" and "local currency" ratings are internationally
comparable assessments. The local currency rating measures the probability of payment
within the relevant sovereign state's currency and jurisdiction and therefore, unlike the
foreign currency rating, does not take account of the possibility of foreign exchange
controls limiting transfer into foreign currency.

INTERNATIONAL LONG-TERM CREDIT RATINGS
The following ratings scale applies to foreign currency and local currency ratings.
Investment Grade:

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.

A: High Credit Quality. "A" ratings denote a low expectation of credit risk. The capacity
for timely payment of financial commitments is considered strong. This capacity may,
nevertheless, be more vulnerable to changes in circumstances or in economic conditions than
is the case for higher ratings.

BBB: Good Credit Quality. "BBB" ratings indicate that there is currently a low expectation
of credit risk. The capacity for timely payment of financial commitments is considered
adequate, but adverse changes in circumstances and in economic conditions are more likely
to impair this capacity. This is the lowest investment-grade category.

Speculative Grade:

BB: Speculative. "BB" ratings indicate that there is a possibility of credit risk
developing, particularly as the result of adverse economic change over time. However,
business or financial alternatives may be available to allow financial commitments to be
met. Securities rated in this category are not investment grade.

B: Highly Speculative. "B" ratings indicate that significant credit risk is present, but a
limited margin of safety remains. Financial commitments are currently being met. However,
capacity for continued payment is contingent upon a sustained, favorable business and
economic environment.

CCC, CC C: High Default Risk. Default is a real possibility. Capacity for meeting
financial commitments is solely reliant upon sustained, favorable business or economic
developments. A "CC" rating indicates that default of some kind appears probable. "C"
ratings signal imminent default.

DDD, DD, and D: Default. The ratings of obligations in this category are based on their
prospects for achieving partial or full recovery in a reorganization or liquidation of the
obligor. While expected recovery values are highly speculative and cannot be estimated with
any precision, the following serve as general guidelines. "DDD" obligations have the
highest potential for recovery, around 90%-100% of outstanding amounts and accrued
interest. "DD" indicates potential recoveries in the range of 50%-90%, and "D" the lowest
recovery potential, i.e., below 50%.

Entities rated in this category have defaulted on some or all of their obligations.
Entities rated "DDD" have the highest prospect for resumption of performance or continued
operation with or without a formal reorganization process. Entities rated "DD" and "D" are
generally undergoing a formal reorganization or liquidation process; those rated "DD" are
likely to satisfy a higher portion of their outstanding obligations, while entities rated
"D" have a poor prospect for repaying all obligations.
Plus (+) and minus (-) signs may be appended to a rating symbol to denote relative status
within the major rating categories. Plus and minus signs are not added to the "AAA"
category or to categories below "CCC," nor to short-term ratings other than "F1" (see
below).

INTERNATIONAL SHORT-TERM CREDIT RATINGS
The following ratings scale applies to foreign currency and local currency ratings. A
short-term rating has a time horizon of less than 12 months for most obligations, or up to
three years for U.S. public finance securities, and thus places greater emphasis on the
liquidity necessary to meet financial commitments in a timely manner.

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.

F3: Fair credit quality. Capacity for timely payment of financial commitments is adequate.
However, near-term adverse changes could result in a reduction to non-investment grade.

B: Speculative. Minimal capacity for timely payment of financial commitments, plus
vulnerability to near-term adverse changes in financial and economic conditions.

C: High default risk. Default is a real possibility. Capacity for meeting financial
commitments is solely reliant upon a sustained, favorable business and economic environment.

D: Default. Denotes actual or imminent payment default.

B-1
Appendix B

MUNICIPAL BOND INDUSTRY CLASSIFICATIONS

Adult Living Facilities
Airlines
Education
Electric Utilities
Gas Utilities
General Obligation
Higher Education
Highways/Railways
Hospital/Healthcare
Hotels, Restaurants & Leisure
Manufacturing, Durable Goods
Manufacturing, Non Durable Goods
Marine/Aviation Facilities
Multi-Family Housing
Municipal Leases
Non Profit Organization
Paper, Containers & Packaging
Parking Fee Revenue
Pollution Control
Resource Recovery
Sales Tax Revenue
Sewer Utilities
Single Family Housing
Special Assessment
Special Tax
Sports Facility Revenue
Student Loans
Telephone Utilities
Tobacco
Water Utilities

C-11
Appendix C

OppenheimerFunds Special Sales Charge Arrangements and Waivers

In certain cases, the initial sales charge that applies to purchases of Class A shares(1)
of the Oppenheimer funds or the contingent deferred sales charge that may apply to Class A,
Class B or Class C shares may be waived.(2) That is because of the economies of sales
efforts realized by OppenheimerFunds Distributor, Inc., (referred to in this document as
the "Distributor"), or by dealers or other financial institutions that offer those shares
to certain classes of investors. Not all waivers apply to all funds.

For the purposes of some of the waivers described below and in the Prospectus and Statement
of Additional Information of the applicable Oppenheimer funds, the term "Retirement Plan"
refers to the following types of plans:
1) plans created or qualified under Sections 401(a) or 401(k) of the Internal
Revenue Code,
2) non-qualified deferred compensation plans,
3) employee benefit plans(3)
4) Group Retirement Plans(4)
5) 403(b)(7) custodial plan accounts
6) Individual Retirement Accounts ("IRAs"), including traditional IRAs, Roth IRAs,
SEP-IRAs, SARSEPs or SIMPLE plans

The interpretation of these provisions as to the applicability of a special arrangement or
waiver in a particular case is in the sole discretion of the Distributor or the transfer
agent (referred to in this document as the "Transfer Agent") of the particular Oppenheimer
fund. These waivers and special arrangements may be amended or terminated at any time by a
particular fund, the Distributor, and/or OppenheimerFunds, Inc. (referred to in this
document as the "Manager").

Waivers that apply at the time shares are redeemed must be requested by the shareholder
and/or dealer in the redemption request.
I.

Applicability of Class A Contingent Deferred Sales Charges in Certain Cases
--------------------------------------------------------------------------------------------

Purchases of Class A Shares of Oppenheimer Funds That Are Not Subject to Initial Sales
Charge but May Be Subject to the Class A Contingent Deferred Sales Charge (unless a waiver
applies).

There is no initial sales charge on purchases of Class A shares of any of the
Oppenheimer funds in the cases listed below. However, these purchases may be subject to the
Class A contingent deferred sales charge if redeemed within 18 months (24 months in the
case of Oppenheimer Rochester National Municipals and Rochester Fund Municipals) of the
beginning of the calendar month of their purchase, as described in the Prospectus (unless a
waiver described elsewhere in this Appendix applies to the redemption). Additionally, on
shares purchased under these waivers that are subject to the Class A contingent deferred
sales charge, the Distributor will pay the applicable concession described in the
Prospectus under "Class A Contingent Deferred Sales Charge."(5) This waiver provision
applies to:
|_| Purchases of Class A shares aggregating $1 million or more.
|_| Purchases of Class A shares by a Retirement Plan that was permitted to purchase such
shares at net asset value but subject to a contingent deferred sales charge prior
to March 1, 2001. That included plans (other than IRA or 403(b)(7) Custodial
Plans) that: 1) bought shares costing $500,000 or more, 2) had at the time of
purchase 100 or more eligible employees or total plan assets of $500,000 or more,
or 3) certified to the Distributor that it projects to have annual plan purchases
of $200,000 or more.
|_| Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the purchases are made:
1) through a broker, dealer, bank or registered investment adviser that has made
special arrangements with the Distributor for those purchases, or
2) by a direct rollover of a distribution from a qualified Retirement Plan if the
administrator of that Plan has made special arrangements with the Distributor
for those purchases.
|_| Purchases of Class A shares by Retirement Plans that have any of the following
record-keeping arrangements:
1) The record keeping is performed by Merrill Lynch Pierce Fenner & Smith, Inc.
("Merrill Lynch") on a daily valuation basis for the Retirement Plan. On the
date the plan sponsor signs the record-keeping service agreement with Merrill
Lynch, the Plan must have $3 million or more of its assets invested in (a)
mutual funds, other than those advised or managed by Merrill Lynch Investment
Management, L.P. ("MLIM"), that are made available under a Service Agreement
between Merrill Lynch and the mutual fund's principal underwriter or
distributor, and (b) funds advised or managed by MLIM (the funds described in
(a) and (b) are referred to as "Applicable Investments").
2) The record keeping for the Retirement Plan is performed on a daily valuation
basis by a record keeper whose services are provided under a contract or
arrangement between the Retirement Plan and Merrill Lynch. On the date the plan
sponsor signs the record keeping service agreement with Merrill Lynch, the Plan
must have $5 million or more of its assets (excluding assets invested in money
market funds) invested in Applicable Investments.
3) The record keeping for a Retirement Plan is handled under a service agreement
with Merrill Lynch and on the date the plan sponsor signs that agreement, the
Plan has 500 or more eligible employees (as determined by the Merrill Lynch
plan conversion manager).
II.

Waivers of Class A Sales Charges of Oppenheimer Funds
--------------------------------------------------------------------------------------------

A. Waivers of Initial and Contingent Deferred Sales Charges for Certain Purchasers.

Class A shares purchased by the following investors are not subject to any Class A sales
charges (and no concessions are paid by the Distributor on such purchases):
|_| The Manager or its affiliates.
|_| Present or former officers, directors, trustees and employees (and their "immediate
families") of the Fund, the Manager and its affiliates, and retirement plans
established by them for their employees. The term "immediate family" refers to
one's spouse, children, grandchildren, grandparents, parents, parents-in-law,
brothers and sisters, sons- and daughters-in-law, a sibling's spouse, a spouse's
siblings, aunts, uncles, nieces and nephews; relatives by virtue of a remarriage
(step-children, step-parents, etc.) are included.
|_| Registered management investment companies, or separate accounts of insurance
companies having an agreement with the Manager or the Distributor for that
purpose.
|_| Dealers or brokers that have a sales agreement with the Distributor, if they purchase
shares for their own accounts or for retirement plans for their employees.
|_| Employees and registered representatives (and their spouses) of dealers or brokers
described above or financial institutions that have entered into sales
arrangements with such dealers or brokers (and which are identified as such to the
Distributor) or with the Distributor. The purchaser must certify to the
Distributor at the time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor children).
|_| Dealers, brokers, banks or registered investment advisors that have entered into an
agreement with the Distributor providing specifically for the use of shares of the
Fund in particular investment products made available to their clients. Those
clients may be charged a transaction fee by their dealer, broker, bank or advisor
for the purchase or sale of Fund shares.
|_| Investment advisors and financial planners who have entered into an agreement for
this purpose with the Distributor and who charge an advisory, consulting or other
fee for their services and buy shares for their own accounts or the accounts of
their clients.
|_| "Rabbi trusts" that buy shares for their own accounts, if the purchases are made
through a broker or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases.
|_| Clients of investment advisors or financial planners (that have entered into an
agreement for this purpose with the Distributor) who buy shares for their own
accounts may also purchase shares without sales charge but only if their accounts
are linked to a master account of their investment advisor or financial planner on
the books and records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements . Each of these investors may
be charged a fee by the broker, agent or financial intermediary for purchasing
shares.
|_| Directors, trustees, officers or full-time employees of OpCap Advisors or its
affiliates, their relatives or any trust, pension, profit sharing or other benefit
plan which beneficially owns shares for those persons.
|_| Accounts for which Oppenheimer Capital (or its successor) is the investment advisor
(the Distributor must be advised of this arrangement) and persons who are
directors or trustees of the company or trust which is the beneficial owner of
such accounts.
|_| A unit investment trust that has entered into an appropriate agreement with the
Distributor.
|_| Dealers, brokers, banks, or registered investment advisers that have entered into an
agreement with the Distributor to sell shares to defined contribution employee
retirement plans for which the dealer, broker or investment adviser provides
administration services.
|_| Retirement Plans and deferred compensation plans and trusts used to fund those plans
(including, for example, plans qualified or created under sections 401(a), 401(k),
403(b) or 457 of the Internal Revenue Code), in each case if those purchases are
made through a broker, agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases.
|_| A TRAC-2000 401(k) plan (sponsored by the former Quest for Value Advisors) whose
Class B or Class C shares of a Former Quest for Value Fund were exchanged for
Class A shares of that Fund due to the termination of the Class B and Class C
TRAC-2000 program on November 24, 1995.
|_| A qualified Retirement Plan that had agreed with the former Quest for Value Advisors
to purchase shares of any of the Former Quest for Value Funds at net asset value,
with such shares to be held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, if that arrangement was consummated and share purchases commenced
by December 31, 1996.
|_| Effective October 1, 2005, taxable accounts established with the proceeds of Required
Minimum Distributions from Retirement Plans.

B. Waivers of Initial and Contingent Deferred Sales Charges in Certain Transactions.

Class A shares issued or purchased in the following transactions are not subject to sales
charges (and no concessions are paid by the Distributor on such purchases):
|_| Shares issued in plans of reorganization, such as mergers, asset acquisitions and
exchange offers, to which the Fund is a party.
|_| Shares purchased by the reinvestment of dividends or other distributions reinvested
from the Fund or other Oppenheimer funds (other than Oppenheimer Cash Reserves) or
unit investment trusts for which reinvestment arrangements have been made with the
Distributor.
|_| Shares purchased by certain Retirement Plans that are part of a retirement plan or
platform offered by banks, broker-dealers, financial advisors or insurance
companies, or serviced by recordkeepers.
|_| Shares purchased by the reinvestment of loan repayments by a participant in a
Retirement Plan for which the Manager or an affiliate acts as sponsor.
|_| Shares purchased in amounts of less than $5.

Class A shares issued and purchased in the following transactions are not subject to sales
charges (a dealer concession at the annual rate of 0.25% is paid by the Distributor on
purchases made within the first 6 months of plan establishment):
|_| Retirement Plans that have $5 million or more in plan assets.
|_| Retirement Plans with a single plan sponsor that have $5 million or more in aggregate
assets invested in Oppenheimer funds.

C. Waivers of the Class A Contingent Deferred Sales Charge for Certain Redemptions.

The Class A contingent deferred sales charge is also waived if shares that would otherwise
be subject to the contingent deferred sales charge are redeemed in the following cases:
|_| To make Automatic Withdrawal Plan payments that are limited annually to no more than
12% of the account value adjusted annually.
|_| Involuntary redemptions of shares by operation of law or involuntary redemptions of
small accounts (please refer to "Shareholder Account Rules and Policies," in the
applicable fund Prospectus).
|_| For distributions from Retirement Plans, deferred compensation plans or other
employee benefit plans for any of the following purposes:
1) Following the death or disability (as defined in the Internal Revenue Code) of
the participant or beneficiary. The death or disability must occur after the
participant's account was established.
2) To return excess contributions.
3) To return contributions made due to a mistake of fact.
4) Hardship withdrawals, as defined in the plan.(6)
5) Under a Qualified Domestic Relations Order, as defined in the Internal Revenue
Code, or, in the case of an IRA, a divorce or separation agreement described in
Section 71(b) of the Internal Revenue Code.
6) To meet the minimum distribution requirements of the Internal Revenue Code.
7) To make "substantially equal periodic payments" as described in Section 72(t)
of the Internal Revenue Code.
8) For loans to participants or beneficiaries.
9) Separation from service.(7)
10) Participant-directed redemptions to purchase shares of a mutual fund
(other than a fund managed by the Manager or a subsidiary of the Manager) if
the plan has made special arrangements with the Distributor.
11) Plan termination or "in-service distributions," if the redemption
proceeds are rolled over directly to an OppenheimerFunds-sponsored IRA.
|_| For distributions from 401(k) plans sponsored by broker-dealers that have entered
into a special agreement with the Distributor allowing this waiver.
|_| For distributions from retirement plans that have $10 million or more in plan assets
and that have entered into a special agreement with the Distributor.
|_| For distributions from retirement plans which are part of a retirement plan product
or platform offered by certain banks, broker-dealers, financial advisors,
insurance companies or record keepers which have entered into a special agreement
with the Distributor.
III. Waivers of Class B, Class C and Class N Sales Charges of Oppenheimer Funds
--------------------------------------------------------------------------------------------

The Class B, Class C and Class N contingent deferred sales charges will not be applied to
shares purchased in certain types of transactions or redeemed in certain circumstances
described below.

A. Waivers for Redemptions in Certain Cases.

The Class B, Class C and Class N contingent deferred sales charges will be waived for
redemptions of shares in the following cases:
|_| Shares redeemed involuntarily, as described in "Shareholder Account Rules and
Policies," in the applicable Prospectus.
|_| Redemptions from accounts other than Retirement Plans following the death or
disability of the last surviving shareholder. The death or disability must have
occurred after the account was established, and for disability you must provide
evidence of a determination of disability by the Social Security Administration.
|_| The contingent deferred sales charges are generally not waived following the death or
disability of a grantor or trustee for a trust account. The contingent deferred
sales charges will only be waived in the limited case of the death of the trustee
of a grantor trust or revocable living trust for which the trustee is also the
sole beneficiary. The death or disability must have occurred after the account was
established, and for disability you must provide evidence of a determination of
disability (as defined in the Internal Revenue Code).
|_| Distributions from accounts for which the broker-dealer of record has entered into a
special agreement with the Distributor allowing this waiver.
|_| Redemptions of Class B shares held by Retirement Plans whose records are maintained
on a daily valuation basis by Merrill Lynch or an independent record keeper under
a contract with Merrill Lynch.
|_| Redemptions of Class C shares of Oppenheimer U.S. Government Trust from accounts of
clients of financial institutions that have entered into a special arrangement
with the Distributor for this purpose.
|_| Redemptions of Class C shares of an Oppenheimer fund in amounts of $1 million or more
requested in writing by a Retirement Plan sponsor and submitted more than 12
months after the Retirement Plan's first purchase of Class C shares, if the
redemption proceeds are invested to purchase Class N shares of one or more
Oppenheimer funds.
|_| Distributions(8) from Retirement Plans or other employee benefit plans for any of the
following purposes:
1) Following the death or disability (as defined in the Internal Revenue Code) of
the participant or beneficiary. The death or disability must occur after the
participant's account was established in an Oppenheimer fund.
2) To return excess contributions made to a participant's account.
3) To return contributions made due to a mistake of fact.
4) To make hardship withdrawals, as defined in the plan.(9)
5) To make distributions required under a Qualified Domestic Relations Order or,
in the case of an IRA, a divorce or separation agreement described in Section
71(b) of the Internal Revenue Code.
6) To meet the minimum distribution requirements of the Internal Revenue Code.
7) To make "substantially equal periodic payments" as described in Section 72(t)
of the Internal Revenue Code.
8) For loans to participants or beneficiaries.(10)
9) On account of the participant's separation from service.(11)
10) Participant-directed redemptions to purchase shares of a mutual fund
(other than a fund managed by the Manager or a subsidiary of the Manager)
offered as an investment option in a Retirement Plan if the plan has made
special arrangements with the Distributor.
11) Distributions made on account of a plan termination or "in-service"
distributions, if the redemption proceeds are rolled over directly to an
OppenheimerFunds-sponsored IRA.
12) For distributions from a participant's account under an Automatic
Withdrawal Plan after the participant reaches age 59 1/2, as long as the aggregate
value of the distributions does not exceed 10% of the account's value, adjusted
annually.
13) Redemptions of Class B shares under an Automatic Withdrawal Plan for an
account other than a Retirement Plan, if the aggregate value of the redeemed
shares does not exceed 10% of the account's value, adjusted annually.
14) For distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special arrangement with the Distributor allowing this waiver.
|_| Redemptions of Class B shares or Class C shares under an Automatic Withdrawal Plan
from an account other than a Retirement Plan if the aggregate value of the
redeemed shares does not exceed 10% of the account's value annually.

B. Waivers for Shares Sold or Issued in Certain Transactions.

The contingent deferred sales charge is also waived on Class B and Class C shares sold or
issued in the following cases:
|_| Shares sold to the Manager or its affiliates.
|_| Shares sold to registered management investment companies or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for
that purpose.
|_| Shares issued in plans of reorganization to which the Fund is a party.
|_| Shares sold to present or former officers, directors, trustees or employees (and
their "immediate families" as defined above in Section I.A.) of the Fund, the
Manager and its affiliates and retirement plans established by them for their
employees.
IV. Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer Funds Who
Were Shareholders of Former Quest for Value Funds
---------------------------------------------------------------------------------------------

The initial and contingent deferred sales charge rates and waivers for Class A, Class B and
Class C shares described in the Prospectus or Statement of Additional Information of the
Oppenheimer funds are modified as described below for certain persons who were shareholders
of the former Quest for Value Funds. To be eligible, those persons must have been
shareholders on November 24, 1995, when OppenheimerFunds, Inc. became the investment
advisor to those former Quest for Value Funds. Those funds include:
Oppenheimer Quest Value Fund, Inc. Oppenheimer Small- & Mid- Cap Value Fund
Oppenheimer Quest Balanced Fund Oppenheimer Quest International Value Fund,
Inc.
Oppenheimer Quest Opportunity Value Fund

These arrangements also apply to shareholders of the following funds when they merged
(were reorganized) into various Oppenheimer funds on November 24, 1995:

Quest for Value U.S. Government Income Fund Quest for Value New York Tax-Exempt Fund
Quest for Value Investment Quality Income Fund Quest for Value National Tax-Exempt
Fund
Quest for Value Global Income Fund Quest for Value California Tax-Exempt Fund

All of the funds listed above are referred to in this Appendix as the "Former Quest
for Value Funds." The waivers of initial and contingent deferred sales charges described
in this Appendix apply to shares of an Oppenheimer fund that are either:
|_| acquired by such shareholder pursuant to an exchange of shares of an Oppenheimer fund
that was one of the Former Quest for Value Funds, or
|_| purchased by such shareholder by exchange of shares of another Oppenheimer fund that
were acquired pursuant to the merger of any of the Former Quest for Value Funds
into that other Oppenheimer fund on November 24, 1995.

A. Reductions or Waivers of Class A Sales Charges.

|X| Reduced Class A Initial Sales Charge Rates for Certain Former Quest for Value Funds
Shareholders.

Purchases by Groups and Associations. The following table sets forth the initial sales
charge rates for Class A shares purchased by members of "Associations" formed for any
purpose other than the purchase of securities. The rates in the table apply if that
Association purchased shares of any of the Former Quest for Value Funds or received a
proposal to purchase such shares from OCC Distributors prior to November 24, 1995.

--------------------------------------------------------------------------------
Initial Sales Initial Sales Charge Concession as
Number of Eligible Charge as a % of as a % of Net Amount % of Offering
Employees or Members Offering Price Invested Price
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
9 or Fewer 2.50% 2.56% 2.00%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
At least 10 but not 2.00% 2.04% 1.60%
more than 49
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------
For purchases by Associations having 50 or more eligible employees or members, there
is no initial sales charge on purchases of Class A shares, but those shares are subject to
the Class A contingent deferred sales charge described in the applicable fund's Prospectus.

Purchases made under this arrangement qualify for the lower of either the sales
charge rate in the table based on the number of members of an Association, or the sales
charge rate that applies under the Right of Accumulation described in the applicable fund's
Prospectus and Statement of Additional Information. Individuals who qualify under this
arrangement for reduced sales charge rates as members of Associations also may purchase
shares for their individual or custodial accounts at these reduced sales charge rates, upon
request to the Distributor.

|X| Waiver of Class A Sales Charges for Certain Shareholders. Class A shares purchased
by the following investors are not subject to any Class A initial or contingent deferred
sales charges:
o Shareholders who were shareholders of the AMA Family of Funds on February 28, 1991
and who acquired shares of any of the Former Quest for Value Funds by merger of
a portfolio of the AMA Family of Funds.
o Shareholders who acquired shares of any Former Quest for Value Fund by merger of any
of the portfolios of the Unified Funds.

|X| Waiver of Class A Contingent Deferred Sales Charge in Certain Transactions. The
Class A contingent deferred sales charge will not apply to redemptions of Class A shares
purchased by the following investors who were shareholders of any Former Quest for Value
Fund:

Investors who purchased Class A shares from a dealer that is or was not permitted to
receive a sales load or redemption fee imposed on a shareholder with whom that dealer has a
fiduciary relationship, under the Employee Retirement Income Security Act of 1974 and
regulations adopted under that law.

B. Class A, Class B and Class C Contingent Deferred Sales Charge Waivers.

|X| Waivers for Redemptions of Shares Purchased Prior to March 6, 1995. In the following
cases, the contingent deferred sales charge will be waived for redemptions of Class A,
Class B or Class C shares of an Oppenheimer fund. The shares must have been acquired by the
merger of a Former Quest for Value Fund into the fund or by exchange from an Oppenheimer
fund that was a Former Quest for Value Fund or into which such fund merged. Those shares
must have been purchased prior to March 6, 1995 in connection with:
o withdrawals under an automatic withdrawal plan holding only either Class B or Class C
shares if the annual withdrawal does not exceed 10% of the initial value of the
account value, adjusted annually, and
o liquidation of a shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum value of such accounts.

|X| Waivers for Redemptions of Shares Purchased on or After March 6, 1995 but Prior to
November 24, 1995. In the following cases, the contingent deferred sales charge will be
waived for redemptions of Class A, Class B or Class C shares of an Oppenheimer fund. The
shares must have been acquired by the merger of a Former Quest for Value Fund into the fund
or by exchange from an Oppenheimer fund that was a Former Quest For Value Fund or into
which such Former Quest for Value Fund merged. Those shares must have been purchased on or
after March 6, 1995, but prior to November 24, 1995:
o redemptions following the death or disability of the shareholder(s) (as evidenced by
a determination of total disability by the U.S. Social Security Administration);
o withdrawals under an automatic withdrawal plan (but only for Class B or Class C
shares) where the annual withdrawals do not exceed 10% of the initial value of
the account value; adjusted annually, and
o liquidation of a shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum account value.
A shareholder's account will be credited with the amount of any contingent deferred
sales charge paid on the redemption of any Class A, Class B or Class C shares of the
Oppenheimer fund described in this section if the proceeds are invested in the same Class
of shares in that fund or another Oppenheimer fund within 90 days after redemption.
V. Special Sales Charge Arrangements for Shareholders of Certain Oppenheimer Funds Who
Were Shareholders of Connecticut Mutual Investment Accounts, Inc.
-----------------------------------------------------------------------------------------

The initial and contingent deferred sale charge rates and waivers for Class A and Class B
shares described in the respective Prospectus (or this Appendix) of the following
Oppenheimer funds (each is referred to as a "Fund" in this section):
Oppenheimer U. S. Government Trust,
Oppenheimer Core Bond Fund,
Oppenheimer Value Fund and
Oppenheimer Disciplined Allocation Fund
are modified as described below for those Fund shareholders who were shareholders of the
following funds (referred to as the "Former Connecticut Mutual Funds") on March 1, 1996,
when OppenheimerFunds, Inc. became the investment adviser to the Former Connecticut Mutual
Funds:
Connecticut Mutual Liquid Account Connecticut Mutual Total Return Account
Connecticut Mutual Government Securities Account CMIA LifeSpan Capital Appreciation
Account
Connecticut Mutual Income Account CMIA LifeSpan Balanced Account
Connecticut Mutual Growth Account CMIA Diversified Income Account

A. Prior Class A CDSC and Class A Sales Charge Waivers.

|X| Class A Contingent Deferred Sales Charge. Certain shareholders of a Fund and the
other Former Connecticut Mutual Funds are entitled to continue to make additional purchases
of Class A shares at net asset value without a Class A initial sales charge, but subject to
the Class A contingent deferred sales charge that was in effect prior to March 18, 1996
(the "prior Class A CDSC"). Under the prior Class A CDSC, if any of those shares are
redeemed within one year of purchase, they will be assessed a 1% contingent deferred sales
charge on an amount equal to the current market value or the original purchase price of the
shares sold, whichever is smaller (in such redemptions, any shares not subject to the prior
Class A CDSC will be redeemed first).

Those shareholders who are eligible for the prior Class A CDSC are:
1) persons whose purchases of Class A shares of a Fund and other Former
Connecticut Mutual Funds were $500,000 prior to March 18, 1996, as a result of
direct purchases or purchases pursuant to the Fund's policies on Combined
Purchases or Rights of Accumulation, who still hold those shares in that Fund
or other Former Connecticut Mutual Funds, and
2) persons whose intended purchases under a Statement of Intention entered into
prior to March 18, 1996, with the former general distributor of the Former
Connecticut Mutual Funds to purchase shares valued at $500,000 or more over a
13-month period entitled those persons to purchase shares at net asset value
without being subject to the Class A initial sales charge

Any of the Class A shares of a Fund and the other Former Connecticut Mutual Funds
that were purchased at net asset value prior to March 18, 1996, remain subject to the prior
Class A CDSC, or if any additional shares are purchased by those shareholders at net asset
value pursuant to this arrangement they will be subject to the prior Class A CDSC.

|X| Class A Sales Charge Waivers. Additional Class A shares of a Fund may be purchased
without a sales charge, by a person who was in one (or more) of the categories below and
acquired Class A shares prior to March 18, 1996, and still holds Class A shares:
1) any purchaser, provided the total initial amount invested in the Fund or any
one or more of the Former Connecticut Mutual Funds totaled $500,000 or more,
including investments made pursuant to the Combined Purchases, Statement of
Intention and Rights of Accumulation features available at the time of the
initial purchase and such investment is still held in one or more of the Former
Connecticut Mutual Funds or a Fund into which such Fund merged;
2) any participant in a qualified plan, provided that the total initial amount
invested by the plan in the Fund or any one or more of the Former Connecticut
Mutual Funds totaled $500,000 or more;
3) Directors of the Fund or any one or more of the Former Connecticut Mutual Funds
and members of their immediate families;
4) employee benefit plans sponsored by Connecticut Mutual Financial Services,
L.L.C. ("CMFS"), the prior distributor of the Former Connecticut Mutual Funds,
and its affiliated companies;
5) one or more members of a group of at least 1,000 persons (and persons who are
retirees from such group) engaged in a common business, profession, civic or
charitable endeavor or other activity, and the spouses and minor dependent
children of such persons, pursuant to a marketing program between CMFS and such
group; and
6) an institution acting as a fiduciary on behalf of an individual or individuals,
if such institution was directly compensated by the individual(s) for
recommending the purchase of the shares of the Fund or any one or more of the
Former Connecticut Mutual Funds, provided the institution had an agreement with
CMFS.

Purchases of Class A shares made pursuant to (1) and (2) above may be subject to the
Class A CDSC of the Former Connecticut Mutual Funds described above.

Additionally, Class A shares of a Fund may be purchased without a sales charge by any
holder of a variable annuity contract issued in New York State by Connecticut Mutual Life
Insurance Company through the Panorama Separate Account which is beyond the applicable
surrender charge period and which was used to fund a qualified plan, if that holder
exchanges the variable annuity contract proceeds to buy Class A shares of the Fund.

B. Class A and Class B Contingent Deferred Sales Charge Waivers.

In addition to the waivers set forth in the Prospectus and in this Appendix, above, the
contingent deferred sales charge will be waived for redemptions of Class A and Class B
shares of a Fund and exchanges of Class A or Class B shares of a Fund into Class A or Class
B shares of a Former Connecticut Mutual Fund provided that the Class A or Class B shares of
the Fund to be redeemed or exchanged were (i) acquired prior to March 18, 1996 or (ii) were
acquired by exchange from an Oppenheimer fund that was a Former Connecticut Mutual Fund.
Additionally, the shares of such Former Connecticut Mutual Fund must have been purchased
prior to March 18, 1996:
1) by the estate of a deceased shareholder;
2) upon the disability of a shareholder, as defined in Section 72(m)(7) of the Internal
Revenue Code;
3) for retirement distributions (or loans) to participants or beneficiaries from
retirement plans qualified under Sections 401(a) or 403(b)(7)of the Code, or from
IRAs, deferred compensation plans created under Section 457 of the Code, or other
employee benefit plans;
4) as tax-free returns of excess contributions to such retirement or employee benefit
plans;
5) in whole or in part, in connection with shares sold to any state, county, or city, or
any instrumentality, department, authority, or agency thereof, that is prohibited by
applicable investment laws from paying a sales charge or concession in connection
with the purchase of shares of any registered investment management company;
6) in connection with the redemption of shares of the Fund due to a combination with
another investment company by virtue of a merger, acquisition or similar
reorganization transaction;
7) in connection with the Fund's right to involuntarily redeem or liquidate the Fund;
8) in connection with automatic redemptions of Class A shares and Class B shares in
certain retirement plan accounts pursuant to an Automatic Withdrawal Plan but limited
to no more than 12% of the original value annually; or
9) as involuntary redemptions of shares by operation of law, or under procedures set
forth in the Fund's Articles of Incorporation, or as adopted by the Board of
Directors of the Fund.
VI. Special Reduced Sales Charge for Former Shareholders of Advance America Funds,
Inc.
--------------------------------------------------------------------------------------------

Shareholders of Oppenheimer AMT-Free Municipals, Oppenheimer U.S. Government Trust,
Oppenheimer Strategic Income Fund and Oppenheimer Capital Income Fund who acquired (and
still hold) shares of those funds as a result of the reorganization of series of Advance
America Funds, Inc. into those Oppenheimer funds on October 18, 1991, and who held shares
of Advance America Funds, Inc. on March 30, 1990, may purchase Class A shares of those four
Oppenheimer funds at a maximum sales charge rate of 4.50%.
VII. Sales Charge Waivers on Purchases of Class M Shares of Oppenheimer Convertible
Securities Fund
--------------------------------------------------------------------------------------------

Oppenheimer Convertible Securities Fund (referred to as the "Fund" in this section) may
sell Class M shares at net asset value without any initial sales charge to the classes of
investors listed below who, prior to March 11, 1996, owned shares of the Fund's
then-existing Class A and were permitted to purchase those shares at net asset value
without sales charge:
|_| the Manager and its affiliates,
|_| present or former officers, directors, trustees and employees (and their "immediate
families" as defined in the Fund's Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans established by them or
the prior investment advisor of the Fund for their employees,
|_| registered management investment companies or separate accounts of insurance
companies that had an agreement with the Fund's prior investment advisor or
distributor for that purpose,
|_| dealers or brokers that have a sales agreement with the Distributor, if they purchase
shares for their own accounts or for retirement plans for their employees,
|_| employees and registered representatives (and their spouses) of dealers or brokers
described in the preceding section or financial institutions that have entered
into sales arrangements with those dealers or brokers (and whose identity is made
known to the Distributor) or with the Distributor, but only if the purchaser
certifies to the Distributor at the time of purchase that the purchaser meets
these qualifications,
|_| dealers, brokers, or registered investment advisors that had entered into an
agreement with the Distributor or the prior distributor of the Fund specifically
providing for the use of Class M shares of the Fund in specific investment
products made available to their clients, and
|_| dealers, brokers or registered investment advisors that had entered into an agreement
with the Distributor or prior distributor of the Fund's shares to sell shares to
defined contribution employee retirement plans for which the dealer, broker, or
investment advisor provides administrative services.

Rochester Fund Municipals

Internet Website
www.oppenheimerfunds.com

Investment Advisor
OppenheimerFunds, Inc.
Two World Financial Center
225 Liberty Street, 11th Floor
New York, New York 10281-1008

Distributor
OppenheimerFunds Distributor, Inc.
Two World Financial Center
225 Liberty Street, 11th Floor
New York, New York 10281-1008

Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1.800.CALLOPP(225.5677)

Custodian Bank
Citibank, N.A.
111 Wall Street
New York, New York 10005

Independent Registered Public Accounting Firm
KPMG LLP
707 Seventeenth Street
Denver, Colorado 80202

Legal Counsel
Mayer, Brown, Rowe & Maw LLP
1675 Broadway
New York, New York 10019

1234
PX0365.001. 0406

(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 Fund and who do not have any direct or indirect financial
interest in the operation of the distribution plan or any agreement under the plan.
(1) Certain waivers also apply to Class M shares of Oppenheimer Convertible Securities Fund.
(2) In the case of Oppenheimer Senior Floating Rate Fund, a continuously-offered closed-end
fund, references to contingent deferred sales charges mean the Fund's Early Withdrawal
Charges and references to "redemptions" mean "repurchases" of shares.
(3) An "employee benefit plan" means any plan or arrangement, whether or not it is
"qualified" under the Internal Revenue Code, under which Class N shares of an Oppenheimer
fund or funds are purchased by a fiduciary or other administrator for the account of
participants who are employees of a single employer or of affiliated employers. These may
include, for example, medical savings accounts, payroll deduction plans or similar plans.
The fund accounts must be registered in the name of the fiduciary or administrator
purchasing the shares for the benefit of participants in the plan.
(4) The term "Group Retirement Plan" means any qualified or non-qualified retirement plan
for employees of a corporation or sole proprietorship, members and employees of a
partnership or association or other organized group of persons (the members of which may
include other groups), if the group has made special arrangements with the Distributor and
all members of the group participating in (or who are eligible to participate in) the plan
purchase shares of an Oppenheimer fund or funds through a single investment dealer, broker
or other financial institution designated by the group. Such plans include 457 plans,
SEP-IRAs, SARSEPs, SIMPLE plans and 403(b) plans other than plans for public school
employees. The term "Group Retirement Plan" also includes qualified retirement plans and
non-qualified deferred compensation plans and IRAs that purchase shares of an Oppenheimer
fund or funds through a single investment dealer, broker or other financial institution
that has made special arrangements with the Distributor.
(5) However, that concession will not be paid on purchases of shares in amounts of $1
million or more (including any right of accumulation) by a Retirement Plan that pays for
the purchase with the redemption proceeds of Class C shares of one or more Oppenheimer
funds held by the Plan for more than one year.
(6) This provision does not apply to IRAs.
(7) This provision only applies to qualified retirement plans and 403(b)(7) custodial plans
after your separation from service in or after the year you reached age 55.
(8) The distribution must be requested prior to Plan termination or the elimination of the
Oppenheimer funds as an investment option under the Plan.
(9) This provision does not apply to IRAs.
(10) This provision does not apply to loans from 403(b)(7) custodial plans and loans from
the OppenheimerFunds-sponsored Single K retirement plan.
(11) This provision does not apply to 403(b)(7) custodial plans if the participant is less
than age 55, nor to IRAs.