Oppenheimer Multi-State Trust

485APOS 1 body.htm FORM N-1A, PROSPECTUSES, SAIS, PART C Oppenheimer Multi-State Trust

                                                     Registration No. 33-30198
                                                             File No. 811-5867

                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
                                  FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933          /  X  /

      PRE-EFFECTIVE AMENDMENT NO.        ___
/      /


      POST-EFFECTIVE AMENDMENT NO.        31                            /  X
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/


                                    and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY
  ACT OF 1940                                                           /  X
/


      Amendment No.  32                                                 /  X
                    ---
/




                    OPPENHEIMER MULTI-STATE MUNICIPAL TRUST
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              (Exact Name of Registrant as Specified in Charter)

            6803 South Tucson Way, Centennial, Colorado 80112-3924
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          (Address of Principal Executive Offices)         (Zip Code)

                                (303) 768-3200
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              (Registrant's Telephone Number including Area Code)

                             Robert G. Zack, Esq.
                            OppenheimerFunds, Inc.
         Two World Financial Center, 225 Liberty Street, 11th Floor,
                        New York, New York 10281-1008
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                    (Name and Address of Agent for Service)


It is proposed that this filing will become effective:


[   ] Immediately upon filing pursuant to paragraph (b)
[   ] On _______________, pursuant to paragraph (b)
[   ] 60 days after filing pursuant to paragraph (a)(1)
[X]   On November 28, 2005, pursuant to paragraph (a)(1)
[   ] 75 days after filing, pursuant to paragraph (a)(2)
[   ] On _________________, pursuant to paragraph (a)(2) of Rule 485



If appropriate, check the following box:
[   ]     This post-effective  amendment designates a new effective date for a
previously filed post-effective amendment.

Oppenheimer New Jersey Municipal Fund

Prospectus dated November 28, 2005

Oppenheimer New Jersey Municipal
Fund is a mutual fund that seeks
current income exempt from federal
and New Jersey personal income taxes
while attempting to preserve
capital. It invests mainly in
municipal securities.
This Prospectus contains
important information about the
Fund's objective, its investment
policies, strategies and risks. It
also contains important information
about how to buy and sell shares of
the Fund and other account
features. Please read this
Prospectus carefully before you
As with all mutual funds, the invest and keep it for future
Securities and Exchange Commission reference about your account.
has not approved or disapproved the
Fund's securities nor has it
determined that this Prospectus is
accurate or complete. It is a
criminal offense to represent
otherwise.

1234

[OppenheimerFunds logo]

Contents
About The Fund
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The Fund's Investment Objective and Principal Strategies

Main Risks of Investing in the Fund

The Fund's Past Performance

Fees and Expenses of the Fund

About the Fund's Investments

How the Fund is Managed

About Your Account
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How to Buy Shares
Class A Shares
Class B Shares
Class C Shares

Special Investor Services
AccountLink
PhoneLink
OppenheimerFunds Internet Website
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege

How to Sell Shares

By Checkwriting
By Mail
By Telephone

How to Exchange Shares

Shareholder Account Rules and Policies

Dividends, Capital Gains and Taxes

Financial Highlights
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About the Fund
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The Fund's Investment Objective and Principal Strategies

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What Is the Fund's Investment Objective? The Fund seeks as high a level of current
interest income exempt from federal and New Jersey income taxes for individual investors as
is consistent with preservation of capital.
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What Does the Fund Invest In? The Fund invests mainly in New Jersey municipal securities
that pay interest exempt from federal and New Jersey individual income taxes. These
securities primarily include municipal bonds (which are debt obligations having a maturity
of more than one year when issued), municipal notes (short-term obligations), and interests
in municipal leases. Most of the securities the Fund buys must be "investment grade"
(securities rated in the four highest rating categories of national rating organizations,
such as Moody's Investors Services ("Moody's")). Under normal market conditions, the Fund
attempts to invest 100% of its net assets in municipal securities, and as a fundamental
policy, invests at least 80% of its net assets (plus borrowings for investment purposes) in
New Jersey municipal securities. This includes securities that generate income subject to
the alternative minimum tax.

The Fund does not limit its investments to securities of a particular maturity range,
and may hold both short-, intermediate- and long-term securities. However, it currently
focuses on longer-term securities to seek higher yields. These investments are more fully
explained in "About the Fund's Investments," below.

|X| How Do the Portfolio Managers Decide What Securities to Buy or Sell? In
selecting securities for the Fund, the portfolio managers look primarily for New Jersey
municipal securities using a variety of factors that may change over time and may vary in
particular cases. The portfolio managers currently look for:

|_| Securities that provide high current income
|_| A wide range of securities of different issuers within the state, including different
agencies and municipalities, to spread risk
|_| Securities having favorable credit characteristics
|_| Special situations that provide opportunities for value

The portfolio manager may consider selling a security if one or more of these factors
no longer apply to a security purchased for the Fund.

Who Is the Fund Designed For? The Fund is designed for individual investors who are seeking
income exempt from federal personal income taxes and New Jersey personal income taxes. The
Fund does not seek capital gains or growth. Because it invests in tax-exempt securities,
the Fund is not appropriate for retirement plan accounts or for investors seeking capital
growth. The Fund is not a complete investment program.

Main Risks of Investing in the Fund

All investments have risks to some degree. The Fund's investments are subject to
changes in their value from a number of factors, described below. There is also the risk
that poor security selection by the Fund's investment Manager, OppenheimerFunds, Inc., will
cause the Fund to underperform other funds having a similar objective.

These risks collectively form the risk profile of the Fund and can affect the value
of the Fund's investments, its investment performance, and the prices of its shares. These
risks mean that you can lose money by investing in the Fund. When you redeem your shares,
they may be worth more or less than what you paid for them. There is no assurance that the
Fund will achieve its objective.

|X| Credit Risk. Municipal securities are subject to credit risk. Credit risk is
the risk that the issuer of a municipal security might not make interest and principal
payments on the security as they become due. If the issuer fails to pay interest, the
Fund's income may be reduced and if the issuer fails to repay principal, the value of that
security and of the Fund's shares may be reduced. Because the Fund can invest as much as
25% of its assets in municipal securities below investment grade to seek higher income, the
Fund's credit risks are greater than those of funds that buy only investment-grade bonds.
A downgrade in an issuer's credit rating or other adverse news about an issuer can reduce
the market value of that issuer's securities.

|X| Interest Rate Risk. Municipal securities are debt securities that are subject to
changes in value when prevailing interest rates change. When prevailing interest rates
fall, the values of already-issued municipal securities generally rise. When prevailing
interest rates rise, the values of already-issued municipal securities generally fall, and
the securities may sell at a discount from their face amount. The magnitude of these price
changes is generally greater for bonds with longer maturities. The Fund currently focuses
on longer-term securities to seek higher income. Callable bonds the Fund buys are more
likely to be called when interest rates fall, and the Fund might then have to reinvest the
proceeds of the called instrument in other securities that have lower yields, reducing its
income.

|X| Tobacco Settlement Revenue Bonds. The Fund may invest a significant portion of
its assets in tobacco settlement revenue 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 nearly all the U.S. tobacco manufacturers (approximately 99% of the current combined
market share of tobacco manufacturers). 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. 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. A market share loss by the MSA companies
to non-MSA participating tobacco manufacturers would cause a downward adjustment in the
payment amounts. A participating manufacturer filing for bankruptcy also could cause delays
or reductions in bond payments. The MSA itself has been subject to legal challenges and
has, to date, withstood those challenges. The Statement of Additional Information contains
more detailed information about the Fund's investments in tobacco settlement revenue bonds.

|X| Borrowing for Leverage. The Fund can borrow from banks to purchase additional
securities, a technique referred to as "leverage" in amounts up to one third of its total
assets (including the amount borrowed) less all liabilities and indebtedness other than
borrowings. It may also borrow up to 5% of its total assets for temporary purposes from
any person. This use of leverage will subject the Fund to greater costs than funds that do
not borrow for leverage, and may also make the Fund's share price more sensitive to
interest rate changes. The interest on borrowed money is an expense that might reduce the
Fund's yield.

|X| Risks of Non-Diversification. The Fund is "non-diversified." That means that
compared to funds that are diversified, it can invest a greater portion of its assets in
the securities of one issuer, such as bonds issued by the State of New Jersey. Having a
higher percentage of its assets invested in the securities of fewer issuers, particularly
government issuers of one state, could result in greater fluctuations of the Fund's share
prices due to economic, regulatory or political problems in New Jersey.

|X| Risks of Derivative Investments. The Fund can use derivatives to seek increased
returns or to try to hedge investment risks. In general terms, a derivative investment is
an investment contract whose value depends on (or is derived from) the value of an
underlying asset, interest rate or index. "Inverse floaters" are examples of derivatives
the Fund can use.

If the issuer of the derivative investment does not pay the amount due, the Fund can
lose money on its investment. Also, the underlying security or investment on which the
derivative is based, and the derivative itself, may not perform the way the Manager
expected it to perform. If that happens, the Fund will get less income than expected, its
hedge might be unsuccessful, and its share price could decline. To try to preserve
capital, the Fund has limits on the amount of particular types of derivatives it can hold.
However, using derivatives can increase the volatility of the Fund's share prices. Some
derivatives may be illiquid, making it difficult for the Fund to sell them quickly at an
acceptable price.

|X| Inverse Floaters Have Special Risks. 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 interest rates rise, inverse floaters produce less
current income, and their market value can become volatile. Inverse floaters are a type of
"derivative security." Some have a "cap," so that if interest rates rise above the "cap,"
the security pays additional interest income. If rates do not rise above the "cap," the
Fund will have paid an additional amount for a feature that proves worthless. The Fund
will not invest more than 20% of its total assets in inverse floaters.

How Risky Is the Fund Overall? The value of the Fund's investments will change over time
due to a number of factors. They include changes in general bond market movements, the
change in value of particular bonds because of an event affecting the issuer, or changes in
interest rates that can affect bond prices overall. The Fund focuses its investments in
New Jersey municipal securities and is non-diversified. It will therefore be vulnerable to
the effects of economic changes that affect New Jersey governmental issuers. These changes
can affect the value of the Fund's investments and its prices per share. In the
OppenheimerFunds spectrum, the Fund is more conservative than some types of taxable bond
funds, such as high yield bond funds, but has greater risks than money market funds.

An investment in the Fund is not a deposit of any bank, and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

The Fund's Past Performance

The bar chart and table below show one measure of the risks of investing in the Fund, by
showing changes in the Fund's performance (for its Class A shares) from year to year for
the full calendar years since the Fund's inception and by showing how the average annual
total returns of the Fund's shares, both before and after taxes, compared to those of a
broad-based market index. The after-tax returns for the other classes of shares will vary.

The after-tax returns are shown for Class A shares only and are calculated using the
historical highest individual federal marginal income tax rates in effect during the
periods shown, and do not reflect the impact of state or local taxes. In certain cases, the
figure representing "Return After Taxes on Distributions and Sale of Fund Shares" may be
higher than the other return figures for the same period. A higher after-tax return
results when a capital loss occurs upon redemption and translates into an assumed tax
deduction that benefits the shareholder. The after-tax returns are calculated based on
certain assumptions mandated by regulation and your actual after-tax returns may differ
from those shown, depending on your individual tax situation. The Fund's past investment
performance, before and after taxes, is not necessarily an indication of how the Fund will
perform in the future.

Annual Total Returns (Class A) (as of December 31 each year)

[See appendix to prospectus for data in bar chart showing annual total return]

Sales charges and taxes are not included in the calculations of return in this bar chart,
and if those charges and taxes were included, the returns may be less than those shown.

For the period from 1/1/05 through 6/30/05, the cumulative return (not annualized) before
taxes for Class A shares was 8.27%.
During the period shown in the bar chart, the highest return (not annualized) before taxes
for a calendar quarter was 6.81% (1Qtr95) and the lowest return (not annualized) before
taxes for a calendar quarter was -4.73% (1 Qtr 03).

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Average Annual Total

Returns for the periods 10 Years
ended December 31, 2004 1 Year 5 Years (Life of
Class, if
less)

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Class A Shares (inception

3/1/94) 3.38% 6.65% 5.96%
Return Before Taxes 3.38% 6.65% 5.93%
Return After Taxes on
Distributions 4.23% 6.47% 5.87%
Return After Taxes on
Distributions and Sale of Fund
Shares

for fees, expenses or taxes) 4.48% 7.20% 7.06%(1)

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Class B Shares (inception 3/1/94) 2.63% 6.57% 6.02%

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Class C Shares (inception 6.71% 6.88% 5.11%

8/29/95)
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1 From 2/28/94.

The Fund's average annual total returns include applicable sales charges: for Class A, the
current maximum initial sales charge of 4.75%; for Class B shares, the contingent deferred
sales charge of 5% (1-year), 2% (5-year) and for Class C shares, the 1% contingent deferred
sales charge for the 1-year period. Because Class B shares convert to Class A shares 72
months after purchase, Class B "life-of-class" performance does not include any contingent
deferred sales charge and uses Class A performance for the period after conversion. The
returns measure the performance of a hypothetical account and assume that all dividends and
capital gains distributions have been reinvested in additional shares. The performance of
the Fund's shares is compared to the Lehman Brothers Municipal Bond Index, an unmanaged
index of a broad range of investment grade municipal bonds. The index includes municipal
securities from many states while the Fund focuses on New Jersey municipal securities.
The index performance includes reinvestment of income but does not reflect transaction
costs, fees, expenses or taxes. The Fund's investments vary from those in the index.

Fees and Expenses of the Fund

The following tables are meant to help you understand the fees and expenses you may
pay if you buy and hold shares of the Fund. The Fund pays a variety of expenses directly
for management of its assets, administration, distribution of its shares and other
services. Those expenses are subtracted from the Fund's assets to calculate the Fund's net
asset values per share. All shareholders therefore pay those expenses indirectly.
Shareholders pay other expenses directly, such as sales charges and account transaction
charges. The numbers below are based on the Fund's expenses during its fiscal year ended
July 31, 2005.

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Shareholder Fees (charges paid directly from your investment):
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Class A Shares Class B Shares Class C Shares
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Maximum Sales Charge (Load) on
purchases (as a % of offering 4.75% None None
price)
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Maximum Deferred Sales Charge
(Load) (as % of the lower of the None(1) 5%(2) 1%(3)
original offering price or
redemption proceeds)
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Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)
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Class A Class B Shares Class C Shares
Shares
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Management Fees(4) 0.59% 0.59% 0.59%

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Distribution and/or Service 0.15% 0.90% 0.90%
(12b-1) Fees

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Other Expenses 0.17% 0.19% 0.18%

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Total Annual Operating 0.91% 1.68% 1.67%

Expenses(4)
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1. A contingent deferred sales charge may apply to redemptions of investments of $1 million
or more of Class A shares. See "How to Buy Shares" for details.

2. Applies to redemptions in first year after purchase. The contingent deferred sales
charge gradually declines from 5% to 1% in years one through six and is eliminated after
that.

3. Applies to shares redeemed within 12 months of purchase.
4. The Manager has voluntarily agreed to waive a portion of its management fee so the
"Management Fees" will not exceed 0.40% of average annual net assets for each class of
shares. The voluntary undertaking is expected to remain in effect indefinitely, however
it may be amended or withdrawn by the Manager at any time without notice to
shareholders. After the Manager's waiver, "Management Fees" for the fiscal year ended
July 31, 2004 were 0.40% for all classes, and "Total Annual Operating Expenses" were as
follows: 0.78% for Class A shares and 1.53% for each of Class B shares and Class C
shares.

Expenses may vary in future years. "Other Expenses" include transfer agent fees, custodial
fees, and accounting and legal expenses that the Fund pays. The "Other Expenses" in the
table are based on, among other things, the fees the Fund would have paid if the transfer
agent had not waived a portion of its fees under a voluntarily undertaking to the Fund to
limit those fees to 0.35% of average daily net assets per fiscal year for all classes. That
undertaking may be amended or withdrawn at any time. The "Other Expenses" in the table
represent the expenses incurred during the prior fiscal year due to the expense limitation
described above not being exceeded.

Examples. The following examples are intended to help you compare the cost of investing in
the Fund with the cost of investing in other mutual funds. The examples assume that you
invest $10,000 in a class of shares of the Fund for the time periods indicated, and
reinvest your dividends and distributions.

The first example assumes that you redeem all of your shares at the end of those
periods. The second example assumes you keep your shares. Both examples also assume that
your investment has a 5% return each year and that the class's operating expenses remain
the same. Your actual costs may be higher or lower because expenses will vary over time.
Based on these assumptions your expenses would be as follows:

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If shares are redeemed: 1 year 3 years 5 years 10 years
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Class A Shares $564 $753 $957 $1,546

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Class B Shares $672 $834 $1,120 $1,605(1)

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Class C Shares $271 $531 $915 $1,992

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If shares are not 1 year 3 years 5 years 10 years
redeemed:
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Class A Shares $564 $753 $957 $1,546

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Class B Shares $172 $534 $920 $1,605(1)

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Class C Shares $171 $531 $915 $1,992

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In the first example, expenses include the initial sales charge for Class A and the
applicable Class B and Class C contingent deferred sales charges. In the second example,
the Class A expenses include the sales charge, but Class B and Class C expenses do not
include contingent deferred sales charges.

1. Class B expenses for years 7 through 10 are based on Class A expenses since Class B
shares automatically convert to Class A shares 72 months after purchase.

About the Fund's Investments

The Fund's Principal Investment Policies and Risks. The allocation of the Fund's portfolio
among different types of investments will vary over time based on the Manager's evaluation
of economic and market trends. The Fund's portfolio might not always include all of the
different types of investments described in this prospectus.

The Manager tries to reduce risks by selecting a wide variety of municipal
investments and by carefully researching securities before they are purchased. However,
changes in the overall market prices of municipal securities and the income they pay can
occur at any time. The yield and share prices of the Fund will change daily based on
changes in market prices of securities, interest rates and market conditions and in
response to other economic events. The Statement of Additional Information contains more
detailed information about the Fund's investment policies and risks.

What is A Municipal Security? A municipal security is essentially a loan by the buyer to
the issuer of the security. The issuer promises to pay back the principal amount of the
loan and normally pays interest exempt from federal personal income taxes.

|X| Municipal Securities. The Fund buys municipal bonds and notes, certificates of
participation in municipal leases and other debt obligations. These debt obligations are
issued by state governments, as well as their political subdivisions (such as cities, towns
and counties), and their agencies and authorities. New Jersey municipal securities are
municipal securities that are not subject to New Jersey personal income tax in the opinion
of bond counsel to the issuer at the time the security is issued. They include obligations
issued by the State of New Jersey and its political subdivisions. They also may include
debt obligations of the governments of certain possessions, territories and commonwealths
of the United States if the interest is not subject to New Jersey personal income tax.

The Fund can also buy other municipal securities issued by the governments of the
District of Columbia and of other states, as well as their political subdivisions,
authorities and agencies, and securities issued by any commonwealths, territories or
possessions of the United States, or their respective agencies, instrumentalities or
authorities, if the interest paid on the security is not subject to federal personal income
tax (in the opinion of bond counsel to the issuer at the time the security is issued).
Under highly unusual circumstances, the Internal Revenue Service may determine that a
municipal bond issued as tax-exempt should in fact be taxable. If the Fund held such a
bond, it might have to distribute taxable income or reclassify as taxable income previously
distributed as tax-free.

Municipal securities are issued to raise money for a variety of public or private
purposes, including financing state or local governments, financing specific projects or
public facilities. The Fund can buy both long-term and short-term municipal securities.
For purposes of this Prospectus, long-term securities have a maturity of more than one
year. The Fund generally focuses on longer-term securities, to seek higher income.

The Fund can buy municipal securities that are "general obligations," which are
secured by the issuer's pledge of its full faith, credit and taxing power for the payment
of principal and interest. The Fund can also buy "revenue obligations," whose interest is
payable only from the revenues derived from a particular facility or class of facilities,
or a specific excise tax or other revenue source such as, e.g., tobacco revenue settlement
bonds. Some of these revenue obligations are industrial development bonds and private
activity bonds that pay interest that may be a tax preference item for investors subject to
alternative minimum tax.

|X| Municipal Lease Obligations. The Fund can also buy "municipal lease obligations"
secured by the obligation of the lessee to make rental payments. Municipal leases are used
by state and local governments to obtain funds to acquire land, equipment or facilities.
The Fund can invest in certificates of participation that represent a proportionate
interest in payments made under municipal lease obligations. Most municipal leases, while
secured by the leased property, are not general obligations of the issuing municipality.
They often contain "non-appropriation" clauses under which the municipal government has no
obligation to make lease or installment payments in future years unless money is
appropriated on a yearly basis. If the government stops making payments or transfers its
payment obligations to a private entity, the obligation could lose value or become
taxable. Some lease obligations might not have an active trading market, making it
difficult for the Fund to sell them quickly at an acceptable price.

|X| Ratings of Municipal Securities the Fund Buys. Most of the municipal securities
the Fund buys are "investment grade" at the time of purchase. The Fund does not invest more
than 25% of its total assets in municipal securities that at the time of purchase are not
"investment-grade." Securities that are rated below "investment grade" are those rated
below "Baa" by Moody's, or lower than "BBB" by Standard & Poor's Rating Services, or
comparable ratings by other nationally recognized rating organizations, or (if unrated)
judged by the Manager to be comparable to securities rated as investment grade. Rating
definitions of rating organizations are described in the Statement of Additional
Information. If a security the Fund buys is not rated, the Manager will use its judgment
to assign a rating that it believes is comparable to that of a rating organization.

The Manager relies to some extent on credit ratings by nationally recognized rating
organizations in evaluating the credit risk of securities selected for the Fund's
portfolio. It also uses its own research and analysis to evaluate risks. Many factors
affect an issuer's ability to make timely payments, and the credit risks of a particular
security may change over time. If the rating of a security is reduced after the Fund buys
it, the Fund is not required automatically to dispose of that security. However, the
Manager will evaluate those securities to determine whether to keep them in the Fund's
portfolio.

The Fund can invest a significant portion of its assets in unrated securities. Some
of these unrated securities may not have an active trading market, which means that the
Fund might have difficulty valuing them and selling them promptly at an acceptable price.

Special Credit Risks of Lower-Grade Securities. Municipal securities below
investment-grade (sometimes called "junk bonds") usually offer higher yields than
investment grade securities but are subject to greater price fluctuations and risks of loss
of income and principal than investment-grade municipal securities. Securities that are
(or that have fallen) below investment grade have a greater risk that the issuers may not
meet their debt obligations. They may also be less liquid than investment-grade securities
making it harder for the Fund to sell them at an acceptable price.

|X| Floating Rate/Variable Rate Obligations. Some municipal securities have variable
or floating interest rates. Variable rates are adjustable at stated periodic intervals.
Floating rates are automatically adjusted according to a specified market rate for such
investments, such as the percentage of the prime rate of a bank, or the ninety one (91) day
U.S. Treasury Bill rate.

Can the Fund's Investment Objective and Policies Change? The Fund's Board of Trustees can
change non-fundamental policies without shareholder approval, although significant changes
will be described in amendments to this Prospectus. Fundamental policies cannot be changed
without the approval of a majority of the Fund's outstanding voting shares. The Fund's
investment objective is a fundamental policy. Other investment restrictions that are
fundamental policies are listed in the Statement of Additional Information. An investment
policy or technique is not fundamental unless this Prospectus or the Statement of
Additional Information says that it is.

Other Investment Strategies. To seek its objective, the Fund can also use the investment
techniques and strategies described below. The Manager might not always use all of the
different types of techniques and investments described below. These techniques involve
risks, although some are designed to help reduce overall investment or market risk.

|X| "When-Issued" and "Delayed Delivery" Transactions. The Fund can purchase
municipal securities on a "when-issued" basis and can purchase or sell such securities on a
"delayed delivery" basis. Between the purchase and settlement, no payment is made for the
security and no interest accrues to the buyer from the investment. There is a risk of loss
to the Fund if the value of the when-issued security declines prior to the settlement date.

|X| Puts and Stand-By Commitments. The Fund can acquire "stand-by commitments" or
"puts" with respect to municipal securities. These investments give the Fund the right to
sell the securities at a set price on demand to the issuing broker-dealer or bank.
However, a security having this feature may have a lower interest rate. The Fund will
acquire stand-by commitments or puts solely to enhance portfolio liquidity.

|X| Illiquid and Restricted Securities. Investments may be illiquid because of the
absence of an active trading market, making it difficult to value them or dispose of them
promptly at an acceptable price. Restricted securities may have terms that limit their
resale to other investors or may require registration under federal securities laws before
they can be sold publicly. The Fund will not invest more than 15% of its net assets in
illiquid securities and cannot invest more than 10% of its net assets in restricted
securities. Certain restricted securities that are eligible for resale to qualified
institutional purchasers may not be subject to that limit. The Manager monitors holdings of
illiquid securities on an ongoing basis to determine whether to sell any holdings to
maintain adequate liquidity.

|X| Hedging. The Fund can purchase and sell derivatives for use as "hedging
instruments." The Fund does not use hedging instruments for speculative purposes, and has
limits on its use of them. The Fund does not use hedging instruments to a substantial
degree and is not required to use them in seeking its investment objective.

Hedging involves risks. If the Manager uses a hedging instrument at the wrong time
or judges market conditions incorrectly, the hedge might be unsuccessful and the strategy
could reduce the Fund's return. The Fund could also experience losses if the prices of its
futures and options positions were not correlated with its other investments or if it could
not close out a position because of an illiquid market for the future or option.

Portfolio Turnover. A change in the securities held by the Fund is known as "portfolio
turnover." The Fund can engage in active and frequent trading to try to achieve its
objective, and may have a high portfolio turnover rate (for example, over 100%). While
increased portfolio turnover creates higher brokerage and transactions cost for the Fund
(and may reduce performance), in most cases the Fund does not pay brokerage commissions on
debt securities it buys. If the Fund realizes capital gains when it sells its portfolio
investments, it generally must pay those gains out to shareholders, increasing their
taxable distributions. The Financial Highlights table at the end of this Prospectus shows
the Fund's portfolio turnover rates during recent prior fiscal years.

Temporary Defensive and Interim Investments. In times of unstable or adverse market,
political or economic conditions, the Fund can invest up to 100% of its total assets in
temporary defensive investments that are inconsistent with the Fund's principal investment
strategies. Generally, the Fund's defensive investments will be short-term municipal
securities, but could be U.S. government securities or highly-rated corporate debt
securities. The income from some temporary defensive investments might not be tax-exempt,
and therefore when making those investments the Fund might not achieve its objective.

Under normal market conditions, the Fund can also hold these types of investments for
cash management purposes pending the investment of proceeds from the sale of Fund shares or
portfolio securities or to meet anticipated redemptions of Fund shares.

PORTFOLIO HOLDINGS. The Fund's portfolio holdings are included in semi-annual and annual
reports that are distributed to shareholders of the Fund within 60 days after the close of
the period for which such report is being made. The Fund also discloses its portfolio
holdings in its Statements of Investments on Form N-Q, which are filed with the SEC no
later than 60 days after the close of its first and third fiscal quarters. These required
filings are publicly available at the SEC. Therefore, portfolio holdings of the Fund are
made publicly available no later than 60 days after the close of each of the Fund's fiscal
quarters.

A description of the Fund's policies and procedures with respect to the disclosure of the
Fund's portfolio securities is available in the Fund's Statement of Additional Information.

How the Fund is Managed

The Manager. OppenheimerFunds, Inc., the Manager, chooses the Fund's investments and
handles its day-to-day business. The Manager carries out its duties, subject to certain
policies established by the Board of Trustees, under an investment advisory agreement that
states the Manager's responsibilities. The agreement sets the fees the Fund pays to the
Manager and describes the expenses that the Fund is responsible to pay to conduct its
business.

The Manager has operated as an investment advisor since January 1960. The Manager
and its subsidiaries and controlled affiliates managed more than $180 billion in assets as
of June 30, 2005, including other Oppenheimer funds with more than 7 million shareholder
accounts. The Manager is located at Two World Financial Center, 225 Liberty Street, 11th
Floor, New York, New York 10281-1008.

|X| Advisory Fees. Under the investment advisory agreement, the Fund pays the
Manager an advisory fee at an annual rate that declines as the Fund's assets grow:
0.60% of the first $200 million of average annual net assets, 0.55% of the next $100
million, 0.50% of the next $200 million, 0.45% of the next $250 million, 0.40% of the
next $250 million, and 0.35% of average annual net assets in excess of $1 billion. As
a result of the Manager's voluntary waiver of certain Fund management fees, which may
be amended or withdrawn at any time without notice to shareholders, the Fund's
management fee for its last fiscal year ended July 31, 2005 was 0.59% of average
annual net assets for each class of shares.

A discussion regarding the basis for the Board of Trustees' approval of the
Fund's investment advisory contract is available in the Fund's Annual Report to
shareholders for the year ended July 31, 2005.

Portfolio Managers. The Fund's portfolio is managed by a team of investment
professional, including Ronald H. Fielding, Daniel G. Loughran, Scott Cottier and Troy
Willis, who are primarily responsible for the day-to-day management of the Fund's
investments.

Mr. Fielding has been a Senior Portfolio Manager of the Fund since July 2002. Mr.
Fielding has been a Senior Vice President of the Manager since January 1996 and
Chairman of the Rochester Division of the Manager since January 1996. He is a
portfolio manager and officer of other funds in the OppenheimerFunds complex. Mr.
Fielding is the team leader and lead manager and a trader for the Fund.

Mr. Loughran has been a Portfolio Manager of the Fund since April 2001. Mr. Loughran
has been a Vice President of the Manager since April 2001 and has been a portfolio
manager with the Manager since 1999. He is a portfolio manager of other funds in the
OppenheimerFunds complex. Mr. Loughran is both a portfolio manager and a trader for
the Fund.

Mr. Cottier has been a Portfolio Manager of the Fund since 2002. Mr. Cottier has been
a Vice President of the Manager since 2002. Prior to joining the Manager in 2002, Mr.
Cottier was a portfolio manager and trader at Victory Capital Management from 1999 to
2002. He is a portfolio manager of other funds in the OppenheimerFunds complex. Mr.
Cottier is both a portfolio manager and a trader for the Fund.

Mr. Willis has been an Associate Portfolio Manager of both the Fund and the Manager
since 2003. Prior to joining the Manager in 2003, Mr. Willis was a Corporate Attorney
for Southern Resource Group from 1999 to 2003. He is an associate portfolio manager
of other funds in the OppenheimerFunds complex. Mr. Willis is both an associate
portfolio manager and a trader for the Fund.

Additional information about the Fund's Portfolio Management Team, regarding
compensation, other accounts managed and their ownership of Fund shares, is
provided in the Statement of Additional Information.

Pending Litigation. A consolidated amended complaint has been filed as putative
derivative and class actions against the Manager, Distributor and Transfer Agent, as
well as 51 of the Oppenheimer funds (collectively the "funds") including the Fund, 30
present and former Directors or Trustees and 8 present and former officers of certain
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 fund assets to make those payments in violation of the Investment
Company Act and the Investment Advisers Act of 1940. Also, like those complaints, the
complaint alleges that by permitting and/or participating in those actions, the
Directors/Trustees and the officers breached their fiduciary duties to Fund shareholders
under the Investment Company Act 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.

The defendants believe the claims asserted in these lawsuits to be without merit, and
intend to defend the suits vigorously. The Manager and the Distributor do not believe that
the pending actions are likely to have a material adverse effect on the Fund or on their
ability to perform their respective investment advisory or distribution agreements with the
Fund.

ABOUT YOUR ACCOUNT

How to Buy Shares

You can buy shares several ways, as described below. The Fund's Distributor,
OppenheimerFunds Distributor, Inc., may appoint servicing agents to accept purchase (and
redemption) orders. The Distributor, in its sole discretion, may reject any purchase order
for the Fund's shares.

Buying Shares Through Your Dealer. You can buy shares through any dealer, broker or
financial institution that has a sales agreement with the Distributor. Your dealer
will place your order with the Distributor on your behalf. A broker or dealer may
charge for that service.

Buying Shares Through the Distributor. Complete an OppenheimerFunds New Account Application
and return it with a check payable to "OppenheimerFunds Distributor, Inc." Mail it to
P.O. Box 5270, Denver, Colorado 80217. If you do not list a dealer on the
application, the Distributor will act as your agent in buying the 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. However, we
recommend that you discuss your investment with a financial advisor before you make a
purchase to be sure that the Fund is appropriate for you.

o Paying by Federal Funds Wire. Shares purchased through the Distributor may be paid
for by Federal Funds wire. The minimum investment is $2,500. Before sending a wire,
call the Distributor's Wire Department at 1.800.225.5677 to notify the Distributor of
the wire and to receive further instructions.
o Buying Shares Through OppenheimerFunds AccountLink. With AccountLink, you pay for
shares by electronic funds transfers from your bank account. Shares are purchased for
your account by a transfer of money from your bank account through the Automated
Clearing House (ACH) system. You can provide those instructions automatically, under
an Asset Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. Please refer to "AccountLink,"
below for more details.
o Buying Shares Through Asset Builder Plans. You may purchase shares of the Fund
automatically each month from your account at a bank or other financial institution
under an Asset Builder Plan with AccountLink. Details are in the Asset Builder
application and the Statement of Additional Information.

WHAT IS THE MINIMUM AMOUNT YOU MUST INVEST? In most cases, you can buy Fund shares with a
minimum initial investment of $1,000 and make additional investments at any time with as
little as $50. There are reduced minimums available under the following special investment
plans:
o By using an Asset Builder Plan or Automatic Exchange Plan (details are in the
Statement of Additional Information), or government allotment plan, you can make
subsequent investments (after making the initial investment of $500) for as little as
$50. For any type of account established under one of these plans prior to November
1, 2002, the minimum additional investment will remain $25.
o The minimum investment requirement does not apply to reinvesting dividends from the
Fund or other Oppenheimer funds (a list of them appears in the Statement of
Additional Information, or you can ask your dealer or call the Transfer Agent), or
reinvesting distributions from unit investment trusts that have made arrangements
with the Distributor.

AT WHAT PRICE ARE SHARES SOLD? Shares are sold at their offering price which is the net
asset value per share plus any initial sales charge that applies. The offering price that
applies to a purchase order is based on the next calculation of the net asset value per
share that is made after the Distributor receives the purchase order at its offices in
Colorado, or after any agent appointed by the Distributor receives the order.

Net Asset Value. The Fund calculates the net asset value of each class of shares as of the
close of the New York Stock Exchange (the "NYSE"), on each day the NYSE is open for
trading (referred to in this Prospectus as a "regular business day"). The NYSE
normally closes at 4:00 p.m., Eastern time, but may close earlier on some days. All
references to time in this Prospectus mean "Eastern time."

The net asset value per share for a class of shares on a "regular business day"
is determined by dividing the value of the Fund's net assets attributable to that
class by the number of shares of that class outstanding on that day. To determine
net asset values, the Fund assets are valued primarily on the basis of current market
quotations. If market quotations are not readily available or do not accurately
reflect fair value for a security (in the Manager's judgment) or if a security's
value has been materially affected by events occurring after the close of the NYSE or
market on which the security is principally traded, that security may be valued by
another method that the Board of Trustees believes accurately reflects the fair
value.

The Board has adopted valuation procedures for the Fund and has delegated the
day-to-day responsibility for fair value determinations to the Manager's Valuation
Committee. Fair value determinations by the Manager are subject to review, approval
and ratification by the Board at its next scheduled meeting after the fair valuations
are determined. In determining whether current market prices are readily available
and reliable, the Manager monitors the information it receives in the ordinary course
of its investment management responsibilities for significant events that it believes
in good faith will affect the market prices of the securities of issuers held by the
Fund. Those may include events affecting specific issuers (for example, a halt in
trading of the securities of an issuer on an exchange during the trading day) or
events affecting securities markets (for example, a foreign securities market closes
early because of a natural disaster).

If, after the close of the principal market on which a security held by the
Fund is traded and before the time as of which the Fund's net asset values are
calculated that day, a significant event occurs that the Manager learns of and
believes in the exercise of its judgment will cause a material change in the value of
that security from the closing price of the security on the principal market on which
it is traded, the Manager will use its best judgment to determine a fair value for
that security.

The Manager believes that foreign securities values may be affected by volatility
that occurs in U.S. markets on a trading day after the close of foreign securities
markets. The Manager's fair valuation procedures therefore include a procedure
whereby foreign securities prices may be "fair valued" to take those factors into
account.

The Offering Price. To receive the offering price for a particular day, the Distributor or
its designated agent must receive your order by the time the NYSE closes that day. If
your order is received on a day when the NYSE is closed or after it has closed, the
order will receive the next offering price that is determined after your order is
received.
Buying Through a Dealer. If you buy shares through a dealer, your dealer must receive the
order by the close of the NYSE and transmit it to the Distributor so that it is
received before the Distributor's close of business on a regular business day
(normally 5:00 p.m.) to receive that day's offering price, unless your dealer has
made alternative arrangements with the Distributor. Otherwise, the order will receive
the next offering price that is determined.

--------------------------------------------------------------------------------------------
WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund offers investors three different
classes of shares. The different classes of shares represent investments in the same
portfolio of securities, but the classes are subject to different expenses and will likely
have different share prices. When you buy shares, be sure to specify the class of shares.
If you do not choose a class, your investment will be made in Class A shares.
--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Class A Shares. If you buy Class A shares, you pay an initial sales charge (on investments
up to $1 million). The amount of that sales charge will vary depending on the amount
you invest. The sales charge rates are listed in "How Can You Buy Class A Shares?"
below.
--------------------------------------------------------------------------------------------
Class B Shares. If you buy Class B shares, you pay no sales charge at the time of purchase,
but you will pay an annual asset-based sales charge. If you sell your shares within 6
years of buying them, you will normally pay a contingent deferred sales charge. That
contingent deferred sales charge varies depending on how long you own your shares, as
described in "How Can You Buy Class B Shares?" below.
--------------------------------------------------------------------------------------------
Class C Shares. If you buy Class C shares, you pay no sales charge at the time of purchase,
but you will pay an annual asset-based sales charge. If you sell your shares within
12 months of buying them, you will normally pay a contingent deferred sales charge of
1.0%, as described in "How Can You Buy Class C Shares?" below.
--------------------------------------------------------------------------------------------

WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Fund is an appropriate
investment for you, the decision as to which class of shares is best suited to your needs
depends on a number of factors that you should discuss with your financial advisor. Some
factors to consider are how much you plan to invest and how long you plan to hold your
investment. If your goals and objectives change over time and you plan to purchase
additional shares, you should re-evaluate those factors to see if you should consider
another class of shares. The Fund's operating costs that apply to a class of shares and the
effect of the different types of sales charges on your investment will vary your investment
results over time.

The discussion below is not intended to be investment advice or a recommendation,
because each investor's financial considerations are different. The discussion below
assumes that you will purchase only one class of shares and not a combination of shares of
different classes. Of course, these examples are based on approximations of the effects of
current sales charges and expenses projected over time, and do not detail all of the
considerations in selecting a class of shares. You should analyze your options carefully
with your financial advisor before making that choice.

How Long Do You Expect to Hold Your Investment? While future financial needs cannot be
predicted with certainty, knowing how long you expect to hold your investment will
assist you in selecting the appropriate class of shares. Because of the effect of
class-based expenses, your choice will also depend on how much you plan to invest.
For example, the reduced sales charges available for larger purchases of Class A
shares may, over time, offset the effect of paying an initial sales charge on your
investment, compared to the effect over time of higher class-based expenses on shares
of Class B or Class C.

o Investing for the Shorter Term. While the Fund is meant to be a long-term investment,
if you have a relatively short-term investment horizon (that is, you plan to hold
your shares for not more than six years), you should most likely purchase Class A or
Class C shares rather than Class B shares. That is because of the effect of the Class
B contingent deferred sales charge if you redeem within six years, as well as the
effect of the Class B asset-based sales charge on the investment return for that
class in the short-term. Class C shares might be the appropriate choice (especially
for investments of less than $100,000), because there is no initial sales charge on
Class C shares, and the contingent deferred sales charge does not apply to amounts
you sell after holding them one year.

However, if you plan to invest more than $100,000 for the shorter term, then as your
investment horizon increases toward six years, Class C shares might not be as
advantageous as Class A shares. That is because the annual asset-based sales charge
on Class C shares will have a greater impact on your account over the longer term
than the reduced front-end sales charge available for larger purchases of Class A
shares.

If you invest $1 million or more, in most cases Class A shares will be the most
advantageous choice, no matter how long you intend to hold your shares. The
Distributor will not accept purchase orders of $100,000 or more of Class B shares or
$1 million or more of Class C shares from a single investor. Dealers or other
financial intermediaries purchasing shares for their customers in omnibus accounts
are responsible for compliance with those limits.

o Investing for the Longer Term. If you are investing less than $100,000 for the
longer-term, for example for retirement, and do not expect to need access to your
money for seven years or more, Class B shares may be appropriate.

Are There Differences in Account Features That Matter to You? Some account features may not
be available to Class B and Class C shareholders. Other features may not be advisable
(because of the effect of the contingent deferred sales charge) for Class B and Class
C shareholders. Therefore, you should carefully review how you plan to use your
investment account before deciding which class of shares to buy.

Additionally, the dividends payable to Class B and Class C shareholders will be
reduced by the additional expenses borne by those classes that are not borne by Class
A shares, such as the Class B and Class C asset-based sales charge described below
and in the Statement of Additional Information. Also, checkwriting is not available
on accounts subject to a contingent deferred sales charge.

How Do Share Classes Affect Payments to Your Broker? A financial advisor may receive
different compensation for selling one class of shares than for selling another
class. It is important to remember that Class B and Class C contingent deferred sales
charges and asset-based sales charges have the same purpose as the front-end sales
charge on sales of Class A shares: to compensate the Distributor for concessions and
expenses it pays to dealers and financial institutions for selling shares. The
Distributor may pay additional compensation from its own resources to securities
dealers or financial institutions based upon the value of shares of the Fund owned by
the dealer or financial institution for its own account or for its customers.

HOW CAN YOU BUY CLASS A SHARES? Class A shares are sold at their offering price, which is
normally net asset value plus an initial sales charge. However, in some cases, described
below, purchases are not subject to an initial sales charge, and the offering price will be
the net asset value. In other cases, reduced sales charges may be available, as described
below or in the Statement of Additional Information. Out of the amount you invest, the
Fund receives the net asset value to invest for your account.

The sales charge varies depending on the amount of your purchase. A portion of the
sales charge may be retained by the Distributor or allocated to your dealer as concession.
The Distributor reserves the right to reallow the entire concession to dealers. The current
sales charge rates and concessions paid to dealers and brokers are as follows:

------------------------------------------------------------------------------
Amount of Purchase Front-End Sales Front-End Sales Concession As
Charge As a
Charge As a Percentage of
Percentage of Net Percentage of
Offering Price Amount Invested Offering Price
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Less than $50,000 4.75% 4.98% 4.00%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
$50,000 or more but 4.50% 4.71% 4.00%
less than $100,000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
$100,000 or more but 3.50% 3.63% 3.00%
less than $250,000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
$250,000 or more but 2.50% 2.56% 2.25%
less than $500,000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
$500,000 or more but 2.00% 2.04% 1.80%
less than $1 million
------------------------------------------------------------------------------

Due to rounding, the actual sales charge for a particular transaction may be higher or
lower than the rates listed above.

SPECIAL SALES CHARGE ARRANGEMENTS AND WAIVERS. Appendix C to the Statement of Additional
Information details the conditions for the waiver of sales charges that apply in certain
cases and the special sales charge rates that apply to purchases of shares of the Fund by
certain groups, or in other special types of transactions. To receive a waiver or special
sales charge rate, you must advise the Distributor when purchasing shares or the Transfer
Agent when redeeming shares that a special condition applies.

Can You Reduce Class A Sales Charges? You and your spouse may be eligible to buy Class A
shares of the Fund at reduced sales charge rates set forth in the table above under the
Fund's "Right of Accumulation" or a "Letter of Intent." The Fund reserves the right to
modify or to cease offering these programs at any time.

o Right of Accumulation. To qualify for the reduced Class A sales charge that would
apply to a larger purchase than you are currently making (as shown in the
table above), you can add the value of any Class A, Class B or, Class C
shares of the Fund or other Oppenheimer funds that you or your spouse
currently own, or are currently purchasing, to the value of your Class A
share purchase. Your Class A shares of Oppenheimer Money Market Fund, Inc.
or Oppenheimer Cash Reserves on which you have not paid a sales charge will
not be counted for this purpose. In totaling your holdings, you may count
shares held in your individual accounts (including IRAs and 403(b) plans),
your joint accounts with your spouse, or accounts you or your spouse hold as
trustees or custodians on behalf of your children who are minors. A
fiduciary can count all shares purchased for a trust, estate or other
fiduciary account that has multiple accounts (including employee benefit
plans for the same employer). If you are buying shares directly from the
Fund, you must inform the Distributor of your eligibility and holdings at
the time of your purchase in order to qualify for the Right of Accumulation.
If you are buying shares through your financial intermediary you must notify
your intermediary of your eligibility for the Right of Accumulation at the
time of your purchase.

To count shares of eligible Oppenheimer funds held in accounts at other
intermediaries under this Right of Accumulation, you may be requested to
provide the Distributor or your current intermediary with a copy of all
account statements showing your current holdings of the Fund or other
eligible Oppenheimer funds, including statements for accounts held by you and
your spouse or in retirement plans or trust or custodial accounts for minor
children as described above. The Distributor or intermediary through which
you are buying shares will calculate the value of your eligible Oppenheimer
fund shares, based on the current offering price, to determine which Class A
sales charge rate you qualify for on your current purchase.

o Letters of Intent. You may also qualify for reduced Class A sales charges by
submitting a Letter of Intent to the Distributor. A Letter of Intent is a
written statement of your intention to purchase a specified value of Class
A, Class B or Class C shares of the Fund or other Oppenheimer funds over a
13-month period. The total amount of your intended purchases of Class A,
Class B and Class C shares will determine the reduced sales charge rate that
will apply to your Class A share purchases of the Fund during that period.
You can choose to include purchases made up to 90 days before the date that
you submit a Letter. Your Class A shares of Oppenheimer Money Market Fund
or Oppenheimer Cash Reserves on which you have not paid a sales charge will
not be counted for this purpose. Submitting a Letter of Intent does not
obligate you to purchase the specified amount of shares. You may also be
able to apply the Right of Accumulation to these purchases.

If you do not complete the Letter of Intent, the front-end sales charge
you paid on your purchases will be recalculated to reflect the actual value
of shares you purchased. A certain portion of your shares will be held in
escrow by the Fund's Transfer Agent for this purpose. Please refer to "How
to Buy Shares - Letters of Intent" in the Fund's Statement of Additional
Information for more complete information.

Other Special Sales Charge Arrangements and Waivers. The Fund and the Distributor
offer other opportunities to purchase shares without front-end or contingent deferred
sales charges under the programs described below. The Fund reserves the right to
amend or discontinue these programs at any time without prior notice.

o Dividend Reinvestment. Dividends and/or capital gains distributions received by a
shareholder from the Fund may be reinvested in shares of the Fund or any of
the other Oppenheimer funds without sales charge, at the net asset value per
share in effect on the payable date. You must notify the Transfer Agent in
writing to elect this option and must have an existing account in the fund
selected for reinvestment.
o Exchanges of Shares. Shares of the Fund may be exchanged for shares of certain other
Oppenheimer funds at net asset value per share at the time of exchange,
without sales charge, and shares of the Fund can be purchased by exchange of
shares of certain other Oppenheimer funds on the same basis. Please refer to
"How to Exchange Shares" in this Prospectus and in the Statement of
Additional Information for more details, including a discussion of
circumstances in which sales charges may apply on exchanges.
o Reinvestment Privilege. Within six months of a redemption of certain Class A and
Class B shares, the proceeds may be reinvested in Class A shares of the Fund
without sales charge. This privilege applies to redemptions of Class A
shares that were subject to an initial sales charge or Class A or Class B
shares that were subject to a contingent deferred sales charge when
redeemed. The investor must ask the Transfer Agent for that privilege at the
time of reinvestment and must identify the account from which the redemption
was made.

o Other Special Reductions and Waivers. The Fund and the Distributor offer additional
arrangements to reduce or eliminate front-end sales charges or to waive
contingent deferred sales charges for certain types of transactions and for
certain classes of investors (primarily retirement plans that purchase shares
in special programs through the Distributor). These are described in greater
detail in Appendix C to the Statement of Additional Information, which may be
ordered by calling 800.225.5677 or through the OppenheimerFunds website, at
www.oppenheimerfunds.com follow the hyperlinks: "Access Accounts and Services"
------------------------
- "Forms & Literature" - "Order Literature" - Statements of Additional
Information"). A description of these waivers and special sales charge
arrangements is also available for viewing on the OppenheimerFunds website
(follow the hyperlinks: "Research Funds" - "Fund Documents" - "View a
description..."). To receive a waiver or special sales charge rate under these
programs, the purchaser must notify the Distributor (or other financial
intermediary through which shares are being purchased) at the time of purchase,
or notify the Transfer Agent at the time of redeeming shares for those waivers
that apply to contingent deferred sales charges.

Class A Contingent Deferred Sales Charge. There is no initial sales charge on purchases of
Class A shares of any one or more of the Oppenheimer funds aggregating $1 million or
more. The Distributor pays dealers of record concessions in an amount equal to 0.50%
of purchases of $1 million or more (other than purchases by retirement plans, which
are not permitted in the Fund). That concession will not be paid on purchases of
shares by exchange or that were previously subject to a front-end sales charge and
dealer concession.

If you redeem any of those shares within an 18 month "holding period" measured from
the beginning of the calendar month of their purchase, a contingent deferred sales
charge (called the "Class A contingent deferred sales charge") may be deducted from
the redemption proceeds. That sales charge will be equal to 1.0% of the lesser of:
o the aggregate net asset value of the redeemed shares at the time of redemption
(excluding shares purchased by reinvestment of dividends or capital gain
distributions) or
o the original net asset value of the redeemed shares.

The Class A contingent deferred sales charge will not exceed the aggregate amount of
the concessions the Distributor paid to your dealer on all purchases of Class A shares of
all Oppenheimer funds you made that were subject to the Class A contingent deferred sales
charge.

HOW CAN YOU BUY CLASS B SHARES? Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed within six years
from the beginning of the calendar month of their purchase, a contingent deferred sales
charge will be deducted from the redemption proceeds. The Class B contingent deferred sales
charge is paid to compensate the Distributor for its expenses of providing
distribution-related services to the Fund in connection with the sale of Class B shares.

The amount of the contingent deferred sales charge will depend on the number of years
since you invested and the dollar amount being redeemed, according to the following
schedule for the Class B contingent deferred sales charge holding period:

--------------------------------------------------------------------------------
Years Since Beginning of Month in Contingent Deferred Sales Charge on
Which Purchase Order was Accepted Redemptions in That Year
(As % of Amount Subject to Charge)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
0 - 1 5.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 - 2 4.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2 - 3 3.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3 - 4 3.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4 - 5 2.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
5 - 6 1.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
More than 6 None
--------------------------------------------------------------------------------
In the table, a "year" is a 12-month period. In applying the contingent
deferred sales charge, all purchases are considered to have been made on the first regular
business day of the month in which the purchase was made.

Automatic Conversion of Class B Shares. Class B shares automatically convert to Class A
shares 72 months after you purchase them. This conversion feature relieves Class B
shareholders of the asset-based sales charge that applies to Class B shares under the
Class B Distribution and Service Plan, described below. The conversion is based on
the relative net asset value of the two classes, and no sales load or other charge is
imposed. When any Class B shares that you hold convert, any other Class B shares
that were acquired by reinvesting dividends and distributions on the converted shares
will also convert to Class A shares. For further information on the conversion
feature and its tax implications, see "Class B Conversion" in the Statement of
Additional Information.

HOW CAN YOU BUY CLASS C SHARES? Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed within a holding
period of 12 months from the beginning of the calendar month of their purchase, a
contingent deferred sales charge of 1.0% will be deducted from the redemption proceeds. The
Class C contingent deferred sales charge is paid to compensate the Distributor for its
expenses of providing distribution-related services to the Fund in connection with the sale
of Class C shares.

DISTRIBUTION AND SERVICE (12b-1) PLANS.

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 quarterly at an annual
rate of up to 0.15% of the average annual net assets of Class A shares of the Fund.
The Board of Trustees can increase that fee to 0.25% of average annual net assets
without shareholder approval. Shareholders will be notified of any such change. The
Distributor currently uses all of those fees to pay dealers, brokers, banks and other
financial institutions quarterly for providing personal service and maintenance of
accounts of their customers that hold Class A shares.

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 pay the Distributor
for its services and costs in distributing Class B and Class C shares and servicing
accounts. Under the plans, the Fund pays the Distributor an annual asset-based sales
charge of 0.75% per year on Class B shares and on Class C shares. The Distributor
also receives a service fee of up to 0.15% per year under each plan. However, the
Board of Trustees can increase that fee to 0.25% of average annual net assets without
shareholder approval. Shareholders will be notified of any such change.

The asset-based sales charge and service fees increase Class B and Class C expenses
by 0.90% of the net assets per year of the respective class. Because these fees are
paid out of the Fund's assets on an ongoing basis, over time these fees will increase
the cost of your investment and may cost you more than other types of sales charges.

The Distributor uses the service fees to compensate dealers for providing personal
services for accounts that hold Class B or Class C shares. The Distributor normally
pays the 0.15% service fees to dealers in advance for the first year after the shares
are sold by the dealer. After the shares have been held for a year, the Distributor
pays the service fees to dealers on a quarterly basis.

The Distributor currently pays a sales concession of 3.85% of the purchase price of
Class B shares to dealers from its own resources at the time of sale. Including the
advance of the service fee, the total amount paid by the Distributor to the dealer at
the time of sale of Class B shares is therefore 4.00% of the purchase price. The
Distributor normally retains the Class B asset-based sales charge. See the Statement
of Additional Information for exceptions.

The Distributor currently pays a sales concession of 0.75% of the purchase price of
Class C shares to dealers from its own resources at the time of sale. Including the
advance of the service fee, the total amount paid by the Distributor to the dealer at
the time of sale of Class C shares is therefore 0.90% of the purchase price. The
Distributor normally pays the asset-based sales charge as an ongoing concession to
the dealer on Class C shares that have been outstanding for a year or more. The
Distributor normally retains the Class C asset-based sales charge during the first
year after the Class C shares are purchased. See the Statement of Additional
Information for exceptions.

Under certain circumstances, the Distributor will pay the full Class B or Class C
asset-based sales charge and the service fee to the dealer beginning in the first
year after purchase of such shares in lieu of paying the dealer the sales concession
and the advance of the first year's service fee at the time of purchase, if there is
a special agreement between the dealer and the Distributor. In those circumstances,
the sales concession will not be paid to the dealer.

In addition, the Manager and the Distributor may make substantial payments to dealers
or other financial intermediaries and service providers for distribution and/or
shareholder servicing activities, out of their own resources, including the profits
from the advisory fees the Manager receives from the Fund. Some of these
distribution-related payments may be made to dealers or financial intermediaries for
marketing, promotional or related expenses; these payments are often referred to as
"revenue sharing." In some circumstances, those types of payments may create an
incentive for a dealer or financial intermediary or its representatives to recommend
or offer shares of the Fund or other Oppenheimer funds to its customers. You should
ask your dealer or financial intermediary for more details about any such payments it
receives.

Special Investor Services

ACCOUNTLINK. You can use our AccountLink feature to link your Fund account with an account
at a U.S. bank or other financial institution. It must be an Automated Clearing House (ACH)
member. AccountLink lets you:
o transmit funds electronically to purchase shares by telephone (through a service
representative or by PhoneLink) or automatically under Asset Builder Plans, or
o have the Transfer Agent send redemption proceeds or transmit dividends and
distributions directly to your bank account. Please call the Transfer Agent for more
information.
You may purchase shares by telephone only after your account has been established. To
purchase shares in amounts up to $250,000 through a telephone representative, call the
Distributor at 1.800.225.5677. The purchase payment will be debited from your bank account.

AccountLink privileges should be requested on your Application or your dealer's
settlement instructions if you buy your shares through a dealer. After your account is
established, you can request AccountLink privileges by sending signature-guaranteed
instructions and proper documentation to the Transfer Agent. AccountLink privileges will
apply to each shareholder listed in the registration on your account as well as to your
dealer representative of record unless and until the Transfer Agent receives written
instructions terminating or changing those privileges. After you establish AccountLink for
your account, any change of bank account information must be made by signature-guaranteed
instructions to the Transfer Agent signed by all shareholders who own the account.

PHONELINK. PhoneLink is the OppenheimerFunds automated telephone system that enables
shareholders to perform a number of account transactions automatically using a touch-tone
phone. PhoneLink may be used on already-established Fund accounts after you obtain a
Personal Identification Number (PIN), by calling the PhoneLink number, 1.800.225.5677.
Purchasing Shares. You may purchase shares in amounts up to $100,000 by phone, by calling
1.800.225.5677. You must have established AccountLink privileges to link your bank
account with the Fund to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds Exchange Privilege, described below, you can
exchange shares automatically by phone from your Fund account to another
OppenheimerFunds account you have already established by calling the special
PhoneLink number.
Selling Shares. You can redeem shares by telephone automatically by calling the PhoneLink
number and the Fund will send the proceeds directly to your AccountLink bank account.
Please refer to "How to Sell Shares," below for details.

CAN YOU SUBMIT TRANSACTION REQUESTS BY FAX? You may send requests for certain types of
account transactions to the Transfer Agent by fax (telecopier). Please call 1.800.225.5677
for information about which transactions may be handled this way. Transaction requests
submitted by fax are subject to the same rules and restrictions as written and telephone
requests described in this Prospectus.

OPPENHEIMERFUNDS INTERNET WEBSITE. You can obtain information about the Fund, as well as
your account balance, on the OppenheimerFunds Internet website, at
www.oppenheimerfunds.com. Additionally, shareholders listed in the account registration
(and the dealer of record) may request certain account transactions through a special
section of that website. To perform account transactions or obtain account information
online, you must first obtain a user I.D. and password on that website. If you do not want
to have Internet account transaction capability for your account, please call the Transfer
Agent at 1.800.225.5677. At times, the website may be inaccessible or its transaction
features may be unavailable.

AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. The Fund has several plans that enable you to sell
shares automatically or exchange them to another OppenheimerFunds account on a regular
basis. Please call the Transfer Agent or consult the Statement of Additional Information
for details.

How to Sell Shares

You can sell (redeem) some or all of your shares on any regular business day. Your shares
will be sold at the next net asset value calculated after your order is received in proper
form (which means that it must comply with the procedures described below) and is accepted
by the Transfer Agent. The Fund lets you sell your shares by writing a letter, by wire, by
using the Fund's checkwriting privilege, or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis. If you have questions about any of
these procedures, and especially if you are redeeming shares in a special situation, such
as due to the death of the owner, please call the Transfer Agent first, at 1.800.225.5677,
for assistance.

Certain Requests Require a Signature Guarantee. To protect you and the Fund from fraud, the
following redemption requests must be in writing and must include a signature
guarantee (although there may be other situations that also require a signature
guarantee):

o You wish to redeem more than $100,000 and receive a check.
o The redemption check is not payable to all shareholders listed on the account
statement.
o The redemption check is not sent to the address of record on your account statement.
o Shares are being transferred to a Fund account with a different owner or name.
o Shares are being redeemed by someone (such as an Executor) other than the owners.

Where Can You Have Your Signature Guaranteed? The Transfer Agent will accept a guarantee of
your signature by a number of financial institutions, including:
o a U.S. bank, trust company, credit union or savings association,
o a foreign bank that has a U.S. correspondent bank,
o a U.S. registered dealer or broker in securities, municipal securities or government
securities, or
o a U.S. national securities exchange, a registered securities association or a
clearing agency.
If you are signing on behalf of a corporation, partnership or other business or as a
fiduciary, you must also include your title in the signature.

Receiving Redemption Proceeds by Wire. While the Fund normally sends your money by
check, you can arrange to have the proceeds of shares you sell sent by Federal Funds wire
to a bank account you designate. It must be a commercial bank that is a member of the
Federal Reserve wire system. The minimum redemption you can have sent by wire is $2,500.
There is a $10 fee for each request. To find out how to set up this feature on your account
or to arrange a wire, call the Transfer Agent at 1.800.225.5677.

CHECKWRITING. To write checks against your Fund account, request that privilege on your
account application, or contact the Transfer Agent for signature cards. They must be signed
(with a signature guarantee) by all owners of the account and returned to the Transfer
Agent so that checks can be sent to you to use. Shareholders with joint accounts can elect
in writing to have checks paid over the signature of one owner. If you previously signed a
signature card to establish checkwriting in another Oppenheimer fund, simply call
1.800.225.5677 to request checkwriting for an account in this Fund with the same
registration as the other account.

o Checks can be written to the order of whomever you wish, but may not be cashed at the
bank the checks are payable through or the Fund's custodian bank.
o Checkwriting privileges are not available for accounts holding shares that are
subject to a contingent deferred sales charge.
o Checks must be written for at least $500. Checks written below the stated amount on
the check will not be accepted. However, if you have existing checks indicating a
$100 minimum, you may still use them for amounts of $100 or more.
o Checks cannot be paid if they are written for more than your account value. Remember,
your shares fluctuate in value and you should not write a check close to the total
account value.
o You may not write a check that would require the Fund to redeem shares that were
purchased by check or Asset Builder Plan payments within the prior 10 days.
o Don't use your checks if you changed your Fund account number, until you receive new
checks.

HOW DO YOU SELL SHARES BY MAIL? Write a letter of instruction that includes:
o Your name,
o The Fund's name,
o Your Fund account number (from your account statement),
o The dollar amount or number of shares to be redeemed,
o Any special payment instructions,
o Any share certificates for the shares you are selling,
o The signatures of all registered owners exactly as the account is registered, and
o Any special documents requested by the Transfer Agent to assure proper authorization
of the person asking to sell the shares.

Use the following address for Send courier or express mail
requests by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue, Building D
Denver, Colorado 80217 Denver, Colorado 80231

HOW DO YOU SELL SHARES BY TELEPHONE? You and your dealer representative of record may also
sell your shares by telephone. To receive the redemption price calculated on a particular
regular business day, your call must be received by the Transfer Agent by the close of the
NYSE that day, which is normally 4:00 p.m., but may be earlier on some days. You may not
redeem shares under a share certificate by telephone.

o To redeem shares through a service representative or automatically on PhoneLink, call
1.800.225.5677.

Whichever method you use, you may have a check sent to the address on the account
statement, or, if you have linked your Fund account to your bank account on
AccountLink, you may have the proceeds sent to that bank account.

Are There Limits on Amounts Redeemed by Telephone?
Telephone Redemptions Paid by Check. Up to $100,000 may be redeemed by telephone in any
seven-day period. The check must be payable to all owners of record of the shares and
must be sent to the address on the account statement. This service is not available
within 30 days of changing the address on an account.

Telephone Redemptions Through AccountLink or by Wire. There are no dollar limits on
telephone redemption proceeds sent to a bank account designated when you establish
AccountLink. Normally the ACH transfer to your bank is initiated on the business day
after the redemption. You do not receive dividends on the proceeds of the shares you
redeemed while they are waiting to be transferred.

If you have requested Federal Funds wire privileges for your account, the wire of the
redemption proceeds will normally be transmitted on the next bank business day after
the shares are redeemed. There is a possibility that the wire may be delayed up to
seven days to enable the Fund to sell securities to pay the redemption proceeds. No
dividends are accrued or paid on the proceeds of shares that have been redeemed and
are awaiting transmittal by wire.

CAN YOU SELL SHARES THROUGH YOUR DEALER? The Distributor has made arrangements to
repurchase Fund shares from dealers and brokers on behalf of their customers. Brokers or
dealers may charge for that service. If your shares are held in the name of your dealer,
you must redeem them through your dealer.

HOW CONTINGENT DEFERRED SALES CHARGES AFFECT REDEMPTIONS. If you purchase shares subject to
a Class A, Class B or Class C contingent deferred sales charge and redeem any of those
shares during the applicable holding period for the class of shares, the contingent
deferred sales charge will be deducted from the redemption proceeds (unless you are
eligible for a waiver of that sales charge based on the categories listed in Appendix C to
the Statement of Additional Information and you advise the Transfer Agent of your
eligibility for the waiver when you place your redemption request.)

A contingent deferred sales charge will be based on the lesser of the net asset value
of the redeemed shares at the time of redemption or the original net asset value. A
contingent deferred sales charge is not imposed on:
o the amount of your account value represented by an increase in net asset value over
the initial purchase price,
o shares purchased by the reinvestment of dividends or capital gains distributions, or
o shares redeemed in the special circumstances described in Appendix C to the Statement
of Additional Information.

To determine whether a contingent deferred sales charge applies to a redemption, the
Fund redeems shares in the following order:
1. shares acquired by reinvestment of dividends and capital gains distributions,
2. shares held for the holding period that applies to the class, and
3. shares held the longest during the holding period.

Contingent deferred sales charges are not charged when you exchange shares of the
Fund for shares of other Oppenheimer funds. However, if you exchange them within the
applicable contingent deferred sales charge holding period, the holding period will carry
over to the fund whose shares you acquire. Similarly, if you acquire shares of this Fund by
exchanging shares of another Oppenheimer fund that are still subject to a contingent
deferred sales charge holding period, that holding period will carry over to this Fund.

How to Exchange Shares

If you want to change all or part of your investment from one Oppenheimer fund to another,
you can exchange your shares for shares of the same class of another Oppenheimer fund that
offers the exchange privilege. For example, you can exchange Class A shares of the Fund
only for Class A shares of another fund. To exchange shares, you must meet several
conditions:

o Shares of the fund selected for exchange must be available for sale in your state of
residence.

o The prospectuses of both funds must offer the exchange privilege.
o When you establish an account, you must hold the shares you buy for at least seven
days before you can exchange them. After the account is open seven days, you can
exchange shares every regular business day, subject to the limitations described
below.
o You must meet the minimum purchase requirements for the selected fund.
o Generally, exchanges may be made only between identically registered accounts, unless
all account owners send written exchange instructions with a signature guarantee.
o Before exchanging into a fund, you must obtain its prospectus and should read it
carefully.

For tax purposes, an exchange of shares of the Fund is considered a sale of those
shares and a purchase of the shares of the fund into which you are exchanging. An exchange
may result in a capital gain or loss.

You can find a list of Oppenheimer funds that are currently available for exchanges
in the Statement of Additional Information or you can obtain a list by calling a service
representative at 1.800.225.5677. The funds available for exchange can change from time to
time.

A contingent deferred sales charge (CDSC) is not charged when you exchange shares of
the Fund for shares of another Oppenheimer fund. However, if you exchange your shares
during the applicable CDSC holding period, the holding period will carry over to the
fund shares that you acquire. Similarly, if you acquire shares of the Fund in
exchange for shares of another Oppenheimer fund that are subject to a CDSC holding
period, that holding period will carry over to the acquired shares of the Fund. In
either of these situations, a CDSC may be imposed if the acquired shares are redeemed
before the end of the CDSC holding period that applied to the exchanged shares.

There are a number of other special conditions and limitations that apply to certain
types of exchanges. These conditions and circumstances are described in detail in the
"How to Exchange Shares" section in the Statement of Additional Information.

HOW DO YOU SUBMIT EXCHANGE REQUESTS? Exchanges may be requested in writing, by telephone or
internet, or by establishing an Automatic Exchange Plan.

Written Exchange Requests. Send a request letter, signed by all owners of the account, to
the Transfer Agent at the address on the back cover. Exchanges of shares for which
share certificates have been issued cannot be processed unless the Transfer Agent
receives the certificates with the request letter.
Telephone and Internet Exchange Requests. Telephone exchange requests may be made either by
calling a service representative or by using PhoneLink by calling 1.800.225.5677. You
may submit internet exchange requests on the OppenheimerFunds internet website, at
www.oppenheimerfunds.com. You must have obtained a user I.D. and password to make
------------------------
transactions on that website. Telephone and/or internet exchanges may be made only
between accounts that are registered with the same name(s) and address. Shares for
which share certificates have been issued may not be exchanged by telephone or the
internet.

Automatic Exchange Plan. Shareholders can authorize the Transfer Agent to exchange a
pre-determined amount of shares automatically on a monthly, quarterly, semi-annual or
annual basis.

Please refer to "How to Exchange Shares" in the Statement of Additional Information for
more details.

ARE THERE LIMITATIONS ON FREQUENT PURCHASES, REDEMPTIONS AND EXCHANGES?

Risks from Excessive Purchase, Redemption and Short-Term Exchange Activity. The
OppenheimerFunds exchange privilege affords investors the ability to switch their
investments among Oppenheimer funds if their investment needs change. However, there are
limits on that privilege. Frequent purchases, redemptions and exchanges of fund shares may
interfere with the Manager's ability to manage the fund's investments efficiently, increase
the fund's transaction and administrative costs and/or affect the fund's performance,
depending on various factors, such as the size of the fund, the nature of its investments,
the amount of fund assets the portfolio manager maintains in cash or cash equivalents, the
aggregate dollar amount and the number and frequency of trades. If large dollar amounts are
involved in exchange and/or redemption transactions, the Fund might be required to sell
portfolio securities at unfavorable times to meet redemption or exchange requests, and the
Fund's brokerage or administrative expenses might be increased.

Therefore, the Manager and the Fund's Board of Trustees have adopted the following policies
and procedures to detect and prevent frequent and/or excessive exchanges, and/or purchase
and redemption activity, while balancing the needs of investors who seek liquidity from
their investment and the ability to exchange shares as investment needs change. There is no
guarantee that the policies and procedures described below will be sufficient to identify
and deter excessive short-term trading.

o Timing of Exchanges. Exchanged shares are normally redeemed from one fund and the
proceeds are reinvested in the fund selected for exchange on the same regular
business day on which the Transfer Agent or its agent (such as a financial
intermediary holding the investor's shares in an "omnibus" or "street name"
account) receives an exchange request that conforms to these policies. The request
must be received by the close of the NYSE that day, which is normally 4:00 p.m.
but may be earlier on some days, in order to receive that day's net asset value on
the exchanged shares. Exchange requests received after the close of the NYSE will
receive the next net asset value calculated after the request is received.
However, the Transfer Agent may delay transmitting the proceeds from an exchange
for up to five business days if it determines, in its discretion, that an earlier
transmittal of the redemption proceeds to the receiving fund would be detrimental
to either the fund from which the exchange is being made or the fund into which
the exchange is being made. The proceeds will be invested in the fund into which
the exchange is being made at the next net asset value calculated after the
proceeds are received. In the event that such a delay in the reinvestment of
proceeds occurs, the Transfer Agent will notify you or your financial
representative.

o Limits on Disruptive Activity. The Transfer Agent may, in its discretion, limit or
terminate trading activity by any person, group or account that it believes would
be disruptive, even if the activity has not exceeded the policy outlined in this
Prospectus. The Transfer Agent may review and consider the history of frequent
trading activity in all accounts in the Oppenheimer funds known to be under common
ownership or control as part of the Transfer Agent's procedures to detect and
deter excessive trading activity.

o Exchanges of Client Accounts by Financial Advisers. The Fund and the Transfer Agent
permit dealers and financial intermediaries to submit exchange requests on behalf of
their customers (unless the customer has revoked that authority). The Distributor
and/or the Transfer Agent have agreements with a number of financial intermediaries
that permit them to submit exchange orders in bulk on behalf of their clients. Those
intermediaries are required to follow the exchange policies stated in this Prospectus
and to comply with additional, more stringent restrictions. Those additional
restrictions include limitations on the funds available for exchanges, the
requirement to give advance notice of exchanges to the Transfer Agent, and limits on
the amount of client assets that may be invested in a particular fund. A fund or the
Transfer Agent may limit or refuse bulk exchange requests submitted by such financial
intermediaries if, in the Transfer Agent's judgment, exercised in its discretion, the
exchanges would be disruptive to any of the funds involved in the transaction.

o Redemptions of Shares. These exchange policy limits do not apply to redemptions of
shares. Shareholders are permitted to redeem their shares on any regular business
day, subject to the terms of this Prospectus.
o Right to Refuse Exchange and Purchase Orders. The Distributor and/or the Transfer
Agent may refuse any purchase or exchange order in their discretion and are not
obligated to provide notice before rejecting an order. The Fund may amend, suspend
or terminate the exchange privilege at any time. You will receive 60 days' notice
of any material change in the exchange privilege unless applicable law allows
otherwise.

o Right to Terminate or Suspend Account Privileges. The Transfer Agent may send a
written warning to direct shareholders that the Transfer Agent believes may be
engaging in excessive purchases, redemptions and/or exchange activity and reserves
the right to suspend or terminate the ability to purchase shares and/or exchange
privileges for any account that the Transfer Agent determines, in carrying out these
policies and in the exercise of its discretion, has engaged in disruptive or
excessive trading activity, with or without such warning.

o Omnibus Accounts. If you hold your shares of the Fund through a financial
intermediary such as a broker-dealer, a bank, an insurance company separate account,
an investment adviser, an administrator or trustee of a retirement plan or 529 plan,
that holds your shares in an account under its name (these are sometimes referred to
as "omnibus" or "street name" accounts), that financial intermediary may impose its
own restrictions or limitations to discourage short-term or excessive trading. You
should consult your financial intermediary to find out what trading restrictions,
including limitations on exchanges, they may apply.

While the Fund, the Distributor, the Manager and the Transfer Agent encourage financial
intermediaries to apply the Fund's policies to their customers who invest indirectly in the
Fund, the Transfer Agent may not be able to detect excessive short term trading activity
facilitated by, or in accounts maintained in, the "omnibus" or "street name" accounts of a
financial intermediary. Therefore the Transfer Agent might not be able to apply this policy
to accounts such as (a) accounts held in omnibus form in the name of a broker-dealer or
other financial institution, or (b) omnibus accounts held in the name of a retirement plan
or 529 plan trustee or administrator, or (c) accounts held in the name of an insurance
company for its separate account(s), or (d) other accounts having multiple underlying
owners but registered in a manner such that the underlying beneficial owners are not
identified to the Transfer Agent.

However, the Transfer Agent will attempt to monitor overall purchase and redemption
activity in those accounts to seek to identify patterns that may suggest excessive trading
by the underlying owners. If evidence of possible excessive trading activity is observed by
the Transfer Agent, the financial intermediary that is the registered owner will be asked
to review account activity, and to confirm to the Transfer Agent and the fund that
appropriate action has been taken to curtail any excessive trading activity. However, the
Transfer Agent's ability to monitor and deter excessive short-term trading in omnibus or
street name accounts ultimately depends on the capability and cooperation of the financial
intermediaries controlling those accounts.

Additional Policies and Procedures. The Fund's Board has adopted the following additional
policies and procedures to detect and prevent frequent and/or excessive exchanges and
purchase and redemption activity:

o 30-Day Limit. A direct shareholder may exchange some or all of the shares of the
Fund held in his or her account to another eligible Oppenheimer fund once in a 30
calendar-day period. When shares are exchanged into a fund account, that account
will be "blocked" from further exchanges into another fund for a period of 30
calendar days from the date of the exchange. The block will apply to the full
account balance and not just to the amount exchanged into the account. For
example, if a shareholder exchanged $1,000 from one fund into another fund in
which the shareholder already owned shares worth $10,000, then, following the
exchange, the full account balance ($11,000 in this example) would be blocked from
further exchanges into another fund for a period of 30 calendar days. A "direct
shareholder" is one whose account is registered on the Fund's books showing the
name, address and tax ID number of the beneficial owner.

o Exchanges Into Money Market Funds. A direct shareholder will be permitted to
exchange shares of a stock or bond fund for shares of a money market fund at any
time, even if the shareholder has exchanged shares into the stock or bond fund
during the prior 30 days. However, all of the shares held in that money market
fund would then be blocked from further exchanges into another fund for 30
calendar days.

o Dividend Reinvestments/B Share Conversions. Reinvestment of dividends or
distributions from one fund to purchase shares of another fund and the conversion
of Class B shares into Class A shares will not be considered exchanges for
purposes of imposing the 30-day limit.

o Asset Allocation. Third-party asset allocation and rebalancing programs will be
subject to the 30-day limit described above. Asset allocation firms that want to
exchange shares held in accounts on behalf of their customers must identify
themselves to the Transfer Agent and execute an acknowledgement and agreement to
abide by these policies with respect to their customers' accounts. "On-demand"
exchanges outside the parameters of portfolio rebalancing programs will be subject
to the 30-day limit. However, investment programs by other Oppenheimer
"funds-of-funds" that entail rebalancing of investments in underlying Oppenheimer
funds will not be subject to these limits.

o Automatic Exchange Plans. Accounts that receive exchange proceeds through automatic
or systematic exchange plans that are established through the Transfer Agent will
not be subject to the 30-day block as a result of those automatic or systematic
exchanges (but may be blocked from exchanges, under the 30-day limit, if they
receive proceeds from other exchanges).

Shareholder Account Rules and Policies

More information about the Fund's policies and procedures for buying, selling and
exchanging shares is contained in the Statement of Additional Information.
A $12 annual fee "Minimum Balanced Fee" is assessed on each Fund account with a value of

less than $500. The fee is automatically deducted from each applicable Fund account
annually in September. See the Statement of Additional Information to learn how you
can avoid this fee and for circumstances under which this fee will not be assessed.

The offering of shares may be suspended during any period in which the determination of net
asset value is suspended, and the offering may be suspended by the Board of Trustees
at any time the Board believes it is in the Fund's best interest to do so.
Telephone transaction privileges for purchases, redemptions or exchanges may be modified,
suspended or terminated by the Fund at any time. The Fund will provide you notice
whenever it is required to do so by applicable law. If an account has more than one
owner, the Fund and the Transfer Agent may rely on the instructions of any one owner.
Telephone privileges apply to each owner of the account and the dealer representative
of record for the account unless the Transfer Agent receives cancellation
instructions from an owner of the account.
The Transfer Agent will record any telephone calls to verify data concerning transactions
and has adopted other procedures to confirm that telephone instructions are genuine,
by requiring callers to provide tax identification numbers and other account data or
by using PINs, and by confirming such transactions in writing. The Transfer Agent and
the Fund will not be liable for losses or expenses arising out of telephone
instructions reasonably believed to be genuine.
Redemption or transfer requests will not be honored until the Transfer Agent receives all
required documents in proper form. From time to time, the Transfer Agent in its
discretion may waive certain of the requirements for redemptions stated in this
Prospectus.
Dealers that perform account transactions for their clients by participating in NETWORKING
through the National Securities Clearing Corporation are responsible for obtaining
their clients' permission to perform those transactions, and are responsible to their
clients who are shareholders of the Fund if the dealer performs any transaction
erroneously or improperly.
The redemption price for shares will vary from day to day because the value of the
securities in the Fund's portfolio fluctuates. The redemption price, which is the net
asset value per share, will normally differ for each class of shares. The redemption
value of your shares may be more or less than their original cost.
Payment for redeemed shares ordinarily is made in cash. It is forwarded by check, or
through AccountLink or by Federal Funds wire (as elected by the shareholder) within
seven days after the Transfer Agent receives redemption instructions in proper form.
However, under unusual circumstances determined by the Securities and Exchange
Commission, payment may be delayed or suspended. For accounts registered in the name
of a broker-dealer, payment will normally be forwarded within three business days
after redemption.
The Transfer Agent may delay processing any type of redemption payment as described under
"How to Sell Shares" for recently purchased shares, but only until the purchase
payment has cleared. That delay may be as much as 10 days from the date the shares
were purchased. That delay may be avoided if you purchase shares by Federal Funds
wire or certified check, or arrange with your bank to provide telephone or written
assurance to the Transfer Agent that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the Fund if the account value has
fallen below $200 for reasons other than the fact that the market value of shares has
dropped. In some cases, involuntary redemptions may be made to repay the Distributor
for losses from the cancellation of share purchase orders.

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

Federal regulations may require the Fund to obtain your name, your date of birth (for a
natural person), your residential street address or principal place of business and
your Social Security number, Employer Identification Number or other government
issued identification when you open an account. Additional information may be
required in certain circumstances or to open corporate accounts. The Fund or the
Transfer Agent may use this information to attempt to verify your identity. The Fund
may not be able to establish an account if the necessary information is not
received. The Fund may also place limits on account transactions while it is in the
process of attempting to verify your identity. Additionally, if the Fund is unable
to verify your identity after your account is established, the Fund may be required
to redeem your shares and close your account.
"Backup withholding" of federal income tax may be applied against taxable dividends,
distributions and redemption proceeds (including exchanges) if you fail to furnish
the Fund your correct, certified Social Security or Employer Identification Number
when you sign your application, or if you under-report your income to the Internal
Revenue Service.
To avoid sending duplicate copies of materials to households, the Fund will mail only one
copy of each prospectus, annual and semi-annual report and annual notice of the
Fund's privacy policy to shareholders having the same last name and address on the
Fund's records. The consolidation of these mailings, called householding, benefits
the Fund through reduced mailing expense.

If you want to receive multiple copies of these materials, you may call the Transfer
Agent at 1.800.225.5677. You may also notify the Transfer Agent in writing.
Individual copies of prospectuses, reports and privacy notices will be sent to you
commencing 30 days after the Transfer Agent receives your request to stop
householding.

Dividends, Capital Gains and Taxes

DIVIDENDS. The Fund intends to declare dividends separately for each class of shares from
net tax-exempt income and/or net taxable investment income each regular business day and to
pay those dividends monthly. Daily dividends will not be declared or paid on
newly-purchased shares until Federal Funds are available to the Fund from the purchase
payment for such shares.

The Fund attempts to pay dividends on Class A shares at a constant level. There is
no assurance that it will be able to do so. The Board of Trustees may change the targeted
dividend level at any time, without prior notice to shareholders. The amount of those
dividends and any other distributions paid on other classes of shares may vary over time,
depending on market conditions, the composition of the Fund's portfolio, and expenses borne
by the particular class of shares. Dividends and other distributions paid on Class A shares
will generally be higher than for Class B and Class C shares, which normally have higher
expenses than Class A. The Fund cannot guarantee that it will pay any dividends or other
distributions.

CAPITAL GAINS. Although the Fund does not seek capital gains, it may realize capital gains
on the sale of portfolio securities. If it does, it may make distributions out of any net
short-term or long-term capital gains of each year. The Fund may make supplemental
distributions of dividends and capital gains following the end of its fiscal year. There
can be no assurance that the Fund will pay any capital gains distributions in a particular
year. Long-term capital gains will be separately identified in the tax information the Fund
sends you after the end of the calendar year.

WHAT CHOICES DO YOU HAVE FOR RECEIVING DISTRIBUTIONS? When you open your account, specify
on your application how you want to receive your dividends and distributions. You have four
options:
Reinvest All Distributions in the Fund. You can elect to reinvest all dividends and capital
gains distributions in additional shares of the Fund.
Reinvest Dividends or Capital Gains. You can elect to reinvest some distributions
(dividends, short-term capital gains or long-term capital gains distributions) in the
Fund while receiving the other types of distributions by check or having them sent to
your bank account through AccountLink.
Receive All Distributions in Cash. You can elect to receive a check for all dividends and
capital gains distributions or have them sent to your bank through AccountLink.
Reinvest Your Distributions in Another OppenheimerFunds Account. You can reinvest all
distributions in the same class of shares of another OppenheimerFunds account you
have established.

TAXES. Dividends paid from net investment income earned by the Fund on municipal securities
will be excludable from gross income for federal income tax purposes. All or a portion of
the dividends paid by the Fund that are derived from interest paid on certain "private
activity bonds" may be an item of tax preference if you are subject to the federal
alternative minimum tax.

Dividends and capital gains distributions may be subject to federal, state or local
taxes. Any short-term capital gain distributions are taxable to you as ordinary income. Any
long-term capital gain distributions are taxable to you as long-term capital gains, no
matter how long you have owned shares in the Fund. The Fund may derive gains in part from
municipal obligations the Fund purchased below their principal or face values. All, or a
portion of these gains may be taxable to you as ordinary income rather than capital gains.
Whether you reinvest your distributions in additional shares or take them in cash, the tax
treatment is the same.

Exempt-interest dividends earned by residents of New Jersey should not be subject to
federal, state, or local income taxes. The portion of the Fund's dividends that are
attributable to income earned on other obligations (not New Jersey municipal securities)
will normally be subject to New Jersey personal income taxes.

Every year the Fund will send you and the IRS a statement showing the amount of any
taxable distribution you received in the previous year. The Fund will also send you a
separate statement summarizing the total distributions paid by the Fund.

The Fund intends each year to qualify as a "regulated investment company" under the
Internal Revenue Code, but reserves the right not to qualify. It qualified during its last
fiscal year. The Fund, as a regulated investment company, will not be subject to federal
income taxes on any of its income, provided that it satisfies certain income,
diversification and distribution requirements.

Remember, There May be Taxes on Transactions. Because the Fund's share prices fluctuate,
you may have a capital gain or loss when you sell or exchange your shares. A capital
gain or loss is the difference between the price you paid for the shares and the
price you received when you sold them. Any capital gain is subject to capital gains
tax.

Returns of Capital Can Occur. In certain cases, distributions made by the Fund may be
considered a non-taxable return of capital to shareholders. If that occurs, it will
be identified in notices to shareholders.

This information is only a summary of certain federal and state income tax
information about your investment. You should consult with your tax advisor about the
effect of an investment in the Fund on your particular tax situation.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's financial
performance for the past five fiscal years. Certain information reflects financial results
for a single Fund share. The total returns in the table represent the rate that an investor
would have earned (or lost) on an investment in the Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by KPMG LLP, the Fund's
independent registered public accounting firm, whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information, which is
available on request.

INFORMATION AND SERVICES

For More Information on Oppenheimer New Jersey Municipal Fund
The following additional information about the Fund is available without charge upon
request:

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information about
the Fund's investment policies, risks, and operations. It is incorporated by reference into
this Prospectus (which means it is legally part of this Prospectus).

ANNUAL AND SEMI-ANNUAL REPORTS. Additional information about the Fund's investments and
performance is available in the Fund's Annual and Semi-Annual Reports to shareholders. The
Annual Report includes a discussion of market conditions and investment strategies that
significantly affected the Fund's performance during its last fiscal year.

How to Get More Information
You can request the Statement of Additional Information, the Annual and Semi-Annual
Reports, the notice explaining the Fund's privacy policy and other information about the
Fund or your account:

------------------------------------------------------------------------------
By Telephone: Call OppenheimerFunds Services toll-free:

1.800.CALL OPP (225.5677)

------------------------------------------------------------------------------
------------------------------------------------------------------------------
By Mail: Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
------------------------------------------------------------------------------
------------------------------------------------------------------------------

On the Internet: You can request these documents by e-mail or
through the OppenheimerFunds website. You may
also read or download certain documents on the
OppenheimerFunds website at:

www.oppenheimerfunds.com
------------------------
------------------------------------------------------------------------------

Information about the Fund including the Statement of Additional Information can be
reviewed and copied at the SEC's Public Reference Room in Washington, D.C. Information on
the operation of the Public Reference Room may be obtained by calling the SEC at
1.202.942.8090. Reports and other information about the Fund are available on the EDGAR
database on the SEC's Internet website at www.sec.gov. Copies may be obtained after payment
-----------
of a duplicating fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov
or by writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.
No one has been authorized to provide any information about the Fund or to make any
representations about the Fund other than what is contained in this Prospectus. This
Prospectus is not an offer to sell shares of the Fund, nor a solicitation of an offer to
buy shares of the Fund, to any person in any state or other jurisdiction where it is
unlawful to make such an offer.

The Fund's shares are distributed by: [logo] OppenheimerFunds Distributor,
Inc.
The Fund's SEC File No. 811-5867

PR0395.001.0905
Printed on recycled paper

APPENDIX TO PROSPECTUS OF
Oppenheimer New Jersey Municipal Fund

Graphic Material included in the Prospectus of Oppenheimer New Jersey Municipal Fund:
"Annual Total Returns (Class A) (% as of December 31 each year)":

A bar chart will be included in the Prospectus of Oppenheimer New Jersey Municipal
Fund (the "Fund") depicting the annual total returns of a hypothetical investment in Class
A shares of the Fund for each of the ten most recent calendar years, without deducting
sales charges or taxes. Set forth below are the relevant data points that will appear on
the bar chart.

Calendar Oppenheimer New Jersey
Year Municipal Fund
Ended Class A Shares
----- --------------

12/31/95 14.42%
12/31/96 5.44%
12/31/97 9.52%
12/31/98 6.38%
12/31/99 -8.01%
12/31/00 9.38%
12/31/01 3.98%
12/31/02 9.44%
12/31/03 7.21%
12/31/04 8.53%

Oppenheimer Pennsylvania Municipal Fund



Prospectus dated November 28, 2005




                                          Oppenheimer Pennsylvania Municipal
                                          Fund is a mutual fund that seeks
                                          current income exempt from federal
                                          and Pennsylvania personal income
                                          taxes while attempting to preserve
                                          capital. It invests mainly in
                                          municipal securities.
                                             This Prospectus contains
                                          important information about the
                                          Fund's objective, its investment
                                          policies, strategies and risks.  It
                                          also contains important information
                                          about how to buy and sell shares of
                                          the Fund and other account
                                          features.  Please read this
                                          Prospectus carefully before you
As with all mutual funds, the             invest and keep it for future
Securities and Exchange Commission        reference about your account.
has not approved or disapproved the
Fund's securities nor has it
determined that this Prospectus is
accurate or complete.  It is a
criminal offense to represent
otherwise.

                                                                          1234





                                                       [OppenheimerFunds logo]







Contents
            About The Fund
------------------------------------------------------------------------------


            The  Fund's   Investment   Objective  and   Principal   Investment
Strategies


            Main Risks of Investing in the Fund

            The Fund's Past Performance

            Fees and Expenses of the Fund

            About the Fund's Investments

            How the Fund is Managed


            About Your Account
-------------------------------------------------------------------------------

            How to Buy Shares
            Class A Shares
            Class B Shares
            Class C Shares

            Special Investor Services
            AccountLink
            PhoneLink
            OppenheimerFunds Internet Website

            How to Sell Shares

            By Checkwriting
            By Mail
            By Telephone


            How to Exchange Shares

            Shareholder Account Rules and Policies

            Dividends, Capital Gains and Taxes

            Financial Highlights
------------------------------------------------------------------------------






About the Fund
------------------------------------------------------------------------------


The Fund's Investment Objective and Principal Investment Strategies


------------------------------------------------------------------------------
What Is The  Fund's  Investment  Objective?  The Fund seeks as high a level of
current interest income exempt from federal and  Pennsylvania  personal income
taxes as is available from municipal securities,  consistent with preservation
of capital.
------------------------------------------------------------------------------


What  Does  the Fund  Invest  In?  The Fund  invests  mainly  in  Pennsylvania
municipal  securities that pay interest  exempt from federal and  Pennsylvania
personal  income  taxes,  and from the  investment  income  tax of the  school
district of Philadelphia.  These securities  primarily include municipal bonds
(which  are debt  obligations  having a  maturity  of more  than one year when
issued), municipal notes (short-term obligations),  and interests in municipal
leases.  They also may include debt  obligations of the governments of certain
possessions,  territories  and  commonwealths  for the United  States or their
respective  agencies,  instrumentalities or authorities if the interest is not
subject to  Pennsylvania  personal  income tax or federal  personal income tax
(in the  opinion of bound  counsel to the issuer at the time the  security  is
issued).  Most of the  securities  the Fund  buys must be  "investment  grade"
(securities  rated in the four highest  rating  categories of national  rating
organizations,  such as Moody's Investors Services ("Moody's")),  although the
Fund  can  hold  lower-grade   securities  as  well  (sometimes  called  "Junk
Bonds").  Under normal market conditions,  the Fund attempts to invest 100% of
its assets in municipal  securities,  and as a fundamental  policy  invests at
least 80% of its net assets  (plus  borrowings  for  investment  purposes)  in
Pennsylvania  municipal  securities.  This includes  securities  that generate
income subject to the alternative minimum tax.


      The Fund does not limit its  investments  to  securities of a particular
maturity range, and may hold both short- and long- term  securities.  However,
it currently  focuses on longer-term  securities to seek higher yields.  These
investments  are more  fully  explained  in "About  the  Fund's  Investments,"
below.

      |X| How Do the  Portfolio  Managers  Decide  What  Securities  to Buy or
Sell?  In selecting  securities  for the Fund,  the  portfolio  managers  look
primarily throughout  Pennsylvania for municipal securities using a variety of
factors  that may  change  over  time and may vary in  particular  cases.  The
portfolio managers currently look for:
            |_|  Securities that provide high current income
|_|   A wide  range of  securities  of  different  issuers  within  the state,
               including different agencies and municipalities, to spread risk
|_|   Securities having favorable credit characteristics
|_|   Special situations that provide opportunities for value
|_|   Unrated bonds that might provide high income
|_|   Securities  of  smaller  issuers  that  might  be  overlooked  by  other
               investors and funds
|_|   Special situations of higher rated bonds that provide  opportunities for
               above average income with limited volatility.
|_|   Buying  issues  across a wide range of  municipal  sectors,  coupons and
               revenue sources.


Who Is the Fund  Designed For? The Fund is designed for  individual  investors
who are seeking income exempt from federal and  Pennsylvania  personal  income
taxes.  The Fund does not seek capital gains or growth.  Because it invests in
tax-exempt  securities,  the  Fund  is not  appropriate  for  retirement  plan
accounts or for investors  seeking capital growth.  The Fund is not a complete
investment program.

Main Risks of Investing in the Fund

      All investments  have risks to some degree.  The Fund's  investments are
subject to changes in their value from a number of factors,  described  below.
There is also the risk that poor security  selection by the Fund's  investment
Manager,  OppenheimerFunds,  Inc., will cause the Fund to  underperform  other
funds having a similar objective.

      These  risks  collectively  form  the risk  profile  of the Fund and can
affect the value of the Fund's investments,  its investment  performance,  and
the  prices  of its  shares.  These  risks  mean  that you can  lose  money by
investing  in the Fund.  When you redeem your  shares,  they may be worth more
or less  than  what you paid for  them.  There is no  assurance  that the Fund
will achieve its objective.

      |X| Credit  Risk.  Municipal  securities  are  subject  to credit  risk.
Credit  risk is the risk that the  issuer of a  municipal  security  might not
make  interest and  principal  payments on the security as they become due. If
the issuer fails to pay interest,  the Fund's income may be reduced and if the
issuer fails to repay principal,  the value of that security and of the Fund's
shares  may be  reduced.  Because  the Fund can  invest  as much as 25% of its
assets in municipal  securities  below investment grade to seek higher income,
the  Fund's  credit  risks  are  greater  than  those of  funds  that buy only
investment-grade  bonds.  A downgrade  in an issuer's  credit  rating or other
adverse  news about an issuer can  reduce  the market  value of that  issuer's
securities.

      |X| Interest Rate Risk.  Municipal  securities are debt  securities that
are subject to changes in value when  prevailing  interest rates change.  When
prevailing  interest  rates  fall,  the  values  of  already-issued  municipal
securities  generally rise.  When  prevailing  interest rates rise, the values
of already-issued  municipal securities generally fall, and the securities may
sell at a discount  from their  face  amount.  The  magnitude  of these  price
changes is  generally  greater  for bonds  with  longer  maturities.  The Fund
currently  focuses on longer-term  securities to seek higher income.  Callable
bonds the Fund buys are more  likely to be called  when  interest  rates fall,
and the  Fund  might  then  have to  reinvest  the  proceeds  of the  callable
instrument in other securities that have lower yields, reducing its income.


|X|   Tobacco Settlement Revenue Bonds.  The Fund may invest a significant
portion of its assets in tobacco settlement revenue 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 nearly all the
U.S. tobacco manufacturers (approximately 99% of the current combined market
share of tobacco manufacturers). 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. 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. A market share loss by the MSA companies to non-MSA
participating tobacco manufacturers would cause a downward adjustment in the
payment amounts. A participating manufacturer filing for bankruptcy also
could cause delays or reductions in bond payments. The MSA itself has been
subject to legal challenges and has, to date, withstood those challenges.
The Statement of Additional Information contains more detailed information
about the Fund's investments in tobacco settlement revenue bonds.

      |X|  Borrowing  for  Leverage.   The  Fund  can  borrow  from  banks  to
purchase  additional  securities,  a technique  referred to as  "leverage"  in
amounts up to one third of its total assets  (including  the amount  borrowed)
less all  liabilities  and  indebtedness  other than  borrowings.  It may also
borrow up to 5% of its total assets for  temporary  purposes  from any person.
This use of leverage  will  subject the Fund to greater  costs than funds that
do not borrow for  leverage,  and may also make the  Fund's  share  price more
sensitive  to interest  rate  changes.  The  interest on borrowed  money is an
expense that might reduce the Fund's yield.


      |X| Risks of  Non-Diversification.  The Fund is "non-diversified."  That
means that  compared  to funds that are  diversified,  it can invest a greater
portion of its assets in the  securities  of one issuer,  such as bonds issued
by the Commonwealth of Pennsylvania.  Having a higher percentage of its assets
invested in the securities of fewer issuers,  particularly  government issuers
of one state, could result in greater  fluctuations of the Fund's share prices
due to economic, regulatory or political problems in Pennsylvania.

      |X|   Risks  in  Using   Derivative   Investments.   The  Fund  can  use
derivatives to seek  increased  returns or to try to hedge  investment  risks.
In general  terms,  a derivative  investment is an investment  contract  whose
value  depends  on (or is  derived  from)  the value of an  underlying  asset,
interest rate or index.  "Inverse  floaters" are examples of  derivatives  the
Fund can use.

      If the issuer of the derivative  investment does not pay the amount due,
the Fund can lose money on its  investment.  Also, the underlying  security or
investment on which the derivative is based,  and the derivative  itself,  may
not perform the way the Manager expected it to perform.  If that happens,  the
Fund will get less income than expected or its share price could  decline.  To
try to  preserve  capital,  the Fund has  limits on the  amount of  particular
types of  derivatives it can hold.  However,  using  derivatives  can increase
the volatility of the Fund's share prices.  Some  derivatives may be illiquid,
making it difficult for the Fund to sell them quickly at an acceptable price.

      |X| Inverse  Floaters Have Special  Risks.  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 interest
rates rise,  inverse  floaters  produce less current income,  and their market
value  can  become  volatile.  Inverse  floaters  are a  type  of  "derivative
security."  Some  have a "cap,"  so that if  interest  rates  rise  above  the
"cap," the security  pays  additional  interest  income.  If rates do not rise
above the  "cap," the Fund will have paid an  additional  amount for a feature
that  proves  worthless.  The Fund will not invest  more than 20% of its total
assets in inverse floaters.

How  Risky Is the Fund  Overall?  The  value of the  Fund's  investments  will
change over time due to a number of factors.  They include  changes in general
bond market  movements,  the change in value of particular bonds because of an
event affecting the issuer,  or changes in interest rates that can affect bond
prices overall.  The Fund focuses its  investments in  Pennsylvania  municipal
securities  and is  non-diversified.  It will  therefore be  vulnerable to the
effects of economic  changes that affect  Pennsylvania  governmental  issuers.
These  changes can affect the value of the Fund's  investments  and its prices
per  share.  The  Fund's  focus on  longer-term  bonds and its use of  inverse
floaters  can  cause   fluctuations  in  the  Fund's  share  prices.   In  the
OppenheimerFunds  spectrum,  the Fund is more  conservative than some types of
taxable bond funds,  such as high yield bond funds, but has greater risks than
money market funds.

      An  investment  in the Fund is not a  deposit  of any  bank,  and is not
insured or  guaranteed by the Federal  Deposit  Insurance  Corporation  or any
other government agency.

The Fund's Past Performance

The bar chart and table  below show one measure of the risks of  investing  in
the Fund,  by  showing  changes  in the  Fund's  performance  (for its Class A
shares)  from year to year for the last 10  calendar  years and by showing how
the average annual total returns of the Fund's  shares,  both before and after
taxes,  compare to a broad-based  market index. The after-tax  returns for the
other classes of shares will vary.

The  after-tax  returns are shown for Class A shares  only and are  calculated
using the historical  highest  individual federal marginal income tax rates in
effect  during the  periods  shown,  and do not reflect the impact of state or
local taxes. In certain cases, the figure representing  "Return After Taxes on
Distributions  and Sale of Fund  Shares" may be higher  than the other  return
figures  for the  same  period.  A  higher  after-tax  return  results  when a
capital  loss  occurs  upon  redemption  and  translates  into an assumed  tax
deduction that benefits the shareholder.  The after-tax returns are calculated
based on certain assumptions  mandated by regulation and your actual after-tax
returns  may  differ  from  those  shown,  depending  on your  individual  tax
situation. The Fund's past investment performance,  before and after taxes, is
not necessarily an indication of how the Fund will perform in the future.


Annual Total Returns (Class A) (as of December 31 each year)


[See bar chart in Appendix to the Prospectus]

Sales  charges  and taxes are not  included in the  calculations  of return in
this bar chart, and if those charges and taxes were included,  the returns may
be less than those shown.


 For the period  from  1/1/05  through  6/30/05,  the  cumulative  return (not
annualized) before taxes for Class A shares was 7.54%.
During the period shown in the bar chart,  the highest return (not annualized)
before  taxes for a  calendar  quarter  was 7.22%  (1Qtr  '95) and the  lowest
return (not  annualized)  before taxes for a calendar quarter was -5.29% (2Qtr
'04).


--------------------------------------------------------------------------------
                                                                   10 Years
Average Annual Total Returns         1 Year         5 Years       (or Life of
for the periods ended December                                  Class if Less)

31, 2004

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class A Shares (inception

9/18/89)                              1.97%          7.21%           6.32%
Return Before Taxes                   1.97%          7.21%           6.32%
Return After Taxes on
Distributions                         3.24%          7.05%           6.25%
Return After Taxes on
Distributions and Sale of Fund
Shares

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Lehman Brothers Municipal Bond

Index (reflects no deduction          4.48%          7.20%         7.06(1)%
for fees, expenses or taxes)

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

                                      1.25%          7.15%           6.36%

Class B Shares (inception
5/3/93)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                                      5.16%          7.42%           5.38%

Class C Shares (inception
8/29/95)
--------------------------------------------------------------------------------
1.    From 12/31/93.

  The Fund's average annual total returns include the applicable sales
  charges: for Class A, the current maximum initial sales charge of 4.75%;
  for Class B, the contingent deferred sales charges of 5% (1-year) and 2%
  (5-years) and for Class C, the 1% contingent deferred sales charge for the
  1-year period.  Because Class B shares convert to Class A shares 72 months
  after purchase, Class B 10 Years performance does not include any
  contingent deferred sales charge and uses Class A performance for the
  period after conversion.  The returns measure the performance of a
  hypothetical account and assume that all dividends and capital gains
  distributions have been reinvested in additional shares.  The performance
  of the Fund's Class A shares is compared to the Lehman Brothers Municipal
  Bond Index, an unmanaged index of a broad range of investment grade
  municipal bonds.  The index includes municipal securities from many states
  while the Fund focuses on Pennsylvania municipal securities.  The index
  performance includes reinvestment of income but does not reflect
  transaction costs, fees, expenses or taxes. The Fund's investments vary
  from those in the index.


Fees and Expenses of the Fund


The following tables are meant to help you understand the fees and expenses
you may pay if you buy and hold shares of the Fund. The Fund pays a variety
of expenses directly for management of its assets, administration,
distribution of its shares and other services. Those expenses are subtracted
from the Fund's assets to calculate the Fund's net asset values per share.
All shareholders therefore pay those expenses indirectly. Shareholders pay
other expenses directly, such as sales charges and account transaction
charges. The numbers below are based on the Fund's expenses during its fiscal
year ended July 31, 2005.



 ------------------------------------------------------------------------------
 Shareholder Fees (charges paid directly from your investment):
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
                                 Class A Shares Class B Shares  Class C Shares
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Maximum Sales Charge (Load) on
 purchases (as a % of offering       4.75%           None            None
 price)
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Maximum Deferred Sales Charge
 (Load) (as % of the lower of
 the original offering price or     None(1)          5%(2)          1%(3)
 redemption proceeds)
 ------------------------------------------------------------------------------

-------------------------------------------------------------------------------
Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
                                    Class A    Class B Shares  Class C Shares
                                    Shares
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Management Fees                      0.54%          0.54%           0.54%

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Distribution and/or Service          0.14%          0.90%           0.90%
(12b-1) Fees
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Other Expenses                       0.13%          0.15%           0.15%

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

Total Annual Operating Expenses      0.81%          1.59%           1.59%

-------------------------------------------------------------------------------
1.  A  contingent   deferred   sales  charge  may  apply  to   redemptions  of
investments  of $1 million or more of Class A shares.  See "How to Buy Shares"
for details.

2.    Applies to  redemptions  in first year after  purchase.  The  contingent
   deferred  sales  charge  gradually  declines  from  5% to 1% in  years  one
   through six and is eliminated after that.

3.    Applies to shares redeemed within 12 months of purchase.


Expenses may vary in future years.  "Other  Expenses"  include  transfer agent
fees,  custodial  fees,  and accounting and legal expenses that the Fund pays.
The "Other  Expenses" in the table are based on, among other things,  the fees
the Fund  would  have paid if the  transfer  agent had not waived a portion of
its fees to  0.35%  of  average  daily  net  assets  per  fiscal  year for all
classes.  That undertaking may be amended or withdrawn at any time. The "other
expenses"  in the table  represent  the  expenses  incurred  during  the prior
fiscal year due to the expense limitation described above not being exceeded


Examples.  The  following  examples  are intended to help you compare the cost
of investing  in the Fund with the cost of  investing  in other mutual  funds.
The examples  assume that you invest  $10,000 in a class of shares of the Fund
for  the  time  periods   indicated,   and   reinvest   your   dividends   and
distributions.

      The first example  assumes that you redeem all of your shares at the end
of those  periods.  The second  example  assumes  you keep your  shares.  Both
examples also assume that your  investment  has a 5% return each year and that
the class's  operating  expenses  remain the same.  Your  actual  costs may be
higher  or  lower  because  expenses  will  vary  over  time.  Based  on these
assumptions your expenses would be as follows:

---------------------------------------------------------------------------------
If shares are redeemed:     1 year      3 years      5 years        10 years
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Class A Shares               $554         $722         $905          $1,433

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

Class B Shares               $663         $806        $1,072       $1,497(1)

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

Class C Shares               $263         $506         $872          $1,904

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

---------------------------------------------------------------------------------
If    shares    are   not   1 year      3 years      5 years        10 years
redeemed:
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Class A Shares               $554         $722         $905          $1,433

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

Class B Shares               $163         $506         $872        $1,497(1)

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

Class C Shares               $163         $506         $872          $1,904

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

In the first  example,  expenses  include the initial sales charge for Class A
and the applicable  Class B or Class C contingent  deferred sales charges.  In
the second example,  the Class A expenses include the sales charge,  but Class
B and Class C expenses do not include contingent deferred sales charges.
1.  Class B  expenses  for  years 7 through  10 are based on Class A  expenses
since Class B shares  automatically  convert to Class A shares 72 months after
purchase.


About the Fund's Investments

The Fund's  Principal  Investment  Policies and Risks.  The  allocation of the
Fund's  portfolio  among  different  types of investments  will vary over time
based on the Manager's  evaluation of economic and market  trends.  The Fund's
portfolio  might not always include all of the different  types of investments
described in this prospectus.

      The  Manager  tries to  reduce  risks by  selecting  a wide  variety  of
municipal investments and by carefully researching  securities before they are
purchased.  However,  changes  in  the  overall  market  prices  of  municipal
securities  and the  income  they pay can  occur at any  time.  The  yield and
share prices of the Fund will change  daily based on changes in market  prices
of securities,  interest rates and market  conditions and in response to other
economic  events.  The  Statement  of  Additional  Information  contains  more
detailed information about the Fund's investment policies and risks.

What is A Municipal  Security?  A municipal  security is essentially a loan by
the buyer to the issuer of the security.  The issuer  promises to pay back the
principal  amount of the loan and normally pays  interest  exempt from federal
personal income taxes.

      |X|  Municipal  Securities.  The Fund buys  municipal  bonds and  notes,
certificates of participation in municipal leases and other debt  obligations.
 These  debt  obligations  are issued by state  governments,  as well as their
political  subdivisions  (such as  cities,  towns  and  counties),  and  their
agencies and  authorities.  Pennsylvania  municipal  securities  are municipal
securities  that are not subject to  Pennsylvania  personal income tax (in the
opinion of bond counsel to the issuer).  They include debt obligations  issued
by the  Commonwealth  of  Pennsylvania  and its political  subdivisions.  They
also may include debt  obligations of the governments of certain  possessions,
territories  and  commonwealths  of the United  States if the  interest is not
subject to Pennsylvania personal income tax.


      The Fund can also buy other municipal securities issued by the
governments of the District of Columbia and of other states, or by any
commonwealths, territories or possessions of the United States, or their
respective agencies, instrumentalities or authorities, if the interest paid
on the security is not subject to federal personal income tax (in the opinion
of bond counsel to the issuer at the time the security is issued).   Under
highly unusual circumstances, the Internal Revenue Service may determine that
a municipal bond issued as tax-exempt should in fact be taxable. If the Fund
held such a bond, it might have to distribute taxable income or reclassify as
taxable income previously distributed as tax-free.


      Municipal  securities  are issued to raise money for a variety of public
or  private  purposes,   including   financing  state  or  local  governments,
financing  specific  projects  or  public  facilities.  The  Fund can buy both
long-term and short-term  municipal  securities.  Long-term  securities have a
maturity  of more than one year.  The Fund  generally  focuses on  longer-term
securities, to seek higher income.


      The Fund can buy municipal  securities  that are "general  obligations,"
which are secured by the issuer's pledge of its full faith,  credit and taxing
power  for the  payment  of  principal  and  interest.  The  Fund can also buy
"revenue  obligations,"  whose  interest  is  payable  only from the  revenues
derived  from a  particular  facility  or class of  facilities,  or a specific
excise tax or other revenue source such as, e.g.,  tobacco revenue  settlement
bonds.  Some of these revenue  obligations  are industrial  development  bonds
and private  activity  bonds that pay  interest  that may be a tax  preference
item for investors subject to the federal alternative minimum tax.


      |X|  Municipal  Lease  Obligations.  Municipal  leases are used by state
and local  government  authorities to obtain funds to acquire land,  equipment
or  facilities.  The Fund can invest in  certificates  of  participation  that
represent a  proportionate  interest in payments  made under  municipal  lease
obligations.  Most  municipal  leases,  while secured by the leased  property,
are not general  obligations of the issuing  municipality.  They often contain
"non-appropriation"  clauses  under  which  the  municipal  government  has no
obligation to make lease or installment  payments in future years unless money
is  appropriated  on a yearly basis.  If the government  stops making payments
or transfers  its payment  obligations  to a private  entity,  the  obligation
could lose value or become taxable.  Some lease  obligations might not have an
active trading  market,  making it difficult for the Fund to sell them quickly
at an acceptable price.

      |X|  Ratings  of  Municipal  Securities  the  Fund  Buys.  Most  of  the
municipal  securities  the Fund  buys are  "investment  grade"  at the time of
purchase.  The Fund  does not  invest  more  than 25% of its  total  assets in
municipal    securities    that   at   the   time   of   purchase    are   not
"investment-grade."  Securities  that are rated below  "investment  grade" are
those rated  below "Baa" by Moody's,  or lower than "BBB" by Standard & Poor's
Rating Services,  or comparable ratings by other nationally  recognized rating
organizations,  or (if  unrated)  judged by the  Manager to be  comparable  to
rated  investment  grade  securities.  Rating  categories are described in the
Statement  of  Additional  Information.  If a  security  the Fund  buys is not
rated,  the Manager  will use its judgment to assign a rating that it believes
is comparable to that of a rating organization.

      The  Manager  relies  to some  extent on credit  ratings  by  nationally
recognized  rating  organizations  in evaluating the credit risk of securities
selected  for  the  Fund's  portfolio.  It also  uses  its  own  research  and
analysis to evaluate  risks.  Many factors affect an issuer's  ability to make
timely  payments,  and the credit  risks of a  particular  security may change
over  time.  If the rating of a  security  is reduced  after the Fund buys it,
the Fund is not required  automatically to dispose of that security.  However,
the Manager will evaluate those  securities to determine  whether to keep them
in the Fund's portfolio.

      The Fund can  invest a  significant  portion  of its  assets in  unrated
securities.  Some of these unrated  securities  may not have an active trading
market,  which  means  that the Fund might have  difficulty  valuing  them and
selling them promptly at an acceptable price.

      |X|  Special   Credit  Risks  of   Lower-Grade   Securities.   Municipal
securities  below  investment-grade  (sometimes  called "junk bonds")  usually
offer  higher  yields  than  investment-grade  securities  but are  subject to
greater  price  fluctuations  and risks of loss of income and  principal  than
investment-grade  municipal  securities.  Securities  that are (or  that  have
fallen)  below  investment  grade have a greater risk that the issuers may not
meet   their   debt   obligations.   They  may  also  be  less   liquid   than
investment-grade  securities  making it harder for the Fund to sell them at an
acceptable price.

      |X| Floating  Rate/Variable Rate Obligations.  Some municipal securities
have variable or floating  interest  rates.  Variable  rates are adjustable at
stated  periodic   intervals.   Floating  rates  are  automatically   adjusted
according  to a  specified  market  rate  for  such  investments,  such as the
percentage  of the  prime  rate of a bank,  or the  ninety-one  (91)  day U.S.
Treasury Bill rate.

Can the Fund's Investment  Objective and Policies Change?  The Fund's Board of
Trustees can change  non-fundamental  policies without  shareholder  approval,
although   significant  changes  will  be  described  in  amendments  to  this
Prospectus.  Fundamental  policies cannot be changed without the approval of a
majority  of the Fund's  outstanding  voting  shares.  The  Fund's  investment
objective is a fundamental  policy.  Other  investment  restrictions  that are
fundamental  policies are listed in the Statement of  Additional  Information.
An investment  policy or technique is not  fundamental  unless this Prospectus
or the Statement of Additional Information says that it is.

Other  Investment  Strategies.  To seek its  objective,  the Fund can also use
the investment  techniques and strategies  described  below. The Manager might
not  always  use all of the  different  types of  techniques  and  investments
described below.  These techniques  involve risks,  although some are designed
to help reduce overall investment or market risk.

      |X|  "When-Issued"  and "Delayed  Delivery"  Transactions.  The Fund can
purchase  municipal  securities on a  "when-issued"  basis and can purchase or
sell such securities on a "delayed  delivery" basis.  Between the purchase and
settlement,  no payment is made for the  security  and no interest  accrues to
the  buyer  from  the  investment.  There is a risk of loss to the Fund if the
value of the when-issued security declines prior to the settlement date.

      |X| Puts and  Stand-By  Commitments.  The  Fund  can  acquire  "stand-by
commitments" or "puts" with respect to municipal  securities.  The investments
give the Fund the  right to sell  securities  at a set  price on demand to the
issuing  broker-dealer  or bank.  However,  a security having this feature may
have a lower  interest  rate.  The Fund will acquire  stand-by  commitments or
puts solely to enhance portfolio liquidity.

      |X|  Illiquid and  Restricted  Securities.  Investments  may be illiquid
because of the absence of an active  trading  market,  making it  difficult to
value them or dispose of them  promptly  at an  acceptable  price.  Restricted
securities  may have terms that limit their  resale to other  investors or may
require  registration  under federal  securities  laws before they can be sold
publicly.  The Fund  will  not  invest  more  than  15% of its net  assets  in
illiquid  securities  and  cannot  invest  more than 10% of its net  assets in
restricted  securities.  Certain  restricted  securities that are eligible for
resale  to  qualified  institutional  purchasers  may not be  subject  to that
limit.  The Manager  monitors  holdings of illiquid  securities  on an ongoing
basis  to  determine  whether  to  sell  any  holdings  to  maintain  adequate
liquidity.

      |X|  Hedging.  The Fund can  purchase  and sell  derivatives  for use as
"hedging   instruments."  The  Fund  does  not  use  hedging  instruments  for
speculative  purposes,  and has  limits on its use of them.  The Fund does not
use hedging  instruments  to a  substantial  degree and is not required to use
them in seeking its investment objective.

      Hedging  involves  risks.  If the Manager uses a hedging  instrument  at
the wrong time or judges  market  conditions  incorrectly,  the hedge might be
unsuccessful  and the strategy could reduce the Fund's return.  The Fund could
also  experience  losses if the prices of its futures  and  options  positions
were not correlated with its other  investments or if it could not close out a
position because of an illiquid market for the future or option.


Portfolio Turnover. A change in the securities held by the Fund is known as
"portfolio turnover." The Fund can engage in active and frequent trading to
try to achieve its objective, and may have a high portfolio turnover rate
(for example, over 100%).  While increased portfolio turnover creates higher
brokerage and transaction costs for the (and may reduce performance), in most
cases the Fund does not pay brokerage commissions on debt securities it buys.
If the Fund realizes capital gains when it sells its portfolio investments,
it generally must pay those gains out to shareholders, increasing their
taxable distributions. The Financial Highlights table at the end of this
Prospectus shows the Fund's portfolio turnover rates during recent prior
fiscal years.

Temporary  Defensive  and Interim  Investments.  In times of unstable  adverse
market,  political or economic  conditions,  the Fund can invest up to 100% of
its total  assets in temporary  defensive  investments  that are  inconsistent
with  the  Fund's  principal  investment  strategies.  Generally,  the  Fund's
defensive  investments will be short-term municipal  securities,  but could be
U.S.  government  securities or highly-rated  corporate debt  securities.  The
income from some temporary defensive investments might not be tax-exempt,  and
therefore  when  making  those  investments  the Fund  might not  achieve  its
objective.


      Under normal  market  conditions,  the Fund can also hold these types of
investments  for cash management  purposes  pending the investment of proceeds
from the sale of Fund shares or portfolio  securities  or to meet  anticipated
redemptions of Fund shares.


PORTFOLIO   HOLDINGS.   The  Fund's   portfolio   holdings   are  included  in
semi-annual  and annual reports that are  distributed to  shareholders  of the
Fund  within 60 days after the close of the  period  for which such  report is
being made. The Fund also  discloses its portfolio  holdings in its Statements
of  Investments  on Form N-Q,  which are filed  with the SEC no later  than 60
days after the close of its first and third fiscal  quarters.  These  required
filings are publicly  available at the SEC.  Therefore,  portfolio holdings of
the Fund are made publicly  available no later than 60 days after the close of
each of the Fund's fiscal quarters.

A  description  of the Fund's  policies  and  procedures  with  respect to the
disclosure  of the Fund's  portfolio  securities  is  available  in the Fund's
Statement of Additional Information.


How the Fund is Managed

The  Manager.   OppenheimerFunds,   Inc.,  the  Manager,  chooses  the  Fund's
investments and handles its day-to-day  business.  The Manager carries out its
duties,  subject to certain  policies  established  by the Board of  Trustees,
under  an   investment   advisory   agreement   that   states  the   Manager's
responsibilities.  The  agreement  sets the fees the Fund pays to the  Manager
and describes the expenses that the Fund is  responsible to pay to conduct its
business.


      The Manager has operated as an  investment  advisor  since January 1960.
The Manager and its subsidiaries and controlled  affiliates  managed more than
$180 billion in assets as of June 30, 2005,  including other Oppenheimer funds
with more than 7 million shareholder  accounts.  The Manager is located at Two
World Financial Center, 11th Floor, New York, New York 10281-1008.

      |X| Advisory Fees.  Under the investment  advisory  agreement,  the Fund
pays the  Manager  an  advisory  fee at an annual  rate that  declines  as the
Fund's  assets  grow:  0.60% of the first $200  million of average  annual net
assets, 0.55% of the next $100 million,  0.50% of the next $200 million, 0.45%
of the next  $250  million,  0.40%  of the next  $250  million,  and  0.35% of
average  annual net  assets in excess of $1  billion.  The  Fund's  management
fees for its last  fiscal  year  ended  July 31,  2005,  was 0.54% of  average
annual net assets for each class of shares.


A discussion regarding the basis for the Board of Trustees' approval of
the Fund's investment advisory contract is available in the Fund's
Annual Report to shareholders for the year ended July 31, 2005.

     Portfolio Managers.   The Fund's portfolio is managed by a team of
     investment professionals, including Ronald H. Fielding, Daniel G.
     Loughran, Scott Cottier and Troy Willis, who are primarily responsible
     for the day-to-day management of the Fund's investments.

     Mr. Fielding has been a Senior Portfolio Manager of the Fund since July
     2002.  Mr. Fielding has been a Senior Vice President of the Manager
     since January 1996 and Chairman of the Rochester Division of the Manager
     since January 1996.  He is a portfolio manager and officer of other
     funds in the OppenheimerFunds complex.  Mr. Fielding is the team leader
     and lead manager and a trader for the Fund.

     Mr. Loughran has been a Portfolio Manager of the Fund since April 2001.
     Mr. Loughran has been a Vice President of the Manager since April 2001
     and has been a portfolio manager with the Manager since 1999.  He is a
     portfolio manager of other funds in the OppenheimerFunds complex.  Mr.
     Loughran is both a portfolio manager and a trader for the Fund.

     Mr. Cottier has been a Portfolio Manager of the Fund since 2002.  Mr.
     Cottier has been a Vice President of the Manager since 2002.  Prior to
     joining the Manager in 2002, Mr. Cottier was a portfolio manager and
     trader at Victory Capital Management from 1999 to 2002.  He is a
     portfolio manager of other funds in the OppenheimerFunds complex.  Mr.
     Cottier is both a portfolio manager and a trader for the Fund.

     Mr. Willis has been an Associate Portfolio Manager of both the Fund and
     the Manager since 2003.  Prior to joining the Manager in 2003, Mr.
     Willis was a Corporate Attorney for Southern Resource Group from 1999 to
     2003.  He is an associate portfolio manager of other funds in the
     OppenheimerFunds complex. Mr. Willis is both an associate portfolio
     manager and a trader for the Fund.

     Additional information about the Fund's Portfolio Management Team,
     regarding compensation, other accounts managed and their ownership
     of Fund shares, is provided in the Statement of Additional
     Information.


Pending Litigation.  A consolidated amended complaint has been filed as
putative derivative and class actions against the Manager, Distributor
and Transfer Agent, as well as 51 of the Oppenheimer funds (collectively
the "funds") including the Fund, 30 present and former Directors or
Trustees and 8 present and former officers of certain 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 fund assets to make those payments in violation of
the Investment Company Act and the Investment Advisers Act of 1940.
Also, like those complaints, the complaint alleges that by permitting
and/or participating in those actions, the Directors/Trustees and the
officers breached their fiduciary duties to Fund shareholders under the
Investment Company Act 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.

The  defendants  believe the claims  asserted in these law suits to be without
merit,  and  intend  to defend  the  suits  vigorously.  The  Manager  and the
Distributor  do not  believe  that the  pending  actions  are likely to have a
material  adverse  effect on the Fund or on their  ability  to  perform  their
respective investment advisory or distribution agreements with the Fund.


 ABOUT YOUR ACCOUNT

How to Buy Shares

You can buy shares several ways, as described below. The Fund's Distributor,
OppenheimerFunds Distributor, Inc., may appoint servicing agents to accept
purchase (and redemption) orders. The Distributor, in its sole discretion,
may reject any purchase order for the Fund's shares.

Buying Shares Through Your Dealer. You can buy shares through any dealer,
      broker or financial institution that has a sales agreement with the
      Distributor. Your dealer will place your order with the Distributor on
      your behalf. A broker or dealer may charge for that service.

Buying Shares Through the Distributor. Complete an OppenheimerFunds New
      Account Application and return it with a check payable to
      "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box 5270, Denver,
      Colorado 80217. If you do not list a dealer on the application, the
      Distributor will act as your agent in buying the 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.  However, we recommend that you discuss your investment
      with a financial advisor before you make a purchase to be sure that the
      Fund is appropriate for you.

o     Paying by Federal Funds Wire. Shares purchased through the Distributor
      may be paid for by Federal Funds wire. The minimum investment is
      $2,500. Before sending a wire, call the Distributor's Wire Department
      at 1.800.225.5677 to notify the Distributor of the wire and to receive
      further instructions.
o     Buying Shares Through OppenheimerFunds AccountLink. With AccountLink,
      you pay for shares by electronic funds transfers from your bank
      account. Shares are purchased for your account by a transfer of money
      from your bank account through the Automated Clearing House (ACH)
      system. You can provide those instructions automatically, under an
      Asset Builder Plan, described below, or by telephone instructions using
      OppenheimerFunds PhoneLink, also described below. Please refer to
      "AccountLink," below for more details.

o     Buying Shares Through Asset Builder Plans. You may purchase shares of
      the Fund automatically each month from your account at a bank or other
      financial institution under an Asset Builder Plan with AccountLink.
      Details are in the Asset Builder application and the Statement of
      Additional Information.


WHAT IS THE MINIMUM AMOUNT YOU MUST INVEST? In most cases, you can buy Fund
shares with a minimum initial investment of $1,000 and make additional
investments at any time with as little as $50. There are reduced minimums
available under the following special investment plans:
o     By using an Asset Builder Plan or Automatic Exchange Plan (details are
      in the Statement of Additional Information), or government allotment
      plan, you can make subsequent investments (after making the initial
      investment of $500) for as little as $50. For any type of account
      established under one of these plans prior to November 1, 2002, the
      minimum additional investment will remain $25.
o     The minimum investment requirement does not apply to reinvesting
      dividends from the Fund or other Oppenheimer funds (a list of them
      appears in the Statement of Additional Information, or you can ask your
      dealer or call the Transfer Agent), or reinvesting distributions from
      unit investment trusts that have made arrangements with the Distributor.

AT WHAT PRICE ARE SHARES SOLD? Shares are sold at their offering price which
is the net asset value per share plus any initial sales charge that applies.
The offering price that applies to a purchase order is based on the next
calculation of the net asset value per share that is made after the
Distributor receives the purchase order at its offices in Colorado, or after
any agent appointed by the Distributor receives the order.


Net Asset Value. The Fund calculates the net asset value of each class of
      shares as of the close of the New York Stock Exchange ("the NYSE"), on
      each day the NYSE is open for trading (referred to in this Prospectus
      as a "regular business day"). The NYSE normally closes at 4:00 p.m.,
      Eastern time, but may close earlier on some days. All references to
      time in this Prospectus mean "Eastern time."

            The net asset value per share for a class of shares on a "regular
      business day" is determined by dividing the value of the Fund's net
      assets attributable to that class by the number of shares of that class
      outstanding on that day.  To determine net asset values, the Fund
      assets are valued primarily on the basis of current market quotations.
      If market quotations are not readily available or do not accurately
      reflect fair value for a security (in the Manager's judgment) or if a
      security's value has been materially affected by events occurring after
      the close of the NYSE or market on which the security is principally
      traded, that security may be valued by another method that the Board of
      Trustees believes accurately reflects the fair value.


            The Board has adopted valuation procedures for the Fund and has
      delegated the day-to-day responsibility for fair value determinations
      to the Manager's Valuation Committee.  Fair value determinations by the
      Manager are subject to review, approval and ratification by the Board
      at its next scheduled meeting after the fair valuations are
      determined.  In determining whether current market prices are readily
      available and reliable, the Manager monitors the information it
      receives in the ordinary course of its investment management
      responsibilities for significant events that it believes in good faith
      will affect the market prices of the securities of issuers held by the
      Fund.  Those may include events affecting specific issuers (for
      example, a halt in trading of the securities of an issuer on an
      exchange during the trading day) or events affecting securities markets
      (for example, a foreign securities market closes early because of a
      natural disaster).

            If, after the close of the principal market on which a security
      held by the Fund is traded and before the time as of which the Fund's
      net asset values are calculated that day, a significant event occurs
      that the Manager learns of and believes in the exercise of its judgment
      will cause a material change in the value of that security from the
      closing price of the security on the principal market on which it is
      traded, the Manager will use its best judgment to determine a fair
      value for that security.

            The Manager believes that foreign securities values may be
      affected by volatility that occurs in U.S. markets on a trading day
      after the close of foreign securities markets.  The Manager's fair
      valuation procedures therefore include a procedure whereby foreign
      securities prices may be "fair valued" to take those factors into
      account.


The Offering Price. To receive the offering price for a particular day, the
      Distributor or its designated agent must receive your order by the time
      the NYSE closes that day. If your order is received on a day when the
      NYSE is closed or after it has closed, the order will receive the next
      offering price that is determined after your order is received.
Buying Through a Dealer. If you buy shares through a dealer, your dealer must
      receive the order by the close of the NYSE and transmit it to the
      Distributor so that it is received before the Distributor's close of
      business on a regular business day (normally 5:00 p.m.) to receive that
      day's offering price, unless your dealer has made alternative
      arrangements with the Distributor. Otherwise, the order will receive
      the next offering price that is determined.


------------------------------------------------------------------------------
WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund offers investors three
different classes of shares.  The different classes of shares represent
investments in the same portfolio of securities, but the classes are subject
to different expenses and will likely have different share prices. When you
buy shares, be sure to specify the class of shares. If you do not choose a
class, your investment will be made in Class A shares.
------------------------------------------------------------------------------
------------------------------------------------------------------------------

------------------------------------------------------------------------------
------------------------------------------------------------------------------
Class A Shares. If you buy Class A shares, you pay an initial sales charge
      (on investments up to $1 million). The amount of that sales charge will
      vary depending on the amount you invest. The sales charge rates are
      listed in "How Can You Buy Class A Shares?" below.
------------------------------------------------------------------------------
Class B Shares. If you buy Class B shares, you pay no sales charge at the
      time of purchase, but you will pay an annual asset-based sales charge.
      If you sell your shares within 6 years of buying them, you will
      normally pay a contingent deferred sales charge. That contingent
      deferred sales charge varies depending on how long you own your shares,
      as described in "How Can You Buy Class B Shares?" below.
------------------------------------------------------------------------------
Class C Shares. If you buy Class C shares, you pay no sales charge at the
      time of purchase, but you will pay an annual asset-based sales charge.
      If you sell your shares within 12 months of buying them, you will
      normally pay a contingent deferred sales charge of 1.0%, as described
      in "How Can You Buy Class C Shares?" below.
------------------------------------------------------------------------------

WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
best suited to your needs depends on a number of factors that you should
discuss with your financial advisor. Some factors to consider are how much
you plan to invest and how long you plan to hold your investment. If your
goals and objectives change over time and you plan to purchase additional
shares, you should re-evaluate those factors to see if you should consider
another class of shares. The Fund's operating costs that apply to a class of
shares and the effect of the different types of sales charges on your
investment will vary your investment results over time.

      The discussion below is not intended to be investment advice or a
recommendation, because each investor's financial considerations are
different. The discussion below assumes that you will purchase only one class
of shares and not a combination of shares of different classes. Of course,
these examples are based on approximations of the effects of current sales
charges and expenses projected over time, and do not detail all of the
considerations in selecting a class of shares. You should analyze your
options carefully with your financial advisor before making that choice.

How Long Do You Expect to Hold Your Investment? While future financial needs
      cannot be predicted with certainty, knowing how long you expect to hold
      your investment will assist you in selecting the appropriate class of
      shares. Because of the effect of class-based expenses, your choice will
      also depend on how much you plan to invest. For example, the reduced
      sales charges available for larger purchases of Class A shares may,
      over time, offset the effect of paying an initial sales charge on your
      investment, compared to the effect over time of higher class-based
      expenses on shares of Class B or Class C.

   o  Investing for the Shorter Term. While the Fund is meant to be a
      long-term investment, if you have a relatively short-term investment
      horizon (that is, you plan to hold your shares for not more than six
      years), you should most likely purchase Class A or Class C shares
      rather than Class B shares. That is because of the effect of the Class
      B contingent deferred sales charge if you redeem within six years, as
      well as the effect of the Class B asset-based sales charge on the
      investment return for that class in the short-term. Class C shares
      might be the appropriate choice (especially for investments of less
      than $100,000), because there is no initial sales charge on Class C
      shares, and the contingent deferred sales charge does not apply to
      amounts you sell after holding them one year.

      However, if you plan to invest more than $100,000 for the shorter term,
      then as your investment horizon increases toward six years, Class C
      shares might not be as advantageous as Class A shares. That is because
      the annual asset-based sales charge on Class C shares will have a
      greater impact on your account over the longer term than the reduced
      front-end sales charge available for larger purchases of Class A
      shares.


      If you invest $1 million or more, in most cases Class A shares will be
      the most advantageous choice, no matter how long you intend to hold
      your shares.  The Distributor  will not accept purchase orders of
      $100,000 or more of Class B shares or $1 million or more of Class C
      shares from a single investor. Dealers or other financial
      intermediaries purchasing shares for their customers in omnibus
      accounts are responsible for compliance with those limits.


o     Investing for the Longer Term.  If you are investing  less than $100,000
      for the  longer-term,  for example for retirement,  and do not expect to
      need  access to your money for seven  years or more,  Class B shares may
      be appropriate.

Are There  Differences  in Account  Features  That Matter to You? Some account
      features  may not be  available  to  Class B and  Class C  shareholders.
      Other  features  may not be  advisable  (because  of the  effect  of the
      contingent  deferred sales charge) for Class B and Class C shareholders.
      Therefore,  you  should  carefully  review  how  you  plan  to use  your
      investment account before deciding which class of shares to buy.

      Additionally, the dividends payable to Class B and Class C shareholders
      will be reduced by the additional expenses borne by those classes that
      are not borne by Class A shares, such as the Class B and Class C
      asset-based sales charge described below and in the Statement of
      Additional Information. Also, checkwriting is not available on accounts
      subject to a contingent deferred sales charge.

How Do Share Classes Affect Payments to Your Broker? A financial advisor may
      receive different compensation for selling one class of shares than for
      selling another class. It is important to remember that Class B and
      Class C contingent deferred sales charges and asset-based sales charges
      have the same purpose as the front-end sales charge on sales of Class A
      shares: to compensate the Distributor for concessions and expenses it
      pays to dealers and financial institutions for selling shares. The
      Distributor may pay additional compensation from its own resources to
      securities dealers or financial institutions based upon the value of
      shares of the Fund owned by the dealer or financial institution for its
      own account or for its customers.


HOW CAN YOU BUY CLASS A SHARES?  Class A shares are sold at their offering
price, which is normally net asset value plus an initial sales charge.
However, in some cases, described below, purchases are not subject to an
initial sales charge, and the offering price will be the net asset value. In
other cases, reduced sales charges may be available, as described below or in
the Statement of Additional Information.  Out of the amount you invest, the
Fund receives the net asset value to invest for your account.

      The sales charge varies depending on the amount of your purchase.  A
portion of the sales charge may be retained by the Distributor or allocated
to your dealer as concession. The Distributor reserves the right to reallow
the entire concession to dealers. The current sales charge rates and
concessions paid to dealers and brokers are as follows:








 ------------------------------------------------------------------------------
 Amount of Purchase       Front-End Sales  Front-End Sales   Concession As
                                           Charge As a
                          Charge As a      Percentage of
                          Percentage of    Net               Percentage of
                          Offering Price   Amount Invested   Offering Price
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Less than $50,000             4.75%             4.98%             4.00%
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $50,000 or more but           4.50%             4.71%             4.00%
 less than $100,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $100,000 or more but          3.50%             3.63%             3.00%
 less than $250,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $250,000 or more but          2.50%             2.56%             2.25%
 less than $500,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $500,000 or more but          2.00%             2.04%             1.80%
 less than $1 million
 ------------------------------------------------------------------------------

Due to rounding, the actual sales charge for a particular transaction may be
higher or lower than the rates listed above.

SPECIAL SALES CHARGE ARRANGEMENTS AND WAIVERS.  Appendix C to the Statement
of Additional Information details the conditions for the waiver of sales
charges that apply in certain cases and the special sales charge rates that
apply to purchases of shares of the Fund by certain groups, or in other
special types of transactions. To receive a waiver or special sales charge
rate, you must advise the Distributor when purchasing shares or the Transfer
Agent when redeeming shares that a special condition applies.

Can You Reduce Class A Sales Charges?  You and your spouse may be eligible to
buy Class A shares of the Fund at reduced sales charge rates set forth in the
table above under the Fund's "Right of Accumulation" or a "Letter of Intent."
The Fund reserves the right to modify or to cease offering these programs at
any time.

o     Right of Accumulation. To qualify for the reduced Class A sales charge
         that would apply to a larger purchase than you are currently
         making (as shown in the table above), you can add the value of
         any Class A, Class B or, Class C shares of the Fund or other
         Oppenheimer funds that you or your spouse currently own, or
         are currently purchasing, to the value of your Class A share
         purchase. Your Class A shares of Oppenheimer Money Market
         Fund, Inc. or Oppenheimer Cash Reserves on which you have not
         paid a sales charge will not be counted for this purpose.  In
         totaling your holdings, you may count shares held in your
         individual accounts (including IRAs and 403(b) plans), your
         joint accounts with your spouse, or accounts you or your
         spouse hold as trustees or custodians on behalf of your
         children who are minors. A fiduciary can count all shares
         purchased for a trust, estate or other fiduciary account that
         has multiple accounts (including employee benefit plans for
         the same employer).  If you are buying shares directly from
         the Fund, you must inform the Distributor of your eligibility
         and holdings at the time of your purchase in order to qualify
         for the Right of Accumulation. If you are buying shares
         through your financial intermediary you must notify your
         intermediary of your eligibility for the Right of Accumulation
         at the time of your purchase.

            To count shares of eligible Oppenheimer funds held in
         accounts at other intermediaries under this Right of
         Accumulation, you may be requested to provide the Distributor
         or your current intermediary with a copy of all account
         statement showing your current holdings of the Fund or other
         eligible Oppenheimer funds, including statements for accounts
         held by you and your spouse or in retirement plans or trust or
         custodial accounts for minor children as described above. The
         Distributor or intermediary through which you are buying
         shares will calculate the value of all your eligible
         Oppenheimer fund shares based on the current offering price,
         to determine which Class A sales charge rate you qualify for
         on your current purchase.

o     Letters of Intent. You may also qualify for reduced Class A sales
         charges by submitting a Letter of Intent to the Distributor.
         A Letter of Intent is a written statement of your intention to
         purchase a specified value of Class A, Class B or Class C
         shares of the Fund or other Oppenheimer funds over a 13-month
         period. The total amount of your intended purchases of Class
         A, Class B and Class C shares will determine the reduced sales
         charge rate that will apply to your Class A share of the
         purchases of the Fund during that period. You can choose to
         include purchases made up to 90 days before the date that you
         submit a Letter.   Your Class A shares of Oppenheimer Money
         Market Fund or Oppenheimer Cash Reserves on which you have not
         paid a sales charge will not be counted for this purpose.
         Submitting a Letter of Intent does not obligate you to
         purchase the specified amount of shares.  You may also be able
         to apply the Right of Accumulation to these purchases.

            If you do not complete the Letter of Intent, the front-end
         sales charge you paid on your purchases will be recalculated
         to reflect the actual value of shares you purchased.  A
         certain portion of your shares will be held in escrow by the
         Fund's Transfer Agent for this purpose.  Please refer to "How
         to Buy Shares - Letters of Intent" in the Fund's Statement of
         Additional Information for more complete information.


Other Special Sales Charge Arrangements and Waivers.  The Fund and the
Distributor offer other opportunities to purchase shares without
front-end or contingent deferred sales charges under the programs
described below. The Fund reserves the right to amend or discontinue
these programs at any time without prior notice.

o     Dividend Reinvestment.  Dividends and/or capital gains distributions
         received by a shareholder from the Fund may be reinvested in
         shares of the Fund or any of the other Oppenheimer funds
         without sales charge, at the net asset value per share in
         effect on the payable date. You must notify the Transfer Agent
         in writing to elect this option and must have an existing
         account in the fund selected for reinvestment.
o     Exchanges of Shares.  Shares of the Fund may be exchanged for shares of
         certain other Oppenheimer funds at net asset value per share
         at the time of exchange, without sales charge, and shares of
         the Fund can be purchased by exchange of shares of certain
         other Oppenheimer funds on the same basis. Please refer to
         "How to Exchange Shares" in this Prospectus and in the
         Statement of Additional Information for more details,
         including a discussion of circumstances in which sales charges
         may apply on exchanges.
o     Reinvestment Privilege.  Within six months of a redemption of certain
         Class A and Class B shares, the proceeds may be reinvested in
         Class A shares of the Fund without sales charge. This
         privilege applies to redemptions of Class A shares that were
         subject to an initial sales charge or Class A or Class B
         shares that were subject to a contingent deferred sales charge
         when redeemed. The investor must ask the Transfer Agent for
         that privilege at the time of reinvestment and must identify
         the account from which the redemption was made.

o     Other Special Reductions and Waivers. The Fund and the Distributor
         offer additional arrangements to reduce or eliminate front-end
         sales charges or to waive contingent deferred sales charges
         for certain types of transactions and for certain classes of
         investors (primarily retirement plans that purchase shares in
         special programs through the Distributor). These are described
         in greater detail in Appendix C to the Statement of Additional
         Information, which may be ordered by calling 800.225.5677 or
         through the OppenheimerFunds website, at
         www.oppenheimerfunds.com follow the hyperlinks: "Access
         ------------------------
         Accounts and Services" - "Forms & Literature" - "Order
         Literature" - Statements of Additional Information").  A
         description of these waivers and special sales charge
         arrangements is also available for viewing on the
         OppenheimerFunds website (follow the hyperlinks: "Research
         Funds" - "Fund Documents" - "View a description...").  To
         receive a waiver or special sales charge rate under these
         programs, the purchaser must notify the Distributor (or other
         financial intermediary through which shares are being
         purchased) at the time of purchase, or notify the Transfer
         Agent at the time of redeeming shares for those waivers that
         apply to contingent deferred sales charges.


Class A Contingent Deferred Sales Charge. There is no initial sales charge on
      purchases of Class A shares of any one or more of the Oppenheimer funds
      aggregating $1 million or more. The Distributor pays dealers of record
      concessions in an amount equal to 0.50% of purchases of $1 million or
      more (other than purchases by retirement plans, which are not permitted
      in the Fund). That concession will not be paid on purchases of shares
      by exchange or that were previously subject to a front-end sales charge
      and dealer concession.

      If you redeem any of those shares within an 18 month "holding period"
      measured from the beginning of the calendar month of their purchase, a
      contingent deferred sales charge (called the "Class A contingent
      deferred sales charge") may be deducted from the redemption proceeds.
      That sales charge will be equal to 1.0% of the lesser of:
o     the aggregate net asset value of the redeemed shares at the time of
      redemption (excluding shares purchased by reinvestment of dividends or
      capital gain distributions) or
o     the original net asset value of the redeemed shares.

      The Class A contingent deferred sales charge will not exceed the
aggregate amount of the concessions the Distributor paid to your dealer on
all purchases of Class A shares of all Oppenheimer funds you made that were
subject to the Class A contingent deferred sales charge.

HOW CAN YOU BUY CLASS B SHARES? Class B shares are sold at net asset value
per share without an initial sales charge. However, if Class B shares are
redeemed within six years from the beginning of the calendar month of their
purchase, a contingent deferred sales charge will be deducted from the
redemption proceeds. The Class B contingent deferred sales charge is paid to
compensate the Distributor for its expenses of providing distribution-related
services to the Fund in connection with the sale of Class B shares.

      The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule for the Class B contingent deferred sales
charge holding period:

--------------------------------------------------------------------------------
Years Since Beginning of Month in       Contingent Deferred Sales Charge on
Which Purchase Order was Accepted       Redemptions in That Year
                                        (As % of Amount Subject to Charge)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
0 - 1                                   5.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 - 2                                   4.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2 - 3                                   3.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3 - 4                                   3.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4 - 5                                   2.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
5 - 6                                   1.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
More than 6                             None
--------------------------------------------------------------------------------
               In the table,  a "year" is a 12-month  period.  In applying the
contingent  deferred  sales charge,  all purchases are considered to have been
made on the first regular  business day of the month in which the purchase was
made.


Automatic Conversion of Class B Shares.  Class B shares automatically convert
      to Class A shares 72 months after you purchase them. This conversion
      feature relieves Class B shareholders of the asset-based sales charge
      that applies to Class B shares under the Class B Distribution and
      Service Plan, described below.  The conversion is based on the relative
      net asset value of the two classes, and no sales load or other charge
      is imposed. When any Class B shares that you hold convert, any other
      Class B shares that were acquired by reinvesting dividends and
      distributions on the converted shares will also convert to Class A
      shares.  For further information on the conversion feature and its tax
      implications, see "Class B Conversion" in the Statement of Additional
      Information.


HOW CAN YOU BUY CLASS C SHARES? Class C shares are sold at net asset value
per share without an initial sales charge. However, if Class C shares are
redeemed within a holding period of 12 months from the beginning of the
calendar month of their purchase, a contingent deferred sales charge of 1.0%
will be deducted from the redemption proceeds. The Class C contingent
deferred sales charge is paid to compensate the Distributor for its expenses
of providing distribution-related services to the Fund in connection with the
sale of Class C shares.

DISTRIBUTION AND SERVICE (12b-1) PLANS.

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 quarterly 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 quarterly for providing
      personal service and maintenance of accounts of their customers that
      hold Class A shares.

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 pay the Distributor for its services and costs in distributing Class
      B and Class C shares and servicing accounts. Under the plans, the Fund
      pays the Distributor an annual asset-based sales charge of 0.75% per
      year on Class B shares and on Class C shares.  The Distributor also
      receives a service fee of up to 0.15% per year under each plan.

      The asset-based sales charge and service fees increase Class B and
      Class C expenses by 0.90% of the net assets per year of the respective
      class. Because these fees are paid out of the Fund's assets on an
      ongoing basis, over time these fees will increase the cost of your
      investment and may cost you more than other types of sales charges.

      The Distributor uses the service fees to compensate dealers for
      providing personal services for accounts that hold Class B or Class C
      shares. The Distributor normally pays the 0.15%  service fees to
      dealers in advance for the first year after the shares are sold by the
      dealer. After the shares have been held for a year, the Distributor
      pays the service fees to dealers on a quarterly basis.

      The Distributor currently pays a sales concession of 3.85% of the
      purchase price of Class B shares to dealers from its own resources at
      the time of sale. Including the advance of the service fee, the total
      amount paid by the Distributor to the dealer at the time of sale of
      Class B shares is therefore 4.00% of the purchase price.  The
      Distributor normally retains the Class B asset-based sales charge.  See
      the Statement of Additional Information for exceptions.

      The Distributor currently pays a sales concession of 0.75% of the
      purchase price of Class C shares to dealers from its own resources at
      the time of sale. Including the advance of the service fee, the total
      amount paid by the Distributor to the dealer at the time of sale of
      Class C shares is therefore 0.90% of the purchase price. The
      Distributor normally pays the asset-based sales charge as an ongoing
      concession to the dealer on Class C shares that have been outstanding
      for a year or more. The Distributor normally retains the Class C
      asset-based sales charge during the first year after the Class C shares
      are purchased. See the Statement of Additional Information for
      exceptions.

      Under certain circumstances, the Distributor will pay the full Class B
      or Class C asset-based sales charge and the service fee to the dealer
      beginning in the first year after purchase of such shares in lieu of
      paying the dealer the sales concession and the advance of the first
      year's service fee at the time of purchase, if there is a special
      agreement between the dealer and the Distributor.  In those
      circumstances, the sales concession will not be paid to the dealer.

      In addition, the Manager and the Distributor may make substantial
      payments to dealers or other financial intermediaries and service
      providers for distribution and/or shareholder servicing activities, out
      of their own resources, including the profits from the advisory fees
      the Manager receives from the Fund.  Some of these distribution-related
      payments may be made to dealers or financial intermediaries for
      marketing, promotional or related expenses; these payments are often
      referred to as "revenue sharing."  In some circumstances, those types
      of payments may create an incentive for a dealer or financial
      intermediary or its representatives to recommend or offer shares of the
      Fund or other Oppenheimer funds to its customers.  You should ask your
      dealer or financial intermediary for more details about any such
      payments it receives.

Special Investor Services

ACCOUNTLINK. You can use our AccountLink feature to link your Fund account
with an account at a U.S. bank or other financial institution. It must be an
Automated Clearing House (ACH) member. AccountLink lets you:
    o transmit funds electronically to purchase shares by telephone (through
      a service representative or by PhoneLink) or automatically under Asset
      Builder Plans, or
    o have the Transfer Agent send redemption proceeds or transmit dividends
      and distributions directly to your bank account. Please call the
      Transfer Agent for more information.
      You may purchase shares by telephone only after your account has been
established. To purchase shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1.800.225.5677. The purchase payment
will be debited from your bank account.


      AccountLink privileges should be requested on your Application or your
dealer's settlement instructions if you buy your shares through a dealer.
After your account is established, you can request AccountLink privileges by
sending signature-guaranteed instructions and proper documentation to the
Transfer Agent.  AccountLink privileges will apply to each shareholder listed
in the registration on your account as well as to your dealer representative
of record unless and until the Transfer Agent receives written instructions
terminating or changing those privileges. After you establish AccountLink for
your account, any change of bank account information must be made by
signature-guaranteed instructions to the Transfer Agent signed by all
shareholders who own the account.


PHONELINK. PhoneLink is the OppenheimerFunds automated telephone system that
enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the PhoneLink number, 1.800.225.5677.
Purchasing Shares. You may purchase shares in amounts up to $100,000 by
      phone, by calling 1.800.225.5677. You must have established AccountLink
      privileges to link your bank account with the Fund to pay for these
      purchases.
Exchanging Shares. With the OppenheimerFunds Exchange Privilege, described
      below, you can exchange shares automatically by phone from your Fund
      account to another OppenheimerFunds account you have already
      established by calling the special PhoneLink number.
Selling Shares. You can redeem shares by telephone automatically by calling
      the PhoneLink number and the Fund will send the proceeds directly to
      your AccountLink bank account. Please refer to "How to Sell Shares,"
      below for details.

CAN YOU SUBMIT TRANSACTION REQUESTS BY FAX? You may send requests for certain
types of account transactions to the Transfer Agent by fax (telecopier).
Please call 1.800.225.5677 for information about which transactions may be
handled this way. Transaction requests submitted by fax are subject to the
same rules and restrictions as written and telephone requests described in
this Prospectus.


OPPENHEIMERFUNDS INTERNET WEBSITE. You can obtain information about the Fund,
as well as your account balance, on the OppenheimerFunds Internet website, at
www.oppenheimerfunds.com.  Additionally, shareholders listed in the account
------------------------
registration (and the dealer of record) may request certain account
transactions through a special section of that website.  To perform account
transactions or obtain account information online, you must first obtain a
user I.D. and password on that website.  If you do not want to have Internet
account transaction capability for your account, please call the Transfer
Agent at 1.800.225.5677.  At times, the website may be inaccessible or its
transaction features may be unavailable.

AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
OppenheimerFunds account on a regular basis.  Please call the Transfer Agent
or consult the Statement of Additional Information for details.


How to Sell Shares

You can sell (redeem) some or all of your shares on any regular business day.
 Your shares will be sold at the next net asset value calculated after your

order is received in proper form (which means that it must comply with the
procedures described below) and is accepted by the Transfer Agent. The Fund
lets you sell your shares by writing a letter, by wire, by using the Fund's
checkwriting privilege, or by telephone. You can also set up Automatic
Withdrawal Plans to redeem shares on a regular basis.  If you have questions
about any of these procedures, and especially if you are redeeming shares in
a special situation, such as due to the death of the owner, please call the
Transfer Agent first, at 1.800.225.5677, for assistance.


Certain Requests Require a Signature Guarantee. To protect you and the Fund
      from fraud, the following redemption requests must be in writing and
      must include a signature guarantee (although there may be other
      situations that also require a signature guarantee):

   o  You wish to redeem more than $100,000 and receive a check.
   o  The redemption check is not payable to all shareholders listed on the
      account statement.
   o  The redemption check is not sent to the address of record on your
      account statement.
   o  Shares are being transferred to a Fund account with a different owner
      or name.

   o  Shares are being redeemed by someone (such as an Executor) other than
      the owners.

Where Can You Have Your Signature Guaranteed? The Transfer Agent will accept
      a guarantee of your signature by a number of financial institutions,
      including:
o     a U.S. bank, trust company, credit union or savings association,
o     a foreign bank that has a U.S. correspondent bank,
o     a U.S. registered dealer or broker in securities, municipal securities
      or government securities, or
o     a U.S. national securities exchange, a registered securities
      association or a clearing agency.
      If you are signing on behalf of a corporation, partnership or other
business or as a fiduciary, you must also include your title in the signature.


Receiving Redemption Proceeds by Wire. While the Fund normally sends your
   money by check, you can arrange to have the proceeds of shares you sell
   sent by Federal Funds wire to a bank account you designate.  It must be a
   commercial bank that is a member of the Federal Reserve wire system. The
   minimum redemption you can have sent by wire is $2,500. There is a $10 fee
   for each request. To find out how to set up this feature on your account
   or to arrange a wire, call the Transfer Agent at 1.800.225.5677.

CHECKWRITING. To write checks against your Fund account, request that
privilege on your account application, or contact the Transfer Agent for
signature cards. They must be signed (with a signature guarantee) by all
owners of the account and returned to the Transfer Agent so that checks can
be sent to you to use.  Shareholders with joint accounts can elect in writing
to have checks paid over the signature of one owner. If you previously signed
a signature card to establish checkwriting in another Oppenheimer fund,
simply call 1.800.225.5677 to request checkwriting for an account in this
Fund with the same registration as the other account.


o     Checks can be written to the order of whomever you wish, but may not be
      cashed at the bank the checks are payable through or the Fund's
      custodian bank.
o     Checkwriting privileges are not available for accounts holding shares
      that are subject to a contingent deferred sales charge.
o     Checks must be written for at least $500. Checks written below the
      stated amount on the check will not be accepted. However, if you have
      existing checks indicating a $100 minimum, you may still use them for
      amounts of $100 or more.
o     Checks cannot be paid if they are written for more than your account
      value. Remember, your shares fluctuate in value and you should not
      write a check close to the total account value.
o     You may not write a check that would require the Fund to redeem shares
      that were purchased by check or Asset Builder Plan payments within the
      prior 10 days.
o     Don't use your checks if you changed your Fund account number, until
      you receive new checks.

HOW DO YOU SELL SHARES BY MAIL? Write a letter of instruction that includes:
   o  Your name
   o  The Fund's name,
   o  Your Fund account number (from your account statement),
   o  The dollar amount or number of shares to be redeemed,
   o  Any special payment instructions,
   o  Any share certificates for the shares you are selling,
   o  The signatures of all registered owners exactly as the account is
      registered, and
   o  Any special documents requested by the Transfer Agent to assure proper
      authorization of the person asking to sell the shares.

Use the following address for            Send courier or express mail
requests by mail:                        requests to:
OppenheimerFunds Services                OppenheimerFunds Services
P.O. Box 5270                            10200 E. Girard Avenue, Building D
Denver, Colorado 80217                   Denver, Colorado 80231


HOW DO YOU SELL SHARES BY TELEPHONE? You and your dealer representative of
record may also sell your shares by telephone. To receive the redemption
price calculated on a particular regular business day, your call must be
received by the Transfer Agent by the close of the NYSE that day, which is
normally 4:00 p.m., but may be earlier on some days. You may not redeem
shares under a share certificate by telephone.

   o  To redeem shares through a service representative or automatically on
      PhoneLink, call 1.800.225.5677.
            Whichever method you use, you may have a check sent to the
            address on the account statement, or, if you have linked your
            Fund account to your bank account on AccountLink, you may have
            the proceeds sent to that bank account.

Are There Limits on Amounts Redeemed by Telephone?
Telephone Redemptions Paid by Check. Up to $100,000 may be redeemed by
      telephone in any seven-day period. The check must be payable to all
      owners of record of the shares and must be sent to the address on the
      account statement. This service is not available within 30 days of
      changing the address on an account.

Telephone Redemptions Through AccountLink or by Wire.  There are no dollar
      limits on telephone redemption proceeds sent to a bank account
      designated when you establish AccountLink. Normally the ACH transfer to
      your bank is initiated on the business day after the redemption. You do
      not receive dividends on the proceeds of the shares you redeemed while
      they are waiting to be transferred.

      If you have requested Federal Funds wire privileges for your account,
      the wire of the redemption proceeds will normally be transmitted on the
      next bank business day after the shares are redeemed. There is a
      possibility that the wire may be delayed up to seven days to enable the
      Fund to sell securities to pay the redemption proceeds. No dividends
      are accrued or paid on the proceeds of shares that have been redeemed
      and are awaiting transmittal by wire.

CAN YOU SELL SHARES THROUGH YOUR DEALER? The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on behalf of
their customers. Brokers or dealers may charge for that service. If your
shares are held in the name of your dealer, you must redeem them through your
dealer.

HOW CONTINGENT DEFERRED SALES CHARGES AFFECT REDEMPTIONS. If you purchase
shares subject to a Class A, Class B or Class C contingent deferred sales
charge and redeem any of those shares during the applicable holding period
for the class of shares, the contingent deferred sales charge will be
deducted from the redemption proceeds (unless you are eligible for a waiver
of that sales charge based on the categories listed in Appendix C to the
Statement of Additional Information and you advise the Transfer Agent of your
eligibility for the waiver when you place your redemption request.)

      A  contingent  deferred  sales charge will be based on the lesser of the
net  asset  value of the  redeemed  shares  at the time of  redemption  or the
original net asset value.  A contingent  deferred  sales charge is not imposed
on:
o     the amount of your  account  value  represented  by an  increase  in net
      asset value over the initial purchase price,
o     shares  purchased by the  reinvestment  of  dividends  or capital  gains
      distributions, or
o     shares redeemed in the special circumstances  described in Appendix C to
      the Statement of Additional Information
      To determine whether a contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order:
   1. shares acquired by reinvestment of dividends and capital gains
      distributions,
   2. shares held for the holding period that applies to the class, and
   3. shares held the longest during the holding period.

      Contingent deferred sales charges are not charged when you exchange
shares of the Fund for shares of other Oppenheimer funds. However, if you
exchange them within the applicable contingent deferred sales charge holding
period, the holding period will carry over to the fund whose shares you
acquire. Similarly, if you acquire shares of this Fund by exchanging shares
of another Oppenheimer fund that are still subject to a contingent deferred
sales charge holding period, that holding period will carry over to this Fund.

How to Exchange Shares


If you want to change all or part of your investment from one Oppenheimer
fund to another, you can exchange your shares for shares of the same class of
another Oppenheimer fund that offers the exchange privilege.  For example,
you can exchange Class A shares of the Fund only for Class A shares of
another fund.  To exchange shares, you must meet several conditions:

   o  Shares of the fund selected for exchange must be available for sale in
      your state of residence.

   o  The prospectuses of both funds must offer the exchange privilege.
   o  When you establish an account you must hold the shares you buy for at
      least seven days before you can exchange them. After the account is
      open seven days, you can exchange shares every regular business day,
      subject to the limitations described below.
   o  You must meet the minimum purchase requirements for the selected fund.
   o  Generally, exchanges may be made only between identically registered
      accounts, unless all account owners send written exchange instructions
      with a signature guarantee.
   o  Before exchanging into a fund, you must obtain its prospectus and
      should read it carefully.

      For tax purposes, an exchange of shares of the Fund is considered a
sale of those shares and a purchase of the shares of the fund into which you
are exchanging.  An exchange may result in a capital gain or loss.

      You can find a list of Oppenheimer funds that are currently available
      for exchanges in the Statement of Additional Information or you can
      obtain a list by calling a service representative at 1.800.225.5677.
      The funds available for exchange can change from time to time.

      A  contingent  deferred  sales  charge  (CDSC) is not  charged  when you
      exchange  shares of the Fund for  shares of  another  Oppenheimer  fund.
      However,  if you exchange your shares during the applicable CDSC holding
      period,  the holding  period will carry over to the fund shares that you
      acquire.  Similarly,  if you acquire  shares of the Fund in exchange for
      shares of another  Oppenheimer  fund that are subject to a CDSC  holding
      period,  that holding  period will carry over to the acquired  shares of
      the Fund.  In either of these  situations,  a CDSC may be imposed if the
      acquired  shares are redeemed  before the end of the CDSC holding period
      that applied to the exchanged shares.

      There are a number of other  special  conditions  and  limitations  that
      apply to certain types of exchanges.  These conditions and circumstances
      are described in detail in the "How to Exchange  Shares"  section in the
      Statement of Additional Information.


HOW DO YOU SUBMIT EXCHANGE REQUESTS? Exchanges may be requested in writing,
by telephone or internet, or by establishing an Automatic Exchange Plan.

Written Exchange Requests.  Send a request letter, signed by all owners of
      the account, to the Transfer Agent at the address on the back cover.
      Exchanges of shares for which share certificates have been issued
      cannot be processed unless the Transfer Agent receives the certificates
      with the request letter.

Telephone and Internet Exchange  Requests.  Telephone exchange requests may be
      made either by calling a service  representative  or by using  PhoneLink
      for  automated  exchanges  by  calling  1.800.225.5677.  You may  submit
      internet exchange requests on the OppenheimerFunds  internet website, at
      www.oppenheimerfunds.com.  You  must  have  obtained  a  user  I.D.  and
      ------------------------
      password  to  make  transactions  on  that  website.   Telephone  and/or
      internet   exchanges  may  be  made  only  between   accounts  that  are
      registered  with the same  name(s) and  address.  Shares for which share
      certificates  have been issued may not be  exchanged by telephone or the
      internet.

Automatic  Exchange  Plan.  Shareholders  can authorize the Transfer  Agent to
      exchange a pre-determined  amount of shares  automatically on a monthly,
      quarterly, semi-annual or annual basis.

Please  refer to "How to  Exchange  Shares"  in the  Statement  of  Additional
Information for more details.


ARE THERE LIMITATIONS ON FREQUENT PURCHASES, REDEMPTIONS AND EXCHANGES?

Risks from Excessive Purchase, Redemption and Short-Term Exchange Activity.
The OppenheimerFunds exchange privilege affords investors the ability to
switch their investments among Oppenheimer funds if their investment needs
change. However, there are limits on that privilege. Frequent purchases,
redemptions and exchanges of fund shares may interfere with the Manager's
ability to manage the fund's investments efficiently, increase the fund's
transaction and administrative costs and/or affect the fund's performance,
depending on various factors, such as the size of the fund, the nature of its
investments, the amount of fund assets the portfolio manager maintains in
cash or cash equivalents, the aggregate dollar amount and the number and
frequency of trades. If large dollar amounts are involved in exchange and/or
redemption transactions, the Fund might be required to sell portfolio
securities at unfavorable times to meet redemption or exchange requests, and
the Fund's brokerage or administrative expenses might be increased.

Therefore, the Manager and the Fund's Board of Trustees have adopted the
following policies and procedures to detect and prevent frequent and/or
excessive exchanges, and/or purchase and redemption activity, while balancing
the needs of investors who seek liquidity from their investment and the
ability to exchange shares as investment needs change. There is no guarantee
that the policies and procedures described below will be sufficient to
identify and deter excessive short-term trading.

o     Timing of Exchanges.  Exchanged shares are normally redeemed from one
         fund and the proceeds are reinvested in the fund selected for
         exchange on the same regular business day on which the Transfer
         Agent or its agent (such as a financial intermediary holding the
         investor's shares in an "omnibus" or "street name" account) receives
         an exchange request that conforms to these policies. The request
         must be received by the close of the NYSE that day, which is
         normally 4:00 p.m. but may be earlier on some days, in order to
         receive that day's net asset value on the exchanged shares. Exchange
         requests received after the close of the NYSE will receive the next
         net asset value calculated after the request is received. However,
         the Transfer Agent may delay transmitting the proceeds from an
         exchange for up to five business days if it determines, in its
         discretion, that an earlier transmittal of the redemption proceeds
         to the receiving fund would be detrimental to either the fund from
         which the exchange is being made or the fund into which the exchange
         is being made. The proceeds will be invested in the fund into which
         the exchange is being made at the next net asset value calculated
         after the proceeds are received. In the event that such a delay in
         the reinvestment of proceeds occurs, the Transfer Agent will notify
         you or your financial representative.

o     Limits on Disruptive Activity. The Transfer Agent may, in its
         discretion, limit or terminate trading activity by any person, group
         or account that it believes would be disruptive, even if the
         activity has not exceeded the policy outlined in this Prospectus.
         The Transfer Agent may review and consider the history of frequent
         trading activity in all accounts in the Oppenheimer funds known to
         be under common ownership or control as part of the Transfer Agent's
         procedures to detect and deter excessive trading activity.

o     Exchanges of Client Accounts by Financial Advisers.  The Fund and the
      Transfer Agent permit dealers and financial intermediaries to submit
      exchange requests on behalf of their customers (unless the customer has
      revoked that authority). The Distributor and/or the Transfer Agent have
      agreements with a number of financial intermediaries that permit them
      to submit exchange orders in bulk on behalf of their clients. Those
      intermediaries are required to follow the exchange policies stated in
      this Prospectus and to comply with additional, more stringent
      restrictions. Those additional restrictions include limitations on the
      funds available for exchanges, the requirement to give advance notice
      of exchanges to the Transfer Agent, and limits on the amount of client
      assets that may be invested in a particular fund. A fund or the
      Transfer Agent may limit or refuse bulk exchange requests submitted by
      such financial intermediaries if, in the Transfer Agent's judgment,
      exercised in its discretion, the exchanges would be disruptive to any
      of the funds involved in the transaction.

o     Redemptions of Shares.  These exchange policy limits do not apply to
         redemptions of shares. Shareholders are permitted to redeem their
         shares on any regular business day, subject to the terms of this
         Prospectus.

o     Right to Refuse Exchange and Purchase Orders.  The Distributor and/or
         the Transfer Agent may refuse any purchase or exchange order in
         their discretion and are not obligated to provide notice before
         rejecting an order. The Fund may amend, suspend or terminate the
         exchange privilege at any time. You will receive 60 days' notice of
         any material change in the exchange privilege unless applicable law
         allows otherwise.

o     Right to Terminate or Suspend Account Privileges.  The Transfer Agent
      may send a written warning to direct shareholders that the Transfer
      Agent believes may be engaging in excessive purchases, redemptions
      and/or exchange activity and reserves the right to suspend or terminate
      the ability to purchase shares and/or exchange privileges for any
      account that the Transfer Agent determines, in carrying out these
      policies and in the exercise of its discretion, has engaged in
      disruptive or excessive trading activity, with or without such warning.

o     Omnibus Accounts.  If you hold your shares of the Fund through a
      financial intermediary such as a broker-dealer, a bank, an insurance
      company separate account, an investment adviser, an administrator or
      trustee of a retirement plan or 529 plan, that holds your shares in an
      account under its name (these are sometimes referred to as "omnibus" or
      "street name" accounts), that financial intermediary may impose its own
      restrictions or limitations to discourage short-term or excessive
      trading. You should consult your financial intermediary to find out
      what trading restrictions, including limitations on exchanges, they may
      apply.

While the Fund, the Distributor, the Manager and the Transfer Agent encourage
financial intermediaries to apply the Fund's policies to their customers who
invest indirectly in the Fund, the Transfer Agent may not be able to detect
excessive short term trading activity facilitated by, or in accounts
maintained in, the "omnibus" or "street name" accounts of a financial
intermediary. Therefore the Transfer Agent might not be able to apply this
policy to accounts such as (a) accounts held in omnibus form in the name of a
broker-dealer or other financial institution, or (b) omnibus accounts held in
the name of a retirement plan or 529 plan trustee or administrator, or (c)
accounts held in the name of an insurance company for its separate
account(s), or (d) other accounts having multiple underlying owners but
registered in a manner such that the underlying beneficial owners are not
identified to the Transfer Agent.

However, the Transfer Agent will attempt to monitor overall purchase and
redemption activity in those accounts to seek to identify patterns that may
suggest excessive trading by the underlying owners. If evidence of possible
excessive trading activity is observed by the Transfer Agent, the financial
intermediary that is the registered owner will be asked to review account
activity, and to confirm to the Transfer Agent and the fund that appropriate
action has been taken to curtail any excessive trading activity. However, the
Transfer Agent's ability to monitor and deter excessive short-term trading in
omnibus or street name accounts ultimately depends on the capability and
cooperation of the financial intermediaries controlling those accounts.

Additional Policies and Procedures. The Fund's Board has adopted the
following additional policies and procedures to detect and prevent frequent
and/or excessive exchanges and purchase and redemption activity:

o     30-Day Limit.  A direct shareholder may exchange some or all of the
         shares of the Fund held in his or her account to another eligible
         Oppenheimer fund once in a 30 calendar-day period. When shares are
         exchanged into a fund account, that account will be "blocked" from
         further exchanges into another fund for a period of 30 calendar days
         from the date of the exchange. The block will apply to the full
         account balance and not just to the amount exchanged into the
         account. For example, if a shareholder exchanged $1,000 from one
         fund into another fund in which the shareholder already owned shares
         worth $10,000, then, following the exchange, the full account
         balance ($11,000 in this example) would be blocked from further
         exchanges into another fund for a period of 30 calendar days. A
         "direct shareholder" is one whose account is registered on the
         Fund's books showing the name, address and tax ID number of the
         beneficial owner.

o     Exchanges Into Money Market Funds.  A direct shareholder will be
         permitted to exchange shares of a stock or bond fund for shares of a
         money market fund at any time, even if the shareholder has exchanged
         shares into the stock or bond fund during the prior 30 days.
         However, all of the shares held in that money market fund would then
         be blocked from further exchanges into another fund for 30 calendar
         days.

o     Dividend Reinvestments/B Share Conversions.  Reinvestment of dividends
         or distributions from one fund to purchase shares of another fund
         and the conversion of Class B shares into Class A shares will not be
         considered exchanges for purposes of imposing the 30-day limit.

o     Asset Allocation.  Third-party asset allocation and rebalancing
         programs will be subject to the 30-day limit described above. Asset
         allocation firms that want to exchange shares held in accounts on
         behalf of their customers must identify themselves to the Transfer
         Agent and execute an acknowledgement and agreement to abide by these
         policies with respect to their customers' accounts. "On-demand"
         exchanges outside the parameters of portfolio rebalancing programs
         will be subject to the 30-day limit. However, investment programs by
         other Oppenheimer "funds-of-funds" that entail rebalancing of
         investments in underlying Oppenheimer funds will not be subject to
         these limits.

o     Automatic Exchange Plans.  Accounts that receive exchange proceeds
         through automatic or systematic exchange plans that are established
         through the Transfer Agent will not be subject to the 30-day block
         as a result of those automatic or systematic exchanges (but may be
         blocked from exchanges, under the 30-day limit, if they receive
         proceeds from other exchanges).



Shareholder Account Rules and Policies

More information about the Fund's policies and procedures for buying, selling
and exchanging shares is contained in the Statement of Additional Information.
A $12 annual "Minimum Balance Fee" is assessed on each Fund account with a

      value of less than $500. The fee is automatically deducted from each
      applicable Fund account annually in September.  See the Statement of
      Additional Information to learn how you can avoid this fee and for
      circumstances under which this fee will not be assessed.

The offering of shares may be suspended during any period in which the
      determination of net asset value is suspended, and the offering may be
      suspended by the Board of Trustees at any time the Board believes it is
      in the Fund's best interest to do so.
Telephone transaction privileges for purchases, redemptions or exchanges may
      be modified, suspended or terminated by the Fund at any time. The Fund
      will provide you notice whenever it is required to do so by applicable
      law. If an account has more than one owner, the Fund and the Transfer
      Agent may rely on the instructions of any one owner. Telephone
      privileges apply to each owner of the account and the dealer
      representative of record for the account unless the Transfer Agent
      receives cancellation instructions from an owner of the account.
The Transfer Agent will record any telephone calls to verify data concerning
      transactions and has adopted other procedures to confirm that telephone
      instructions are genuine, by requiring callers to provide tax
      identification numbers and other account data or by using PINs, and by
      confirming such transactions in writing. The Transfer Agent and the
      Fund will not be liable for losses or expenses arising out of telephone
      instructions reasonably believed to be genuine.
Redemption or transfer requests will not be honored until the Transfer Agent
      receives all required documents in proper form. From time to time, the
      Transfer Agent in its discretion may waive certain of the requirements
      for redemptions stated in this Prospectus.
Dealers that perform account transactions for their clients by participating
      in NETWORKING through the National Securities Clearing Corporation are
      responsible for obtaining their clients' permission to perform those
      transactions, and are responsible to their clients who are shareholders
      of the Fund if the dealer performs any transaction erroneously or
      improperly.
The redemption price for shares will vary from day to day because the value
      of the securities in the Fund's portfolio fluctuates. The redemption
      price, which is the net asset value per share, will normally differ for
      each class of shares. The redemption value of your shares may be more
      or less than their original cost.
Payment for redeemed shares ordinarily is made in cash. It is forwarded by
      check, or through AccountLink or by Federal Funds wire (as elected by
      the shareholder) within seven days after the Transfer Agent receives
      redemption instructions in proper form. However, under unusual
      circumstances determined by the Securities and Exchange Commission,
      payment may be delayed or suspended. For accounts registered in the
      name of a broker-dealer, payment will normally be forwarded within
      three business days after redemption.
The Transfer Agent may delay processing any type of redemption payment as
      described under "How to Sell Shares" for recently purchased shares, but
      only until the purchase payment has cleared. That delay may be as much
      as 10 days from the date the shares were purchased. That delay may be
      avoided if you purchase shares by Federal Funds wire or certified
      check, or arrange with your bank to provide telephone or written
      assurance to the Transfer Agent that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the Fund if the
      account value has fallen below $200 for reasons other than the fact
      that the market value of shares has dropped. In some cases, involuntary
      redemptions may be made to repay the Distributor for losses from the
      cancellation of share purchase orders.
Shares may be "redeemed in kind" under unusual circumstances (such as a lack
      of liquidity in the Fund's portfolio to meet redemptions). This means
      that the redemption proceeds will be paid with liquid securities from
      the Fund's portfolio. If the Fund redeems your shares in kind, you may
      bear transaction costs and will bear market risks until such time as
      such securities are converted into cash.
Federal regulations may require the Fund to obtain your name, your date of
      birth (for a natural person), your residential street address or
      principal place of business and your Social Security number, Employer
      Identification Number or other government issued identification when
      you open an account. Additional information may be required in certain
      circumstances or to open corporate accounts.  The Fund or the Transfer
      Agent may use this information to attempt to verify your identity.  The
      Fund may not be able to establish an account if the necessary
      information is not received.  The Fund may also place limits on account
      transactions while it is in the process of attempting to verify your
      identity.  Additionally, if the Fund is unable to verify your identity
      after your account is established, the Fund may be required to redeem
      your shares and close your account.
"Backup withholding" of federal income tax may be applied against taxable
      dividends, distributions and redemption proceeds (including exchanges)
      if you fail to furnish the Fund your correct, certified Social Security
      or Employer Identification Number when you sign your application, or if
      you under-report your income to the Internal Revenue Service.
To avoid sending duplicate copies of materials to households, the Fund will
      mail only one copy of each prospectus, annual and semi-annual report
      and annual notice of the Fund's privacy policy to shareholders having
      the same last name and address on the Fund's records. The consolidation
      of these mailings, called householding, benefits the Fund through
      reduced mailing expense.

      If you want to receive multiple copies of these materials, you may call
      the Transfer Agent at 1.800.225.5677. You may also notify the Transfer
      Agent in writing. Individual copies of prospectuses, reports and
      privacy notices will be sent to you commencing 30 days after the
      Transfer Agent receives your request to stop householding.

Dividends, Capital Gains and Taxes

DIVIDENDS. The Fund intends to declare dividends separately for each class of
shares from net tax-exempt income and/or net taxable investment income each
regular business day and to pay those dividends monthly. Daily dividends will
not be declared or paid on newly-purchased shares until Federal Funds are
available to the Fund from the purchase payment for such shares.

       The Fund attempts to pay dividends on Class A shares at a constant
level. There is no assurance that it will be able to do so. The Board of
Trustees may change the targeted dividend level at any time, without prior
notice to shareholders. The amount of those dividends and any other
distributions paid on other classes of shares may vary over time, depending
on market conditions, the composition of the Fund's portfolio, and expenses
borne by the particular class of shares. Dividends and other distributions
paid on Class A shares will generally be higher than for Class B and Class C
shares, which normally have higher expenses than Class A.  The Fund cannot
guarantee that it will pay any dividends or other distributions.


CAPITAL GAINS. Although the Fund does not seek capital gains, it may realize
capital gains on the sale of portfolio securities.  If it does, it may make
distributions out of any net short-term or long-term capital gains of each
year. The Fund may make supplemental distributions of dividends and capital
gains following the end of its fiscal year. There can be no assurance that
the Fund will pay any capital gains distributions in a particular year.
Long-term capital gains will be separately identified in the tax information
the Fund sends you after the end of the calendar year.


WHAT CHOICES DO YOU HAVE FOR RECEIVING DISTRIBUTIONS? When you open your
account, specify on your application how you want to receive your dividends
and distributions. You have four options:
Reinvest All Distributions in the Fund. You can elect to reinvest all
      dividends and capital gains distributions in additional shares of the
      Fund.
Reinvest Dividends or Capital Gains. You can elect to reinvest some
      distributions (dividends, short-term capital gains or long-term capital
      gains distributions) in the Fund while receiving the other types of
      distributions by check or having them sent to your bank account through
      AccountLink.
Receive All Distributions in Cash. You can elect to receive a check for all
      dividends and capital gains distributions or have them sent to your
      bank through AccountLink.
Reinvest Your Distributions in Another OppenheimerFunds Account. You can
      reinvest all distributions in the same class of shares of another
      OppenheimerFunds account you have established.

TAXES. Dividends paid from net investment income earned by the Fund on
municipal securities will be excludable from gross income for federal income
tax purposes. All or a portion of the dividends paid by the Fund that are
derived from interest paid on certain "private activity bonds" may be an item
of tax preference if you are subject to the federal alternative minimum tax.

      Dividends and capital gains distributions may be subject to federal,
state or local taxes. Any short-term capital gain distributions are taxable
to you as ordinary income. Any long-term capital gain distributions are
taxable to you as long-term capital gains, no matter how long you have owned
shares in the Fund. The Fund may derive gains in part from municipal
obligations the Fund purchased below their principal or face values. All, or
a portion of these gains may be taxable to you as ordinary income rather than
capital gains. Whether you reinvest your distributions in additional shares
or take them in cash, the tax treatment is the same.


      Exempt-interest dividends earned by residents of Pennsylvania should
not be subject to federal, state, or local income taxes, and for
Philadelphia residents, from the investment income tax of the School
District of Philadelphia. Shares of the Fund will be exempt from
Pennsylvania county personal property taxes to the extent that the Fund's
portfolio securities consist of Pennsylvania municipal securities on the
annual assessment date. The portion of the Fund's dividends that are
attributable to income earned on other obligations (not Pennsylvania
municipal securities) will normally be subject to Pennsylvania personal
income taxes.

     Every year the Fund will send you and the IRS a statement showing the
amount of any taxable distribution you received in the previous year.  The
Fund will also send you a separate statement summarizing the total
distributions paid by the Fund.

     The Fund intends each year to qualify as a "regulated investment
company" under the Internal Revenue Code, but reserves the right not to
qualify.  It qualified during its last fiscal year. The Fund, as a regulated
investment company, will not be subject to federal income taxes on any of its
income, provided that it satisfies certain income, diversification and
distribution requirements.

Remember, There May be Taxes on Transactions.  Because the Fund's share
      prices fluctuate, you may have a capital gain or loss when you sell or
      exchange your shares. A capital gain or loss is the difference between
      the price you paid for the shares and the price you received when you
      sold them. Any capital gain is subject to capital gains tax.
Returns of Capital Can Occur.  In certain cases, distributions made by the
      Fund may be considered a non-taxable return of capital to shareholders.

       If that occurs, it will be identified in notices to shareholders.

      This information is only a summary of certain federal and state income
tax information about your investment. You should consult with your tax
advisor about the effect of an investment in the Fund on your particular tax
situation.







Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's
financial performance for the past five fiscal years.  Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned (or lost) on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by KPMG LLP, the Fund's
independent registered public accounting firm, whose report, along with the
Fund's financial statements, is included in the Statement of Additional
Information, which is available on request.






INFORMATION AND SERVICES

For More Information on Oppenheimer Pennsylvania Municipal Fund
The following additional information about the Fund is available without
charge upon request:

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional
information about the Fund's investment policies, risks, and operations. It
is incorporated by reference into this Prospectus (which means it is legally
part of this Prospectus).

ANNUAL AND SEMI-ANNUAL REPORTS. Additional information about the Fund's
investments and performance is available in the Fund's Annual and Semi-Annual
Reports to shareholders. The Annual Report includes a discussion of market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year.

How to Get More Information
You can request the Statement of Additional Information, the Annual and
Semi-Annual Reports, the notice explaining the Fund's privacy policy and
other information about the Fund or your account:

------------------------------------------------------------------------------
By Telephone:                 Call OppenheimerFunds Services toll-free:

                              1.800.CALL OPP(225.5677

------------------------------------------------------------------------------
------------------------------------------------------------------------------
By Mail:                      Write to:
                              OppenheimerFunds Services
                              P.O. Box 5270
                              Denver, Colorado 80217-5270
------------------------------------------------------------------------------
------------------------------------------------------------------------------

On the Internet:              You can request these documents by e-mail or
                              through the OppenheimerFunds website.  You may
                              also read or download certain documents on the
                              OppenheimerFunds website at:
                              www.oppenheimerfunds.com
                              ------------------------

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

Information about the Fund including the Statement of Additional Information
can be reviewed and copied at the SEC's Public Reference Room in Washington,
D.C. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1.202.942.8090.  Reports and other information
about the Fund are available on the EDGAR database on the SEC's Internet
website at www.sec.gov. Copies may be obtained after payment of a duplicating
           -----------
fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or
by writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.
No one has been authorized to provide any information about the Fund or to
make any representations about the Fund other than what is contained in this
Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a
solicitation of an offer to buy shares of the Fund, to any person in any
state or other jurisdiction where it is unlawful to make such an offer.

The Fund's shares are distributed by:                [logo]   OppenheimerFunds
Distributor, Inc.
The Fund's SEC File No. 811-5867

PR0740.001.0905
Printed on recycled paper







Appendix to Prospectus of
                   Oppenheimer Pennsylvania Municipal Fund


      Graphic material included in the Prospectus of Oppenheimer Pennsylvania
Municipal Fund: "Annual Total Returns (Class A) (% as of December 31 each
year)":


      A bar chart will be included in the Prospectus of Oppenheimer
Pennsylvania Municipal Fund (the "Fund") depicting the annual total returns
of a hypothetical investment in Class A shares of the Fund for each of the
ten most recent calendar years, without deducting sales charges or taxes.
Set forth below are the relevant data points that will appear on the bar
chart:

Calendar                  Oppenheimer
Year                      Pennsylvania Municipal Fund
Ended                     Class A Shares
-----                     --------------


12/31/95                   16.95%
12/31/96                     4.35%
12/31/97                     8.97%
12/31/98                     4.45%
12/31/99                    -6.18%
12/31/00                     7.06%
12/31/01                     6.51%
12/31/02                   10.95%
12/31/03                  _ 9.81%
12/31/04                     7.06%

Oppenheimer Rochester National Municipals



Prospectus dated November_28, 2005




                                          Oppenheimer Rochester National
                                          Municipals is a mutual fund that
                                          seeks high current income exempt
                                          from federal income taxes. It
                                          invests in high-yield municipal
                                          securities.
                                             This Prospectus contains
                                          important information about the
                                          Fund's objective, its investment
                                          policies, strategies and risks.  It
                                          also contains important information
                                          about how to buy and sell shares of
                                          the Fund and other account
                                          features.  Please read this
                                          Prospectus carefully before you
                                          invest and keep it for future
As with all mutual funds, the             reference about your account.
Securities and Exchange Commission
has not approved or disapproved the
Fund's securities nor has it
determined that this Prospectus is
accurate or complete.  It is a
criminal offense to represent
otherwise.

                                                                          1234




                                                               [OppenheimerFunds logo]










Contents
            About The Fund
--------------------------------------------------------------------------------------


            The Fund's Investment Objective and Principal Investment Strategies


            Main Risks of Investing in the Fund

            The Fund's Past Performance

            Fees and Expenses of the Fund

            About the Fund's Investments

            How the Fund is Managed


            About Your Account
-------------------------------------------------------------------------------

            How to Buy Shares
            Class A Shares
            Class B Shares
            Class C Shares

            Special Investor Services
            AccountLink
            PhoneLink
            OppenheimerFunds Internet Website

            How to Sell Shares

            By Checkwriting
            By Mail
            By Telephone


            How to Exchange Shares

            Shareholder Account Rules and Policies

            Dividends, Capital Gains and Taxes

            Financial Highlights







--------------------------------------------------------------------------------------
About the Fund
--------------------------------------------------------------------------------------


The Fund's Investment Objective and Principal Investment Strategies


--------------------------------------------------------------------------------------
What Is the  Fund's  Investment  Objective?  The Fund  seeks a high  level of  current
income  exempt from federal  income taxes for  individual  investors by investing in a
diversified portfolio of high-yield municipal securities.
--------------------------------------------------------------------------------------


What Does the Fund Invest In?   To seek its investment objective, under normal
market conditions, the Fund attempts to invest 100% of its assets in municipal
securities that pay interest exempt from federal individual income tax, and as a
fundamental policy, the Fund invests at least 80% of its net assets (plus borrowing
for investment purposes) in municipal securities.  This includes securities that
generate income subject to the alternative minimum tax.  Up to 100% of the
securities the Fund buys may be high-yield, lower-grade fixed income securities,
commonly called "junk bonds." However, although under normal market conditions the
Fund intends to invest approximately 50% to 70% of its total assets below investment
grade securities, there are no specific maximum or minimum limits on the amount of
the Fund's assets that can be invested in these types of securities.  Lower-grade
debt securities are those rated below "Baa" by Moody's Investors Service, Inc.
("Moody's") or lower than "BBB" by Standard & Poor's Rating Services ("S&P") or
comparable ratings by other nationally recognized rating organizations (or, in the
case of unrated securities, determined by the Fund's investment manager,
OppenheimerFunds, Inc. (the Manager"), to be comparable to securities rated below
investment grade).  See Appendix A to the Statement of Additional Information for a
description of the Bond Ratings.


      The Fund does not limit its investments to securities of a particular maturity
range, and may include municipal bonds (which are long term obligations), municipal
notes (short term obligations), interests in municipal leases and tax-exempt
commercial paper.  However, the Fund currently focuses on longer-term securities to
seek higher yields.  The Fund can buy general obligation bonds as well as "private
activity" municipal securities that pay income subject to alternative minimum
taxation.  A substantial percentage of the municipal securities the Fund buys may be
"callable," allowing the issuer of the securities to redeem them before their
maturity date.  The Fund also uses certain derivative investments such as "inverse
floaters" and variable rate obligations to try to increase income. The high yield,
lower-grade fixed income securities the Fund buys may be less liquid than investment
grade securities and the small issues that the Fund may buy tend to be less liquid
than larger issues. These investments are more fully explained in "About the Fund's
Investments," below.

      Since the Fund may invest in lower rated securities without limit, the Fund's
investments should be considered speculative.  Further, since market risks are
inherent in all securities to varying degrees, there can be no assurance that the
Fund's investment objectives will be met.  See "Main Risks of Investing in the Fund"
below.

      |X| How Do the Portfolio Managers Decide What Securities to Buy or Sell?  In
selecting securities for the Fund, the portfolio managers currently look for
high-yield, tax-exempt municipal securities using a variety of factors, which may
change over time and may vary in particular cases.  Currently, the portfolio
managers focus on:


|_|   Finding primarily lower-grade securities that offer high-income opportunities.
|_|   Buying a wide range of securities of different issuers for portfolio
               diversification to help spread credit risks.
|_|   Looking for unrated bonds that might provide high income and securities of
               smaller issuers that might be overlooked by other investors and funds.
|_|   Special situations that provide opportunities for value.
|_|   Special situations of higher rated bonds that provide opportunities for above
               average income with limited volatility.
|_|   Buying issues across a wide range of municipal sectors, coupons, and revenue
               sources.

Who Is the Fund Designed For?  The Fund is designed for individual investors who are
seeking a high level of current income exempt from federal income taxes through
investment in a fund that may invest without limit in lower-grade municipal debt
securities. Those investors should be willing to assume the greater risks of
short-term share price fluctuations that are typical for a fund that invests in
those debt securities, which also have special credit risks.  Since the Fund's
income level will fluctuate, it is not designed for investors needing an assured
level of current income.  The Fund does not seek capital gains or growth.  Because
it invests in tax-exempt securities, the Fund is not appropriate for retirement plan
accounts or for investors seeking capital growth.  The Fund is not a complete
investment program.

Main Risks of Investing in the Fund

      All investments have risks to some degree.  The Fund's investments are subject
to changes in their value from a number of factors, described below.  There is also
the risk that poor security selection by the Manager will cause the Fund to
underperform other funds having a similar objective.

      These risks collectively form the risk profile of the Fund and can affect the
value of the Fund's investments, its investment performance, and the prices of its
shares.  These risks mean that you can lose money by investing in the Fund.  When
you redeem your shares, they may be worth more or less than what you paid for them.
There is no assurance that the Fund will achieve its objective.

|X|   Credit Risk.  Municipal securities are subject to credit risk.  Credit risk is
the risk that the issuer of a municipal security might not make interest and
principal payments on the security as they become due.  If the issuer fails to pay
interest, the Fund's income may be reduced and if the issuer fails to repay
principal, the value of that security and of the Fund's shares may be reduced.
Because the Fund can invest without limit in municipal securities below investment
grade to seek higher income, the Fund's credit risks are greater than those of funds
that buy only investment-grade bonds.  A downgrade in an issuer's credit rating or
other adverse news about an issuer can reduce the market value of that issuer's
securities.

|X|   Special Risks of Lower-Grade Securities.  The Fund's credit risks are greater
than those of funds that buy only investment-grade securities.  Lower-grade debt
securities may be subject to greater market fluctuations and greater risks of loss
of income and principal than investment-grade debt securities.  Securities that are
(or that have fallen) below investment grade are exposed to a greater risk that the
issuers of those securities might not meet their debt obligations.  These risks can
reduce the Fund's share prices and the income it earns.

      While investment grade securities are subject to risks of non-payment of
interest and principal, generally, higher yielding lower-grade bonds, whether rated
or unrated, have greater risks than investment grade securities.  The market for
lower-grade securities may be less liquid, especially during times of general
economic distress, and therefore they may be harder to sell at an acceptable price.

|X|   Interest Rate Risk.  Municipal securities are debt securities that are subject
to changes in value when prevailing interest rates change.  When prevailing interest
rates fall, the values of already-issued municipal securities generally rise.  When
prevailing interest rates rise, the values of already-issued municipal securities
generally fall, and the securities may sell at a discount from their face amount.
The magnitude of these price changes is generally greater for bonds with longer
maturities. When the average maturity of the Fund's portfolio is longer, its share
price may fluctuate more if interest rates change. Additionally, the Fund can buy
variable rate obligations. When interest rates fall, the yields of these securities
decline. Callable bonds the Fund buys are more likely to be called when interest
rates fall, and the Fund might then have to reinvest the proceeds of the callable
instrument in other securities that have lower yields, reducing its income. When
interest rates fall, the income the Fund earns on its investments, and the Fund's
distributions to shareholders, may decline. The Fund currently focuses on
longer-term securities to seek higher income.


Tobacco Settlement Revenue Bonds.  The Fund may invest a significant portion of its
assets in tobacco settlement revenue 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 nearly all the U.S. tobacco manufacturers (approximately 99% of the
current combined market share of tobacco manufacturers). 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. 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. A market share loss by the MSA companies to non-MSA
participating tobacco manufacturers would cause a downward adjustment in the payment
amounts. A participating manufacturer filing for bankruptcy also could cause delays
or reductions in bond payments. The MSA itself has been subject to legal challenges
and has, to date, withstood those challenges.  The Statement of Additional
Information contains more detailed information about the Fund's investments in
tobacco settlement revenue bonds.

|X|   Borrowing for Leverage.  The Fund can borrow from banks to purchase additional
securities, a technique referred to as "leverage" in amounts up to one third of its
total assets (including the amount borrowed) less all liabilities and indebtedness
other than borrowings.  It may also borrow up to 5% of its total assets for
temporary purposes from any person.  This use of leverage will subject the Fund to
greater costs than funds that do not borrow for leverage and may also make the
Fund's share price more sensitive to interest rate changes.  The interest on borrowed
money is an expense that might reduce the Fund's yield.


      |X| Risks of Using Derivative Investments.  The Fund can use derivatives to
seek increased returns or to try to hedge investment risks.  In general terms, a
derivative investment is an investment contract whose value depends on (or is
derived from) the value of an underlying asset, interest rate or index.  "Inverse
floaters" are examples of derivatives the Fund may use.

      If the issuer of the derivative investment does not pay the amount due, the
Fund can lose money on its investment.  Also, the underlying security or investment
on which the derivative is based, and the derivative itself, may not perform the way
the Manager expected it to perform.  If that happens, the Fund will get less income
than expected or its share price could decline.  To try to preserve capital, the
Fund has limits on the amount of particular types of derivatives it can hold.
However, using derivatives can increase the volatility of the Fund's share prices.
Also, some derivatives may be illiquid, making it difficult for the Fund to sell
them quickly at an acceptable price.

      Inverse Floaters Have Special Risks.  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 interest rates rise, inverse
floaters produce less current income, and their market value can become volatile.
Inverse floaters are a type of "derivative security."  Some have a "cap," so that if
interest rates rise above the "cap," the security pays additional interest income.
If rates do not rise above the "cap," the Fund will have paid an additional amount
for a feature that proves worthless. The Fund will not invest more than 35% of its
total assets in inverse floaters.

How Risky Is the Fund Overall?  The risks described above collectively form the
overall risk profile of the Fund and can affect the value of the Fund's investments,
its investment performance and the prices of its shares.  These risks mean that you
can lose money by investing in the Fund.  When you redeem your shares, they may be
worth more or less than what you paid for them.  There is no assurance that the Fund
will achieve its objectives.

      The value of the Fund's investments will change over time due to a number of
factors.  They include changes in general bond market movements, changes in values
of particular bonds because of events affecting the issuer, changes in interest
rates that can affect bond prices overall and changes in perceptions about the
high-yield market among investors.  Also, defaults by issuers of lower-grade
securities could reduce the Fund's income and share prices.  These changes can
affect the value of the Fund's investments and its prices per share.  In the
OppenheimerFunds spectrum, the Fund is likely to be more volatile and has more risks
than funds that focus on investing in investment grade bonds.

      An investment in the Fund is not a deposit of any bank, and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

The Fund's Past Performance


The bar chart and table below show one measure of the risks of investing in the
Fund, by showing changes in the Fund's performance (for its Class A shares) from
year to year for the last 10 calendar years and by showing how the average annual
total returns of the Fund's shares, both before and after taxes, compared to those
of a broad-based market index.  The after-tax returns for those classes will vary.


The after-tax returns are shown for Class A shares only and are calculated using the
historical highest individual federal marginal income tax rates in effect during the
periods shown, and do not reflect the impact of state or local taxes.  In certain
cases, the figure representing "Return After Taxes on Distributions and Sale of Fund
Shares" may be higher than the other return figures for the same period.  A higher
after-tax return may result when a capital loss occurs upon redemption and
translates into an assumed tax deduction that benefits the shareholder.  The
after-tax returns are calculated based on certain assumptions mandated by regulation
and your actual after-tax returns may differ from those shown, depending on your
individual tax situation.  The Fund's past investment performance, both before and
after taxes, is not necessarily an indication of how the Fund will perform in the
future.


Annual Total Returns (Class A) (as of December 31 each year)


[See appendix to prospectus for data in bar chart showing annual total return]

Sales  charges and taxes are not  included in the  calculations  of return in this bar
chart,  and if those  charges  and taxes were  included,  the returns may be less than
those shown.


For the period from 1/1/05 through  6/30/05,  the cumulative  return (not  annualized)
before taxes for Class A shares was 9.79%.
During the period shown in the bar chart, the highest return (not  annualized)  before
taxes for a calendar  quarter  was  16.48%  (2nd Qtr 03) and the  lowest  return  (not
annualized) before taxes for a calendar quarter was -10.22% (1st Qtr 03).


---------------------------------------------------------------------------------
Average   Annual  Total  Returns

for the periods  ended  December 1 Year         5 Years          10 Years (Life
31, 2004                                                         of Class, if

                                                                 less)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class A Shares (inception

10/1/93)                         5.31%          8.34%            7.20%
Return Before Taxes              5.31%          8.34%            7.19%
Return After Taxes on
Distributions                    5.98%          8.11%            7.06%
Return After Taxes on
Distributions and Sale of Fund
Shares

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lehman Brothers Municipal Bond

Index (reflects no deduction     4.48%          7.20%            7.06%(1)
for fees, expenses or taxes)

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


Class B Shares (inception        4.60%          8.29%            7.24%

10/1/93)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------


Class C Shares (inception        8.64%          8.57%            6.28%

8/29/95)
---------------------------------------------------------------------------------

(1)   From 12/31/94.
The Fund's average annual total returns include applicable sales charges: for Class
A, the current maximum initial sales charge of 4.75%; for Class B, the contingent
deferred sales charges of 5% (1-year) and 2% (5-years); and for Class C, the 1%
contingent deferred sales charge for the 1-year period.  Because Class B shares
convert to Class A shares 72 months after purchase, Class B 10 Years performance
does not include the contingent deferred sales charge and uses Class A performance
for the period after conversion.  The returns measure the performance of a
hypothetical account and assume that all dividends and capital gains distributions
have been reinvested in additional shares.  The performance of the Fund's shares is
compared to the Lehman Brothers Municipal Bond Index, an unmanaged index of a broad
range of investment grade municipal bonds that is a measure of the performance of
the general municipal bond market.  The index performance includes the reinvestment
of income but does not reflect transaction costs, fees, expenses or taxes.  The
Fund's investments vary from those in the index.


Fees and Expenses of the Fund


      The following tables are meant to help you understand the fees and expenses
you may pay if you buy and hold shares of the Fund.  The Fund pays a variety of
expenses directly for management of its assets, administration, distribution of its
shares and other services.  Those expenses are subtracted from the Fund's assets to
calculate the Fund's net asset values per share.  All shareholders therefore pay
those expenses indirectly.  Shareholders pay other expenses directly, such as sales
charges and account transaction charges.  The numbers below are based on the Fund's
expenses during its fiscal year ended July 31, 2005.


---------------------------------------------------------------------------------
Shareholder Fees (charges paid directly from your investment):
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
                                  Class A Shares  Class B Shares  Class C Shares
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Maximum Sales Charge (Load) on
purchases (as a % of offering     4.75%           None            None
price)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Maximum Deferred Sales Charge
(Load) (as % of the lower of the  None(1)         5%(2)           1%(3)
original offering price or
redemption proceeds)
---------------------------------------------------------------------------------


---------------------------------------------------------------------------------
Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
                               Class A Shares   Class B Shares   Class C Shares
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Management Fees                0.41%            0.41%            0.41%

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Distribution and/or Service
(12b-1) Fees                   0.15%            0.90%            0.90%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Other Expenses                 0.13%            0.17%            0.15%

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Total Annual Operating

Expenses                       0.69%            1.48%            1.46%

---------------------------------------------------------------------------------
1. A contingent deferred sales charge may apply to redemptions of investments of $1
   million or more of Class A shares.  See "How to Buy Shares" for details.

2.    Applies to redemptions in first year after purchase.  The contingent deferred
   sales charge gradually declines from 5% to 1% in years one through six and is
   eliminated after that.

3.    Applies to shares redeemed within 12 months of purchase.


Expenses may vary in future years. "Other Expenses" include transfer agent fees,
custodial fees, and accounting and legal expenses that the Fund pays. The "Other
Expenses" in the table are based on, among other things, the fees the Fund would
have paid if the transfer agent had not waived a portion of its fees under a
voluntarily undertaking to the Fund to limit those fees to 0.35% of average daily
net assets per fiscal year for all classes. That undertaking may be amended or
withdrawn at any time. The "Other Expenses in the table represent the expenses
incurred during the prior fiscal year due to the expense limitation described above
not being exceeded.


Examples.  The following examples are intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.  The
examples assume that you invest $10,000 in a class of shares of the Fund for the
time periods indicated, and reinvest your dividends and distributions.

      The first example assumes that you redeem all of your shares at the end of
those periods.  The second example assumes you keep your shares. Both examples also
assume that your investment has a 5% return each year and that the class's operating
expenses remain the same. Your actual costs may be higher or lower because expenses
will vary over time. Based on these assumptions your expenses would be as follows:

---------------------------------------------------------------------------------
If shares are redeemed:     1 year      3 years      5 years        10 years
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Class A Shares               $542         $686         $842          $1,296

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

Class B Shares               $652         $771        $1,014       $1,365(1)

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

Class C Shares               $250         $465         $803          $1,759

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








---------------------------------------------------------------------------------
If    shares    are   not   1 year      3 years      5 years        10 years
redeemed:
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Class A Shares               $542         $686         $842          $1,296

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

Class B Shares               $152         $471         $814        $1,365(1)

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

Class C Shares               $150         $465         $803          $1,759

---------------------------------------------------------------------------------
In the first example, expenses include the initial sales charge for Class A and the
applicable Class B and Class C contingent deferred sales charges. In the second
example, the Class A expenses include the sales charge, but Class B and Class C
expenses do not include contingent deferred sales charges.

1.  Class B expenses for years 7 through 10 are based on Class A expenses since
Class B shares automatically convert to Class A shares 72 months after purchase.


About the Fund's Investments

The Fund's Principal Investment Policies and Risks.  The allocation of the Fund's
portfolio among different types of investments will vary over time based on the
Manager's evaluation of economic and market trends.  The Fund's portfolio might not
always include all of the different types of investments described in this
prospectus.

      The Manager tries to reduce risks by carefully researching securities before
they are purchased.  The Fund attempts to reduce its exposure to market risks by
diversifying its investments, that is, by not holding a substantial amount of
securities of any one issuer and by not investing too great a percentage of the
Fund's assets in any one issuer.  However, changes in the overall market prices of
municipal securities and the income they pay can occur at any time.  The yield and
share prices of the Fund will change daily based on changes in market prices of
securities, interest rates and market conditions and in response to other economic
events.  The Statement of Additional Information contains more detailed information
about the Fund's investment policies and risks.

What is A Municipal Security?  A municipal security is essentially a loan by the
buyer to the issuer of the security.  The issuer promises to pay back the principal
amount of the loan and normally pay interest exempt from federal individual income
taxes.


      |X| Municipal Securities. The Fund buys municipal bonds and notes, tax-exempt
commercial paper, certificates of participation in municipal leases and other debt
obligations.  These debt obligations are issued by state governments, as well as
their political subdivisions (such as cities, towns and counties), and their
agencies and authorities.  The Fund can also buy securities issued by the District
of Columbia, any commonwealths, territories or possessions of the United States, or
their respective agencies, instrumentalities or authorities, if the interest paid on
the security is not subject to federal individual income tax (in the opinion of bond
counsel to the issuer at the time the security is issued).   Under highly unusual
circumstances, the Internal Revenue Service may determine that a municipal bond
issued as tax-exempt should in fact be taxable. If the Fund held such a bond, it
might have to distribute taxable income or reclassify as taxable income previously
distributed as tax-free.


      Municipal securities are issued to raise money for a variety of public or
private purposes, including financing state or local governments, financing specific
projects or public facilities.  The Fund can buy both long-term and short-term
municipal securities.  Long-term securities have a maturity of more than one (1)
year.  The Fund generally focuses on longer-term securities, to seek higher income.


      The Fund can buy municipal securities that are "general obligations," which
are secured by the issuer's pledge of its full faith, credit and taxing power for
the payment of principal and interest. Some debt securities, such as zero-coupon
securities, do not pay current interest.  Other securities may be subject to calls
by the issuer to redeem the debt or to prepayment prior to their stated maturity.
The Fund can also buy "revenue obligations," whose interest is payable only from the
revenues derived from a particular facility or class of facilities, or a specific
excise tax or other revenue source such as, e.g., tobacco revenue settlement bonds.
Some of these revenue obligations are industrial development bonds and private
activity bonds that pay interest that may be a tax preference item subject to
alternative minimum taxation for investors subject to federal alternative minimum
tax.


      |X| Municipal Lease  Obligations.  Municipal  leases are used by state and local
governments  to obtain funds to acquire land,  equipment or  facilities.  The Fund can
invest in certificates  of  participation  that represent a proportionate  interest in
payments  made  under  municipal  lease  obligations.  Most  municipal  leases,  while
secured  by  the  leased  property,   are  not  general  obligations  of  the  issuing
municipality.  They often  contain  "non-appropriation"  clauses that provide that the
municipal  government  has no  obligation  to make lease or  installment  payments  in
future years unless money is appropriated on a yearly basis.

      If the  government  stops making  payments or transfers its payment  obligations
to a private entity,  the obligation  could lose value or become  taxable.  Some lease
obligations  might not have an active  trading  market,  making it  difficult  for the
Fund to sell them quickly at an acceptable price.

      |X| Floating  Rate/Variable  Rate  Obligations.  Some municipal  securities have
variable  or  floating  interest  rates.  Variable  rates  are  adjustable  at  stated
periodic  intervals.   Floating  rates  are  automatically  adjusted  according  to  a
specified market rate for such  investments,  such as the percentage of the prime rate
of a bank, or the ninety-one (91) day U.S.  Treasury Bill rate. These  obligations may
be secured by bank letters of credit or other credit support arrangements.

      |X| Ratings of Municipal  Securities the Fund Buys.  The Fund buys  lower-grade,
high-yield  municipal  securities to seek high current income.  There are no limits on
the  amount  of the  Fund's  assets  that can be  invested  in debt  securities  below
investment  grade.  Securities  that are  rated  below  "investment  grade"  are those
rated  below  "Baa" by  Moody's,  or lower  than  "BBB" by  Standard  & Poor's  Rating
Services,    or   comparable   ratings   by   other   nationally   recognized   rating
organizations.  The  Fund  can  invest  in  securities  rated  as low as "C" or "D" or
which  may be in  default  at the time the  Fund  buys  them.  Rating  categories  are
described in the  Statement  of  Additional  Information.  If a security the Fund buys
is not rated,  the Manager  will use its  judgment to assign a rating that it believes
is comparable to that of a rating  organization.  If a rating of a security is reduced
after the Fund buys it,  the Fund is not  required  automatically  to  dispose of that
security.  However,  the Manager will evaluate those  securities to determine  whether
to keep them in the Fund's portfolio.

      The Manager  relies to some extent on credit  ratings by  nationally  recognized
rating  agencies in evaluating  the credit risk of securities  selected for the Fund's
portfolio.  It also  uses its own  research  and  analysis.  Many  factors  affect  an
issuer's  ability  to make  timely  payments,  and the  credit  risks of a  particular
security  may change over time.  If a rating of a security  is reduced  after the Fund
buys  it,  the  Fund is not  required  automatically  to  dispose  of  that  security.
However,  the Manager will  evaluate  those  securities  to determine  whether to keep
them in the Fund's portfolio.

      The  Fund  can   invest  a   significant   portion  of  its  assets  in  unrated
securities.  Some of these unrated  securities may not have an active trading  market,
which  means  that the Fund  might  have  difficulty  valuing  them and  selling  them
promptly at an acceptable price.

      |X|  Can the  Fund's  Investment  Objective  and  Policies  Change?  The  Fund's
Board of Trustees can change  non-fundamental  policies without shareholder  approval,
although  significant  changes  will be described in  amendments  to this  Prospectus.
Fundamental  policies  cannot be changed  without  the  approval  of a majority of the
Fund's  outstanding  voting shares.  The Fund's investment  objective is a fundamental
policy.  Other  investment  restrictions  that are fundamental  policies are listed in
the Statement of  Additional  Information.  An  investment  policy or technique is not
fundamental  unless this  Prospectus or the Statement of Additional  Information  says
that it is.

Other  Investment  Strategies.  To seek  its  objective,  the  Fund  can  also use the
investment  techniques and strategies  described  below.  The Manager might not always
use all of the different types of techniques and investments  described  below.  These
techniques  involve  risks,  although  some are designed to help reduce  investment or
market risk.

      |X| "When-Issued"  and "Delayed  Delivery"  Transactions.  The Fund can purchase
municipal  securities  on  a  "when-issued"  basis  and  can  purchase  or  sell  such
securities on a "delayed  delivery"  basis.  Between the purchase and  settlement,  no
payment  is made for the  security  and no  interest  accrues  to the  buyer  from the
investment.  There  is a risk  of  loss  to the  Fund  if the  value  of the  security
declines prior to the settlement date.

      |X|  Puts  and   Stand-By   Commitments.   The   Fund  can   acquire   "stand-by
commitments"  or "puts" with respect to municipal  securities.  The  investments  give
the Fund  the  right to sell  securities  at a set  price  on  demand  to the  issuing
broker-dealer  or bank.  However,  a security  having  this  feature  may have a lower
interest  rate. The Fund will acquire  stand-by  commitments or puts solely to enhance
portfolio liquidity.

      |X| Illiquid and  Restricted  Securities.  Investments  may be illiquid  because
they do not have an active  trading  market,  making  it  difficult  to value  them or
dispose of them  promptly  at an  acceptable  price.  Restricted  securities  may have
terms that limit their  resale to other  investors or may require  registration  under
federal  securities  laws before they can be sold  publicly.  The Fund will not invest
more than 15% of its net assets in  illiquid  securities  and cannot  invest more than
10% of its net  assets in  restricted  securities.  Those  limits  include  unrated or
illiquid  tax-exempt  municipal  leases that cannot make up more than 5% of the Fund's
net assets.  Certain  restricted  securities that are eligible for resale to qualified
institutional  purchasers  may not be subject to the 10% limit.  The Manager  monitors
holdings of illiquid  securities on an ongoing basis to determine  whether to sell any
holdings to maintain adequate liquidity.

      |X|  Hedging.  The Fund can purchase  and sell  derivatives  for use as "hedging
instruments."  The Fund does not use hedging  instruments  for  speculative  purposes,
and has  limits on its use of them.  The Fund does not use  hedging  instruments  to a
substantial  degree  and is not  required  to  use  them  in  seeking  its  investment
objective.

      Hedging  involves risks.  If the Manager uses a hedging  instrument at the wrong
time or judges market  conditions  incorrectly,  the hedge might be  unsuccessful  and
the strategy could reduce the Fund's  return.  The Fund could also  experience  losses
if the prices of its  futures  and  options  positions  were not  correlated  with its
other  investments  or if it could not close out a  position  because  of an  illiquid
market for the future or option.

      |X| Other Derivatives.          The  Fund  can   invest   in  other   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.

      Interest  rate swaps are subject to credit  risks and interest  rate risks.  The
Fund could be obligated to pay more under its swap  agreements  than it receives under
them,  as a result of interest  rate  changes.  The Fund cannot  enter into swaps with
respect to more than 25% of its total assets.


Portfolio Turnover. A change in the securities held by the Fund is known as
"portfolio turnover." The Fund may engage in active and frequent trading to try to
achieve its objective, and may have a high portfolio turnover rate (for example,
over 100%).  While increased portfolio turnover creates higher brokerage and
transaction costs for the (and may reduce performance), in most cases the Fund does
not pay brokerage commissions on debt securities it buys. If the Fund realizes
capital gains when it sells its portfolio investments, it generally must pay those
gains out to shareholders, increasing their taxable distributions. The Financial
Highlights table at the end of this Prospectus shows the Fund's portfolio turnover
rates during recent prior fiscal years.


Temporary  Defensive  and  Interim  Investments.  In  times  of  unstable  or  adverse
market, political or economic conditions,  the Fund can invest up to 100% of its total
assets in  temporary  defensive  investments  that are  inconsistent  with the  Fund's
principal  investment  strategies.  Generally,  the Fund's defensive  investments will
be  short-term  municipal  securities,  but  could be U.S.  government  securities  or
highly-rated  corporate  debt  securities.  The income from some  temporary  defensive
investments  might not be tax-exempt,  and therefore when making those investments the
Fund might not achieve its objective.


      Under  normal  market  conditions,  the  Fund  can  also  hold  these  types  of
investments for cash management  purposes  pending the investment of proceeds from the
sale of Fund shares or portfolio  securities  or to meet  anticipated  redemptions  of
Fund shares.


PORTFOLIO  HOLDINGS.  The Fund's  portfolio  holdings are included in semi-annual  and
annual reports that are  distributed to  shareholders of the Fund within 60 days after
the  close of the  period  for  which  such  report  is  being  made.  The  Fund  also
discloses its portfolio  holdings in its  Statements of Investments on Form N-Q, which
are filed  with the SEC no later  than 60 days  after the close of its first and third
fiscal  quarters.   These  required  filings  are  publicly   available  at  the  SEC.
Therefore,  portfolio  holdings of the Fund are made publicly  available no later than
60 days after the close of each of the Fund's fiscal quarters.

A description  of the Fund's  policies and  procedures  with respect to the disclosure
of  the  Fund's  portfolio   securities  is  available  in  the  Fund's  Statement  of
Additional Information.




How the Fund is Managed

The Manager.  OppenheimerFunds,  Inc., the Manager, chooses the Fund's investments and
handles its day-to-day  business.  The Manager carries out its duties,  subject to the
policies  established  by  the  Board  of  Trustees,   under  an  investment  advisory
agreement  that states the Manager's  responsibilities.  The  agreement  sets the fees
the Fund pays to the Manager and describes  the expenses that the Fund is  responsible
to pay to conduct its business.


      The Manager has  operated as an  investment  advisor  since  January  1960.  The
Manager  and its  subsidiaries  and  controlled  affiliates  managed  more  than  $180
billion in assets as of June 30, 2005,  including  other  Oppenheimer  funds with more
than 7 million  shareholder  accounts.  The Manager is located at 225 Liberty  Street,
11th Floor, New York, New York 10281-1008.

      |X| Advisory Fees. Under the investment  advisory  agreement,  the Fund pays the
Manager an advisory  fee at an annual rate that  declines as the Fund's  assets  grow:
0.60% of the first $200 million of average  annual net assets,  0.55% of the next $100
million,  0.50% of the next $200  million,  0.45% of the next $250  million,  0.40% of
the next  $250  million,  and  0.35% of  average  annual  net  assets  in excess of $1
billion.  The Fund's  management  fees for its last fiscal  year ended July 31,  2005,
was 0.41% of average annual net assets for each class of shares.

A discussion regarding the basis for the Board of Trustees' approval of the
Fund's investment advisory contract is available in the Fund's Annual Report to
shareholders for the year ended July 31, 2005.

     Portfolio Managers.   The Fund's portfolio is managed by a team of investment
     professionals, including Ronald H. Fielding, Daniel G. Loughran, Scott Cottier
     and Troy Willis, who are primarily responsible for the day-to-day management of
     the Fund's investments.

     Mr. Fielding has been a Senior Portfolio Manager of the Fund since July 2002.
     Mr. Fielding has been a Senior Vice President of the Manager since January 1996
     and Chairman of the Rochester Division of the Manager since January 1996.  He is
     a portfolio manager and officer of other funds in the OppenheimerFunds complex.
     Mr. Fielding is the team leader and lead manager and a trader for the Fund.

     Mr. Loughran has been a Portfolio Manager of the Fund since April 2001.  Mr.
     Loughran has been a Vice President of the Manager since April 2001 and has been
     a portfolio manager with the Manager since 1999.  He is a portfolio manager of
     other funds in the OppenheimerFunds complex.  Mr. Loughran is both a portfolio
     manager and a trader for the Fund.

     Mr. Cottier has been a Portfolio Manager of the Fund since 2002.  Mr. Cottier
     has been a Vice President of the Manager since 2002.  Prior to joining the
     Manager in 2002, Mr. Cottier was a portfolio manager and trader at Victory
     Capital Management from 1999 to 2002.  He is a portfolio manager of other funds
     in the OppenheimerFunds complex.  Mr. Cottier is both a portfolio manager and a
     trader for the Fund.

     Mr. Willis has been an Associate Portfolio Manager of both the Fund and the
     Manager since 2003.  Prior to joining the Manager in 2003, Mr. Willis was a
     Corporate Attorney for Southern Resource Group from 1999 to 2003.  He is an
     associate portfolio manager of other funds in the OppenheimerFunds complex. Mr.
     Willis is both an associate portfolio manager and a trader for the Fund.

     Additional information about the Fund's Portfolio Management Team, regarding
     compensation, other accounts managed and their ownership of Fund shares, is
     provided in the Statement of Additional Information.


Pending Litigation.  A consolidated amended complaint has been filed as putative
derivative and class actions against the Manager, Distributor and Transfer
Agent, as well as 51 of the Oppenheimer funds (collectively the "funds")
including the Fund, 30 present and former Directors or Trustees and 8 present
and former officers of certain 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 fund assets to make those payments in violation of the Investment Company Act
and the Investment Advisers Act of 1940. Also, like those complaints, the
complaint alleges that by permitting and/or participating in those actions, the
Directors/Trustees and the officers breached their fiduciary duties to Fund
shareholders under the Investment Company Act 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.

The  defendants  believe the claims  asserted in these law suits to be without  merit,
and intend to defend the suits  vigorously.  The  Manager and the  Distributor  do not
believe that the pending  actions are likely to have a material  adverse effect on the
Fund  or  on  their  ability  to  perform  their  respective  investment  advisory  or
distribution agreements with the Fund.


ABOUT YOUR ACCOUNT

How to Buy Shares

You can buy shares several ways, as described below. The Fund's Distributor,
OppenheimerFunds Distributor, Inc., may appoint servicing agents to accept purchase
(and redemption) orders. The Distributor, in its sole discretion, may reject any
purchase order for the Fund's shares.


Buying Shares Through Your Dealer. You can buy shares through any dealer, broker or
      financial institution that has a sales agreement with the Distributor. Your
      dealer will place your order with the Distributor on your behalf.  A broker or
      dealer may charge for that service.
Buying Shares Through the Distributor.  Complete an OppenheimerFunds New Account
      Application and return it with a check payable to "OppenheimerFunds
      Distributor, Inc." Mail it to P.O. Box 5270, Denver, Colorado 80217.  If you
      do not list a dealer on the application, the Distributor will act as your agent
      in buying the 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.   However, we recommend that you discuss
      your investment with a financial advisor before you make a purchase to be sure
      that the Fund is appropriate for you.

o     Paying by Federal Funds Wire. Shares purchased through the Distributor may be
      paid for by Federal Funds wire. The minimum investment is $2,500. Before
      sending a wire, call the Distributor's Wire Department at 1.800.225.5677 to
      notify the Distributor of the wire and to receive further instructions.

o     Buying Shares Through OppenheimerFunds AccountLink. With AccountLink, you pay
      for shares by electronic funds transfers from your bank account. Shares are
      purchased for your account by a transfer of money from your bank account
      through the Automated Clearing House (ACH) system. You can provide those
      instructions automatically, under an Asset Builder Plan, described below, or
      by telephone instructions using OppenheimerFunds PhoneLink, also described
      below.  Please refer to "AccountLink," below for more details.
o     Buying Shares Through Asset Builder Plans. You may purchase shares of the Fund
      automatically each month from your account at a bank or other financial
      institution under an Asset Builder Plan with AccountLink. Details are in the
      Asset Builder application and the Statement of Additional Information.


WHAT IS THE MINIMUM AMOUNT YOU MUST INVEST? In most cases, you can buy Fund shares
with a minimum initial investment of $1,000 and make additional investments at any
time with as little as $50. There are reduced minimums available under the following
special investment plans:
o     By using an Asset Builder Plan or Automatic Exchange Plan (details are in the
      Statement of Additional Information), or government allotment plan, you can
      make subsequent investments (after making the initial investment of $500) for
      as little as $50. For any type of account established under one of these plans
      prior to November 1, 2002, the minimum additional investment will remain $25.
o     The minimum investment requirement does not apply to reinvesting dividends
      from the Fund or other Oppenheimer funds (a list of them appears in the
      Statement of Additional Information, or you can ask your dealer or call the
      Transfer Agent), or reinvesting distributions from unit investment trusts that
      have made arrangements with the Distributor.

AT WHAT PRICE ARE SHARES SOLD? Shares are sold at their offering price which is the
net asset value per share plus any initial sales charge that applies. The offering
price that applies to a purchase order is based on the next calculation of the net
asset value per share that is made after the Distributor receives the purchase order
at its offices in Colorado, or after any agent appointed by the Distributor receives
the order.


Net Asset Value. The Fund calculates the net asset value of each class of shares as
      of the close of the New York Stock Exchange (the "NYSE"), on each day the NYSE
      is open for trading (referred to in this Prospectus as a "regular business
      day"). The NYSE normally closes at 4:00 p.m., Eastern time, but may close
      earlier on some days. All references to time in this Prospectus mean "Eastern
      time."


            The net asset value per share for a class of shares on a "regular
      business day" is determined by dividing the value of the Fund's net assets
      attributable to that class by the number of shares of that class outstanding
      on that day.  To determine net asset values, the Fund assets are valued
      primarily on the basis of current market quotations.  If market quotations are
      not readily available or do not accurately reflect fair value for a security
      (in the Manager's judgment) or if a security's value has been materially
      affected by events occurring after the close of the exchange or market on
      which the security is principally traded, that security may be valued by
      another method that the Board of Trustees believes accurately reflects the
      fair value.

            The Board has adopted valuation procedures for the Fund and has
      delegated the day-to-day responsibility for fair value determinations to the
      Manager's Valuation Committee.  Fair value determinations by the Manager are
      subject to review, approval and ratification by the Board at its next
      scheduled meeting after the fair valuations are determined.  In determining
      whether current market prices are readily available and reliable, the Manager
      monitors the information it receives in the ordinary course of its investment
      management responsibilities for significant events that it believes in good
      faith will affect the market prices of the securities of issuers held by the
      Fund.  Those may include events affecting specific issuers (for example, a
      halt in trading of the securities of an issuer on an exchange during the
      trading day) or events affecting securities markets (for example, a foreign
      securities market closes early because of a natural disaster).

            If, after the close of the principal market on which a security held by
      the Fund is traded and before the time as of which the Fund's net asset values
      are calculated that day, a significant event occurs that the Manager learns of
      and believes in the exercise of its judgment will cause a material change in
      the value of that security from the closing price of the security on the
      principal market on which it is traded, the Manager will use its best judgment
      to determine a fair value for that security.

      The Manager believes that foreign securities values may be affected by
      volatility that occurs in U.S. markets on a trading day after the close of
      foreign securities markets.  The Manager's fair valuation procedures therefore
      include a procedure whereby foreign securities prices may be "fair valued" to
      take those factors into account.


The Offering Price.  To receive the offering price for a particular day, the
      Distributor or its designated agent must receive your order by the time the
      NYSE closes that day. If your order is received on a day when the NYSE is
      closed or after it has closed, the order will receive the next offering price
      that is determined after your order is received.
Buying Through a Dealer.  If you buy shares through a dealer, your dealer must
      receive the order by the close of the NYSE and transmit it to the Distributor
      so that it is received before the Distributor's close of business on a regular
      business day (normally 5:00 p.m.) to receive that day's offering price, unless
      your dealer has made alternative arrangements with the Distributor. Otherwise,
      the order will receive the next offering price that is determined.


--------------------------------------------------------------------------------------
WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund offers investors three
different classes of shares.  The different classes of shares represent investments
in the same portfolio of securities, but the classes are subject to different
expenses and will likely have different share prices. When you buy shares, be sure
to specify the class of shares. If you do not choose a class, your investment will
be made in Class A shares.
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Class A Shares. If you buy Class A shares, you pay an initial sales charge (on
      investments up to $1 million). The amount of that sales charge will vary
      depending on the amount you invest. The sales charge rates are listed in "How
      Can You Buy Class A Shares?" below.
--------------------------------------------------------------------------------------
Class B Shares. If you buy Class B shares, you pay no sales charge at the time of
      purchase, but you will pay an annual asset-based sales charge. If you sell
      your shares within 6 years of buying them, you will normally pay a contingent
      deferred sales charge. That contingent deferred sales charge varies depending
      on how long you own your shares, as described in "How Can You Buy Class B
      Shares?" below.
--------------------------------------------------------------------------------------
Class C Shares. If you buy Class C shares, you pay no sales charge at the time of
      purchase, but you will pay an annual asset-based sales charge. If you sell
      your shares within 12 months of buying them, you will normally pay a
      contingent deferred sales charge of 1.0%, as described in "How Can You Buy
      Class C Shares?" below.
--------------------------------------------------------------------------------------

WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is best
suited to your needs depends on a number of factors that you should discuss with
your financial advisor. Some factors to consider are how much you plan to invest and
how long you plan to hold your investment. If your goals and objectives change over
time and you plan to purchase additional shares, you should re-evaluate those
factors to see if you should consider another class of shares. The Fund's operating
costs that apply to a class of shares and the effect of the different types of sales
charges on your investment will vary your investment results over time.

      The discussion below is not intended to be investment advice or a
recommendation, because each investor's financial considerations are different. The
discussion below assumes that you will purchase only one class of shares and not a
combination of shares of different classes. Of course, these examples are based on
approximations of the effects of current sales charges and expenses projected over
time, and do not detail all of the considerations in selecting a class of shares.
You should analyze your options carefully with your financial advisor before making
that choice.

How Long Do You Expect to Hold Your Investment? While future financial needs cannot
      be predicted with certainty, knowing how long you expect to hold your
      investment will assist you in selecting the appropriate class of shares.
      Because of the effect of class-based expenses, your choice will also depend on
      how much you plan to invest. For example, the reduced sales charges available
      for larger purchases of Class A shares may, over time, offset the effect of
      paying an initial sales charge on your investment, compared to the effect over
      time of higher class-based expenses on shares of Class B or Class C.

   o  Investing for the Shorter Term. While the Fund is meant to be a long-term
      investment, if you have a relatively short-term investment horizon (that is,
      you plan to hold your shares for not more than six years), you should most
      likely purchase Class A or Class C shares rather than Class B shares. That is
      because of the effect of the Class B contingent deferred sales charge if you
      redeem within six years, as well as the effect of the Class B asset-based
      sales charge on the investment return for that class in the short-term. Class
      C shares might be the appropriate choice (especially for investments of less
      than $100,000), because there is no initial sales charge on Class C shares,
      and the contingent deferred sales charge does not apply to amounts you sell
      after holding them one year.

      However, if you plan to invest more than $100,000 for the shorter term, then
      as your investment horizon increases toward six years, Class C shares might
      not be as advantageous as Class A shares. That is because the annual
      asset-based sales charge on Class C shares will have a greater impact on your
      account over the longer term than the reduced front-end sales charge available
      for larger purchases of Class A shares.

      If you invest $1 million or more, in most cases Class A shares will be the
      most advantageous choice, no matter how long you intend to hold your shares.
      The Distributor will not accept purchase orders of $100,000 or more for Class
      B shares or $1 million or more of Class C shares from a single investor.
      Dealers or other financial intermediaries purchasing shares for their
      customers in omnibus accounts are responsible for compliance with those limits.

o     Investing for the Longer Term.  If you are investing  less than $100,000 for the
      longer-term,  for  example for  retirement,  and do not expect to need access to
      your money for seven years or more, Class B shares may be appropriate.

Are There  Differences in Account  Features That Matter to You? Some account  features
      may not be available  to Class B and Class C  shareholders.  Other  features may
      not be  advisable  (because  of the  effect  of the  contingent  deferred  sales
      charge) for Class B and Class C shareholders.  Therefore,  you should  carefully
      review how you plan to use your  investment  account before deciding which class
      of shares to buy.

      Additionally, the dividends payable to Class B and Class C shareholders will
      be reduced by the additional expenses borne by those classes that are not
      borne by Class A shares, such as the Class B and Class C asset-based sales
      charge described below and in the Statement of Additional Information. Also,
      checkwriting is not available on accounts subject to a contingent deferred
      sales charge.

How Do Share Classes Affect Payments to Your Broker? A financial advisor may receive
      different compensation for selling one class of shares than for selling another
      class. It is important to remember that Class B and Class C contingent deferred
      sales charges and asset-based sales charges have the same purpose as the
      front-end sales charge on sales of Class A shares: to compensate the
      Distributor for concessions and expenses it pays to dealers and financial
      institutions for selling shares. The Distributor may pay additional
      compensation from its own resources to securities dealers or financial
      institutions based upon the value of shares of the Fund owned by the dealer or
      financial institution for its own account or for its customers.


HOW CAN YOU BUY CLASS A SHARES? Class A shares are sold at their offering price,
which is normally net asset value plus an initial sales charge.  However, in some
cases, described below, purchases are not subject to an initial sales charge, and
the offering price will be the net asset value. In other cases, reduced sales
charges may be available, as described below or in the Statement of Additional
Information. Out of the amount you invest, the Fund receives the net asset value to
invest for your account.

      The sales charge varies depending on the amount of your purchase.  A portion
of the sales charge may be retained by the Distributor or allocated to your dealer
as concession. The Distributor reserves the right to reallow the entire concession
to dealers. The current sales charge rates and concessions paid to dealers and
brokers are as follows:


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






 ------------------------------------------------------------------------------
 Amount of Purchase       Front-End Sales  Front-End Sales   Concession As
                          ---------------- Charge As a
                          Charge As a      Percentage of
                          Percentage of    Net               Percentage of
                          Offering Price   Amount Invested   Offering Price
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 Less than $50,000             4.75%             4.98%             4.00%
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $50,000 or more but           4.50%             4.71%             4.00%
 less than $100,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $100,000 or more but          3.50%             3.63%             3.00%
 less than $250,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $250,000 or more but          2.50%             2.56%             2.25%
 less than $500,000
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
 $500,000 or more but          2.00%             2.04%             1.80%
 less than $1 million
 ------------------------------------------------------------------------------

Due to rounding, the actual sales charge for a particular transaction may be higher
or lower than the rates listed above.

SPECIAL SALES CHARGE ARRANGEMENTS AND WAIVERS.  Appendix C to the Statement of
Additional Information details the conditions for the waiver of sales charges that
apply in certain cases and the special sales charge rates that apply to purchases of
shares of the Fund by certain groups, or in other special types of transactions. To
receive a waiver or special sales charge rate, you must advise the Distributor when
purchasing shares or the Transfer Agent when redeeming shares that a special
condition applies.

Can You Reduce Class A Sales Charges?  You and your spouse may be eligible to buy
Class A shares of the Fund at reduced sales charge rates set forth in the table
above under the Fund's "Right of Accumulation" or a "Letter of Intent." The Fund
reserves the right to modify or to cease offering these programs at any time.

o     Right of Accumulation. To qualify for the reduced Class A sales charge that
         would apply to a larger purchase than you are currently making (as
         shown in the table above), you can add the value of any Class A,
         Class B or, Class C shares of the Fund or other Oppenheimer funds
         that you or your spouse currently own, or are currently purchasing,
         to the value of your Class A share purchase. Your Class A shares of
         Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves on
         which you have not paid a sales charge will not be counted for this
         purpose.  In totaling your holdings, you may count shares held in
         your individual accounts (including IRAs and 403(b) plans), your
         joint accounts with your spouse, or accounts you or your spouse hold
         as trustees or custodians on behalf of your children who are minors.
         A fiduciary can count all shares purchased for a trust, estate or
         other fiduciary account that has multiple accounts (including
         employee benefit plans for the same employer).  If you are buying
         shares directly from the Fund, you must inform the Distributor of
         your eligibility and holdings at the time of your purchase in order
         to qualify for the Right of Accumulation. If you are buying shares
         through your financial intermediary you must notify your intermediary
         of your eligibility for the Right of Accumulation at the time of your
         purchase.

            To count shares of eligible Oppenheimer funds held in accounts at
         other intermediaries under this Right of Accumulation, you may be
         requested to provide the Distributor or your current intermediary with a
         copy of all account statements showing your current holdings of the
         Fund or other eligible Oppenheimer funds, including statements for
         accounts held by you and your spouse or in retirement plans or trust or
         custodial accounts for minor children as described above. The
         Distributor or intermediary through which you are buying shares will
         calculate the value of your eligible Oppenheimer fund shares, based on
         the current offering price, per share to determine which Class A sales
         charge rate you qualify for on your current purchase.

o     Letters of Intent. You may also qualify for reduced Class A sales charges by
         submitting a Letter of Intent to the Distributor.  A Letter of Intent
         is a written statement of your intention to purchase a specified
         value of Class A, Class B or Class C shares of the Fund or other
         Oppenheimer funds over a 13-month period. The total amount of your
         intended purchases of Class A, Class B and Class C shares will
         determine the reduced sales charge rate that will apply to your Class
         A share purchases during that period. You can choose to include
         purchases made up to 90 days before the date that you submit a
         Letter.   Your Class A shares of Oppenheimer Money Market Fund or
         Oppenheimer Cash Reserves on which you have not paid a sales charge
         will not be counted for this purpose.  Submitting a Letter of Intent
         does not obligate you to purchase the specified amount of shares.
         You may also be able to apply the Right of Accumulation to these
         purchases.

            If you do not complete the Letter of Intent, the front-end sales
         charge you paid on your purchases will be recalculated to reflect the
         actual value of shares you purchased.  A certain portion of your
         shares will be held in escrow by the Fund's Transfer Agent for this
         purpose.  Please refer to "How to Buy Shares - Letters of Intent" in
         the Fund's Statement of Additional Information for more complete
         information.


Other Special Sales Charge Arrangements and Waivers.  The Fund and the
Distributor offer other opportunities to purchase shares without front-end or
contingent deferred sales charges under the programs described below. The Fund
reserves the right to amend or discontinue these programs at any time without
prior notice.

o     Dividend Reinvestment.  Dividends and/or capital gains distributions received
         by a shareholder from the Fund may be reinvested in shares of the
         Fund or any of the other Oppenheimer funds without sales charge, at
         the net asset value per share in effect on the payable date. You must
         notify the Transfer Agent in writing to elect this option and must
         have an existing account in the fund selected for reinvestment.
o     Exchanges of Shares.  Shares of the Fund may be exchanged for shares of
         certain other Oppenheimer funds at net asset value per share at the
         time of exchange, without sales charge, and shares of the Fund can be
         purchased by exchange of shares of certain other Oppenheimer funds on
         the same basis. Please refer to "How to Exchange Shares" in this
         Prospectus and in the Statement of Additional Information for more
         details, including a discussion of circumstances in which sales
         charges may apply on exchanges.
o     Reinvestment Privilege.  Within six months of a redemption of certain Class A
         and Class B shares, the proceeds may be reinvested in Class A shares
         of the Fund without sales charge. This privilege applies to
         redemptions of Class A shares that were subject to an initial sales
         charge or Class A or Class B shares that were subject to a contingent
         deferred sales charge when redeemed. The investor must ask the
         Transfer Agent for that privilege at the time of reinvestment and
         must identify the account from which the redemption was made.

o     Other Special Reductions and Waivers. The Fund and the Distributor offer
         additional arrangements to reduce or eliminate front-end sales charges
         or to waive contingent deferred sales charges for certain types of
         transactions and for certain classes of investors (primarily retirement
         plans that purchase shares in special programs through the Distributor).
         These are described in greater detail in Appendix C to the Statement of
         Additional Information, which may be ordered by calling 800.225.5677 or
         through the OppenheimerFunds website, at www.oppenheimerfunds.com follow
                                                  ------------------------
         the hyperlinks:   "Access Accounts and Services - `Forms & Literature" -
         "Order Literature" - Statements of Additional Information").  A
         description of these waivers and special sales charge arrangements is
         also available for viewing on the OppenheimerFunds website (follow the
         hyperlinks: "Research Funds" - "Fund Documents" - "View a
         description...").  To receive a waiver or special sales charge rate under
         these programs, the purchaser must notify the Distributor (or other
         financial intermediary through which shares are being purchased) at the
         time of purchase, or notify the Transfer Agent at the time of redeeming
         shares for those waivers that apply to contingent deferred sales charges.


Class A Contingent Deferred Sales Charge. There is no initial sales charge on
      purchases of Class A shares of any one or more of the Oppenheimer funds
      aggregating $1 million or more. The Distributor pays dealers of record
      concessions in an amount equal to 1.0% of purchases of $1 million or more
      (other than purchases by retirement plans, which are not permitted in the
      Fund). That concession will not be paid on purchases of shares by exchange or
      that were previously subject to a front-end sales charge and dealer concession.

      If you redeem any of those shares within a 24 month "holding period" measured
      from the beginning of the calendar month of their purchase, a contingent
      deferred sales charge (called the "Class A contingent deferred sales charge")
      may be deducted from the redemption proceeds. That sales charge will be equal
      to 1.0% of the lesser of:
o     the aggregate net asset value of the redeemed shares at the time of redemption
      (excluding shares purchased by reinvestment of dividends or capital gain
      distributions) or
o     the original net asset value of the redeemed shares.


      The Class A contingent deferred sales charge will not exceed the aggregate
      amount of the concessions the Distributor paid to your dealer on all purchases
      of Class A shares of all Oppenheimer funds you made that were subject to the
      Class A contingent deferred sales charge.

HOW CAN YOU BUY CLASS B SHARES? Class B shares are sold at net asset value per share
without an initial sales charge. However, if Class B shares are redeemed within six
years from the beginning of the calendar month of their purchase, a contingent
deferred sales charge will be deducted from the redemption proceeds. The Class B
contingent deferred sales charge is paid to compensate the Distributor for its
expenses of providing distribution-related services to the Fund in connection with
the sale of Class B shares.

      The amount of the contingent deferred sales charge will depend on the number
of years since you invested and the dollar amount being redeemed, according to the
following schedule for the Class B contingent deferred sales charge holding period:

--------------------------------------------------------------------------------
Years Since Beginning of Month in       Contingent Deferred Sales Charge on
Which Purchase Order was Accepted       Redemptions in That Year
                                        (As % of Amount Subject to Charge)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
0 - 1                                   5.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
1 - 2                                   4.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2 - 3                                   3.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
3 - 4                                   3.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
4 - 5                                   2.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
5 - 6                                   1.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
More than 6                             None
--------------------------------------------------------------------------------
In the table,  a "year" is a 12-month  period.  In applying  the  contingent  deferred
sales  charge,  all  purchases  are  considered to have been made on the first regular
business day of the month in which the purchase was made.


Automatic Conversion of Class B Shares.  Class B shares automatically convert to
      Class A shares 72 months after you purchase them. This conversion feature
      relieves Class B shareholders of the asset-based sales charge that applies to
      Class B shares under the Class B Distribution and Service Plan, described
      below.  The conversion is based on the relative net asset value of the two
      classes, and no sales load or other charge is imposed. When any Class B shares
      that you hold convert, any other Class B shares that were acquired by
      reinvesting dividends and distributions on the converted shares will also
      convert to Class A shares.  For further information on the conversion feature
      and its tax implications, see "Class B Conversion" in the Statement of
      Additional Information.


HOW CAN YOU BUY CLASS C SHARES? Class C shares are sold at net asset value per share
without an initial sales charge. However, if Class C shares are redeemed within a
holding period of 12 months from the beginning of the calendar month of their
purchase, a contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. The Class C contingent deferred sales charge is paid to
compensate the Distributor for its expenses of providing distribution-related
services to the Fund in connection with the sale of Class C shares.

DISTRIBUTION AND SERVICE (12b-1) PLANS.

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
      quarterly at an annual rate of up to 0.15% of the average annual net assets of
      Class A shares of the Fund.  The Board of Trustees can increase that fee to
      0.25% of average annual net assets without shareholder approval. Shareholders
      will be notified of any such change.  The Distributor currently uses all of
      those fees to pay dealers, brokers, banks and other financial institutions
      quarterly for providing personal service and maintenance of accounts of their
      customers that hold Class A shares.

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 pay the
      Distributor for its services and costs in distributing Class B and Class C
      shares and servicing accounts. Under the plans, the Fund pays the Distributor
      an annual asset-based sales charge of 0.75% per year on Class B shares and on
      Class C shares.  The Distributor also receives a service fee of up to 0.15%
      per year under each plan.  However, the Board of Trustees can increase that
      fee to 0.25% of average annual net assets without shareholder approval.
      Shareholders will be notified of any such change.

      The asset-based sales charge and service fees increase Class B and Class C
      expenses by 0.90% of the net assets per year of the respective class. Because
      these fees are paid out of the Fund's assets on an ongoing basis, over time
      these fees will increase the cost of your investment and may cost you more
      than other types of sales charges.

      The Distributor uses the service fees to compensate dealers for providing
      personal services for accounts that hold Class B or Class C shares. The
      Distributor normally pays the 0.15%  service fees to dealers in advance for
      the first year after the shares are sold by the dealer. After the shares have
      been held for a year, the Distributor pays the service fees to dealers on a
      quarterly basis.

      The Distributor currently pays a sales concession of 3.85% of the purchase
      price of Class B shares to dealers from its own resources at the time of sale.
      Including the advance of the service fee, the total amount paid by the
      Distributor to the dealer at the time of sale of Class B shares is therefore
      4.00% of the purchase price. The Distributor normally retains the Class B
      asset-based sales charge. See the Statement of Additional Information for
      exceptions.

      The Distributor currently pays a sales concession of 0.75% of the purchase
      price of Class C shares to dealers from its own resources at the time of sale.
      Including the advance of the service fee, the total amount paid by the
      Distributor to the dealer at the time of sale of Class C shares is therefore
      0.90% of the purchase price. The Distributor pays the asset-based sales charge
      as an ongoing concession to the dealer on Class C shares that have been
      outstanding for a year or more. The Distributor normally retains the Class C
      asset-based sales charge during the first year after Class C shares are
      purchased. See the Statement of Additional Information for exceptions.

      Under certain circumstances, the Distributor will pay the full Class B or
      Class C asset-based sales charge and the service fee to the dealer beginning
      in the first year after purchase of such shares in lieu of paying the dealer
      the sales concession and the advance of the first year's service fee at the
      time of purchase, if there is a special agreement between the dealer and the
      Distributor.  In those circumstances, the sales concession will not be paid to
      the dealer.

      In addition, the Manager and the Distributor may make substantial payments to
      dealers or other financial intermediaries and service providers for
      distribution and/or shareholder servicing activities, out of their own
      resources, including the profits from the advisory fees the Manager receives
      from the Fund.  Some of these distribution-related payments may be made to
      dealers or financial intermediaries for marketing, promotional or related
      expenses; these payments are often referred to as "revenue sharing."  In some
      circumstances, those types of payments may create an incentive for a dealer or
      financial intermediary or its representatives to recommend or offer shares of
      the Fund or other Oppenheimer funds to its customers.  You should ask your
      dealer or financial intermediary for more details about any such payments it
      receives.


Special Investor Services

ACCOUNTLINK. You can use our AccountLink feature to link your Fund account with an
account at a U.S. bank or other financial institution. It must be an Automated
Clearing House (ACH) member. AccountLink lets you:
    o transmit funds electronically to purchase shares by telephone (through a
      service representative or by PhoneLink) or automatically under Asset Builder
      Plans, or
    o have the Transfer Agent send redemption proceeds or transmit dividends and
      distributions directly to your bank account. Please call the Transfer Agent
      for more information.
      You may purchase shares by telephone only after your account has been
established. To purchase shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1.800.225.5677. The purchase payment will be
debited from your bank account.


      AccountLink privileges should be requested on your Application or your
dealer's settlement instructions if you buy your shares through a dealer.  After your
account is established, you can request AccountLink privileges by sending
signature-guaranteed instructions and proper documentation to the Transfer Agent.
AccountLink privileges will apply to each shareholder listed in the registration on
your account as well as to your dealer representative of record unless and until the
Transfer Agent receives written instructions terminating or changing those
privileges. After you establish AccountLink for your account, any change of bank
account information must be made by signature-guaranteed instructions to the
Transfer Agent signed by all shareholders who own the account.


PHONELINK. PhoneLink is the OppenheimerFunds automated telephone system that enables
shareholders to perform a number of account transactions automatically using a
touch-tone phone. PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the PhoneLink number,
1.800.225.5677.
Purchasing Shares. You may purchase shares in amounts up to $100,000 by phone, by
      calling 1.800.225.5677. You must have established AccountLink privileges to
      link your bank account with the Fund to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds Exchange Privilege, described below,
      you can exchange shares automatically by phone from your Fund account to
      another OppenheimerFunds account you have already established by calling the
      special PhoneLink number.
Selling Shares. You can redeem shares by telephone automatically by calling the
      PhoneLink number and the Fund will send the proceeds directly to your
      AccountLink bank account. Please refer to "How to Sell Shares," below for
      details.

CAN YOU SUBMIT TRANSACTION REQUESTS BY FAX? You may send requests for certain types
of account transactions to the Transfer Agent by fax (telecopier). Please call
1.800.225.5677 for information about which transactions may be handled this way.
Transaction requests submitted by fax are subject to the same rules and restrictions
as written and telephone requests described in this Prospectus.


OPPENHEIMERFUNDS INTERNET WEBSITE. You can obtain information about the Fund, as
well as your account balance, on the OppenheimerFunds Internet website, at
www.oppenheimerfunds.com.  Additionally, shareholders listed in the account
------------------------
registration (and the dealer of record) may request certain account transactions
through a special section of that website. To perform account transactions or obtain
account information online, you must first obtain a user I.D. and password on that
website.  If you do not want to have Internet account transaction capability for
your account, please call the Transfer Agent at 1.800.225.5677. At times, the
website may be inaccessible or its transaction features may be unavailable.

AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. The Fund has several plans that enable you
to sell shares automatically or exchange them to another OppenheimerFunds account on
a regular basis.  Please call the Transfer Agent or consult the Statement of
Additional Information for details.


How to Sell Shares


You can sell (redeem) some or all of your shares on any regular business day. Your
shares will be sold at the next net asset value calculated after your order is
received in proper form (which means that it must comply with the procedures
described below) and is accepted by the Transfer Agent. The Fund lets you sell your
shares by writing a letter, by wire, by using the Fund's checkwriting privilege, or
by telephone. You can also set up Automatic Withdrawal Plans to redeem shares on a
regular basis.  If you have questions about any of these procedures, and especially
if you are redeeming shares in a special situation, such as due to the death of the
owner, please call the Transfer Agent first, at 1.800.225.5677, for assistance.


Certain Requests Require a Signature Guarantee. To protect you and the Fund from
      fraud, the following redemption requests must be in writing and must include a
      signature guarantee (although there may be other situations that also require
      a signature guarantee):
   o  You wish to redeem more than $100,000 and receive a check.
   o  The redemption check is not payable to all shareholders listed on the account
      statement.
   o  The redemption check is not sent to the address of record on your account
      statement.
   o  Shares are being transferred to a Fund account with a different owner or name.
   o  Shares are being redeemed by someone (such as an Executor) other than the
      owners.

Where Can You Have Your Signature Guaranteed? The Transfer Agent will accept a
      guarantee of your signature by a number of financial institutions, including:
o     a U.S. bank, trust company, credit union or savings association,
o     a foreign bank that has a U.S. correspondent bank,
o     a U.S. registered dealer or broker in securities, municipal securities or
      government securities, or
o     a U.S. national securities exchange, a registered securities association or a
      clearing agency.
      If you are signing on behalf of a corporation, partnership or other business
or as a fiduciary, you must also include your title in the signature.


Receiving Redemption Proceeds by Wire. While the Fund normally sends your money by
      check, you can arrange to have the proceeds of shares you sell sent by Federal
      Funds wire to a bank account you designate.  It must be a commercial bank that
      is a member of the Federal Reserve wire system. The minimum redemption you can
      have sent by wire is $2,500. There is a $10 fee for each request. To find out
      how to set up this feature on your account or to arrange a wire, call the
      Transfer Agent at 1.800.225.5677.

CHECKWRITING To write checks against your Fund account, request that privilege on
your account application, or contact the Transfer Agent for signature cards. They
must be signed (with a signature guarantee) by all owners of the account and
returned to the Transfer Agent so that checks can be sent to you to use.
Shareholders with joint accounts can elect in writing to have checks paid over the
signature of one owner.  If you previously signed a signature card to establish
checkwriting in another Oppenheimer fund, simply call 1.800.225.5677 to request
checkwriting for an account in this Fund with the same registration as the other
account.


o     Checks can be written to the order of whomever you wish, but may not be cashed
      at the bank the checks are payable through or the Fund's custodian bank.
o     Checkwriting privileges are not available for accounts holding shares that are
      subject to a contingent deferred sales charge.
o     Checks must be written for at least $500. Checks written below the stated
      amount on the check will not be accepted. However, if you have existing checks
      indicating a $100 minimum, you may still use them for amounts of $100 or more.
o     Checks cannot be paid if they are written for more than your account value.
      Remember, your shares fluctuate in value and you should not write a check
      close to the total account value.
o     You may not write a check that would require the Fund to redeem shares that
      were purchased by check or Asset Builder Plan payments within the prior 10
      days.
o     Don't use your checks if you changed your Fund account number, until you
      receive new checks.

HOW DO YOU SELL SHARES BY MAIL? Write a letter of instruction that includes:
   o  Your name,
   o  The Fund's name,
   o  Your Fund account number (from your account statement),
   o  The dollar amount or number of shares to be redeemed,
   o  Any special payment instructions,
   o  Any share certificates for the shares you are selling,
   o  The signatures of all registered owners exactly as the account is registered,
      and
   o  Any special documents requested by the Transfer Agent to assure proper
      authorization of the person asking to sell the shares.

Use the following address for            Send courier or express mail
requests by mail:                        requests to:
OppenheimerFunds Services                OppenheimerFunds Services
P.O. Box 5270                            10200 E. Girard Avenue, Building D
Denver, Colorado 80217                   Denver, Colorado 80231


HOW DO YOU SELL SHARES BY TELEPHONE? You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price calculated
on a particular regular business day, your call must be received by the Transfer
Agent by the close of the NYSE that day, which is normally 4:00 P.M., but may be
earlier on some days. You may not redeem shares under a share certificate by
telephone.

   o  To redeem shares through a service representative or automatically on
      PhoneLink, call 1.800.225.5677.

  Whichever method you use, you may have a check sent to the address on the account
  statement, or, if you have linked your Fund account to your bank account on
  AccountLink, you may have the proceeds sent to that bank account.

Are There Limits on Amounts Redeemed by Telephone?
Telephone Redemptions Paid by Check. Up to $100,000 may be redeemed by telephone in
      any seven-day period. The check must be payable to all owners of record of the
      shares and must be sent to the address on the account statement. This service
      is not available within 30 days of changing the address on an account.

Telephone Redemptions Through AccountLink or by Wire.  There are no dollar limits on
      telephone redemption proceeds sent to a bank account designated when you
      establish AccountLink. Normally the ACH transfer to your bank is initiated on
      the business day after the redemption. You do not receive dividends on the
      proceeds of the shares you redeemed while they are waiting to be transferred.

      If you have requested Federal Funds wire privileges for your account, the wire
      of the redemption proceeds will normally be transmitted on the next bank
      business day after the shares are redeemed. There is a possibility that the
      wire may be delayed up to seven days to enable the Fund to sell securities to
      pay the redemption proceeds. No dividends are accrued or paid on the proceeds
      of shares that have been redeemed and are awaiting transmittal by wire.

CAN YOU SELL SHARES THROUGH YOUR DEALER? The Distributor has made arrangements to
repurchase Fund shares from dealers and brokers on behalf of their customers.
Brokers or dealers may charge for that service. If your shares are held in the name
of your dealer, you must redeem them through your dealer.

HOW CONTINGENT DEFERRED SALES CHARGES AFFECT REDEMPTIONS. If you purchase shares
subject to a Class A, Class B or Class C contingent deferred sales charge and redeem
any of those shares during the applicable holding period for the class of shares,
the contingent deferred sales charge will be deducted from the redemption proceeds
(unless you are eligible for a waiver of that sales charge based on the categories
listed in Appendix C to the Statement of Additional Information and you advise the
Transfer Agent of your eligibility for the waiver when you place your redemption
request.)

      A  contingent  deferred  sales  charge  will be based on the  lesser  of the net
asset value of the  redeemed  shares at the time of  redemption  or the  original  net
asset value. A contingent deferred sales charge is not imposed on:
o     the amount of your account value  represented  by an increase in net asset value
      over the initial purchase price,
o     shares   purchased  by  the   reinvestment   of   dividends  or  capital   gains
      distributions, or
o     shares  redeemed in the  special  circumstances  described  in Appendix C to the
      Statement of Additional Information.

      To determine whether a contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order:
   1. shares acquired by reinvestment of dividends and capital gains distributions,
   2. shares held for the holding period that applies to the class, and
   3. shares held the longest during the holding period.

      Contingent deferred sales charges are not charged when you exchange shares of
the Fund for shares of other Oppenheimer funds. However, if you acquire Class B or
Class C shares of this Fund by exchanging shares of another Oppenheimer fund that
are still subject to a contingent deferred sales charge holding period, that holding
period will carry over to this Fund. If you exchange Class A shares subject to a
contingent deferred sales charge of another Oppenheimer fund for Class A shares of
this Fund, the 24 month contingent deferred sales charge holding period applicable
to Class A shares of this Fund will apply. If you exchange Class A shares subject to
a contingent deferred sales charge holding period of this Fund for Class A shares of
another Oppenheimer fund, the holding period of the other Oppenheimer fund will
normally apply.

How to Exchange Shares


If you want to change all or part of your investment from one Oppenheimer fund to
another, you can exchange your shares for shares of the same class of another
Oppenheimer fund that offers the exchange privilege.  For example, you can exchange
Class A shares of the Fund only for Class A shares of another fund.  To exchange
shares, you must meet several conditions:


   o  Shares of the fund selected for exchange must be available for sale in your
      state of residence.

   o  The prospectuses of both funds must offer the exchange privilege.
   o  When you establish an account you must hold the shares you buy for at least
      seven days before you can exchange them. After the account is open seven days,
      you can exchange shares every regular business day, subject to the limitations
      described below.
   o  You must meet the minimum purchase requirements for the selected fund.
   o  Generally, exchanges may be made only between identically registered accounts,
      unless all account owners send written exchange instructions with a signature
      guarantee.
   o  Before exchanging into a fund, you must obtain its prospectus and should read
      it carefully.

      For tax purposes, an exchange of shares of the Fund is considered a sale of
those shares and a purchase of the shares of the fund into which you are exchanging.
An exchange may result in a capital gain or loss.

      You can find a list of Oppenheimer funds that are currently available for
exchanges in the Statement of Additional Information or you can obtain a list by
calling a service representative at 1.800.225.5677.  The funds available for
exchange can change from time to time.

      A  contingent  deferred  sales  charge  (CDSC) is not charged  when you exchange
shares of the Fund for shares of another  Oppenheimer fund.  However,  if you exchange
your shares during the applicable CDSC holding  period,  the holding period will carry
over to the fund  shares that you  acquire.  Similarly,  if you acquire  shares of the
Fund in  exchange  for shares of another  Oppenheimer  fund that are subject to a CDSC
holding  period,  that holding  period will carry over to the  acquired  shares of the
Fund.  In either of these  situations,  a CDSC may be imposed if the  acquired  shares
are redeemed  before the end of the CDSC holding  period that applied to the exchanged
shares.

      There are a number of other special  conditions  and  limitations  that apply to
certain  types of  exchanges.  These  conditions  and  circumstances  are described in
detail  in the  "How to  Exchange  Shares"  section  in the  Statement  of  Additional
Information.

HOW DO YOU SUBMIT EXCHANGE REQUESTS? Exchanges may be requested in writing, by
telephone or internet, or by establishing an Automatic Exchange Plan.

Written Exchange Requests.  Send a request letter, signed by all owners of the
      account, to the Transfer Agent at the address on the back cover. Exchanges of
      shares for which share certificates have been issued cannot be processed
      unless the Transfer Agent receives the certificates with the request letter.
Telephone and Internet  Exchange  Requests.  Telephone  exchange  requests may be made
      either by calling a service  representative  or by using PhoneLink for automated
      exchanges by calling  1.800.225.5677.  You may submit internet exchange requests
      on the  OppenheimerFunds  internet  website,  at  www.oppenheimerfunds.com.  You
                                                        ------------------------
      must have  obtained  a user  I.D.  and  password  to make  transactions  on that
      website.   Telephone  and/or  internet   exchanges  may  be  made  only  between
      accounts  that are  registered  with the same  name(s) and  address.  Shares for
      which share  certificates  have been issued may not be exchanged by telephone or
      the internet.

Automatic  Exchange  Plan.  Shareholders  can authorize the Transfer Agent to exchange
      a  pre-determined  amount  of  shares  automatically  on a  monthly,  quarterly,
      semi-annual or annual basis.
Please refer to "How to Exchange  Shares" in the Statement of  Additional  Information
for more details.

ARE THERE LIMITATIONS ON FREQUENT PURCHASES, REDEMPTIONS AND  EXCHANGES?

Risks from Excessive Purchase, Redemption and Short-Term Exchange Activity. The
OppenheimerFunds exchange privilege affords investors the ability to switch their
investments among Oppenheimer funds if their investment needs change. However, there
are limits on that privilege. Frequent purchases, redemptions and exchanges of fund
shares may interfere with the Manager's ability to manage the fund's investments
efficiently, increase the fund's transaction and administrative costs and/or affect
the fund's performance, depending on various factors, such as the size of the fund,
the nature of its investments, the amount of fund assets the portfolio manager
maintains in cash or cash equivalents, the aggregate dollar amount and the number
and frequency of trades. If large dollar amounts are involved in exchange and/or
redemption transactions, the Fund might be required to sell portfolio securities at
unfavorable times to meet redemption or exchange requests, and the Fund's brokerage
or administrative expenses might be increased.

Therefore, the Manager and the Fund's Board of Trustees have adopted the following
policies and procedures to detect and prevent frequent and/or excessive exchanges,
and/or purchase and redemption activity, while balancing the needs of investors who
seek liquidity from their investment and the ability to exchange shares as
investment needs change. There is no guarantee that the policies and procedures
described below will be sufficient to identify and deter excessive short-term
trading.

o     Timing of Exchanges.  Exchanged shares are normally redeemed from one fund and
         the proceeds are reinvested in the fund selected for exchange on the same
         regular business day on which the Transfer Agent or its agent (such as a
         financial intermediary holding the investor's shares in an "omnibus" or
         "street name" account) receives an exchange request that conforms to these
         policies. The request must be received by the close of the NYSE that day,
         which is normally 4:00 p.m. but may be earlier on some days, in order to
         receive that day's net asset value on the exchanged shares. Exchange
         requests received after the close of the NYSE will receive the next net
         asset value calculated after the request is received. However, the Transfer
         Agent may delay transmitting the proceeds from an exchange for up to five
         business days if it determines, in its discretion, that an earlier
         transmittal of the redemption proceeds to the receiving fund would be
         detrimental to either the fund from which the exchange is being made or the
         fund into which the exchange is being made. The proceeds will be invested
         in the fund into which the exchange is being made at the next net asset
         value calculated after the proceeds are received. In the event that such a
         delay in the reinvestment of proceeds occurs, the Transfer Agent will
         notify you or your financial representative.

o     Limits on Disruptive Activity. The Transfer Agent may, in its discretion,
         limit or terminate trading activity by any person, group or account that it
         believes would be disruptive, even if the activity has not exceeded the
         policy outlined in this Prospectus. The Transfer Agent may review and
         consider the history of frequent trading activity in all accounts in the
         Oppenheimer funds known to be under common ownership or control as part of
         the Transfer Agent's procedures to detect and deter excessive trading
         activity.

o     Exchanges of Client Accounts by Financial Advisers.  The Fund and the Transfer
      Agent permit dealers and financial intermediaries to submit exchange requests
      on behalf of their customers (unless the customer has revoked that authority).
      The Distributor and/or the Transfer Agent have agreements with a number of
      financial intermediaries that permit them to submit exchange orders in bulk on
      behalf of their clients. Those intermediaries are required to follow the
      exchange policies stated in this Prospectus and to comply with additional,
      more stringent restrictions. Those additional restrictions include limitations
      on the funds available for exchanges, the requirement to give advance notice
      of exchanges to the Transfer Agent, and limits on the amount of client assets
      that may be invested in a particular fund. A fund or the Transfer Agent may
      limit or refuse bulk exchange requests submitted by such financial
      intermediaries if, in the Transfer Agent's judgment, exercised in its
      discretion, the exchanges would be disruptive to any of the funds involved in
      the transaction.

o     Redemptions of Shares.  These exchange policy limits do not apply to
         redemptions of shares. Shareholders are permitted to redeem their shares on
         any regular business day, subject to the terms of this Prospectus.

o     Right to Refuse Exchange and Purchase Orders.  The Distributor and/or the
         Transfer Agent may refuse any purchase or exchange order in their
         discretion and are not obligated to provide notice before rejecting an
         order. The Fund may amend, suspend or terminate the exchange privilege at
         any time. You will receive 60 days' notice of any material change in the
         exchange privilege unless applicable law allows otherwise.

o     Right to Terminate or Suspend Account Privileges.  The Transfer Agent may send
      a written warning to direct shareholders that the Transfer Agent believes may
      be engaging in excessive purchases, redemptions and/or exchange activity and
      reserves the right to suspend or terminate the ability to purchase shares
      and/or exchange privileges for any account that the Transfer Agent determines,
      in carrying out these policies and in the exercise of its discretion, has
      engaged in disruptive or excessive trading activity, with or without such
      warning.

o     Omnibus Accounts.  If you hold your shares of the Fund through a financial
      intermediary such as a broker-dealer, a bank, an insurance company separate
      account, an investment adviser, an administrator or trustee of a retirement
      plan or 529 plan, that holds your shares in an account under its name (these
      are sometimes referred to as "omnibus" or "street name" accounts), that
      financial intermediary may impose its own restrictions or limitations to
      discourage short-term or excessive trading. You should consult your financial
      intermediary to find out what trading restrictions, including limitations on
      exchanges, they may apply.

While the Fund, the Distributor, the Manager and the Transfer Agent encourage
financial intermediaries to apply the Fund's policies to their customers who invest
indirectly in the Fund, the Transfer Agent may not be able to detect excessive short
term trading activity facilitated by, or in accounts maintained in, the "omnibus" or
"street name" accounts of a financial intermediary. Therefore the Transfer Agent
might not be able to apply this policy to accounts such as (a) accounts held in
omnibus form in the name of a broker-dealer or other financial institution, or (b)
omnibus accounts held in the name of a retirement plan or 529 plan trustee or
administrator, or (c) accounts held in the name of an insurance company for its
separate account(s), or (d) other accounts having multiple underlying owners but
registered in a manner such that the underlying beneficial owners are not identified
to the Transfer Agent.

However, the Transfer Agent will attempt to monitor overall purchase and redemption
activity in those accounts to seek to identify patterns that may suggest excessive
trading by the underlying owners. If evidence of possible excessive trading activity
is observed by the Transfer Agent, the financial intermediary that is the registered
owner will be asked to review account activity, and to confirm to the Transfer Agent
and the fund that appropriate action has been taken to curtail any excessive trading
activity. However, the Transfer Agent's ability to monitor and deter excessive
short-term trading in omnibus or street name accounts ultimately depends on the
capability and cooperation of the financial intermediaries controlling those
accounts.

Additional Policies and Procedures. The Fund's Board has adopted the following
additional policies and procedures to detect and prevent frequent and/or excessive
exchanges and purchase and redemption activity:

o     30-Day Limit.  A direct shareholder may exchange some or all of the shares of
         the Fund held in his or her account to another eligible Oppenheimer fund
         once in a 30 calendar-day period. When shares are exchanged into a fund
         account, that account will be "blocked" from further exchanges into another
         fund for a period of 30 calendar days from the date of the exchange. The
         block will apply to the full account balance and not just to the amount
         exchanged into the account. For example, if a shareholder exchanged $1,000
         from one fund into another fund in which the shareholder already owned
         shares worth $10,000, then, following the exchange, the full account
         balance ($11,000 in this example) would be blocked from further exchanges
         into another fund for a period of 30 calendar days. A "direct shareholder"
         is one whose account is registered on the Fund's books showing the name,
         address and tax ID number of the beneficial owner.

o     Exchanges Into Money Market Funds.  A direct shareholder will be permitted to
         exchange shares of a stock or bond fund for shares of a money market fund
         at any time, even if the shareholder has exchanged shares into the stock or
         bond fund during the prior 30 days. However, all of the shares held in that
         money market fund would then be blocked from further exchanges into another
         fund for 30 calendar days.

o     Dividend Reinvestments/B Share Conversions.  Reinvestment of dividends or
         distributions from one fund to purchase shares of another fund and the
         conversion of Class B shares into Class A shares will not be considered
         exchanges for purposes of imposing the 30-day limit.

o     Asset Allocation.  Third-party asset allocation and rebalancing programs will
         be subject to the 30-day limit described above. Asset allocation firms that
         want to exchange shares held in accounts on behalf of their customers must
         identify themselves to the Transfer Agent and execute an acknowledgement
         and agreement to abide by these policies with respect to their customers'
         accounts. "On-demand" exchanges outside the parameters of portfolio
         rebalancing programs will be subject to the 30-day limit. However,
         investment programs by other Oppenheimer "funds-of-funds" that entail
         rebalancing of investments in underlying Oppenheimer funds will not be
         subject to these limits.

o     Automatic Exchange Plans.  Accounts that receive exchange proceeds through
         automatic or systematic exchange plans that are established through the
         Transfer Agent will not be subject to the 30-day block as a result of those
         automatic or systematic exchanges (but may be blocked from exchanges, under
         the 30-day limit, if they receive proceeds from other exchanges).



Shareholder Account Rules and Policies

More information about the Fund's policies and procedures for buying, selling and
exchanging shares is contained in the Statement of Additional Information.
A $12 annual "Minimum Balance Fee" is assessed on each Fund account with a value of

      less than $500. The fee is automatically deducted from each applicable Fund
      account annually in September.  See the Statement of Additional Information to
      learn how you can avoid this fee and for circumstances under which this fee
      will not be assessed.

The offering of shares may be suspended during any period in which the determination
      of net asset value is suspended, and the offering may be suspended by the
      Board of Trustees at any time the Board believes it is in the Fund's best
      interest to do so.
Telephone transaction privileges for purchases, redemptions or exchanges may be
      modified, suspended or terminated by the Fund at any time. The Fund will
      provide you notice whenever it is required to do so by applicable law. If an
      account has more than one owner, the Fund and the Transfer Agent may rely on
      the instructions of any one owner. Telephone privileges apply to each owner of
      the account and the dealer representative of record for the account unless the
      Transfer Agent receives cancellation instructions from an owner of the account.
The Transfer Agent will record any telephone calls to verify data concerning
      transactions and has adopted other procedures to confirm that telephone
      instructions are genuine, by requiring callers to provide tax identification
      numbers and other account data or by using PINs, and by confirming such
      transactions in writing. The Transfer Agent and the Fund will not be liable
      for losses or expenses arising out of telephone instructions reasonably
      believed to be genuine.
Redemption or transfer requests will not be honored until the Transfer Agent
      receives all required documents in proper form. From time to time, the
      Transfer Agent in its discretion may waive certain of the requirements for
      redemptions stated in this Prospectus.
Dealers that perform account transactions for their clients by participating in
      NETWORKING through the National Securities Clearing Corporation are
      responsible for obtaining their clients' permission to perform those
      transactions, and are responsible to their clients who are shareholders of the
      Fund if the dealer performs any transaction erroneously or improperly.
The redemption price for shares will vary from day to day because the value of the
      securities in the Fund's portfolio fluctuates. The redemption price, which is
      the net asset value per share, will normally differ for each class of shares.
      The redemption value of your shares may be more or less than their original
      cost.
Payment for redeemed shares ordinarily is made in cash. It is forwarded by check, or
      through AccountLink or by Federal Funds wire (as elected by the shareholder)
      within seven days after the Transfer Agent receives redemption instructions in
      proper form.  However, under unusual circumstances determined by the
      Securities and Exchange Commission, payment may be delayed or suspended. For
      accounts registered in the name of a broker-dealer, payment will normally be
      forwarded within three business days after redemption.
The Transfer Agent may delay processing any type of redemption payment as described
      under "How to Sell Shares" for recently purchased shares, but only until the
      purchase payment has cleared. That delay may be as much as 10 days from the
      date the shares were purchased. That delay may be avoided if you purchase
      shares by Federal Funds wire or certified check, or arrange with your bank to
      provide telephone or written assurance to the Transfer Agent that your
      purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the Fund if the account
      value has fallen below $200 for reasons other than the fact that the market
      value of shares has dropped. In some cases, involuntary redemptions may be
      made to repay the Distributor for losses from the cancellation of share
      purchase orders.
Shares may be "redeemed in kind" under unusual circumstances (such as a lack of
      liquidity in the Fund's portfolio to meet redemptions). This means that the
      redemption proceeds will be paid with liquid securities from the Fund's
      portfolio. If the Fund redeems your shares in kind, you may bear transaction
      costs and will bear market risks until such time as such securities are
      converted into cash.
Federal regulations may require the Fund to obtain your name, your date of birth
      (for a natural person), your residential street address or principal place of
      business and your Social Security number, Employer Identification Number or
      other government issued identification when you open an account. Additional
      information may be required in certain circumstances or to open corporate
      accounts.  The Fund or the Transfer Agent may use this information to attempt
      to verify your identity.  The Fund may not be able to establish an account if
      the necessary information is not received.  The Fund may also place limits on
      account transactions while it is in the process of attempting to verify your
      identity.  Additionally, if the Fund is unable to verify your identity after
      your account is established, the Fund may be required to redeem your shares
      and close your account.
"Backup withholding" of federal income tax may be applied against taxable dividends,
      distributions and redemption proceeds (including exchanges) if you fail to
      furnish the Fund your correct, certified Social Security or Employer
      Identification Number when you sign your application, or if you under-report
      your income to the Internal Revenue Service.
To avoid sending duplicate copies of materials to households, the Fund will mail
      only one copy of each prospectus, annual and semi-annual report and annual
      notice of the Fund's privacy policy to shareholders having the same last name
      and address on the Fund's records. The consolidation of these mailings, called
      householding, benefits the Fund through reduced mailing expense.

      If you want to receive multiple copies of these materials, you may call the
      Transfer Agent at 1.800.225.5677. You may also notify the Transfer Agent in
      writing. Individual copies of prospectuses, reports and privacy notices will
      be sent to you commencing 30 days after the Transfer Agent receives your
      request to stop householding.

Dividends, Capital Gains and Taxes


DIVIDENDS. The Fund intends to declare dividends separately for each class of shares
from net tax-exempt income and/or net taxable investment income each regular
business day and to pay those dividends monthly.  Daily dividends will not be
declared or paid on newly-purchased shares until Federal Funds are available to the
Fund from the purchase payment for such shares.


       The Fund attempts to pay dividends on Class A shares at a constant level.
There is no assurance that it will be able to do so. The Board of Trustees may
change the targeted dividend level at any time, without prior notice to
shareholders. The amount of those dividends and any other distributions paid on
other classes of shares may vary over time, depending on market conditions, the
composition of the Fund's portfolio, and expenses borne by the particular class of
shares. Dividends and other distributions paid on Class A shares will generally be
higher than dividends for Class B and Class C shares, which normally have higher
expenses than Class A.  The Fund cannot guarantee that it will pay any dividends or
other distributions.

CAPITAL GAINS. Although the Fund does not seek capital gains, it may realize capital
gains on the sale of portfolio securities. If it does, it may make distributions out
of any net short-term or long-term capital gains of each year. The Fund may make
supplemental distributions of dividends and capital gains following the end of its
fiscal year. There can be no assurance that the Fund will pay any capital gains
distributions in a particular year. Long-term capital gains will be separately
identified in the tax information the Fund sends you after the end of the calendar
year.

WHAT CHOICES DO YOU HAVE FOR RECEIVING DISTRIBUTIONS? When you open your account,
specify on your application how you want to receive your dividends and
distributions. You have four options:
Reinvest All Distributions in the Fund. You can elect to reinvest all dividends and
      capital gains distributions in additional shares of the Fund.
Reinvest Dividends or Capital Gains. You can elect to reinvest some distributions
      (dividends, short-term capital gains or long-term capital gains distributions)
      in the Fund while receiving the other types of distributions by check or
      having them sent to your bank account through AccountLink.
Receive All Distributions in Cash. You can elect to receive a check for all
      dividends and capital gains distributions or have them sent to your bank
      through AccountLink.
Reinvest Your Distributions in Another OppenheimerFunds Account. You can reinvest
      all distributions in the same class of shares of another OppenheimerFunds
      account you have established.

TAXES.  Dividends paid from net investment income earned by the Fund on municipal
securities will be excludable from gross income for federal income tax purposes. All
or a portion of the dividends paid by the Fund that are derived from interest paid
on certain "private activity bonds" may be an item of tax preference if you are
subject to the federal alternative minimum tax.

      Dividends and capital gains distributions may be subject to federal, state or
local taxes. Any short-term capital gain distributions are taxable to you as
ordinary income. Any long-term capital gain distributions are taxable to you as
long-term capital gains, no matter how long you have owned shares in the Fund. The
Fund may derive gains in part from municipal obligations the Fund purchased below
their principal or face values. All, or a portion of these gains may be taxable to
you as ordinary income rather than capital gains. Whether you reinvest your
distributions in additional shares or take them in cash, the tax treatment is the
same.

     Every year the Fund will send you and the IRS a statement showing the amount of
any taxable distribution you received in the previous year. The Fund will also send
you a separate statement summarizing the total distributions paid by the Fund.


The Fund intends each year to qualify as a "regulated investment company" under the
Internal Revenue Code, but reserves the right not to qualify.  It qualified during
its last fiscal year. The Fund, as a regulated investment company, will not be
subject to Federal income taxes on any of its income, provided that it satisfies
certain income, diversification and distribution requirements.


Remember, There May be Taxes on Transactions. Because the Fund's share prices
      fluctuate, you may have a capital gain or loss when you sell or exchange your
      shares. A capital gain or loss is the difference between the price you paid
      for the shares and the price you received when you sold them. Any capital gain
      is subject to capital gains tax.

Returns of Capital Can Occur. In certain cases, distributions made by the Fund may
      be considered a non-taxable return of capital to shareholders.  If that
      occurs, it will be identified in notices to shareholders.


      This information is only a summary of certain federal and state income tax
information about your investment. You should consult with your tax advisor about
the effect of an investment in the Fund on your particular tax situation.

Financial Highlights

The Financial Highlights Table is presented to help you understand the Fund's
financial performance for the past five fiscal years.  During the period prior to
October 1, 2001, the Fund invested primarily in investment-grade Florida municipal
securities.  Certain information reflects financial results for a single Fund share.
The total returns in the table represent the rate that an investor would have earned
(or lost) on an investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by KPMG LLP, the Fund's
independent registered public accounting firm, whose report, along with the Fund's
financial statements, is included in the Statement of Additional Information, which
is available on request.






INFORMATION AND SERVICES

For More Information on Oppenheimer Rochester National Municipals
The following additional information about the Fund is available without charge
upon request:

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional information
about the Fund's investment policies, risks, and operations. It is incorporated by
reference into this Prospectus (which means it is legally part of this Prospectus).

ANNUAL AND SEMI-ANNUAL REPORTS. Additional information about the Fund's investments
and performance is available in the Fund's Annual and Semi-Annual Reports to
shareholders. The Annual Report includes a discussion of market conditions and
investment strategies that significantly affected the Fund's performance during its
last fiscal year.

How to Get More Information
You can request the Statement of Additional Information, the Annual and Semi-Annual
Reports, the notice explaining the Fund's privacy policy and other information about
the Fund or your account:

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By Telephone:                 Call OppenheimerFunds Services toll-free:

                              1.800.CALL OPP(225.5677)

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By Mail:                      Write to:
                              OppenheimerFunds Services
                              P.O. Box 5270
                              Denver, Colorado 80217-5270
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On the Internet:              You can request these documents by e-mail or
                              through the OppenheimerFunds website.  You may
                              also read or download certain documents on the
                              OppenheimerFunds website at:

                              www.oppenheimerfunds.com
                              ------------------------
------------------------------------------------------------------------------

Information about the Fund including the Statement of Additional Information can be
reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
Information on the operation of the Public Reference Room may be obtained by calling
the SEC at 1.202.942.8090.  Reports and other information about the Fund are
available on the EDGAR database on the SEC's Internet website at www.sec.gov. Copies
                                                                 -----------
may be obtained after payment of a duplicating fee by electronic request at the
SEC's e-mail address: publicinfo@sec.gov or by writing to the SEC's Public Reference
Section, Washington, D.C. 20549-0102.
No one has been authorized to provide any information about the Fund or to make any
representations about the Fund other than what is contained in this Prospectus. This
Prospectus is not an offer to sell shares of the Fund, nor a solicitation of an
offer to buy shares of the Fund, to any person in any state or other jurisdiction
where it is unlawful to make such an offer.

The Fund's shares are distributed by:                [logo]           OppenheimerFunds
Distributor, Inc.
The Fund's SEC File No. 811-5867

PR0795.001.0905
Printed on recycled paper







                              Appendix to Prospectus of
                      Oppenheimer Rochester National Municipals


      Graphic material included in the Prospectus of Oppenheimer Rochester National
Municipals: "Annual Total Returns (Class A) (% as of  December 31 each year)":


      A bar chart will be included in the Prospectus of Oppenheimer Rochester
National Municipals (the "Fund") depicting the annual total returns of a
hypothetical investment in Class A shares of the Fund for each of the ten most
recent calendar years since the Fund's inception, without deducting sales charges or
taxes. Set forth below are the relevant data points that will appear on the bar
chart:


Calendar                         Oppenheimer Rochester
Year                             National Municipals
Ended                            Class A Shares
-----                            --------------


12/31/95                             17.60%
12/31/96                               4.01%
12/31/97                               9.13%
12/31/98                               5.95%
12/31/99                             -5.08%
12/31/00                            10.83%
12/31/01                              5.23%
12/31/02                              5.78%
12/31/03                            14.93%
12/31/04                            10.56%

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Oppenheimer New Jersey Municipal Fund
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6803 South Tucson Way, Centennial, Colorado 80112-3924
1.800.525.7048

Statement of Additional Information dated November 28, 2005

This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated November 28, 2005. It should be read
together with the Prospectus. You can obtain the Prospectus 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................................................
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 Auditors' Report..................................................
Financial Statements .........................................................

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

Additional Information About the Fund's Investment Policies and Risks

The investment objective and the principal investment policies and the
main risks of the Fund are described in the Prospectus. This Statement of
Additional Information contains supplemental information about those policies
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 may 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 Fund's Manager uses in selecting
portfolio securities will vary over time. The Fund is not required to use
all of the investment techniques and strategies described below at all times
in seeking its objective. It may use some of the special 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 vary inversely
with changes in prevailing interest rates, if interest rates increased after
a security is purchased, that security will normally decline 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 may
dispose of securities prior to their maturity 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
may invest are described in the Prospectus under "What Does the Fund Invest
in?" and "About the Fund's Investments." As a fundamental policy, the Fund
invests at least 80% of its assets in municipal securities. In addition, as a
fundamental policy, the Fund invests at least 80% of its net assets (plus
borrowings for investment purposes) in New Jersey municipal securities. This
includes securities that generate income subject to the alternative minimum
tax. The Manager has interpreted the Fund's policy regarding investment in
municipal securities to require the Fund to invest at least 80% of the Fund's
net assets in 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. The Fund has classified municipal securities
having a maturity (when the security is issued) of more than one (1) year as
"municipal bonds." The principal classifications of long-term municipal
bonds are "general obligation" and "revenue" (including "private activity")
bonds. They may have fixed, variable or floating rates of interest, as
described below.

Some bonds may be "callable," allowing the issuer to redeem them before
their maturity date. To protect bondholders, callable bonds may be issued
with provisions that prevent them from being called for a period of time.
Typically, that is five (5) to ten (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.

|_| General Obligation Bonds. The basic security behind general
obligation bonds is the issuer's pledge of its full faith and credit and
taxing power, if any, for the repayment of principal and the payment of
interest. Issuers of general obligation bonds include states, counties,
cities, towns, and school 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.

|_| 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.

|_| 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.

|_| Private Activity 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 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 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 (and excludable from gross income).
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 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 federal 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. There are no limits on the
amount of assets the Fund may invest in private activity bonds.

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

The term "private business use" means any direct or indirect use in a
trade or business carried on by an individual or entity other than a state or
municipal governmental unit. Under the private loan restriction, the amount
of bond proceeds that may be used to make private loans is limited to the
lesser of 5% or $5.0 million of the proceeds. Thus, certain issues of
municipal securities could lose their tax-exempt status retroactively if the
issuer fails to meet certain requirements as to the expenditure of the
proceeds of that issue or the use of the bond-financed facility. The 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 advisers 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 (1) 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.

|_| 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.

|_| 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.

|_| 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.

|_| 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.

|_| Tax-Exempt Commercial Paper. This type of short-term
obligation (usually having a maturity of 270 days or less), is issued by a
municipality to meet current working capital needs.

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

Some municipal lease securities may be deemed to be "illiquid"
securities. Their purchase by the Fund would be limited as described below
in "Illiquid Securities." From time to time the Fund may invest more than 5%
of its net assets in municipal lease obligations that the Manager has
determined to be liquid under guidelines set by the Board of Trustees. Those
guidelines require the Manager to evaluate:

|_| the frequency of trades and price quotations for such securities;
|_| the number of dealers or other potential buyers willing to purchase
or sell such securities;
|_| the availability of market-makers; and
|_| the nature of the trades for such securities.

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

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

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

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 July 31, 2005, 19.9% 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 nearly
all of the U.S. tobacco manufacturers (approximately 99% of the current
combined market share of tobacco manufacturers). 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. 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. A market share loss by the MSA companies to non-MSA
participating tobacco manufacturers would cause a downward adjustment in the
payment amounts. A participating manufacturer filing for bankruptcy also
could cause delays or reductions in bond payments. The MSA itself has been
subject to legal challenges and has, to date, withstood those challenges.

On September 21, 2004, a civil trial (United States v. Philip Morris,
et. al.) began in U.S. district court nearly five years after the U.S.
Department of Justice first filed charges 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. However, on February 4, 2005, the U.S. Court of Appeals for the
District of Columbia dismissed the specific claim seeking the disgorgement of
$280 billion representing industry profits, and funding for cessation and
counter-advertising programs, and release of all industry documents. During
final arguments of the case before the U.S. Court of Appeals in June 2005,
the U.S. government reduced its demand for damages from the tobacco industry
to $14 billion - a significant reduction from the original claim for $280
billion. On July 18, 2005, the U.S. Department of Justice filed a petition
for certiorari with the U.S. Supreme Court seeking further review of the
dismissal of the specific claim seeking disgorgement.

The named defendant tobacco companies represent approximately 98% of
the tobacco industry's market share. The tobacco industry denies any
wrongdoing and counters that it has greatly modified its practices, including
warning labels on cigarette packs since the 1960s and agreeing to the MSA
with the states. A negative outcome to the trial would adversely affect the
MSA companies and, in turn, could potentially cause delays or reductions in
bond payments by those companies. However, to date, it is not possible to
predict the outcome of the litigation.

|X| Ratings of Municipal Securities. Ratings by ratings organizations
such as Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Rating
Services, a division of the McGraw-Hill Companies, Inc., ("S&P") 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.
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.

Lower grade securities (also referred to as "junk bonds") may have a
higher yield than securities rated in the higher 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
harder to sell at an acceptable price. The additional risks mean that the
Fund may not receive the anticipated level of income from these securities,
and the Fund's net asset value may be affected by declines in the value of
lower-grade securities. However, because the added risk of lower quality
securities might not be consistent with the Fund's policy of preservation of
capital, the Fund limits its investments in lower quality securities.

Subsequent to its purchase by the Fund, a municipal security may cease
to be rated or its rating may be reduced below the minimum required for
purchase by the Fund. Neither event requires the Fund to sell the security,
but the Manager will consider such events in determining whether the Fund
should continue to hold the security. To the extent that ratings given by
Moody's, S&P or Fitch 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, S&P and Fitch for municipal
securities are contained in Appendix A to this Statement of Additional
Information. 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.

Special Risks of Investing Primarily in New Jersey Municipal Securities.
Because the Fund focuses its investments primarily on New Jersey municipal
securities, the value of its portfolio investments will be highly sensitive
to events affecting the fiscal stability of the State of New Jersey and its
municipalities, authorities and other instrumentalities that issue securities
in which the Fund invests, including political developments, economic
problems and legislation as well as adverse events affecting borrower
entities and credit enhancement providers.

It is not possible to predict the future impact of political
developments, economic, regulatory or tax problems and legislation on the
long-term ability of the State of New Jersey or New Jersey municipal issuers,
borrower entities or credit enhancement providers to pay interest or repay
principal on their obligations. The information below is only a brief
summary of general information regarding the state and the types of
obligations issued by it and its political subdivisions, based upon
information the Fund has drawn from sources that it believes are reliable,
including official statements relating to securities offerings of New Jersey
issuers. The information below is general in nature and does not provide
information about the financial condition of the state or specific issuers in
whose securities the Fund may invest, or the risks of those specific
investments. The information provided below is subject to change without
notice, and the inclusion of such information herein shall not under any
circumstances create any implication that there has been no change in the
affairs of the State since the date hereof.

New Jersey Economic Information and Trends -- New Jersey's economic base is
diversified, consisting of a variety of manufacturing, construction and
service industries, supplemented by rural areas with selective commercial
agriculture.

The New Jersey economy had a breakout year in 2004 after struggling for three
years in the context of a weak national economy. New Jersey's economy was one
of the best performing in the nation. Employment increased by 75,900 jobs, or
by 1.9%, from December 2003 through December 2004. With almost all of the
state's employment sectors showing gains in the last year, New Jersey has
strong economic momentum going into 2005. The outlook for 2005 is for
continued, but moderating, growth. The state unemployment rate was 4.2% as of
December 2004, and remains well below the 5.2% rate for the nation during the
same period. New Jersey's personal income grew by 4.2% in 2004. Economic
forecasts project personal income growth of 4.7% in 2005.

New Jersey's economy and the nation's economy are both expected to have
momentum heading into 2006. New Jersey's economy is expected to follow the
national trend in 2006. The State and the nation may experience further
near-term slow growth and the expected recovery may stall if consumers,
investors, and businesses remain more cautious than currently assumed.
However,
the fundamentals of the State's economic health remain stable and the long
run prospects for economic growth of the State in 2006 and beyond are
favorable.

New Jersey's Budget And Appropriation System -- Current Operating Expenses

The General Fund -- New Jersey operates on a fiscal year ending on June 30.
The General Fund is the fund into which all New Jersey revenues, not
otherwise restricted by statute, are deposited and from which appropriations
are made. The largest part of the total financial operations of New Jersey is
accounted for in the General Fund. The Appropriations Act enacted by the New
Jersey Legislature and approved by the Governor provides the basic framework
for the operation of
the General Fund. The undesignated General Fund balance at year end for
fiscal year 2001 was $388.7 million, for fiscal year 2002 was 292.3 million,
for fiscal year 2003 was $373.0 million and for fiscal year 2004 was 376.5
million. For fiscal year 2005 and 2006, the balance in the undesignated
General Fund is estimated to be $111.6 million each year. The fund balances
are available for appropriation in succeeding fiscal years.

Tax And Revenue Anticipation Notes -- In fiscal year 1992, New Jersey
initiated a program pursuant to which it issues tax and revenue anticipation
notes to aid in providing effective cash flow management to fund imbalances
which occur in the collection and disbursement of General Fund revenues and
Property Tax Relief Fund revenues. It is anticipated that New Jersey will
continue this program for fiscal year 2006. Such tax and revenue anticipation
notes do not constitute a general obligation of New Jersey or a debt or
liability within the meaning of the New Jersey Constitution. Such notes
constitute special obligations of New Jersey payable solely from monies on
deposit in the General Fund and Property Tax Relief Fund that are legally
available for such payment.

NEW JERSEY CAPITAL PROJECT FINANCINGS

General Obligation Bonds -- New Jersey finances certain capital projects
through the sale of its general obligation bonds. These bonds are backed by
the full faith and credit of New Jersey. Certain state tax revenues and
certain other fees are pledged to meet the principal payments, interest
payments and redemption premium payments, if any, required to fully pay the
bonds. The aggregate outstanding general obligation bonded indebtedness of
New Jersey as of June 30, 2004 was $3,236,100,000. The appropriation for the
debt service obligation on outstanding projected indebtedness is $185.4
million for fiscal year 2006.

Pay-As-You-Go -- In addition to payment from bond proceeds, capital projects
can also be funded by appropriation of current revenues on a pay-as-you-go
basis. In fiscal year 2006, the amount appropriated for this purpose is
$1,089.4 million.

OTHER LONG TERM DEBT OBLIGATIONS OF NEW JERSEY

Bonds Guaranteed By New Jersey -- The New Jersey Sports and Exposition
Authority ("NJSEA") has issued State-guaranteed bonds of which $20,050,000
were outstanding as of June 30, 2004. To date, the NJSEA has not had a
revenue deficiency requiring New Jersey to make debt service payments
pursuant to its guarantee. It is anticipated that the NJSEA's revenues will
continue to be sufficient to pay debt service on these bonds without recourse
to New Jersey's
guarantee.

"Moral Obligation" Bonds -- The authorizing legislation for certain New
Jersey entities provides for specific budgetary procedures with respect to
certain of the obligations issued by such entities. Pursuant to such
legislation, a designated official is required to certify any deficiency in a
debt service reserve fund maintained to meet payments of principal of and
interest on the obligations and a New Jersey appropriation in the amount of
the deficiency is to be made. However, the New Jersey Legislature is not
legally bound to make such an appropriation. Bonds issued pursuant to
authorizing legislation of this type are sometimes referred to as "moral
obligation" bonds. Below is a discussion of those New Jersey authorities and
instrumentalities that issue bonds that constitute a "moral obligation" of
New Jersey.

New Jersey Housing And Mortgage Finance Agency -- Neither the New Jersey
Housing and Mortgage Finance Agency nor its predecessor agencies (the New
Jersey Housing Finance Agency and the New Jersey Mortgage Finance Agency)
have had a deficiency in a debt service reserve fund which required New
Jersey to appropriate funds to meet its "moral obligation." It is anticipated
that this agency's revenues will continue to be sufficient to pay debt
service on its
bonds.

South Jersey Port Corporation -- New Jersey has periodically provided the
South Jersey Port Corporation (the "SJPC") with funds to cover debt service
and property tax requirements, when earned revenues are anticipated to be
insufficient to cover these obligations. For calendar years 2000 through
2004, New Jersey has made appropriations totaling $20,371,846.00 which covered
deficiencies in revenues of the SJPC for debt service.

New Jersey Higher Education Student Assistance Authority -- The New Jersey
Higher Education Student Assistance Authority ("NJHESAA") (successor to the
Higher Education Assistance Authority) has not had a revenue deficiency that
required New Jersey to appropriate funds to meet its "moral obligation". It
currently is anticipated that the NJHESAA's revenues will continue to be
sufficient to cover debt service on its bonds.

There is no statutory limitation on the amount of "moral obligation" bonds
which may be issued by eligible New Jersey entities. As of June 30, 2004,
outstanding "moral obligation" bonded indebtedness issued by New Jersey
entities totaled $1,167,907,668, and fiscal year 2004 debt service subject to
"moral obligation" is $53,999,749.

Obligations Supported By New Jersey Revenue Subject To Annual Appropriation
-- New Jersey has entered into a number of leases and contracts described
below (collectively, the "Agreements" and each an "Agreement") with several
governmental authorities to secure the financing of various New Jersey
projects. Under the terms of the Agreements, New Jersey has agreed to make
payments equal to the debt service on, and other costs related to, the
obligations sold to finance the projects, including payments on swap
agreements defined below. New Jersey's obligations to make payments with
respect to certain financings includes payments related to interest rate
exchange agreements described below ("swap agreements") entered into with
respect to such financings. Under such swap agreements, the issuer is
required to pay a fixed rate to the swap counter party and any swap
termination payment. If the payments to an issuer under a swap agreement are
not sufficient to pay the interest on the issuer's related
obligation, the issuer must pay such deficiency. New Jersey's obligation to
make payments under the Agreements is subject to and dependent upon annual
appropriations being made by the New Jersey Legislature for such purposes.
The New Jersey Legislature has no legal obligation to enact such
appropriations, but has done so to date for all such obligations. Below is a
discussion of those financings pursuant to which State authorities and
instrumentalities have entered into Agreements with New Jersey to secure the
financing of various State projects.

New Jersey Economic Development Authority -- The New Jersey Economic
Development Authority ("NJEDA") issues bonds secured by Agreements pursuant
to the following legislative programs: (i) Economic Recovery Bonds issued to
finance various economic development purposes (with payments made by New
Jersey pursuant to an Agreement being equivalent to payments due to New
Jersey under an agreement with the Port Authority of New York and New
Jersey); (ii) Pension Bonds issued for the purpose of financing the unfunded
accrued pension liability for New Jersey's retirement system; (iii) Market
Transition Facility Bonds issued to pay current and anticipated liabilities
and expenses of the Market Transition Facility, which issued private
passenger automobile insurance policies for drivers who could not be insured
by private insurance companies on a voluntary basis; (iv) the Community
Mental Health Loan Program, pursuant to which revenue bonds are issued on
behalf of non-profit community mental health
service providers and debt service is paid by New Jersey pursuant to
Agreements between the New Jersey Department of Human Services and the
service providers; (v) the School Facility Construction Bonds (the principal
amount of bonds authorized to be issued is $6 billion for the "Abbott"
districts, $2.5 billion for all other districts and $100 million for county
vocational school district projects), pursuant to which the NJEDA issues
bonds to finance New Jersey's
share of costs for school facility construction projects and debt service on
the bonds is paid pursuant to a contract between the NJEDA and the New Jersey
Treasurer; (vi) pursuant to the Motor Vehicle Security and Customer Service
Act, the NJEDA is authorized to issue bonds to pay the costs of capital
improvements for the New Jersey Moter Vehicle Commission facilities
(authorized in an amount not exceeding $160 million); (vii) the lease
financing program through which certain real property, office buildings and
equipment are financed with NJEDA bonds (secured by Agreements between the
New Jersey Treasurer and NJEDA); (viii) the NJEDA is authorized to issue
bonds to fund business employment incentive grants that the NJEDA is
contractually obligated to pay annually pursuant to the Business Employment
Incentive Program Act; (ix) the Motor Vehicle Surcharges Securitization Act
authorized the issuance of bonds, the proceeds of which will be held by the
NJEDA and deposited into the General Fund or the Motor Vehicle Surcharges
Fund at the request of the New Jersey Treasurer; (x) pursuant to the
Cigarette Tax Securitization Act, the NJEDA may issue bonds secured by
$0.0325 per cigarette of the cigarette tax (debt service will be paid
pursuant to a contract between the NJEDA and the New Jersey Treasurer), with
the proceeds to be deposited into the General Fund or the Cigarette Tax
Securitization Fund; and (xi) the Municipal Rehabilitation and Economic
Recovery Act authorized bonds issued for the purpose of providing loans and
grants to sustain economic
activity in qualified municipalities.

Swap Agreements -- The NJEDA has entered into a number of swap agreements
with certain bond issuers. In connection with the $375,000,000 State Pension
Variable Rate Refunding Bonds, Series 2003, the NJEDA has entered into swap
agreements for the purpose of converting the NJEDA's variable rate exposure
to a fixed rate. The outstanding aggregate principal amount of the bonds is
equal to the aggregate notional amount of the swap agreements related
thereto. In
connection with School Facilities Construction Bonds, the NJEDA has entered
into six separate tranches of swap agreements in an aggregate notional amount
of $3 billion. These forward-starting swap agreements effectively hedge
against rising interest rates a portion of the NJEDA's future borrowings
expense associated with bonds anticipated to be issued under the Educational
Facilities Construction and Financing Act, enacted July 18, 2000, P.L. 2000,
c.72. In 2004, the NJEDA entered into three additional swap agreements in the
aggregate notional amount of $750 million for the same purpose. The NJEDA
also entered in swap agreements in the aggregate notional amount of
$214,795,000 to hedge against rising interest rates for a portion of the
NJEDA's future borrowing expense associated with bonds anticipated to be
issued under the Business Employment Incentive Program in Fiscal Years 2005,
2006, and 2007.

New Jersey Educational Facilities Authority -- The New Jersey Educational
Facilities Authority issues bonds secured by Agreements pursuant to seven
separate legislative programs to finance (i) the purchase of equipment to be
leased to institutions of higher learning; (ii) grants to New Jersey's public
and private institutions of higher education for the development,
construction and improvement of instructional, laboratory, communication and
research
facilities; (iii) grants to public and private institutions of higher
education to develop a technology infrastructure within and among New
Jersey's institutions of higher education; (iv) capital projects at county
colleges; (v) grants to public and private institutions of higher education
to finance and refinance eligible educational facilities; (vi) grants to
public libraries to
finance the acquisition, expansion and rehabilitation of buildings to be used
as public library facilities; and (vii) loans to public and private
institutions of higher education and public and private secondary schools,
military schools and boarding schools located within New Jersey to install
automatic fire suppression systems.

New Jersey Transportation Trust Fund Authority -- In July 1984, New Jersey
created the New Jersey Transportation Trust Fund Authority (the "NJTTFA") for
the purpose of funding a portion of New Jersey's share of the cost of
improvements to its transportation system. The principal amount of the
NJTTFA's bonds, notes or other obligations which may be issued in any fiscal
year generally may not exceed $650 million plus amounts carried over from
prior
fiscal years. The obligations issued by the NJTTFA are special obligations of
the NJTTFA payable from a contract among the NJTTFA, the New Jersey Treasurer
and the Commissioner of Transportation.

New Jersey Building Authority -- The New Jersey Building Authority ("NJBA")
issues bonds for the acquisition, construction, renovation and rehabilitation
of various New Jersey office buildings, historic buildings, and correctional
facilities. Pursuant to a lease agreement, New Jersey makes rental payments
to NJBA in amounts sufficient to pay debt service on the NJBA bonds.

New Jersey Sports And Exposition Authority -- Legislation enacted in 1992
authorizes the New Jersey Sports and Exposition Authority (the "NJSEA") to
issue bonds for various purposes payable from a contract between the NJSEA
and the New Jersey Treasurer. Pursuant to such contract, the NJSEA undertakes
certain projects and the New Jersey Treasurer credits to the NJSEA amounts
from the General Fund sufficient to pay debt service and other costs related
to the bonds.

Garden State Preservation Trust -- In July 1999, New Jersey established the
Garden State Preservation Trust ("GSPT") for the purpose of preserving, as
open space, farmland and historic properties. Pursuant to the enabling act of
the GSPT, the principal amount of bonds, notes or other obligations which may
be issued prior to July 1, 2009, other than refunding bonds, cannot exceed $1
billion. After July 1, 2009, only refunding bonds can be issued. The
obligations
to be issued by the GSPT will be special obligations of the GSPT payable from
amounts paid to it under a contract between GSPT and the New Jersey Treasurer.

New Jersey Certificates Of Participation -- Beginning in April 1984, New
Jersey, acting through the Director of the Division of Purchase and Property,
has entered into a series of lease purchase agreements which provide for the
acquisition of equipment, services and real property to be used by various
departments and agencies of New Jersey. Certificates of Participation in
such lease purchase agreements have been issued. A Certificate of
Participation represents a proportionate interest of the owner thereof in the
lease payments to be made by New Jersey under the terms of the lease purchase
agreement.

New Jersey Supported School And County College Bonds - Legislation provides
for future appropriations for New Jersey aid to local school districts equal
to a portion of the debt service on bonds issued by such local school
districts for construction and renovation of school facilities (P.L. 1968, c.
177; P.L. 1971, c. 10; and P.L. 1978, c. 74) and for New Jersey aid to
counties equal to a portion of the debt service on bonds issued by or on
behalf of counties for construction of county college facilities (P.L. 1971,
c. 12, as amended). The New Jersey Legislature has no legal obligation to
make such appropriations, but has done so to date for all obligations issued
under these laws.

Conduit Indebtedness Of New Jersey Authorities And Instrumentalities --
Certain State authorities and instrumentalities are authorized to issue debt
on behalf of various private and governmental entities on a conduit basis.
Under such circumstances, neither the New Jersey authority or instrumentality
acting as a conduit issuer nor the State of New Jersey is responsible for the
repayment of such debt. The payment obligations with respect to such debt are
solely that
of the entity on whose behalf the debt was issued. Those State authorities
and instrumentalities that issue debt on behalf of private and governmental
entities on a conduit basis include: (i) the New Jersey Economic Development
Authority; (ii) the New Jersey Health Care Facilities Financing Authority;
(iii) the New Jersey Education Facilities Authority; (iv) the New Jersey
Housing and Mortgage Finance Agency; (v) the New Jersey Environmental
Infrastructure Trust;
and (vi) the New Jersey Redevelopment Agency.

COUNTIES AND MUNICIPALITIES

Regulation Of County And Municipal Finance -- New Jersey's county and
municipal finance system is regulated by various statutes designed to assure
that all county and municipal governments and their issuing authorities
remain on a sound financial basis. Regulatory and remedial statutes are
enforced by the Division of Local Government Services (the "Division") in the
New Jersey Department of Community Affairs.

The Local Budget Law (N.J.S.A. 40A:4-1 ET SEQ.) (the "Local Budget Law")
imposes specific budgetary procedures upon counties and municipalities
("local units"). Every local unit must adopt an operating budget which is
balanced on a cash basis, and items of revenue and appropriation must be
examined by the Director of the Division (the "Director"). The accounts of
each local unit must be independently audited by a registered municipal
accountant. New Jersey law provides that budgets must be submitted in a form
promulgated by the Division.
The Division reviews all local unit annual budgets prior to adoption for
compliance with the Local Budget Law. The Director is empowered (i) to
require changes for compliance with law as a condition of approval; (ii) to
disapprove budgets not in accordance with law; and (iii) to prepare the
budget of a local unit, within the limits of the adopted budget of the
previous year with suitable adjustments for legal compliance, if the local
unit fails to adopt a budget in
accordance with law. This process insures that every local unit annually
adopts a budget balanced on a cash basis, within limitations on
appropriations or tax levies, respectively, and making adequate provision for
(i) principal of and interest on indebtedness falling due in the fiscal year,
(ii) deferred charges, and (iii) other statutory expenditure requirements.
The Director also oversees changes to local budgets after adoption as
permitted by law, and enforces
regulations pertaining to execution of adopted budgets and financial
administration. In addition to the exercise of regulatory and oversight
functions, the Division offers expert technical assistance to local units in
all aspects of financial administration, including revenue collection and
cash management procedures, contracting procedures, debt management and
administrative analysis.

The Local Government Cap Law (N.J.S.A. 40A:4-45.1 ET SEQ.) (the "Cap Law")
limits the year-to-year increase of the total appropriations of any local
unit to either 5 percent or an index rate determined annually by the
Director, whichever is less. However, where the index percentage rate exceeds
5 percent, the Cap Law permits the governing body of any local unit to
approve the use of a higher percentage rate up to the index rate. Further,
where the index percentage rate is less than 5 percent, the Cap Law also
permits the governing body of any
local unit to approve the use of a higher percentage rate up to 5 percent.
Regardless of the rate utilized, certain exceptions exist to the Cap Law's
limitation on increases in appropriations. The principal exceptions to these
limitations are: (i) municipal and county appropriations to pay debt service
requirements; (ii) requirements to comply with certain other New Jersey or
federal mandates; (iii) appropriations of private and public dedicated funds;
(iv) amounts approved by referendum; and (v) in the case of municipalities
only, to fund the preceding year's cash deficit or to reserve for shortfalls
in tax collections, and amounts required pursuant to contractual obligations
for specified services. The Cap Law was re-enacted in 1990 with amendments
and made a permanent part of the municipal finance system.

Regulation Of The Issuance Of Bonds By Counties And Municipalities -- New
Jersey law also regulates the issuance of debt by local units. The Local
Budget Law limits the amount of tax anticipation notes that may be issued by
local units and requires the repayment of such notes within 120 days of the
end of the fiscal year (six months in the case of the counties) in which
issued. The Local Bond Law (N.J.S.A. 40A:2-1 ET SEQ.) governs the issuance of
bonds and
notes by the local units. No local unit is permitted to issue bonds for the
payment of current expenses (other than fiscal year adjustment bonds). Local
units may not issue bonds to pay outstanding bonds, except for refunding
purposes, and then only with the approval of the Local Finance Board. Local
units may issue bond anticipation notes for temporary periods not exceeding
in the aggregate approximately ten years from the date of issue. The debt
that any
local unit may authorize is limited to a percentage of its equalized
valuation basis. In the calculation of debt capacity, the Local Bond Law and
certain other statutes permit the deduction of certain classes of debt
("statutory deduction") from all authorized debt of the local unit in
computing whether a local unit has exceeded its statutory debt limit. The
Local Bond Law permits the issuance of certain obligations, including
obligations issued for certain emergency or self liquidating purposes,
notwithstanding the statutory debt limitation described above, but, with
certain exceptions, it is then necessary to obtain the approval of the Local
Finance Board.

SCHOOL DISTRICTS

Regulation of School District Finance -- All New Jersey school districts are
coterminous with the boundaries of one or more municipalities. They are
characterized by the manner in which the board of education, the governing
body of the school districts, takes office. Type I school districts, most
commonly found in cities, have a board of education, appointed by the mayor
or the chief executive officer of the municipality, constituting the school
district. In a Type II school district, the board of education is elected by
the voters of the district.

Nearly all regional and consolidated school districts are Type II school
districts. The New Jersey Department of Education has been empowered with
authority to abolish an existing school board and create a State-operated
school district where the existing school board has failed or is unable to
take the corrective actions necessary to provide a thorough and efficient
system of education in that school district pursuant to N.J.S.A. 18A:7A-15 ET
SEQ. (the "School Intervention Act"). The State-operated school district,
under the direction of a New Jersey appointed superintendent, has all of the
powers and authority of the local board of education and of the local district
superintendent. Pursuant to the authority granted under the School
Intervention Act, the New Jersey Department of Education has ordered the
creation of a State-operated school district in the City of Jersey City, the
City of Paterson and the City of Newark.

New Jersey's school districts operate under the same comprehensive review and
regulation as do its counties and municipalities. Certain exceptions and
differences are provided, but New Jersey's supervision of school finance
closely parallels that of local governments.

Regulation Of The Issuance Of Bonds By School Districts -- School district
bonds and temporary notes are issued in conformity with N.J.S.A. 18A:24-1 ET
SEQ. (the "School Bond Law"), which closely parallels the Local Bond Law (for
further information relating to the Local Bond Law, see "Counties and
Municipalities -- Regulation of the Issuance of Bonds by Counties and
Municipalities" herein). Although school districts are exempted from the 5
percent down payment provision generally applied to bonds issued by local
units, they are subject to debt limits (which vary depending on the type of
school system) and to New Jersey regulation of their borrowing.

School bonds are authorized by (i) an ordinance adopted by the governing body
of a municipality within a Type I school district; (ii) adoption of a
proposal by resolution by the board of education of a Type II school district
having a board of school estimate; (iii) adoption of a proposal by resolution
by the board of education and approval of the proposal by the legal voters of
any other Type II school district; or (iv) adoption of a proposal by
resolution by a capital project control board for projects in a
State-operated school district.

If school bonds of a Type II school district will exceed the school district
borrowing capacity, a school district (other than a regional school district)
may use the balance of the municipal borrowing capacity. If the total amount
of debt exceeds the school district's borrowing capacity, the Commissioner
and the Local Finance Board must approve the proposed authorization before it
is submitted to the voters. All authorizations of debt in a Type II school
district without a board of school estimate require an approving referendum,
except where, after hearing, the Commissioner and the New Jersey Department
of Education determine that the issuance of such debt is necessary to meet
the constitutional obligation to provide a thorough and efficient system of
public schools. When such obligations are issued, they are issued by, and in
the name of, the school district.

In Type I and II school districts with a board of school estimate, that board
examines the capital proposal of the board of education and certifies the
amount of bonds to be authorized. When it is necessary to exceed the
borrowing capacity of the municipality, the approval of a majority of the
legally qualified voters of the municipality is required, together with the
approval of the Commissioner and the Local Finance Board. When such bonds are
issued by a Type I school district, they are issued by the municipality and
identified as school bonds. When bonds are issued by a Type II school
district having a board of school estimate, they are issued by, and in the
name of, the school district.

School District Lease Purchase Financings -- School districts are permitted
to enter into lease purchase agreements for the acquisition of equipment or
for the acquisition of land and school buildings in order to undertake the
construction or the improvement of the school buildings. Lease purchase
agreements for equipment cannot exceed five years. Lease purchase agreements
for school facilities must be approved by the Commissioner, the voters or the
board of school estimate, as applicable. The payment of rent on an equipment
lease and on a five year and under facilities lease purchase agreement is
treated as a current expense and is within the cap on the school district's
budget. Under the Comprehensive Education Improvement and Financing Act,
lease purchase payments on leases in excess of five years will be treated as
debt service payments and therefore receive debt service aid if the school
district is entitled and will
be outside the school district's spending limitation of the General Fund.

New Jersey School Bond Reserve Act -- The New Jersey School Bond Reserve Act
(N.J.S.A. 18A:56-17 ET SEQ.) establishes a school bond reserve within the
constitutionally dedicated Fund for the support of free public schools. Under
this law, the reserve is maintained at an amount equal to 1.5 percent of the
aggregate outstanding bonded indebtedness of counties, municipalities or
school districts for school purposes (exclusive of bonds whose debt service
is provided by New Jersey appropriations), but not in excess of monies
available in such Fund. If a municipality, county or school district is
unable to meet payment of the principal of or interest on any of its school
bonds, the trustee of the school bond reserve will purchase such bonds at the
face amount thereof or pay the holders thereof the interest due or to become
due. There has never been an occasion to call upon this Fund.

LOCAL FINANCING AUTHORITIES

Regulation Of Local Financing Authorities -- The Local Authorities Fiscal
Control Law (N.J.S.A. 40A:5A-1 ET SEQ.) provides for State supervision of the
fiscal operations and debt issuance practices of independent local
authorities and special taxing districts by the New Jersey Department of
Community Affairs. The Local Authorities Fiscal Control Law applies to all
autonomous public bodies, created by local units, which are empowered (i) to
issue bonds, (ii) to
impose facility or service charges, or (iii) to levy taxes in their
districts. This encompasses most autonomous local authorities (sewerage,
municipal utilities, parking, pollution control, mprovement, etc.) and
special taxing
districts (fire, water, etc.). Authorities which are subject to differing New
Jersey or federal financial restrictions are exempted, but only to the extent
of that difference.

Financial control responsibilities over local authorities and special
districts are assigned to the Local Finance Board and the Director. The Local
Finance Board exercises approval over creation of new authorities and special
districts as well as their dissolution. The Local Finance Board prescribes
minimum audit requirements to be followed by authorities and special
districts in the conduct of their annual audits. The Director reviews and
approves annual budgets of authorities and special districts.

Regulation Of The Issuance Of Bonds By Local Financing Authorities -- Certain
local authorities are authorized to issue debt on behalf of various entities
on a conduit basis. Under such circumstances, neither the local authority
acting as a conduit issuer, the local unit creating such local authority nor
the State of New Jersey is responsible for the repayment of such debt. The
payment obligations with respect to such debt is solely that of the entity on
whose behalf the debt was issued. The Local Finance Board reviews, conducts
public hearings, and issues findings and recommendations on any proposed
project financing of an authority or district, and on any proposed financing
agreement between a local unit and an authority or special district.

Pollution Control Bonds -- In the 1970's, the New Jersey Legislature
initiated a comprehensive statutory mechanism for the management of solid
waste disposal within New Jersey that required each county to develop a plan
for county-wide controlled flow of solid waste to a franchised location. The
controlled flow of solid waste to a franchised location enabled the imposition
of above-market-rate disposal fees. Most counties created independent local
authorities or utilized existing local authorities in order to finance, with
the proceeds of bonds, the technically complex and expensive infrastructure
required to implement this statutory mechanism. Typically, the primary
security for the amortization of the bonds was the above-market-rate disposal
fees, although some bonds were further secured by a guaranty of the
respective county. On May 1,
1997, in ATLANTIC COAST DEMOLITION & RECYCLING, INC. V. BOARD OF CHOSEN
FREEHOLDERS OF ATLANTIC COUNTY, 112 F.3d 652 (3d Cir. 1997), the United
States Court of Appeals for the Third Circuit held that New Jersey's system
of controlled flow of solid waste to franchised locations unconstitutionally
discriminated against out-of-State operators of waste disposal facilities
and, therefore, violated the Commerce Clause of the United States
Constitution. Subsequently, the United States Supreme Court denied a petition
for writ of
certiorari. This decision has terminated controlled flow of solid waste to
franchised locations within New Jersey. In the absence of controlled flow,
franchisees facing competition from other operators of waste disposal
facilities are unable to charge above-market-rate disposal fees. The
reduction of such fees to competitive levels has reduced correspondingly the
primary source of security for the outstanding bonds of the local
authorities. The facts relevant to each local authority within New Jersey
remain unique. Some local authorities have successfully implemented refunding
and work-out financings. Other local authorities have eliminated revenue
shortfalls through the imposition of special waste disposal taxes. In other
cases, revenue shortfalls continue, but bond payment defaults by such local
authorities have been avoided as a result of a New Jersey program by which
New Jersey to date has voluntarily provided financial assistance to
qualifying local authorities to satisfy bond payment obligations on a given
bond payment date. However, no assurance can be given that such New Jersey
subsidies will be made available to such local authorities in the future (or
that sufficient funds will be made available to New Jersey for such purpose),
particularly given recent New Jersey budget reductions.

Qualified Bonds -- In 1976, legislation was enacted (P.L. 1976, c. 38 and c.
39) which provides for the issuance by municipalities and school districts of
"qualified bonds." Whenever a local board of education or the governing body
of a municipality determines to issue bonds, it may file an application with
the Local Finance Board, and, in the case of a local board of education, the
Commissioner, to qualify bonds pursuant to P.L. 1976 c. 38 or c. 39. Upon
approval of such an application, the New Jersey Treasurer shall withhold from
certain New Jersey revenues or other New Jersey aid payable to the
municipalities, or from New Jersey school aid payable to the school district,
as appropriate, an amount sufficient to pay debt service on such bonds. These
"qualified bonds" are not direct, guaranteed or moral obligations of New
Jersey, and debt service on such bonds will be provided by New Jersey only if
the above mentioned appropriations are made by New Jersey. As of June 30,
2004, the aggregate amount of school district and municipal qualified bonds
outstanding is $251,901,700 and $1,104,790,953, respectively.

LITIGATION OF THE STATE OF NEW JERSEY

General -- At any given time, there are various numbers of claims and cases
pending against the State of New Jersey, State agencies and State employees,
seeking recovery of monetary damages that are primarily paid out of the fund
created pursuant to the New Jersey Tort Claims Act (N.J.S.A. 59:1-1 ET SEQ.).
New Jersey does not formally estimate its reserve representing potential
exposure for these claims and cases. New Jersey is unable to estimate its
exposure for these claims and cases.

New Jersey routinely receives notices of claim seeking substantial sums of
money. The majority of these claims have historically proven to be of
substantially less value than the amount originally claimed. Under the New
Jersey Tort Claims Act, any tort litigation against New Jersey must be
preceded by a notice of claim, which affords New Jersey the opportunity for a
six-month
investigation prior to the filing of any suit against it. In addition, at any
given time, there are various numbers of contract and other claims against
New Jersey and New Jersey agencies, including environmental claims asserted
against New Jersey, among other parties, arising from the alleged disposal of
hazardous waste. Claimants in such matters seek recovery of monetary damages
or other relief which, if granted, would require the expenditure of funds.
New Jersey is
unable to estimate its exposure for these claims. At any given time, there
are various numbers of claims and cases pending against the University of
Medicine and Dentistry of New Jersey and its employees, seeking recovery of
monetary damages that are primarily paid out of the Self Insurance Reserve
Fund created pursuant to the New Jersey Tort Claims Act.

An independent study estimated an aggregate potential exposure of $88,860,618
for tort and medical malpractice claims pending as of December 31, 2003. In
addition, at any given time, there are various numbers of contract and other
claims against the University of Medicine and Dentistry of New Jersey,
seeking recovery of monetary damages or other relief which, if granted, would
require the expenditure of funds. New Jersey is unable to estimate its
exposure for these claims.

Lawsuits currently pending or threatened in which New Jersey has the
potential for either a significant loss of revenue or a significant
unanticipated expenditure are described in official statements relating to
securities offerings of New Jersey municipal obligations available as of the
date of this Statement of Additional Information.

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 them.

Portfolio Turnover. A change in the securities held by the Fund from buying
and selling investments is known as "portfolio turnover." Active and
frequent 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 active and frequent 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 100%. The
Financial Highlights table at the end of the Prospectus shows the Fund's
portfolio turnover rates during the past five fiscal years.

|X| Floating Rate and Variable Rate Obligations. Variable rate
demand obligations 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
obligation.

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 ninety-one (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 demand note is also based on a stated prevailing market rate
but is adjusted automatically at specified intervals of no less than one (1)
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 demand obligation meets the Fund's quality standards by reason of being
backed 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 (1) year may have features that permit the holder
to recover the principal amount of the underlying security at specified
intervals not exceeding one (1) year and upon not more than thirty (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's limitations on
investments in illiquid securities.

|X| Inverse Floaters. "Inverse floaters" are municipal obligations on which
the interest rates typically fall as market rates increase and increase as
market rates fall. Inverse floaters are a form of derivative instruments.
Changes in market interest rates or the floating rate of the security
inversely affect the residual interest rate of an inverse floater. As a
result, the price of an inverse floater will be considerably more volatile
than that of a fixed-rate obligation when interest rates change.

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 20% of its total assets in inverse floaters. Inverse
floaters may offer relatively high current income, reflecting the spread
between short-term and long-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.

Other Derivative Investments. 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, futures, indexed securities and entering into swap agreements, 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.

|X| "When-Issued" and "Delayed Delivery" Transactions. The Fund can
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 (6) 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 (6) months and
possibly as long as two (2) 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 will 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. Their
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 for its portfolio 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 of any
type 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 may buy 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 to enhance
portfolio liquidity and to try to reduce the average effective portfolio
maturity. 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 may 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.

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. They must meet
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 (1) to five (5) days of
the purchase. Repurchase agreements having a maturity beyond seven (7) days
are subject to the Fund's limits on holding illiquid investments. There is no
limit on the amount of the Fund's net assets that may be subject to
repurchase agreements of seven (7) days or less.

Repurchase agreements considered "loans" under the Investment Company
Act of 1940 ("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 collateral's value 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 continuously monitor the
collateral's value. 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 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. The Fund has percentage
limitations that apply to purchases of illiquid and restricted securities, as
stated in the Prospectus. The Manager monitors holdings of illiquid and
restricted securities on an ongoing basis to determine whether to sell any
holdings to maintain adequate liquidity.

|X| Borrowing for Leverage. The Investment Company Act imposes
certain restrictions on the borrowing activities of mutual funds. The
restrictions on borrowing are designed to protect shareholders and their
investment in a fund by limiting a fund's ability to leverage its assets.
Leverage exists when a fund has the right to a return on an investment that
exceeds the amount the fund contributed to the investment. Borrowing money
to make an investment is an example of how a fund leverages its assets. The
use of leverage exposes shareholders and their investments in a fund to a
greater risk of loss. For example, borrowing may cause the value of a fund's
shares to be more volatile than if the fund did not borrow. A fund may not
deviate from its borrowing policy unless authorized by the vote of a
"majority of its outstanding voting securities" as defined in the Investment
Company Act. 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 all
liabilities and indebtedness other than borrowing. Notwithstanding the
preceding sentence, the Fund may also 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. If the value of the Fund's assets fails
to meet the 300% asset coverage (i.e., up to one-third of its total assets)
requirement, the Fund is required to reduce its bank debt within three (3)
days to meet the requirement. To do so, the Fund might have to sell a
portion of its investments at a disadvantageous time.

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| Loans of Portfolio Securities. To attempt to raise income or raise
cash for liquidity purposes, the Fund may lend its portfolio securities to
brokers, dealers and other financial institutions approved by the Fund's
Board of Trustees. These loans are limited to not more than 25% of the value
of the Fund's total assets. The Fund presently does not intend to engage in
loans of securities that will exceed 5% of the value of the Fund's total
assets in the coming year. Income from securities loans does not constitute
exempt-interest income for the purpose of paying tax-exempt dividends.

There are risks in connection with securities lending. The Fund might
experience a delay in receiving additional collateral to secure a loan, or a
delay in recovery of the loaned securities. The Fund must receive collateral
for a loan. Under current applicable regulatory requirements (which are
subject to change), on each business day the loan collateral must be at least
equal to the value of the loaned securities. It must consist of cash, bank
letters of credit, securities of the U.S. government or its agencies or
instrumentalities, or other cash equivalents in which the Fund is permitted
to invest. To be acceptable as collateral, letters of credit must obligate a
bank to pay amounts demanded by the Fund if the demand meets the terms of the
letter. The terms of the letter of credit and the issuing bank both must be
satisfactory to the Fund.

When it lends securities, the Fund receives amounts equal to the
dividends or interest on the loaned securities. It also receives one or more
of (a) negotiated loan fees, (b) interest on securities used as collateral,
and (c) interest on short-term debt securities purchased with the loan
collateral. Either type of interest may be shared with the borrower. The
Fund may pay reasonable finder's, custodian and administrative or other fees
in connection with these loans. The terms of the Fund's loans must meet
applicable tests under the Internal Revenue Code and must permit the Fund to
reacquire loaned securities on five (5) days' notice or in time to vote on
any important matter.

|X| Hedging. The Fund may 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:

|_| sell interest rate futures or municipal bond index futures,
|_| buy puts on such futures or securities, or
|_| write covered calls on securities, broadly-based municipal bond
indices, interest rate futures or municipal bond index futures.

The Fund can also write covered calls 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 may also use hedging to establish a position in the debt
securities market as a temporary substitute for purchasing individual debt
securities. In that case the Fund would normally seek to purchase the
securities, and then terminate that hedging position. For this type of
hedging, the Fund could:

|_| buy interest rate futures or municipal bond index futures, or
|_| buy calls on such futures or on securities.

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
Fund's strategy of hedging with futures and options on futures will be
incidental to the Fund's investment activities in the underlying cash market.
The particular hedging instruments the Fund can use are described below. The
Fund may employ new hedging instruments and strategies when they are
developed, if those investment methods are consistent with the Fund's
investment objective, are approved by its Board, and are permissible under
applicable regulations governing the Fund.

|X| Futures. The Fund may buy and sell futures contracts relating to
debt securities (these are called "interest rate futures") and municipal bond
indices (these are referred to as "municipal bond index futures").

An interest rate future obligates the seller to deliver (and the
purchaser to take) cash or a specific type of debt security to settle the
futures transaction. Either party could also enter into an offsetting
contract to close out the futures position.

A "municipal bond index" assigns relative values to the municipal bonds
in the index, and is used as the basis for trading long-term municipal bond
futures contracts. Municipal bond index futures are similar to interest rate
futures except that settlement is made only in cash. The obligation under
the contract may also be satisfied by entering into an offsetting contract.
The strategies which the Fund employs in using municipal bond index futures
are similar to those with regard to interest rate futures.

No money is paid by or received by the fund on the purchase or sale of
a futures contract. Upon entering into a futures transaction, the Fund will
be required to deposit an initial margin payment in cash or U.S. government
securities with the futures commission merchant (the "futures broker").
Initial margin payments will be deposited with the Fund's custodian bank in
an account registered in the futures broker's name. However, the futures
broker can gain access to that account only under certain specified
conditions. As the future is marked to market (that is, its value on the
Fund's books is changed) to reflect changes in its market value, subsequent
margin payments, called variation margin, will be paid to or by the futures
broker daily.

At any time prior to the expiration of the future, the Fund may elect
to close out its position by taking an opposite position at which time a
final determination of variation margin is made and additional cash is
required to be paid by or released to the Fund. Any gain or loss is then
realized by the Fund on the future for tax purposes. Although interest rate
futures by their terms call for settlement by the delivery of debt
securities, in most cases the obligation is fulfilled without such delivery
by entering into an offsetting transaction. All futures transactions are
effected through a clearing house associated with the exchange on which the
contracts are traded.

The Fund may concurrently buy and sell futures contracts in a strategy
anticipating that the future the Fund purchased will perform better than the
future the Fund sold. For example, the Fund might buy municipal bond futures
and concurrently sell U.S. Treasury Bond futures (a type of interest rate
future). The Fund would benefit if municipal bonds outperform U.S. Treasury
Bonds on a duration-adjusted basis.

Duration is a volatility measure that refers to the expected percentage
change in the value of a bond resulting from a change in general interest
rates (measured by each 1% change in the rates on U.S. Treasury securities).
For example, if a bond has an effective duration of three years, a 1%
increase in general interest rates would be expected to cause the value of
the bond to decline about 3%. There are risks that this type of futures
strategy will not be successful. U.S. Treasury bonds might perform better on
a duration-adjusted basis than municipal bonds, and the assumptions about
duration that were used might be incorrect (for example, the duration of
municipal bonds relative to U.S. Treasury Bonds might have been greater than
anticipated).

|X| 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 Options. The Fund can write (that is, sell)
call options. The Fund's call writing is subject to a number of
restrictions:

(1) After the Fund writes a call, not more than 25% of the Fund's total
assets may be subject to calls.
(2) Calls the Fund sells must be listed on a securities or commodities
exchange or quoted on NASDAQ, the automated quotation system of The
Nasdaq Stock Market, Inc. or traded in the over-the-counter market.
(3) 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.

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 (9) 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.

When the Fund writes a call on an index, it receives cash (a premium).
If the buyer of the call exercises it, the Fund will pay an amount of cash
equal to the difference between the closing price of the call and the
exercise price, multiplied by the specified multiple that determines the
total value of the call for each point of difference. If the value of the
underlying 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.

The Fund's custodian, 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.

When the Fund writes an over-the-counter ("OTC") option, it will enter
into an arrangement with a primary U.S. Government securities dealer which
will establish a formula price at which the Fund will have the absolute right
to repurchase that OTC option. The formula price would generally be based on
a multiple of the premium received for the option, plus the amount by which
the option is exercisable below the market price of the underlying security
(that is, the option is "in-the-money"). When the Fund writes an OTC option,
it will treat as illiquid (for purposes of its restriction on illiquid
securities) the mark-to-market value of any OTC option held by it, unless the
option is subject to a buy-back agreement by the executing broker. The
Securities and Exchange Commission is evaluating whether OTC options should
be considered liquid securities. The procedure described above could be
affected by the outcome of that evaluation.

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.

The Fund may also write calls on futures contracts without owning the
futures contract or securities deliverable under the contract. To do so, at
the time the call is written, the Fund must cover the call by segregating in
escrow in all appropriate cases an equivalent dollar value of liquid assets
identified on the Fund's books. The Fund will segregate additional liquid
assets if the value of the escrowed assets drops below 100% of the current
value of the future. Because of this escrow requirement, in no circumstances
would the Fund's receipt of an exercise notice as to that future put the Fund
in a "short" futures position.

|_| Writing Put Options. The Fund can sell put options on debt
securities, broadly-based securities indices, futures, or foreign currency
options. A put option on securities gives the purchaser the right to sell,
and the writer the obligation to buy, the underlying investment at the
exercise price during the option period. A put written on debt securities
must be covered by segregated liquid assets and the Fund cannot write puts
if, as a result, more than 50% of the Fund's net assets would be required to
be segregated to cover such put options.

If the Fund writes a put, the put must be covered by liquid assets
identified on the Fund's books. The premium the Fund receives from writing a
put represents a profit, as long as the price of the underlying investment
remains equal to or above the exercise price of the put. However, the Fund
also assumes the obligation during the option period to buy the underlying
investment from the buyer of the put at the exercise price, even if the value
of the investment falls below the exercise price.

If a put the Fund has written expires unexercised, the Fund realizes a
gain in the amount of the premium less the transaction costs incurred. If the
put is exercised, the Fund must fulfill its obligation to purchase the
underlying investment at the exercise price. That price will usually exceed
the market value of the investment at that time. In that case, the Fund may
incur a loss if it sells the underlying investment. That loss will be equal
to the sum of the sale price of the underlying investment and the premium
received minus the sum of the exercise price and any transaction costs the
Fund incurred.

When writing a put option on a security, to secure its obligation to
pay for the underlying security the Fund will identify liquid assets on its
books with a value equal to or greater than the exercise price of the
underlying securities. The Fund therefore forgoes the opportunity of
investing the segregated assets or writing calls against those assets.

As long as the Fund's obligation as the put writer continues, it may be
assigned an exercise notice by the broker-dealer through which the put was
sold. That notice will require the Fund to take delivery of the underlying
security and pay the exercise price. The Fund has no control over when it may
be required to purchase the underlying security, since it may be assigned an
exercise notice at any time prior to the termination of its obligation as the
writer of the put. That obligation terminates upon expiration of the put. It
may also terminate if, before it receives an exercise notice, the Fund
effects a closing purchase transaction by purchasing a put of the same series
as it sold. Once the Fund has been assigned an exercise notice, it cannot
effect a closing purchase transaction.

The Fund may decide to effect a closing purchase transaction to realize
a profit on an outstanding put option it has written or to prevent the
underlying security from being put. Effecting a closing purchase transaction
will also permit the Fund to write another put option on the security, or to
sell the security and use the proceeds from the sale for other investments.
The Fund will realize a profit or loss from a closing purchase transaction
depending on whether the cost of the transaction is less or more than the
premium received from writing the put option. Any profits from writing puts
are considered short-term capital gains for federal tax purposes, and when
distributed by the Fund, are taxable as ordinary income.

|X| Purchasing Calls and Puts. The Fund may buy calls only on
securities, 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, 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 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, interest rate future or municipal bond index future 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).

|_| Risks of Hedging with Options and Futures. 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 futures and
options positions were not correlated with its other investments.

The Fund's option activities may affect its portfolio turnover rate and
brokerage commissions. The exercise of calls written by the Fund may 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 within 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 may 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 may 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 selling interest rate futures
and municipal bond index futures or 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 may
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 may 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.

The ordinary spreads between prices in the cash and futures markets are
subject to distortions due to differences in the natures of those markets.
All participants in the futures markets are subject to margin deposit and
maintenance requirements. Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. From the point of view of speculators, the deposit
requirements in the futures markets are less onerous than margin requirements
in the securities markets. Therefore, increased participation by speculators
in the futures markets may cause temporary price distortions.

The Fund may use hedging instruments to establish a position in the
municipal securities markets as a temporary substitute for the purchase of
individual securities (long hedging). It is possible that the market may
decline. If the Fund then concludes not to invest in such securities because
of concerns that there may be further market decline or for other reasons,
the Fund will realize a loss on the hedging instruments that is not offset by
a reduction in the purchase price of the securities.

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 incur losses.

|_| 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."

|_| Regulatory Aspects of Hedging Instruments. The Commodities Futures
Trading Commission (the "CFTC") recently 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.

Under interpretations of staff members of the Securities and Exchange
Commission regarding applicable provisions of the Investment Company Act,
when the Fund purchases an interest rate future or municipal bond index
future, it must segregate cash or readily marketable short-term debt
instruments in an amount equal to the purchase price of the future, less the
margin deposit applicable to it. The account must be a segregated account or
accounts held by its custodian bank.

|X| Temporary Defensive Investments. The securities the Fund can invest
in for temporary defensive purposes include the following:

|_| short-term municipal securities;
|_| obligations issued or guaranteed by the U.S. Government or
its agencies or instrumentalities;
|_| corporate debt securities rated within the three highest
grades by a nationally recognized rating agency;
|_| commercial paper rated "A-1" by S&P, or a comparable rating
by another nationally recognized rating agency; and
|_| certificates of deposit of domestic banks with assets of $1
billion or more.

|X| Taxable Investments. While the Fund can invest up to 20% of its net
(plus borrowings for investment purposes) assets in investments that generate
income subject to income taxes, it 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, hedging instruments, repurchase agreements,
and some of the types of securities the Fund would buy for temporary
defensive purposes.

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:

|_| 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
|_| more than 50% of the outstanding shares.

The Fund's investment objective is a fundamental policy. Other
policies described in the Prospectus or this Statement of Additional
Information are "fundamental" only if they are identified as such. The
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
Statement of Additional Information, 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:

|_| 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 Jersey municipal securities.

|_| The Fund cannot invest in real estate, physical commodities or
commodity contracts, except to the extent permitted under the 1940 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.

|_| The Fund cannot underwrite securities of other companies. A
permitted exception is in case it is deemed to be an underwriter under the
Securities Act of 1933 when reselling any securities held in its own
portfolio.

|_| The Fund cannot make loans, except to the extent permitted under
the 1940 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.

|_| The Fund may not borrow money, except to the extent permitted under
the 1940 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.

|_| 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.

|_| The Fund invests at least 80% of its net assets (plus borrowings for
investment purposes) in New Jersey municipal securities. This
includes securities that generate income subject to the alternative
minimum tax.

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 (except in the case of borrowing and
investments in illiquid securities). 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.

The Fund cannot invest in other investment companies except to the
extent permitted by the Act. The Fund would be permitted under this policy to
invest its assets in the securities of one or more open-end management
investment company for which the Manager, one of its affiliates or a
successor is the investment advisor or sub-advisor. That fund or funds must
have substantially the same fundamental investment objective, policies and
limitations as the Fund. The Fund's policy not to concentrate its
investments, as described above, also would permit the Fund to adopt a
"master-feeder" structure. Under that structure, the Fund would be a "feeder"
fund and would invest all of its assets in a single pooled "master fund" in
which other feeder funds could also invest. This could enable the Fund to
take advantage of potential operational and cost efficiencies in the
master-feeder structure. The Fund has no present intention of adopting the
master-feeder structure. If it did so, the Prospectus and this Statement of
Additional Information would be revised accordingly.

|X| Does the Fund Have Other Restrictions that are Not Fundamental
Policies?

The Fund has several additional restrictions on its investment policies
that are not fundamental, which means that they can be changed by the Board
of Trustees, without obtaining shareholder approval.

|_| The Fund cannot invest in securities or other investments other
than municipal securities, the temporary investments described in its
Prospectus, repurchase agreements, covered calls, private activity municipal
securities and hedging instruments described in "About the Fund" in the
Prospectus or this Statement of Additional Information.

|_| The Fund cannot purchase securities other than hedging instruments
on margin. However, the Fund may obtain short-term credits that may be
necessary for the clearance of purchases and sales of securities.

|_| The Fund cannot sell securities short.

|_| The Fund can pledge, mortgage or otherwise encumber, transfer or
assign its assets to secure borrowings by or indebtedness of the Fund. In
addition, the use of escrow or other collateral arrangements in connection
with borrowings and hedging instruments is permitted.

|_| The Fund cannot buy or sell futures contracts other than interest
rate futures and municipal bond index futures.

|_| The Fund will not invest more than 10% of its net assets in
securities which are restricted as to disposition under the federal
securities laws, except that the Fund may purchase without regard to this
limitation restricted securities which are eligible for resale pursuant to
Rule 144A under the Securities Act of 1933.

The Fund currently has an operating policy (which is not a fundamental
policy but will not be changed without the approval of a shareholder vote)
that prohibits the Fund from issuing senior securities. However, that policy
does not prohibit certain activities that are permitted by the Fund's other
policies, including borrowing money for emergency purposes as permitted by
its other investment policies and applicable regulations, entering into
delayed-delivery and when-issued arrangements for portfolio securities
transactions, and entering into contracts to buy or sell derivatives, hedging
instruments, options, futures and the related margin, collateral or escrow
arrangements permitted under its other investment policies.

Non-Diversification of the Fund's Investments. The Fund is
"non-diversified," as defined in the Investment Company Act. Funds that are
diversified have restrictions against investing too much of their assets in
the securities of any one "issuer." That means that the Fund can invest more
of its assets in the securities of a single issuer than a fund that is
diversified.

Being non-diversified poses additional investment risks, because if the
Fund invests more of its assets in fewer issuers, the value of its shares is
subject to greater fluctuations from adverse conditions affecting any one of
those issuers. However, the Fund does limit its investments in the
securities of any one issuer to qualify for tax purposes as a "regulated
investment company" under the Internal Revenue Code. By qualifying, it does
not have to pay federal income taxes if more than 90% of its earnings are
distributed to shareholders. To qualify, the Fund must meet a number of
conditions. First, not more than 25% of the market value of the Fund's total
assets may be invested in the securities of a single issuer. Second, with
respect to 50% of the market value of its total assets, (1) no more than 5%
of the market value of its total assets may be invested in the securities of
a single issuer, and (2) the Fund must not own more than 10% of the
outstanding voting securities of a single issuer.

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 such government or
other entity.

Applying the Restriction Against Concentration. To implement its policy not
to concentrate its investments, the Fund has adopted the industry
classifications set forth in Appendix B to this Statement of Additional
Information. Those industry classifications are not a fundamental policy.

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. Although this application of the concentration
restriction is not a fundamental policy of the Fund, it will not be changed
without shareholder approval. The Manager has no present intention of
investing 25% or more of the Fund's total assets in securities paying
interest from revenues of similar type projects or in industrial development
bonds. This is not a fundamental policy and therefore could be changed
without shareholder approval. However, if that change were made, the
Prospectus or this Statement of Additional Information would be supplemented
to reflect the change.

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 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 certified public accountants and 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-advisers 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:

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A.G. Edwards & Sons Keijser Securities

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ABG Securities Kempen & Co. USA Inc.

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ABN AMRO Kepler Equities/Julius
Baer Sec

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Advest KeyBanc Capital Markets

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AG Edwards Leerink Swan

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American Technology Research Legg Mason

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Auerbach Grayson Lehman

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Banc of America Securities Lehman Brothers

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Barclays Lipper

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Baseline Loop Capital Markets

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Bear Stearns MainFirst Bank AG

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Belle Haven Makinson Cowell US Ltd

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Bloomberg Maxcor Financial

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BNP Paribas Merrill

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BS Financial Services Merrill Lynch

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Buckingham Research Group Midwest Research

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Caris & Co. Mizuho Securities

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CIBC World Markets Morgan Stanley

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Citigroup Morningstar

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Citigroup Global Markets Natexis Bleichroeder

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Collins Stewart Ned Davis Research Group

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Craig-Hallum Capital Group LLCNomura Securities

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Credit Agricole Cheuvreux Pacific Crest
N.A. Inc.

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Credit Suisse First Boston Pacific Crest Securities

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Daiwa Securities Pacific Growth Equities

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Davy Petrie Parkman

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Deutsche Bank Pictet

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Deutsche Bank Securities Piper Jaffray Inc.

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Dresdner Kleinwort WassersteinPlexus

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Emmet & Co Prager Sealy & Co.

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Empirical Research Prudential Securities

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Enskilda Securities Ramirez & Co.

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Essex Capital Markets Raymond James

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Exane BNP Paribas RBC Capital Markets

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Factset RBC Dain Rauscher

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Fidelity Capital Markets Research Direct

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Fimat USA Inc. Robert W. Baird

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First Albany Roosevelt & Cross

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First Albany Corporation Russell Mellon

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Fixed Income Securities Ryan Beck & Co.

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Fortis Securities Sanford C. Bernstein

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Fox-Pitt, Kelton Scotia Capital Markets

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Friedman, Billing, Ramsey SG Cowen & Co.

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Fulcrum Global Partners SG Cowen Securities

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Garp Research Soleil Securities Group

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George K Baum & Co. Standard & Poors

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Goldman Stone & Youngberg

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Goldman Sachs SWS Group

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HSBC Taylor Rafferty

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HSBC Securities Inc Think Equity Partners

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ING Barings Thomas Weisel Partners

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ISI Group UBS

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Janney Montgomery Wachovia

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Jefferies Wachovia Corp

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Jeffries & Co. Wachovia Securities

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JP Morgan Wescott Financial

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JP Morgan Securities William Blair

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JPP Eurosecurities Yieldbook

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Keefe, Bruyette & Woods

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How the Fund Is Managed

Organization and History. The Fund, a series of Multi-State Municipal
(referred to as the "Trust), is an open-end, non-diversified management
investment company with an unlimited number of authorized shares of
beneficial interest. The Fund was organized as a Massachusetts business
trust in 1989. In 1993 it was reorganized to be a multi-series business
trust (now called Oppenheimer Multi-State Municipal Trust). The Fund was
added as a separate series of that Trust in 1994. The Fund is an open-end,
non-diversified management investment company with an unlimited number of
authorized shares of beneficial interest. Each of the three (3) series of the
Trust is a separate fund that issues its own shares, has its own investment
portfolio, and has its own assets and liabilities.

|X| Classes of Shares. The Trustees are authorized, without shareholder
approval, to create new series and classes of shares. The Trustees may
reclassify unissued shares of the Fund into additional series or classes of
shares. The Trustees also may 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 or preemptive or subscription rights. Shares may be
voted in person or by proxy at shareholder meetings.

The Fund currently has three classes of shares: Class A, Class B and
Class C. All classes invest in the same investment portfolio. Each class of
shares:
o has its own dividends and distributions,
o pays certain expenses which may be different for the different classes,
o may have a different net asset value,
o may 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 the 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.

|X| 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 a vote or
declaration in writing 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 Oversight Committees. The Fund is governed by a Board
of Trustees, which is responsible for protecting the interests of
shareholders under Massachusetts law. The Trustees meet periodically
throughout the year to oversee the Fund's activities, review its performance,
and review the actions of the Manager.

The Board of Trustees has an Audit Committee, a Regulatory & Oversight
Committee, a Governance Committee and a Proxy Committee. The Audit Committee
is comprised solely of Independent Trustees. The members of the Audit
Committee are Joel Motley (Chairman), Kenneth A. Randall, and Mary F. Miller
and Joseph M. Wikler. The Audit Committee held __ meetings during the Fund's
fiscal year ended July 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 Auditor 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 Trustees who
are not "interested persons" under the Investment Company Act (the
"Independent Trustees"); (v) reviewing the independence of the Fund's
independent Auditors; (vi) pre-approving the provision of any 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 also 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 for the Audit Committee's consideration by
mailing such information, accompanied by complete and properly supported
resumes, to the Audit Committee in care of the Fund. The Audit Committee may
consider such persons at such time as it meets to consider possible nominees.
The Audit Committee, however, reserves sole discretion to determine the
candidates to present to the Board and/or shareholders when it meets for the
purpose of considering potential nominees.

The members of the Regulatory & Oversight Committee are Robert G. Galli
(Chairman), Joel W. Motley, Phillip A. Griffiths and Peter I Wold. The
Regulatory & Oversight Committee held 6 meetings during the Fund's fiscal
year ended July 31, 2005. The Regulatory & Oversight Committee evaluates and
reports to the Board on the Fund's contractual arrangements, including the
Investment Advisory and Distribution Agreements, transfer and shareholder
service agreements and custodian agreements as well as the policies and
procedures adopted by the Fund to comply with the Investment Company Act and
other applicable law, among other duties as set forth in the Regulatory &
Oversight Committee's Charter.

The members of the Governance Committee are Phillip A. Griffiths
(Chairman), Russell S. Reynolds, Jr. and Kenneth A. Randall. The Governance
Committee held no meetings during the Fund's fiscal year ended July 31,
2005. The Governance Committee reviews the Fund's governance guidelines, the
adequacy of the Fund's Codes of Ethics, and develops qualification criteria
for Board members consistent with the Fund's governance guidelines, among
other duties set forth in the Committee's Charter.

The members of the Proxy Committee are Russell S. Reynolds Jr.
(Chairman), Matthew P. Fink and Mary F. Miller. The Proxy Committee held 1
meeting during the Fund's fiscal year ended July 31, 2005. The Proxy
Committee provides the Board with recommendations for proxy voting of
portfolio securities held by the Fund and monitors proxy voting by the Fund.

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

Oppenheimer AMT-Free Municipals Oppenheimer International Value Fund
Oppenheimer Limited Term California
Oppenheimer AMT-Free New York Municipals Municipal Fund
Oppenheimer Balanced Fund Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-State Municipal Trust,
a series fund having the following three
Oppenheimer California Municipal Fund series:
Oppenheimer New Jersey Municipal
Oppenheimer Capital Appreciation Fund Fund
Oppenheimer Pennsylvania Municipal
Oppenheimer Developing Markets Fund Fund
Oppenheimer Rochester National
Oppenheimer Discovery Fund Municipals
Oppenheimer Dividend Growth Fund
Oppenheimer Emerging Growth Fund Oppenheimer Portfolio Series
Oppenheimer Emerging Technologies Fund Oppenheimer Real Estate Fund
Oppenheimer Enterprise Fund Oppenheimer Select Value Fund
Oppenheimer Series Fund, Inc., a series
Oppenheimer Global Fund fund having the following two series:
Oppenheimer Disciplined Allocation
Oppenheimer Global Opportunities Fund Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Value Fund
Oppenheimer Growth Fund OFI Tremont Core Strategies Hedge Fund
Oppenheimer International Diversified
Fund OFI Tremont Market Neutral Hedge Fund
Oppenheimer Tremont Market Neutral Fund
Oppenheimer International Growth Fund LLC
Oppenheimer International Large Cap Core
Fund Oppenheimer Tremont Opportunity Fund LLC
Oppenheimer International Small Company
Fund Oppenheimer U.S. Government Trust

In addition to being a trustee or director of the Board I Funds, Mr.
Galli is also a director or trustee of 10 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, Gillespie, Murphy, Petersen, Vandehey, Vottiero,
Wixted, and Zack, and Mss. Bloomberg and Ives who are officers of the Fund,
hold the same offices with one or more of the other Board I Funds. As of
August 31, 2005, the Trustees and officers of the Fund, as a group, owned of
record or beneficially less than 1% of each class of shares of the Fund. The
foregoing statement does not reflect ownership of shares of the Fund held of
record by an employee benefit plan for employees of the Manager, other than
the shares beneficially owned under the plan by the officers of the Fund
listed above. In addition, none of the Independent Trustees, (nor any of
their immediate family members) own securities of either the Manager or
Distributor of the Board I Funds or of any entity directly or indirectly
controlling, controlled by or under common control with the Manager or
Distributor.

|X| Affiliated Transactions and Material Business Relationships. Mr.
Reynolds has reported he has a controlling interest in The Directorship
Group, Inc. ("The Directorship Search Group"), a director recruiting firm
that provided consulting services to Massachusetts Mutual Life Insurance
Company (which controls the Manager) for fees of $137,500 for calendar year
ended December 31, 2002. Mr. Reynolds reported that The Directorship Search
Group did not provide consulting services to Massachusetts Mutual Life
Insurance Company during the calendar years ended December 31, 2003 and 2004
and does not expect to provide any such services in the calendar year ended
December 31, 2005.

The Independent Trustees have unanimously (except for Mr. Reynolds, who
abstained) determined that the consulting arrangements between The
Directorship Search Group and Massachusetts Mutual Life Insurance Company
were not material business or professional relationships that would
compromise Mr. Reynolds' status as an Independent Trustee. Nonetheless, to
assure certainty as to determinations of the Board and the Independent
Trustees as to matters upon which the Investment Company Act or the rules
thereunder require approval by a majority of Independent Trustees, Mr.
Reynolds will not be counted for purposes of determining whether a quorum of
Independent Trustees was present or whether a majority of Independent
Trustees approved the matter.

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 the past five years are listed
in the charts below. The information for each Trustee also includes the
dollar range of shares beneficially owned in the Fund and the aggregate
dollar range of shares beneficially owned in all funds in the Oppenheimer
family of funds that are overseen by the Trustee ("Supervised Funds"). The
address of each Trustee in the chart below is 6803 S. Tucson Way, Centennial,
CO 80112-3924. Each Trustee serves for an indefinite term, until his or her
resignation, retirement, death or removal. Ms. Miller was elected to certain
Board I Funds during 2004 and did not hold shares of Board I Funds during the
calendar year ended December 31, 2004.Mr. Fink was elected to the Board I
Funds in 2005 and did not hold shares of Board I Funds during the calendar
year ended December 31, 2004.

-----------------------------------------------------------------------------------
Independent Trustees
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Name, Principal Occupation(s) During Past 5 Dollar Aggregate
Dollar
Range Of
Shares
Beneficially
Owned in
Years; Range of Any of the
Position(s) Held Other Trusteeships/Directorships Held Shares Oppenheimer
with Fund, by Trustee; BeneficiallFunds
Length of Service, Number of Portfolios in Fund Complex Owned in Overseen
Age Currently Overseen by Trustee the Fund by Trustee
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
As of December 31,

2004

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

Clayton K. Director of American Commercial Lines None Over
Yeutter, Chairman (barge company) (since January 2005); $100,000
of the Board of Attorney at Hogan & Hartson (law firm)
Trustees since (since June 1993); Director of
2003; Danielson Holding Corp.
Trustee since 1994 (waste-to-energy comp[any) (since
Age: 74 2002); Director of Weyerhaeuser Corp.
(1999-April 2004); Director of
Caterpillar, Inc. (1993-December 2002);
Director of ConAgra Foods (1993-2001);
Director of Texas Instruments
(1993-2001); Director of FMC
Corporation (1993-2001). Oversees 38
portfolios in the OppenheimerFunds
complex.

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

Matthew P. Fink Trustee of the Committee for Economic None None
Trustee since 2005 Development (policy research
Age: 64 foundation) (since 2005); Director of
ICI Education Foundation (education
foundation) (since October 1991);
President of the Investment Company
Institute (trade association)
(1991-2004); Director of ICI Mutual
Insurance Company (insurance company)
(1991-2004). Oversees 38 portfolios in
the OppenheimerFunds complex.

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

Robert G. Galli, A trustee or director of other None Over
Trustee since 1994 Oppenheimer funds. Oversees 48 $100,000
Age: 72 portfolios in the OppenheimerFunds

complex.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------

Phillip A. A Director of GSI Lumonics Inc. None Over
Griffiths, (precision medical equipment supplier) $100,000
Trustee, since (since 2001); Trustee of Woodward
1999 Academy, (since 1983); Senior Advisor
Age: 66 of The Andrew W. Mellon Foundation
(since 2001); Member of the National
Academy of Sciences (since 1979);
Member of the American Philosophical
Society (since 1996); Council on
Foreign Relations (since 2002);
Director of the Institute for Advanced
Study (1991-2004); Director of Bankers
Trust New York Corporation (1994-1999).
Oversees 38 portfolios in the
OppenheimerFunds complex.

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

Mary F. Miller, Trustee of the American Symphony None None
Trustee since Orchestra (not-for-profit) (since
2004 October 1998); Senior Vice President
Age: 62 and General Auditor of American Express
Company (financial services company)
(July 1998-February 2003). Oversees 38
portfolios in the OppenheimerFunds
complex.

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

Joel W. Motley, Director Columbia Equity Financial None Over
Trustee since 2002 Corp. (privately-held financial $100,000
Age: 53 adviser) (since January 2002); Managing
Director of Carmona Motley, Inc.
(privately-held financial adviser)
(since January 2002); Managing Director
of Carmona Motley Hoffman Inc.
(privately-held financial adviser)
(January 1998-December 2001). Oversees
38 portfolios in the OppenheimerFunds
complex.

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

Kenneth A.
Randall, Trustee
since 1989Age: 78

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

Kenneth A. Director of Dominion Resources, Inc. None Over
Randall, Trustee (electric utility holding company) $100,000
since 1989 (since February 1972); Former Director
Age: 78 of Prime Retail, Inc. (real estate
investment trust), Dominion Energy Inc.
(electric power and oil & gas
producer), Lumbermens Mutual Casualty
Company, American Motorists Insurance
Company and American Manufacturers
Mutual Insurance Company; Former
President and Chief Executive Officer
of The Conference Board, Inc.
(international economic and business
research). Oversees 38 portfolios in
the OppenheimerFunds complex.

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

Russell S. Chairman (since 1993) of The None Over
Reynolds, Jr., Directorship Search Group, Inc. $100,000
Trustee since 1994 (corporate governance consulting and
Age: 73 executive recruiting); a Life Trustee

of International House (non-profit
educational organization); a former
trustee of The Historical Society of
the Town of Greenwich. Oversees 25
portfolios in the OppenheimerFunds
complex.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------

Joseph M. Wikler, Director of the following medical None $50,001-$100,000
Trustee since device companies: Medintec (since 1992)
August 2005 and Cathco (since 1996); Director of
Age: 64 Lakes Environmental Association (since
1996); Member of the Investment
Committee of the Associated Jewish
Charities of Baltimore (since 1994);
Director of Fortis/Hartford mutual
funds (1994-December 2001). Oversees 15
portfolios in the OppenheimerFunds
complex.

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

Peter I. Wold President of Wold Oil Properties, Inc. None Over
Trustee since (oil and gas exploration and production $100,000
September 2005 company) (since 1994); Vice President,
Age: 57 Secretary and Treasurer of Wold Trona
Company, Inc. (soda ash processing and
production) (since 1996); Vice
President of Wold Talc Company, Inc.
(talc mining) (since 1999); Managing
Member of Hole-in-the-Wall Ranch
(cattle ranching) (since 1979);
Director and Chairman of the Denver
Branch of the Federal Reserve Bank of
Kansas City (1993-1999); and Director
of PacifiCorp. (electric utility)
(1995-1999). Oversees 15 portfolios in
the OppenheimerFunds complex.

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

The address of Mr. Murphy is Two World Financial Center, 225 Liberty
Street, 11th Floor, New York, NY 10281-1008. Mr. Murphy serves as Trustee for
an indefinite term and as an Officer for an annual term, or until his
resignation, death or removal.

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

INTERESTED [DIRECTOR/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, 2004

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

John V. Murphy, Chairman, Chief Executive Officer and $None Over $100,000
President and Director (since June 2001) and President
Trustee since 2001 (since September 2000) of the Manager;
Age: 56 President and Director or Trustee of other
Oppenheimer funds; President and Director
of Oppenheimer Acquisition Corp. ("OAC")
(the Manager's parent holding company) and
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 77 portfolios as
a Trustee or Director and 10 additional
portfolios as an officer in the
OppenheimerFunds complex.

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

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

The addresses of the officers in the chart below are as follows: for Messrs.
Gillespie and Zack and Ms. Bloomberg, Two World Financial Center, 225 Liberty
Street, New York, NY 10281-1008, for Messrs. Petersen, Vandehey, Vottiero, and
Wixted and Ms. Ives, 6803 S. Tucson Way, Centennial, CO 80112-3924 and for Mr.
Fielding, 350 Linden Oaks, Rochester, NY 14625. Each Officer serves for an annual
term or until his or her resignation, death or removal.

Other Officers of the Fund

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

Name, Position(s) Held Principal Occupation(s) During Past 5 Years
with Fund, Length of
Service, Age

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

Ronald H. Fielding, Senior Vice President (since January 1996) of the Manager;
---------------------- Chairman of the Rochester Division of the Manager (since
Vice President and January 1996); an officer of 9 portfolios in the
Portfolio Manager OppenheimerFunds complex.
since 2001
Age: 55

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

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. (since
Age: 55 June 1983). Former Vice President and Director of Internal
Audit of the Manager (1997-February 2004). An officer of 87
portfolios in the OppenheimerFunds complex.

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

Brian W. Wixted, Senior Vice President and Treasurer of the Manager (since
Treasurer since 1999 March 1999); Treasurer of the following: HarbourView Asset
Age: 45 Management Corporation, Shareholder Financial Services,
Inc., Shareholder Services, Inc., Oppenheimer Real Asset
Management Corporation, and Oppenheimer Partnership
Holdings, Inc. (since March 1999), OFI Private Investments,
Inc. (since March 2000), OppenheimerFunds International Ltd.
(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 87
portfolios in the OppenheimerFunds complex.

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

Brian Petersen, Assistant Vice President of the Manager (since August 2002);
Assistant Treasurer Manager/Financial Product Accounting of the Manager
since 2004 (November 1998-July 2002). An officer of 87 portfolios in
Age: 35 the OppenheimerFunds complex.

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

Philip F. Vottiero, Vice President/Fund Accounting of the Manager (since March
Assistant Treasurer 2002); Vice President/Corporate Accounting of the Manager
since 2002 (July 1999-March 2002); Chief Financial Officer of Sovlink
Age: 42 Corporation (April 1996-June 1999). An officer of 87
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 87 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: 39 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: 37 Corporate Vice President (May 1999-April 2001) and Assistant
General Counsel (May 1999-December 2000) of UBS Financial
Services Inc. (formerly, PaineWebber Incorporated). An
officer of 87 portfolios in the OppenheimerFunds complex.

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

Phillip S. Gillespie, Senior Vice President and Deputy General Counsel of the
Assistant Secretary Manager (since September 2004); Mr. Gillespie held the
since 2004 following positions at Merrill Lynch Investment Management:
Age: 41 First Vice President (2001-September 2004); Director
(2000-September 2004) and Vice President (1998-2000). An
officer of 87 portfolios in the OppenheimerFunds complex.

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

|X| Remuneration of Trustees. The Trustees of the Fund are affiliated
with the Manager and receive no salary or fee from the Fund. The Independent
Trustees received the compensation shown below from the Fund for serving as
a Trustee and member of a committee (if applicable), with respect to the
Fund's fiscal year ended July 31, 2005. The total compensation, including
accrued retirement benefits, from the Fund and fund complex represents
compensation received for serving as a Trustee and a 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, 2004.

------------------------------------------------------------------------------------
Trustee Name and Other Aggregate Retirement Estimated Total
Benefits Annual Compensation

Accrued as Benefits From the Fund
Fund Position(s) Compensation Part of Fund Upon and Fund
(as applicable) From Fund(1) Expenses Retirement(2) Complex

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

Clayton K. Yeutter $(3) $ $86,171 $173,700

Chairman of the Board
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------

Matthew P. Fink(4) $ $ $2,641 None
Proxy Committee

------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Robert G. Galli

Regulatory & Oversight $ $ $100,824(5) $237,312(6)
Committee Chairman

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

Phillip A. Griffiths

Governance Committee

Chairman and $(7) $ $34,972 $142,092
Regulatory & Oversight
Committee Member

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

Mary F. Miller
Audit Committee Member
and Proxy Committee $ None $7,128 $8,532
Member

Chairman and $(9) $ $23,945 $150,760
Regulatory & Oversight
Committee Member

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

Kenneth A. Randall $ $(10) $85,944 $134,080

Audit Committee Member
and Governance
Committee Member
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------

Edward V. Regan(11) $ $ $70,977 $118,788

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

Russell S. Reynolds, $ $ $66,602 $106,792
Jr.
Proxy Committee
Chairman and
Governance Committee
Member

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

Donald Spiro (12) $ $ None $64,080

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

Eustis Walcott (14) None None $18,500

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

Joseph M. Wikler $ $ - $23,000
Audit Committee Member

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

Peter I. Wold
Regulatory & Oversight $ $ - $20,500
Committee Member

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

"1. Aggregate Compensation From the Fund" includes fees and deferred
compensation, if any.
2. "Estimated Annual Retirement 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."
3. Includes $___ deferred by Mr. Yeutter under the Deferred Compensation
Plan described below.
4. Mr. Fink was appointed as a Director or Trustee of 10 of the Board I
Funds effective January 1, 2005 and was elected as Director or Trustee of
all of the other Board I Funds during 2005.
5. Includes $45,840 estimated to be paid to Mr. Galli for serving as a
trustee or director of 10 other Oppenheimer funds that are not Board I
Funds.
6. Includes $111,000 for serving as trustee or director of 10 other
Oppenheimer funds (at December 31, 2004) that are not Board I Funds.
7. Includes $____ deferred by Mr. Griffiths under the "Deferred
Compensation Plan" described below.
8. Ms. Miller was appointed as Director or Trustee of 13 of the Board I
Funds effective August13, 2004 and of 9 of the Board I Funds effective
October 26, 2004. She was elected as Director or Trustee of all of the
other Board I Funds during 2005.
9. Includes $____deferred by Mr. Motley under the "Deferred Compensation
Plan" described below.
10. Due to actuarial considerations, no additional retirement benefits were
accrued with respect to Mr. Randall.
11. Mr. Regan retired as Trustee of the Board I funds effective June 30,
2005.
12. Mr. Spiro retired as Trustee of the Board I funds effective October 31,
2004.
13. Mr. Wold and Mr. Wikler were elected as Trustees of the Board I Funds
as of August 17, 2005.
14. Mr. Abdow and Mr. Walcott retired as Trustees of the Fund as of
September 26, 2005.
15. Includes $61,333 compensation paid to Mr. Abdow for serving as a
trustee for two open-end investment companies (MassMutual Institutional
Funds and MML Series Investment Fund) the investment adviser for which is
the indirect parent company of the Fund's Manager. The Manager also serves
as the Sub-Advisor to the MassMutual International Equity Fund, a series
of MassMutual Institutional Funds. In accordance with SEC regulations, for
purposes of this section only, "Fund Complex" includes the Oppenheimer
funds, MassMutual Institutional Funds and MML Series Investment Fund. The
Manager does not consider MassMutual Institutional Funds and MML Series
Investment Fund to be part of the OppenheimerFunds' "Fund Complex" as that
term may be otherwise interpreted.

|X| 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 trustee for any of the Board I Funds for at least seven years in order 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. The Board of Trustees has adopted a
Deferred Compensation Plan for Independent Trustees that enables them to
elect to defer receipt of all or a portion of the annual fees they are
entitled to receive from the 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 the 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 August 31, 2005, the only persons or
entities who owned of record or who were known by the Fund to own
beneficially 5% or more of any class of the Fund's outstanding shares were:

MLPF&S for the sole benefit of its customers, Attn. Fund ADMN/#97DN1,
4800 Deer Lake Drive East Floor 3, Jacksonville, FL 32246-6484, which owned
_________ Class A shares (____% of the Class A shares then outstanding) for
the benefit of its customers.

Citigroup Global Mkts Inc. 109801250, Attn. Cindy Tempesta, 7th Floor
333 West 34th Street, New York, New York 10001-2483, which owned _________
Class A shares (_____% of the Class A shares then outstanding) for the
benefit of its customers.

Citigroup Global Mkts Inc. 109801250, Attn. Cindy Tempesta, 7th Floor
333 West 34th Street, New York, New York 10001-2483, which owned __________
Class B shares (_____% of the Class B shares then outstanding) for the
benefit of its customers.

MLPF&S for the sole benefit of its customers, Attn. Fund ADMN/#97HF5,
4800 Deer Lake Drive East Floor 3, Jacksonville, FL 32246-6484, which owned
________ Class C shares (______% of the Class C shares then outstanding) for
the benefit of its customers.

Citigroup Global Mkts Inc. 109801250, Attn. Cindy Tempesta, 7th Floor
333 West 34th Street, New York, New York 10001-2483, which owned _______
Class C shares (______% of the Class C shares then outstanding) for the
benefit of its customers.

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 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 Proxy Voting Guidelines include provisions to address
conflicts of interest that may arise between the Fund and the Manager where a
directly-controlled affiliate of the Manager manages or administers the
assets of a pension plan of the company soliciting the proxy. The Fund's
Portfolio Proxy Voting Guidelines on routine and non-routine proxy proposals
are summarized below.

o The Fund votes with the recommendation of the issuer's management on
routine matters, including election of directors nominated by
management and ratification of the independent registered public
accounting firm, unless circumstances indicate otherwise.
o In general, the Fund opposes anti-takeover proposals and supports the
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.
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, 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 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 it's last three
fiscal years are listed below.

-----------------------------------------------------------------------------
Management Fee Paid to
Fiscal Year Management Fee OppenheimerFunds, Inc.
Ended 7/31 (Without Voluntary Waiver) (after waiver)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2003 $700,465 $466,975
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2004 $901,530 $600,745
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------

2005 $1,363,857 $902,968

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

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.

Portfolio Managers. The Fund's portfolio is managed by Ronald H.
Fielding and a team of investment professionals including Daniel G. Loughran,
Scott Cottier and Troy Willis (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 and Willis 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 Messrs. Fielding, Loughran, Cottier and
Willis as of July 31, 2005. No account has a performance-based advisory fee:

Portfolio Manager RegisteredTotal Other Total Other Total
Assets in
Assets in Other
Registered Pooled Pooled Assets
InvestmentInvestment InvestmentInvestment in Other
Companies Companies Vehicles Vehicles AccountsAccounts
Managed Managed* Managed Managed* Managed Managed*

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

Ronald H. 10 None $0 None $0
Fielding $19,636.80

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

Daniel G. 10 None $0 None $0
Loughran $19,636.80

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

Scott Cottier 10 None $0 None $0
$19,636.80

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

Troy Willis 10 None $0 None $0
$19,636.80
* In millions.

As indicated above, each of the Portfolio Managers also manages 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 he may need to execute transactions for another
fund or account that could have a negative impact on the value of securities
held by the 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 obligations 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 they may manage funds or accounts with
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 July 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 Jersey 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 July 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 buy and sell
portfolio securities for the Fund. The investment advisory agreement allows
the Manager to use broker-dealers to effect the Fund's portfolio
transactions. The Manager is authorized by the advisory agreement to employ
broker-dealers, including, as that term is defined in the Investment Company
Act that, in the Manager's best judgment based on all relevant factors, will
implement the Fund's policy to obtain, at reasonable expense, the "best
execution" of portfolio transactions. "Best execution" refers to prompt and
reliable execution at the most favorable price obtainable. The Manager need
not seek competitive commission bidding. However, the Manager is expected to
minimize the commissions paid to the extent consistent with the interest 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 brokerage and/or research services to the Fund
and/or the other accounts over which the Manager or its affiliates have
investment discretion. 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.

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.

Brokerage Practices Followed by the Manager. The Manager allocates brokerage
for the Fund subject to the provisions of the investment advisory agreement
and the procedures and rules described above. Generally the Manager's
portfolio traders allocate brokerage upon recommendations from the Manager's
portfolio managers. 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.

The Fund seeks to obtain prompt execution of orders at the most
favorable net prices. 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 funds advised by the Manager
have investment objectives and policies similar to those of the Fund. Those
other funds 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.
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.

The investment advisory agreement permits the Manager to allocate
brokerage for research services. The research services provided by a
particular broker may be useful only to one or more of the advisory accounts
of the Manager and its affiliates. Investment research received by the
Manager for the commissions paid by those other accounts may be useful both
to the Fund and one or more of the Manager's other accounts. Investment
research services may be supplied to the Manager by a third party at the
instance of a broker through which trades are placed.
Investment research services include information and analyses on
particular companies and industries as well as market or economic trends and
portfolio strategy, market quotations for portfolio evaluations, information
systems, computer hardware and similar products and services. If a research
service also assists the Manager in a non-research capacity (such as
bookkeeping or other administrative functions), then only the percentage or
component that provides assistance to the Manager in the investment
decision-making process may be paid in commission dollars.

The Board of Trustees permits the Manager to use commissions on
fixed-price offerings to obtain research, in the same manner as is permitted
for agency transactions. The Board permits 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 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 of the Fund 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.

In the fiscal years ended July 31, 2003, 2004 and 2005, there were no
transactions directed to brokers for research services, and the amount of the
commissions paid to broker-dealers for those services was $0. As explained
above, in the fiscal years ended July 31, 2003, 2004 and 2005 respectively,
the Fund did not pay any brokerage commissions.

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.

------------------------------------------------------------------------------
Aggregate Class A Concessions Concessions
Fiscal Front-End Front-End Concessions on Class B on Class C
Year Sales Sales on Class A Shares Shares
Ended Charges on Charges Shares Advanced by Advanced by
7/31: Class A Retained by Advanced by Distributor(2Distributor(2)
Shares Distributor(1Distributor(2)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
2003 $432,635 $62,816 $37,785 $443,729 $76,829
------------------------------------------------------------------------------
------------------------------------------------------------------------------
2004 $761,563 $118,554 $31,075 $531,567 $95,807
------------------------------------------------------------------------------
------------------------------------------------------------------------------

2005 $1,979,397 $321,354 $74,595 $623,968 $402,303

------------------------------------------------------------------------------
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 financial
intermediaries 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.

------------------------------------------------------------------------------
Class A Contingent Class B Contingent Class C Contingent
Fiscal Deferred Sales Deferred Sales Deferred Sales
Year Ended Charges Retained by Charges Retained by Charges Retained by
7/31: Distributor Distributor Distributor
------------------------------------------------------------------------------
------------------------------------------------------------------------------
2003 $0 $140,792 $6,649
------------------------------------------------------------------------------
------------------------------------------------------------------------------
2004 $0 $97,081 $3,962
------------------------------------------------------------------------------
------------------------------------------------------------------------------

2005 $250 $133,731 $40,746

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

Distribution and Service Plans. The Fund has adopted a Service Plan for its
Class A shares and Distribution and Service Plans for its Class B and Class C
shares under Rule 12b-1 of the Investment Company Act. Under those plans,
the Fund makes payments to 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.

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

Unless 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 Fund's 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 or
replacement 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 quarter 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.

|_| 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. The Board has set the rate at the level. 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 quarterly at an annual rate
not to exceed 0.25% of the average annual net assets of Class A shares held
in accounts of the service providers or their customers.

For the fiscal year ended July 31, 2005, payments under the Class A
plan totaled $194,249, all of which was paid by the Distributor to recipients
and included $2,471 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.

|_| Class B and Class C Service and Distribution Plans. 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 plans during the period for which the fee is paid. The types of
services that recipients provide are similar to the services provided under
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 quarterly 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 quarterly on those shares. The advance payment is
based on the net asset value of shares sold. Shares purchased by exchange do
not qualify for an 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
classes.

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 fees and the asset-based sales charge to the dealer quarterly 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:
|_| pays sales concessions to authorized brokers and dealers at the time of
sale and pays service fees as described above,
|_| 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,

employs personnel to support distribution of Class B and Class C shares,
|_| 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,
|_| 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,
|_| 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,
|_| may use the payments under the plan to include the Fund in various
third-party distribution programs that may increase sales of Fund
shares,
|_| 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
|_| 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.

During a calendar year, 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
asset-based sales charges paid to the Distributor by the Fund under the
distribution and service plans. Those excess expenses are carried over on the
Distributor's books and may be recouped from asset-based sales charge
payments from the Fund in future years. However, the Distributor has
voluntarily agreed to cap the amount of expenses under the plans that may be
carried over from year to year and recouped that relate to (i) expenses the
Distributor has incurred that represent compensation and expenses of its
sales personnel and (ii) other direct distribution costs it has incurred,
such as sales literature, state registration fees, advertising and
prospectuses used to offer Fund shares. The cap on the carry-over of those
categories of expenses is set at 0.70% of annual gross sales of shares of the
Fund. If those categories of expenses exceed the capped amount, the
Distributor bears the excess costs. If the Class B or Class C plan were to be
terminated by the Fund, the Fund's Board of Trustees may allow the Fund to
continue payments of the asset-based sales charge to the Distributor for
distributing shares prior to the termination of the plan.

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

Distribution Fees Paid to the Distributor in the Fiscal Year Ended 7/31/05

-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class: Total Payments Amount Distributor's Distributor's
Aggregate Unreimbursed
Unreimbursed Expenses as %
Retained by Expenses Under of Net Assets
Under Plan Distributor Plan of Class
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Class B $509,751 $441,267(1) $2,170,424 3.48%

Plan
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

Class C $365,028 $188,257(2) $925,040 1.32%

Plan
-------------------------------------------------------------------------------

1. Includes $492 paid to an affiliate of the Distributor's parent company.
2. Includes $1,077 paid to an affiliate of the Distributor's parent

company.

All payments under the Class B and Class C plans are subject to the
limitations imposed by the Conduct Rules of the National Association of
Securities Dealers, Inc. on payments of asset-based sales charges and service
fees.

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 its 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:

|_| 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.

|_| The Fund's performance returns may not reflect the effect of taxes
on dividends and capital gains distributions.
|_| An investment in the Fund is not insured by the FDIC or any other
government agency.

|_| 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.
|_| When an investor's shares are redeemed, they may be worth more or
less than their original cost.
|_| 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.

|_| Standardized Yield. The "standardized yield" (sometimes referred
to just as "yield") is shown for a class of shares for a stated thirty 30-
day period. It is not based on actual distributions paid by the Fund to
shareholders in the thirty 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:

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

The symbols above represent the following factors:
a = dividends and interest earned during the thirty (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 thirty (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 thirty 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 thirty-day period.

|_| 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 twelve 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. The Class A dividend yield may
also be quoted without deducting the maximum initial sales charge.

|_| 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 Federal 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 thirty (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 7/31/05

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Tax-Equivalent Yield

Dividend Yield Standardized Yield (40.83% Combined

Federal/New Jersey
Class of Tax Bracket)
Shares
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Without After Without After Without After
Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Class A 5.19% 4.94% 4.36% 4.15% 7.36% 7.01%

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

Class B 4.26% N/A 356% N/A 6.01% N/A

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

Class C 4.27% N/A 3.55% N/A 6.01% N/A

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

|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% contingent
deferred sales charge is deducted for returns for the one-year period.

|_| 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:

1/n
(ERV)
(---) - 1 = Average Annual Total Return
( P )

|_| 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:

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

|_| 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
-----
1/n Distributions and Redemptions)
P

|_| 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

|_| 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 Class A, Class B or Class C
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 7/31/05

---------------------------------------------------------------------------------
-----------------------------------------------------------------------
Cumulative Total Average Annual Total Returns
Returns (10
years or life of
class)
Class of
Shares
---------------------------------------------------------------------------------
-----------------------------------------------------------------------
10-Year
1-Year 5-Year (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 A 78.03%(1)86.90%(1) 12.83% 18.46% 7.70% 8.75% 5.94%(1)6.45%(1)

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

Class B 79.08%(2)79.08%(2) 12.53% 17.53% 7.65% 7.95% 6.00%(2)6.00%(2)

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

Class C 73.17%(3)73.17%(3) 16.54% 17.54% 7.95% 7.95% 5.69%(3)5.69%(3)

---------------------------------------------------------------------------------
(1) Inception of Class A shares: 3/1/94
(2) Inception of Class B shares: 3/1/94
(3) Inception of Class C shares: 8/29/95

---------------------------------------------------------------------------------
Average Annual Total Returns for Class A(1) Shares (After Taxes)

For the Periods Ended 7/31/05

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
1-Year 5-Year 10-Year
(or life of
class)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

After Taxes on Distributions 12.83% 7.70% 5.91%

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

After Taxes on Distributions and 10.46% 7.38% 5.82%

Redemption of Fund Shares
---------------------------------------------------------------------------------
1. Inception date of Class A shares: 3/1/94

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
Statement of Additional Information. 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.

|_| 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.

|_| 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 their specialized market sectors. The Fund is ranked among
the Municipal Single State Long category.

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.

|_| 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 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 nor 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 Statement of Additional Information 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 Government Fund
Oppenheimer AMT-Free New York Municipals Oppenheimer Limited Term Municipal Fund
Oppenheimer Balanced Fund Oppenheimer Main Street Fund
Oppenheimer Core Bond Fund Oppenheimer Main Street Opportunity Fund
Oppenheimer California Municipal Fund Oppenheimer Main Street Small Cap Fund
Oppenheimer Capital Appreciation Fund Oppenheimer MidCap Fund
Oppenheimer Capital Income Fund Oppenheimer New Jersey Municipal Fund
Oppenheimer Champion Income Fund Oppenheimer Pennsylvania Municipal Fund

Oppenheimer Principal Protected Main

Oppenheimer Convertible Securities Fund Street Fund

Oppenheimer Principal Protected Main

Oppenheimer Developing Markets Fund Street Fund II
Oppenheimer Principal Protected Main
Oppenheimer Disciplined Allocation Fund Street Fund III
Oppenheimer Discovery Fund Oppenheimer Quest Balanced Fund
Oppenheimer Quest Capital Value Fund,
Oppenheimer Dividend Growth Fund Inc.
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 Asset Fund
Oppenheimer Global Fund Oppenheimer Real Estate Fund
Oppenheimer Rochester National
Oppenheimer Global Opportunities Fund Municipals
Oppenheimer Gold & Special Minerals Fund Oppenheimer Select Value Fund
Oppenheimer Growth Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer High Yield Fund Oppenheimer Small- & Mid- Cap Value Fund
Oppenheimer International Bond Fund Oppenheimer Strategic Income Fund
Oppenheimer International Growth Fund Oppenheimer Total Return Bond Fund
Oppenheimer International Small Company
Fund Oppenheimer U.S. Government Trust
Oppenheimer International Value Fund Oppenheimer Value Fund
Oppenheimer Limited Term California
Municipal Fund Limited-Term New York Municipal Fund
Rochester Fund Municipals
Oppenheimer Portfolio Series:
Active Allocation Fund
Aggressive Investor Fund
Conservative Investor Fund
And the following money market funds: Moderate Investor Fund

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 Statement of Additional
Information, 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 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 reduced sales charge rate
that applies to your Class A shares purchases during that period. You can
choose to include purchases made up to 90 days before the date of the Letter.
Class A shares of Oppenheimer Money Market Fund 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 of Intent is an investor's statement in writing to the
Distributor of his or her intention to purchase a special 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 a 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 applies 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 of
Intent 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 Statement of Additional Information 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 in placing any purchase
orders for the investor during the Letter of Intent 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 of Intent period, the escrowed shares
will be promptly released to the investor.

3. If, at the end of the 13-month Letter of Intent 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 $100,000 or more 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 an 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.

|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,
Statements of Additional Information 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
on or about the second to last business day of 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.

o 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 Statement of Additional Information
mean "Eastern time." The NYSE's most recent annual announcement regarding
holidays and days when the market may close early is available on the NYSE's
website at www.nyse.com.

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 on the valuation date. If not, the value shall be the
closing bid price on the principal exchange or on Nasdaq on the valuation
date. If the put, call or future is not traded on an exchange or on Nasdaq,
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 or put
written by the Fund is exercised, the proceeds are increased by the premium
received. If a call or put 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 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 Statement of Additional
Information).

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 Statement of Additional
Information.

|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 Centennial New York Tax Exempt
Trust Trust
Centennial Government Trust Centennial Tax Exempt Trust
Centennial Money Market Trust Oppenheimer Money Market Fund, Inc.

The following funds do not offer Class N shares:
Oppenheimer AMT-Free Municipals Oppenheimer Pennsylvania
Municipal Fund
Oppenheimer AMT-Free New York Oppenheimer Rochester National
Municipals Municipals
Oppenheimer California Municipal Fund Limited Term New York Municipal
Fund

Oppenheimer Limited Term Municipal Oppenheimer Senior Floating Rate
Fund Fund
Oppenheimer New Jersey Municipal Fund Rochester Fund Municipals
Oppenheimer Principal Protected Main Oppenheimer Limited Term
Street Fund II California Municipal Fund
Oppenheimer International Value Fund Oppenheimer Money Market Fund,
Inc.
Oppenheimer New Jersey Municipal Fund Oppenheimer Principal Protected
Main Street Fund II

The following funds do not offer Class Y shares:
Oppenheimer AMT-Free Municipals Oppenheimer Balanced Fund
Oppenheimer AMT-Free New York Oppenheimer New Jersey Municipal Fund
Municipals
Oppenheimer California Municipal Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Capital Income Fund Oppenheimer Principal Protected Main
Street Fund
Oppenheimer Champion Income Fund Oppenheimer Principal Protected Main
Street Fund II

Oppenheimer Convertible Securities Oppenheimer Principal Protected Main
Fund Street Fund III
Oppenheimer Disciplined Allocation Oppenheimer Quest Capital Value Fund,
Fund Inc.
Oppenheimer Developing Markets Fund Oppenheimer Quest International Value
Fund, Inc.
Oppenheimer Gold & Special Minerals Oppenheimer Rochester National
Fund Municipals
Oppenheimer International Bond Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer International Growth Fund Oppenheimer Small- & Mid- Cap Value Fund
Oppenheimer International Small Oppenheimer Total Return Bond Fund
Company Fund
Oppenheimer Limited Term Municipal Limited Term New York Municipal Fund
Fund
Oppenheimer Dividend Growth Fund Oppenheimer Cash Reserves

o Oppenheimer Money Market Fund, Inc. only offers Class A and Y shares.
o Class Y shares of Oppenheimer Real Asset Fund may not be exchanged for

shares of any other fund.
o Class B, Class C and Class N 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 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
any of the Oppenheimer funds.
o Shares of Oppenheimer Principal Protected Main Street Fund may be
exchanged at net asset value for shares of any of the Oppenheimer
funds. 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 any of the Oppenheimer
funds. 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 any of the Oppenheimer
funds. 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
(12/06/2011).

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 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 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 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 Limited-Term Government Fund, 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 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
Statement of Additional Information, or would include shares covered by a
share certificate that is not tendered with the request. In those cases, only
the shares available for exchange without restriction will be exchanged.

The different 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 Statement of Additional
Information is based on tax law in effect on the date of the Prospectus and
this Statement of Additional Information. Those laws and regulations may be
changed by legislative, judicial, or administrative action, 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. 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.

To the extent that distributions paid by the Fund are derived from
interest on New Jersey municipal securities and obligations of the U.S.
Treasury, those distributions will also be exempt from New Jersey individual
income tax. Distributions from the Fund attributable to income from sources
other than those will generally be subject to New Jersey individual income
tax as ordinary income.

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.

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 listed above. 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 served as an
Independent Registered Public Accounting Firm for the Fund. KPMG LLP audits
the Fund's financial statements and perform other related audit services.
KPMG LLP also acts as an 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.

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-12

Appendix C

OppenheimerFunds Special Sales Charge Arrangements and Waivers
--------------------------------------------------------------

In certain cases, the initial sales charge that applies to purchases of Class
A shares(2) 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.(3) 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 example, waivers relating to
Retirement Plans do not apply to Oppenheimer municipal funds, because shares
of those funds are not available for purchase by or on behalf of retirement
plans. Other waivers apply only to shareholders of certain 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 qualified under Sections 401(a) or 401(k) of the Internal
Revenue Code,
2) non-qualified deferred compensation plans,
3) employee benefit plans(4)
4) Group Retirement Plans(5)
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."(6) 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 $3 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.

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 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.

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.(7)
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.(8)
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 by the Social Security
Administration.
|_| 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(9) 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.(10)
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.(11)
9) On account of the participant's separation from service.(12)
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 Cap Value
Fund
Oppenheimer Quest Balanced Value 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.

1. 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.

2. 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.

3. 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.

4. 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.

5. 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 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.

6. 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.

7. 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.

Oppenheimer New Jersey Municipal Fund

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.CALL OPP(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
PX395.001.0905

--------
(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 or the Trust and
who do not have any direct or indirect financial interest in the operation of
the distribution plan or any agreement under the plan.

(2) Certain waivers also apply to Class M shares of Oppenheimer Convertible
Securities Fund.
(3) 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.
(4) 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.
(5) 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.
(6) 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.
(7) This provision does not apply to IRAs.
(8) 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.
(9) The distribution must be requested prior to Plan termination or the
elimination of the Oppenheimer funds as an investment option under the Plan.
(10) This provision does not apply to IRAs.
(11) This provision does not apply to loans from 403(b)(7) custodial plans
and loans from the OppenheimerFunds-sponsored Single K retirement plan.
(12) This provision does not apply to 403(b)(7) custodial plans if the
participant is less than age 55, nor to IRAs.

------------------------------------------------------------------------------
Oppenheimer Pennsylvania Municipal Fund
------------------------------------------------------------------------------

6803 South Tucson Way, Centennial, Colorado 80112-3924
1.800.525.7048


Statement of Additional Information dated November 28, 2005

      This Statement of Additional Information is not a Prospectus.  This
document contains additional information about the Fund and supplements
information in the Prospectus dated November 28, 2005.  It should be read
together with the Prospectus.  You can obtain the Prospectus 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................................................
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 Auditors' Report..................................................
Financial Statements .........................................................
Appendix A: Municipal Bond Ratings.........................................A-1
Appendix B: Industry Classifications.......................................B-1
Appendix C: Special Sales Charge Arrangements and Waivers..................C-1





104

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                                     104

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

ABOUT THE FUND
------------------------------------------------------------------------------

Additional Information About the Fund's Investment Policies and Risks

      The investment objective, the principal investment policies and the
main risks of the Fund are described in the Prospectus.  This Statement of
Additional Information contains supplemental information about those policies
and the types of securities that the Fund's investment manager,
OppenheimerFunds, Inc. (the Manager), can select for the Fund.  Additional
information is also provided about the strategies the Fund may 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 Fund's Manager may use in selecting
portfolio securities will vary over time.  The Fund is not required to use
all of the investment techniques and strategies described below at all times
in seeking its objective.  It may use some of the special investment
techniques and strategies at some times or not at all.

      The Fund does not make investments with the objective of seeking
capital growth , since that would generally be inconsistent with its goal of
seeking tax-exempt income.  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 vary
inversely with changes in prevailing interest rates, if interest rates
increased after a security is purchased, that security will normally decline
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
may invest are described in the Prospectus under "What Does the Fund Invest
In?" and "About the Fund's Investments."  As a fundamental policy, the Fund
invests at least 80% of its assets in municipal securities.  In addition, as
a fundamental policy, the Fund invests at least 80% of its net assets (plus
borrowings for investment purposes) in Pennsylvania municipal securities.
This includes securities that generate income subject to the alternative
minimum tax. The Manager has interpreted the Fund's policy regarding
investment in municipal securities to require the Fund to invest at least 80%
of the Fund's net assets in 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.  The Fund has have classified municipal securities
having a maturity (when the security is issued) of more than one (1) year as
"municipal bonds."  The principal classifications of long-term municipal
bonds are "general obligation" and "revenue" (including "industrial
development") bonds.  They may have fixed, variable or floating rates of
interest, as described below.

      Some bonds may be "callable," allowing the issuer to redeem them before
their maturity date. To protect bondholders, callable bonds may be issued
with provisions that prevent them from being called for a period of time.
Typically, that is five (5) to ten (10) years from the issuance date.  When
interest rates decline, if the call provision 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 have a
lower rate of return.

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

            |X| 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.

            |X| 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.

            |X| Private Activity 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 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 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 federal 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. There are no limits on the
amount of assets the Fund may invest in private activity securities.

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

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

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

      The term "private business use" means any direct or indirect use in a
trade or business carried on by an individual or entity other than a state or
municipal governmental unit.  Under the private loan restriction, the amount
of bond proceeds that may be used to make private loans is limited to the
lesser of 5% or $5.0 million of the proceeds.  Thus, certain issues of
municipal securities could lose their tax-exempt status retroactively if the
issuer fails to meet certain requirements as to the expenditure of the
proceeds of that issue or the use of the bond-financed facility. The 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 advisers 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 (1) 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.

      |X| 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.

      |X| 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.

      |X| 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.

      |X| Construction Loan Notes.  These are sold to provide project
construction financing until permanent financing can be secured.  After
successful completion and acceptance of the project, it may receive permanent
financing through public agencies, such as the Federal Housing Administration.

      |X| Tax-Exempt Commercial Paper. This type of short-term obligation
(usually having a maturity of 270 days or less), is issued by a municipality
to meet current working capital needs.

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

      Some  municipal  lease   securities  may  be  deemed  to  be  "illiquid"
securities.  Their purchase by the Fund would be limited as described below in
"Illiquid  Securities."  From time to time the Fund may invest more than 5% of
its net assets in municipal lease  obligations that the Manager has determined
to be liquid under  guidelines set by the Board of Trustees.  Those guidelines
require the Manager to evaluate:

      |_| the frequency of trades and price quotations for such securities;
      |_| the number of dealers or other potential  buyers willing to purchase
      or sell such securities;
      |_| the availability of market-makers; and
      |_| the nature of the trades for such securities.

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

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

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


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 July 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 nearly
all of the U.S. tobacco manufacturers (approximately 99% of the current
combined market share of tobacco manufacturers). 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. 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. A market share loss by the MSA companies to non-MSA
participating tobacco manufacturers would cause a downward adjustment in the
payment amounts. A participating manufacturer filing for bankruptcy also
could cause delays or reductions in bond payments. The MSA itself has been
subject to legal challenges and has, to date, withstood those challenges.

      On September 21, 2004, a civil trial (United States v. Philip Morris,
et. al.) began in U.S. district court nearly five years after the U.S.
Department of Justice first filed charges 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. However, on February 4, 2005, the U.S. Court of Appeals for the
District of Columbia dismissed the specific claim seeking the disgorgement of
$280 billion representing industry profits, and funding for cessation and
counter-advertising programs, and release of all industry documents. During
final arguments of the case before the U.S. Court of Appeals in June 2005,
the U.S. government reduced its demand for damages from the tobacco industry
to $14 billion - a significant reduction from the original claim for $280
billion. On July 18, 2005, the U.S. Department of Justice filed a petition
for certiorari with the U.S. Supreme Court seeking further review of the
dismissal of the specific claim seeking disgorgement.

      The named defendant tobacco companies represent approximately 98% of
the tobacco industry's market share. The tobacco industry denies any
wrongdoing and counters that it has greatly modified its practices, including
warning labels on cigarette packs since the 1960s and agreeing to the MSA
with the states. A negative outcome to the trial would adversely affect the
MSA companies and, in turn, could potentially cause delays or reductions in
bond payments by those companies. However, to date, it is not possible to
predict the outcome of the litigation.





      |X| Ratings of Municipal  Securities.  Ratings by ratings  organizations
such as Moody's Investors Service, Inc. ("Moody's"),  Standard & Poor's Rating
Services,  a division of the McGraw-Hill  Companies,  Inc.  ("S&P") 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.
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.

      Lower grade  securities  (often  referred to as "junk bonds") may have a
higher  yield  than  securities  rated in the  higher  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
harder to sell at an  acceptable  price.  The  additional  risks mean that the
Fund may not receive the  anticipated  level of income from these  securities,
and the Fund's net asset  value may be  affected  by  declines in the value of
lower-grade  securities.  However,  because  the added  risk of lower  quality
securities  might not be consistent  with the Fund's policy of preservation of
capital, the Fund limits its investments in lower quality securities.

      Subsequent  to its purchase by the Fund, a municipal  security may cease
to be rated or its  rating  may be  reduced  below the  minimum  required  for
purchase by the Fund.  Neither  event  requires the Fund to sell the security,
but the Manager  will  consider  such events in  determining  whether the Fund
should  continue to hold the  security.  To the extent that  ratings  given by
Moody's,  S&P,  or  Fitch  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,   S&P  and  Fitch  for  municipal
securities  are  contained  in  Appendix  A to this  Statement  of  Additional
Information.  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.

Special Risks of Investing  Primarily in  Pennsylvania  Municipal  Securities.
Because the Fund focuses its investments  primarily on Pennsylvania  municipal
securities,  the value of its portfolio  investments  will be highly sensitive
to events  affecting the fiscal  stability of the Commonwealth of Pennsylvania
and its  municipalities,  authorities and other  instrumentalities  that issue
securities  in  which  the Fund  invests,  including  political  developments,
economic problems and legislation.  Many different  social,  environmental and
economic  factors may affect the financial  condition of Pennsylvania  and its
political  subdivisions.  From time to time  Pennsylvania  and  certain of its
political  subdivisions  have  encountered  financial  difficulties  that have
adversely  affected their respective credit standings.  Other factors that may
negatively affect economic conditions in Pennsylvania  include adverse changes
in  employment  rates,  federal  revenue  sharing  or  laws  with  respect  to
tax-exempt  financing.  In addition,  the recent national  economic  recession
and the continuing  economic  uncertainty has had, and may continue to have, a
negative impact on the Pennsylvania economy.

      It is not  possible  to  predict  the  future  impact  of the  political
developments,  economic  problems and legislation on the long-term  ability of
the  Commonwealth of Pennsylvania  or  Pennsylvania  municipal  issuers to pay
interest  or repay  principal  on their  obligations.  The  information  below
about these  conditions  is only a brief summary  based upon  information  the
Fund has drawn from sources that it believes are reliable,  including official
statements  relating to  securities  offerings of  Pennsylvania  issuers.  The
information below is general in nature and does not provide  information about
financial  condition of the state or specific  issuers in whose securities the
Fund may invest, or the risks of those specific investments.

      |X|  The  Effect  of  General  Economic  Conditions  in the  State.  The
Commonwealth  of  Pennsylvania  is one of the most  populous  states,  ranking
sixth behind California,  Texas, New York, Florida and Illinois.  Pennsylvania
is an established  state with a diversified  economy.  It is the  headquarters
for many major  corporations.  Pennsylvania had  historically  been identified
as a heavy industry  state.  That  reputation has changed over the last thirty
years  as  the  coal,   steel  and  railroad   industries   declined  and  the
Commonwealth's   business  environment  readjusted  with  a  more  diversified
economic base. This economic  readjustment  was a direct result of a long-term
shift in jobs,  investment  and workers  away from the  northeast  part of the
nation.  Currently,  the major  sources of growth in  Pennsylvania  are in the
service sector,  including trade,  medical and the health services,  education
and financial institutions.  Pennsylvania's  estimated 5.7 million-person work
force ranks as the sixth largest labor pool in the nation.

      The Commonwealth  uses the fund method of accounting.  The General Fund,
the Commonwealth's  largest fund, receives all tax revenues,  non-tax revenues
and  federal  grants  and  entitlements  that are not  specified  by law to be
deposited  elsewhere.   The  majority  of  the  Commonwealth's  operating  and
administrative  expenses are payable from the General  Fund.  Debt service and
all bonded  indebtedness of the  Commonwealth,  except that issued for highway
purposes or for the benefit of other special  revenue  funds,  is payable from
the General Fund.


      Beginning with its GAAP basis  financial  statements for the fiscal year
ended June 30, 2002,  the  Commonwealth  adopted  several new  accounting  and
reporting  standards  established  by the  Governmental  Accounting  Standards
Board  (collectively,  the "New  Standards").  Among other  things,  these New
Standards  require   presentation  of   government-wide   and  fund  financial
statements   that   constitute   basic   financial   statements   and  replace
general-purpose   financial   statements   reported  under  former  standards.
Government-wide  financial  statements  are intended to portray the government
"as  a  whole"  while  fund   financial   statements   provide   fund-specific
information.  Government-wide  financial  statements  are intended to describe
the total cost of providing  governmental  services  and disclose  whether the
Commonwealth's financial condition improved or weakened during the fiscal year



Fiscal 2004 Results.

      A rebounding national economy that exceeded preliminary estimates for
growth resulted in actual fiscal year 2004 Commonwealth General Fund revenues
exceeding the budget estimate by 2.9 percent, or $636.7 million.  Total
fiscal year 2004 revenues net of reserves for tax refunds and including
intergovernmental transfers and additional resources totaled $23,159.7
million.  Total expenditures net of appropriation lapses and including
intergovernmental transfers and expenditures from additional resources was
$23,089.2 million.  As result of Commonwealth financial operations during the
fiscal year the preliminary unappropriated surplus balance, prior to the
statutorily required 25 percent transfer to the Budget Stabilization Reserve
Fund, was scheduled to increase $57.5 million to $266.8 million from the
fiscal year 2003 ending balance.  Following the statutorily required 25
percent transfer to the Budget Stabilization Reserve Fund ($66.7 million), a
supplemental transfer of $123.3 million also made to the Budget Stabilization
Reserve Fund.  As result, the fiscal year 2004 final unappropriated surplus
balance was $76.7 million as of June 30, 2004.

      Revenues available to the Commonwealth, including intergovernmental
transfers and additional resources increased 6.2 percent from fiscal year
2003 levels.  Fiscal year 2004 revenues totaled $23,159.7 million, an
increase of $1,351.2 million over fiscal year 2003 revenues. Commonwealth
taxes and revenues, prior to reserves for refunds, increased by $1,513.6
million to $22,828.1 million in fiscal year 2004, a 7.1 percent increase from
fiscal year 2003 actual receipts.  This increase in tax revenues was
primarily due to increases for certain Commonwealth taxes enacted with the
fiscal year 2004 budget.  Tax revenues to the Commonwealth for fiscal year
2004 exceeded the budget estimate, as re-certified in December 2003, by
$636.7 million or 2.9 percent.  Nearly all Commonwealth major tax and revenue
categories experienced revenue collections above the budget estimate.
Non-tax revenue collections were $158.9 million (25.5 percent) greater than
projected, principally due to increased earnings on investments and the
enhancement of Commonwealth's escheat program.  In addition, as part of the
fiscal year 2004 budget certain tax, fee and other revenue enhancement items
totaling $794 million were enacted.

      Reserves for tax refunds in fiscal year 2004 were $1,014.7 million, an
increase of 9.2 percent over fiscal year 2003 reserves.  Recent tax rate and
tax base changes have contributed to the growth rate in refunds in fiscal
year 2004.  Actual tax refunds have stabilized after several recent years of
increases.  At the end of fiscal year 2004, approximately $91.7 million of
reserves were available for making tax refunds in the following fiscal year.

      Expenditures for the fiscal year, including supplemental
appropriations, intergovernmental transfers and additional resources, and net
of appropriation lapses, totaled $23,089.2million, representing an increase
of $1,417.3 million or 6.5 percent from the fiscal year 2003 level.  A total
of $182.9 million in appropriations were lapsed in fiscal year 2004.  The
fiscal year 2004 budget continued to utilize an enhanced level of
intergovernmental transfers for a portion of medical assistance costs, albeit
at a reduced rate from fiscal year 2003.

      GAAP financial information is not yet available for fiscal year 2004.

      As part of his fiscal year 2004 budget proposal, the Governor proposed
two major program expansions that were enacted by the General Assembly.  In
education, the Governor proposed to shift a substantial portion of local
public school costs from local property taxes levied by school districts to
an increased subsidy payment to school districts by the Commonwealth.  The
program as enacted would increase, over time, the Commonwealth's subsidy of
local public school costs to 50 percent of total costs in the aggregate.
Funds for education at the local level totaling nearly $1.0 billion are
expected to be funded from taxes realized from the legalization of slot
machines at racetracks in the state.  The increased level of education
funding from the Commonwealth would be used to reduce local property taxes by
an equal amount.  The Governor also proposed an economic stimulus plan for
the Commonwealth to provide additional funding to be combined with private
investments to invest in economic development projects within the state.
Investments are to be directed to blighted rural, urban and suburban sites to
be re-developed to spur the location of new job-creating businesses.  The
funding for the economic stimulus program is to come from $2,025 million of
debt issued over more than four fiscal years.

      Major portions of the Governor's economic stimulus proposal were
enacted with the passage of Acts 10, 12, 22, 23 and 67 of 2004.

Fiscal 2005 Budget.The adopted budget for fiscal year 2005 is based on an
estimated 4.5 percent increase for Commonwealth General Fund revenues prior
to accounting for any changes in tax and revenue provisions enacted in the
second half of fiscal year 2004.  After adjustments for various tax rate and
tax base changes enacted for the fiscal year 2004 budget, total Commonwealth
General Fund revenues are projected to increase 3.8 percent over fiscal year
2004 actual receipts and total $23,866.5 million prior to reserves for tax
refunds.  The tax revenue component of Commonwealth receipts, including the
effects of the tax rate and tax base changes enacted in fiscal year 2004, is
expected to rise $1,342.1 million or 6.1 percent over fiscal year 2004 actual
receipts.  Approximately two-thirds of the increase in tax revenues is
associated with the various tax rate and tax base changes.

      Receipts of Commonwealth non-tax revenues are expected to return to
historic levels of approximately $478.4 million in fiscal year 2005, a
reduction of $303.6 million from fiscal year 2004 actual receipts.

      The fiscal year 2005 estimate for Commonwealth revenues as estimated in
June 2004 was based upon an economic forecast for national real gross
domestic product to grow at a 4.1 percent rate from the second quarter 2004
to the second quarter 2005.  The forecast anticipates that economic growth
will continue to recover from a recent period of softness in the second
quarter of 2004 and that employment levels will continue to improve
moderately.  Trends in the Pennsylvania economy are expected to maintain
their close association with national economic trends.  Personal income
growth in Pennsylvania is projected to remain slightly below that of the
U.S., while the Pennsylvania unemployment rate is anticipated to be close to
the national rate.
      The enacted fiscal year 2005 budget provides $22,876.1 million of
appropriations from Commonwealth revenues, an increase of 4.5 percent from
fiscal year 2004 appropriations, and represents a planned draw down of $71.8
million of the unappropriated surplus balance available at the end of fiscal
year 2004.  In addition, approximately $377.6 million of remaining federal
fiscal relief is appropriated in fiscal year 2005 to fund expenditures
normally funded from Commonwealth revenues.  The enacted budget also includes
$673.8 million in funding for medical assistance expenditures through
intergovernmental transfer proceeds.  This amount is a decrease of 8.8
percent from the $738.7 million in intergovernmental transfer proceeds
utilized during fiscal year 2004.

      The achievement of the budgeted results may be adversely affected by a
number of trends or events, including developments in the national and state
economy.

      According to the  Pennsylvania  Department of Revenue  "Monthly  Revenue
Report" for August 2004, the state collected  $1,657.7 million in General Fund
revenues in August 2004 - $103.7  million,  or 6.7 percent  above the official
estimate.   Fiscal  year-to-date   General  Fund  collections  total  $3,133.8
million,   which  is  $28.6  million,  or  0.9  percent,  above  the  official
estimate.


Fiscal Year 2006  The 2006 budget was enacted in July 2005 and is scheduled
to be $846 million, or 3.6 percent, higher than the enacted 2004-05 operating
budget, taking into account the $378 million in 2004-05 expenditures that
were supported by a one-time federal "fiscal relief" grant from 2004-05 that
has been discontinued.  The highlights of the 2006 budget include an increase
in funding for the Department of Public Welfare and additional investment in
public education reflected in a 3.7 percent increase for the Department of
Education bringing the total 2005-06 enacted General Fund operating budget to
$24.3 billion.

In addition, the budget includes $625 million in bond funding under the
Growing Greener initiative which will be spread out over six years and allows
the Commonwealth to address some of the Commonwealth's environmental problems
and help the state win the race for new development and job creation without
increasing fees or imposing new taxes.

According to the Department of Revenue's  "Monthly  Revenue Report" for August
2005,  General Fund  collections  of $1,566.4  million for the month of August
2005 were $1.2  million,  or 0.1%,  below the official  estimate.  Fiscal year
2005-06  collections of $3,302.6 million exceed the official  estimate by $9.7
million, or 0.3%.Commonwealth Debt.


      The current  constitutional  provisions  relating to  Commonwealth  debt
permit the  issuance  of the  following  types of debt:  (i) debt to  suppress
insurrection  or  rehabilitate  areas  affected by disaster,  (ii)  electorate
approved debt,  (iii) debt for capital  projects  subject to an aggregate debt
limit of 1.75 times the annual  average tax revenue of the preceding  five (5)
fiscal years,  and (iv) tax  anticipation  notes payable in the fiscal year of
issuance.  All  debt  except  tax  anticipation  notes  must be  amortized  in
substantial and regular amounts.  Outstanding  general obligation debt totaled
$6,892.6 million at June 30, 2004.

      Other  state-related  obligations  include  "moral  obligations."  Moral
obligation  indebtedness may be issued by the Pennsylvania  Housing  Financing
Agency, a state-created  agency which provides financing for housing for lower
and  moderate  income  families,   and  the  Hospitals  and  Higher  Education
Facilities  Authority of Philadelphia,  a municipal authority organized by the
City of  Philadelphia  to,  among other  things,  acquire and prepare  various
sites for use as intermediate care facilities for the mentally retarded.

      The  Commonwealth,  through  several of its  departments  and  agencies,
leases various real property and equipment.  Some leases and their  respective
lease payments are, with the Commonwealth's approval,  pledged as security for
debt  obligations  issued by  certain  public  authorities  or other  entities
within the state. All lease payments  payable by Commonwealth  departments and
agencies are subject to and dependent  upon an annual  spending  authorization
approved through the  Commonwealth's  annual budget process.  The Commonwealth
is not required by law to appropriate  or otherwise  provide moneys from which
the lease payments are to be paid. The  obligations to be paid from such lease
payments are not bonded debt of the Commonwealth.

      In addition, certain  Commonwealth-created  organizations have statutory
authorization to issue debt for which Commonwealth  appropriations to pay debt
service thereon are not required.  The debt of these  organizations  is funded
by the assets of, or revenues derived from, the various projects  financed and
is not a statutory  or moral  obligation  of the  Commonwealth.  Some of these
agencies,   however,  are  indirectly  dependent  on  Commonwealth   operating
appropriations.  The Commonwealth  also maintains pension plans covering state
employees,  public school  employees  and  employees of certain  state-related
organizations.

      As of September 20, 2003,  Pennsylvania  general  obligation  bonds were
rated AA by S&P,  Aa2 by Moody's  and AA by Fitch.  Those  ratings are subject
to change.

      |X| Local Tax  Considerations.  Pennsylvania  municipalities  and school
districts  are,  with certain  limitations,  authorized to impose a variety of
taxes.  The real estate tax is the only tax  authorized by law to be levied by
all  classes  of  local  government  in  the  state.  Thus,   property  owners
generally  pay  real  estate  taxes  to three  independent  authorities  - the
county, the municipality and the school district.

      The  Local  Tax  Enabling  Act,   applicable  to  almost  all  political
subdivisions in Pennsylvania,  gives local  governments  (other than counties)
and school  districts  in  Pennsylvania  a broad range of non-real  estate tax
sources.  The taxes  commonly in use  include  the earned  income or wage tax,
per capita taxes, occupation taxes,  occupational privilege taxes, real estate
transfer  taxes,  amusement and admission  taxes and business  gross  receipts
taxes.  Counties are also  permitted to impose  intangible  personal  property
taxes.

      In addition,  the City and School District of Philadelphia have separate
taxing  authority to impose a variety of business  taxes,  wage taxes,  income
and other various taxes.

      There is  various  litigation  pending  against  the  Commonwealth,  its
officers  and  employees.  An adverse  decision  in one or more of these cases
could materially affect the Commonwealth's governmental operations.

      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 them.

      Portfolio  Turnover.  A change in the  securities  held by the Fund from
buying and selling  investments is known as "portfolio  turnover."  Active and
frequent 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 active  and  frequent  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 100%.  The
Financial  Highlights  table at the end of the  Prospectus  shows  the  Fund's
portfolio turnover rates during the past five fiscal years.

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

      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 ninety-one (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  demand 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 demand  obligation meets the Fund's quality  standards by reason of being
backed 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 (1) year and upon no more than thirty (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's  limitations  on
investments in illiquid securities.


|X| Inverse Floaters.   "Inverse floaters" are municipal obligations on which
the interest rates typically fall as market rates increase and increase as
market rates fall. Inverse floaters are a form of derivative instruments.
Changes in market interest rates or the floating rate of the security
inversely affect the residual interest rate of an inverse floater. As a
result, the price of an inverse floater will be considerably more volatile
than that of a fixed-rate obligation when interest rates change.

      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 20% of its  total  assets  in
inverse  floaters.  Inverse floaters may offer relatively high current income,
reflecting  the spread between  short-term  and long-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.


      Other  Derivative  Investments.  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,  futures,  indexed securities and entering into swap agreements,  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.


      |X|  "When-Issued"  and "Delayed  Delivery"  Transactions.  The Fund can
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 (6) 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 (6) months and
possibly  as  long  as two (2)  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 will  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.  Their  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  for its  portfolio  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  of any
type 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 may buy  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  to  enhance
portfolio  liquidity  and to try to reduce  the  average  effective  portfolio
maturity.  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  may  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.

      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 as primary dealers in government  securities.  They must meet
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 (1) to five (5) days of
the purchase.  Repurchase  agreements  having a maturity beyond seven (7) days
are subject to the Fund's limits on holding illiquid investments.  There is no
limit  on the  amount  of the  Fund's  net  assets  that  may  be  subject  to
repurchase agreements of seven (7) days or less.

      Repurchase  agreements,  considered "loans" under the Investment Company
Act of 1940 ("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 collateral's  value 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   continuously   monitor  the
collateral's  value.  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 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.   The  Fund  has  percentage
limitations that apply to purchases of illiquid and restricted securities,  as
stated in the  Prospectus.  The Manager  monitors  holdings  of  illiquid  and
restricted  securities  on an ongoing  basis to determine  whether to sell any
holdings to maintain adequate liquidity.


      |X| Borrowing for Leverage.  The Investment Company Act imposes certain
restrictions on the borrowing activities of mutual funds.  The restrictions
on borrowing are designed to protect shareholders and their investment in a
fund by limiting a fund's ability to leverage its assets.  Leverage exists
when a fund has the right to a return on an investment that exceeds the
amount the fund contributed to the investment.  Borrowing money to make an
investment is an example of how a fund leverages its assets.  The use of
leverage exposes shareholders and their investments in a fund to a greater
risk of loss.  For example, borrowing may cause the value of a fund's shares
to be more volatile than if the fund did not borrow.  A fund may not deviate
from its borrowing policy unless authorized by the vote of a "majority of its
outstanding voting securities" as defined in the Investment Company Act.
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 all liabilities and
indebtedness other than borrowing.  Notwithstanding the preceding sentence,
the Fund may also 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. If the value of the Fund's assets fails to meet the 300%
asset coverage (i.e., up to one-third of its total assets) requirement, the
Fund is required to reduce its bank debt within three (3) days to meet the
requirement.  To do so, the Fund might have to sell a portion of its
investments at a disadvantageous time.



      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| Loans of Portfolio Securities. To attempt to raise income or raise
cash for liquidity purposes, the Fund may lend its portfolio securities to
brokers, dealers and other financial institutions approved by the Fund's
Board of Trustees.  These loans are limited to not more than 25% of the value
of the Fund's total assets.  The Fund presently does not intend to engage in
loans of securities that will exceed 5% of the value of the Fund's total
assets in the coming year.  Income from securities loans does not constitute
exempt-interest income for the purpose of paying tax-exempt dividends.

      There are risks in connection with securities lending.  The Fund might
experience a delay in receiving additional collateral to secure a loan, or a
delay in recovery of the loaned securities. The Fund must receive collateral
for a loan.  Under current applicable regulatory requirements (which are
subject to change), on each business day the loan collateral must be at least
equal to the value of the loaned securities.  It must consist of cash, bank
letters of credit, securities of the U.S. government or its agencies or
instrumentalities, or other cash equivalents in which the Fund is permitted
to invest.  To be acceptable as collateral, letters of credit must obligate a
bank to pay amounts demanded by the Fund if the demand meets the terms of the
letter.  The terms of the letter of credit and the issuing bank both must be
satisfactory to the Fund.

      When it lends securities, the Fund receives amounts equal to the
dividends or interest on the loaned securities.  It also receives one or more
of (a) negotiated loan fees, (b) interest on securities used as collateral,
and (c) interest on short-term debt securities purchased with the loan
collateral. Either type of interest may be shared with the borrower.  The
Fund may pay reasonable finder's, custodian and administrative or other fees
in connection with these loans.  The terms of the Fund's loans must meet
applicable tests under the Internal Revenue Code and must permit the Fund to
reacquire loaned securities on five (5) days' notice or in time to vote on
any important matter.

      |X| Hedging.  The Fund may 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:

      |_| sell interest rate futures or municipal bond index futures,
      |_| buy puts on such futures or securities, or
      |_| write covered calls on securities, broadly-based municipal bond
      indices, interest rate futures or municipal bond index futures.

      The Fund can also write covered calls 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 may also use hedging to establish a position in the debt
securities market as a temporary substitute for purchasing individual debt
securities.  In that case the Fund will normally seek to purchase the
securities, and then terminate that hedging position.  For this type of
hedging, the Fund could:

      |_| buy interest rate futures or municipal bond index futures, or
      |_| buy calls on such futures or on securities.

      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
Fund's strategy of hedging with futures and options on futures will be
incidental to the Fund's investment activities in the underlying cash market.
The particular hedging instruments the Fund can use are described below.  The
Fund may employ new hedging instruments and strategies when they are
developed, if those investment methods are consistent with the Fund's
investment objective and are permissible under applicable regulations
governing the Fund.

      |X| Futures.  The Fund may buy and sell futures contracts relating to
debt securities (these are called "interest rate futures") and municipal bond
indices (these are referred to as "municipal bond index futures").

      An interest rate future obligates the seller to deliver (and the
purchaser to take) cash or a specific type of debt security to settle the
futures transaction.  Either party could also enter into an offsetting
contract to close out the futures position.

      A "municipal bond index" assigns relative values to the municipal bonds
in the index, and is used as the basis for trading long-term municipal bond
futures contracts.  Municipal bond index futures are similar to interest rate
futures except that settlement is made only in cash.  The obligation under
the contract may also be satisfied by entering into an offsetting contract.
The strategies which the Fund employs in using municipal bond index futures
are similar to those with regard to interest rate futures.

      No money is paid by or received by the Fund on the purchase or sale of
a futures contract. Upon entering into a futures transaction, the Fund will
be required to deposit an initial margin payment in cash or U.S. government
securities with the futures commission merchant (the "futures broker").
Initial margin payments will be deposited with the Fund's Custodian bank in
an account registered in the futures broker's name.  However, the futures
broker can gain access to that account only under certain specified
conditions.  As the future is marked to market (that is, its value on the
Fund's books is changed) to reflect changes in its market value, subsequent
margin payments, called variation margin, will be paid to or by the futures
broker daily.

      At any time prior to the expiration of the Future, the Fund may elect
to close out its position by taking an opposite position at which time a
final determination of variation margin is made and additional cash is
required to be paid by or released to the Fund.  Any gain or loss is then
realized by the Fund on the Future for tax purposes.  Although Interest Rate
Futures by their terms call for settlement by the delivery of debt
securities, in most cases the obligation is fulfilled without such delivery
by entering into an offsetting transaction.  All futures transactions are
effected through a clearing house associated with the exchange on which the
contracts are traded.

      The Fund may concurrently buy and sell futures contracts in a strategy
anticipating that the future the Fund purchased will perform better than the
future the Fund sold.  For example, the Fund might buy municipal bond futures
and concurrently sell U.S. Treasury Bond futures (a type of interest rate
future).  The Fund would benefit if municipal bonds outperform U.S. Treasury
Bonds on a duration-adjusted basis.

      Duration is a volatility measure that refers to the expected percentage
change in the value of a bond resulting from a change in general interest
rates (measured by each 1% change in the rates on U.S. Treasury securities).
For example, if a bond has an effective duration of three years, a 1%
increase in general interest rates would be expected to cause the value of
the bond to decline about 3%.  There are risks that this type of futures
strategy will not be successful. U.S. Treasury bonds might perform better on
a duration-adjusted basis than municipal bonds, and the assumptions about
duration that were used might be incorrect (for example, the duration of
municipal bonds relative to U.S. Treasury Bonds might have been greater than
anticipated).

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

      |X| Writing Covered Call Options.  The Fund may write (that is, sell)
call options.  The Fund's call writing is subject to a number of
restrictions:

(1)   After the Fund writes a call, not more than 25% of the Fund's total
         assets may be subject to calls.
(2)   Calls the Fund sells must be listed on a securities or commodities
         exchange or quoted on NASDAQ, the automated quotation system of The
         Nasdaq Stock Market, Inc. or traded in the over-the-counter market.
(3)   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.

      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.

      When the Fund writes a call on an index, it receives cash (a premium).
If the buyer of the call exercises it, the Fund will pay an amount of cash
equal to the difference between the closing price of the call and the
exercise price, multiplied by the specified multiple that determines the
total value of the call for each point of difference.  If the value of the
underlying 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.

      The Fund's custodian, 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.

      When the Fund writes an over-the-counter ("OTC") option, it will enter
into an arrangement with a primary U.S. Government securities dealer which
will establish a formula price at which the Fund will have the absolute right
to repurchase that OTC option.  The formula price would generally be based on
a multiple of the premium received for the option, plus the amount by which
the option is exercisable below the market price of the underlying security
(that is, the option is "in-the-money"). When the Fund writes an OTC option,
it will treat as illiquid (for purposes of its restriction on illiquid
securities) the mark-to-market value of any OTC option held by it, unless the
option is subject to a buy-back agreement by the executing broker.  The
Securities and Exchange Commission is evaluating whether OTC options should
be considered liquid securities. The procedure described above could be
affected by the outcome of that evaluation.

      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.

      The Fund may also write calls on futures contracts without owning the
futures contract or securities deliverable under the contract. To do so, at
the time the call is written, the Fund  must cover the call by segregating in
escrow in all appropriate cases an equivalent dollar value of liquid assets
identified on the Fund's books.  The Fund will segregate additional liquid
assets if the value of the escrowed assets drops below 100% of the current
value of the future.  Because of this escrow requirement, in no circumstances
would the Fund's receipt of an exercise notice as to that future put the Fund
in a "short" futures position.

      |_| Writing Put Options. The Fund can sell put options on debt
securities, broadly-based securities indices, futures, or foreign currency
options. A put option on securities gives the purchaser the right to sell,
and the writer the obligation to buy, the underlying investment at the
exercise price during the option period. A put written on debt securities
must be covered by segregated liquid assets and the Fund cannot write puts
if, as a result, more than 50% of the Fund's net assets would be required to
be segregated to cover such put options.

      If the Fund writes a put, the put must be covered by liquid assets
identified on the Fund's books. The premium the Fund receives from writing a
put represents a profit, as long as the price of the underlying investment
remains equal to or above the exercise price of the put. However, the Fund
also assumes the obligation during the option period to buy the underlying
investment from the buyer of the put at the exercise price, even if the value
of the investment falls below the exercise price.

      If a put the Fund has written expires unexercised, the Fund realizes a
gain in the amount of the premium less the transaction costs incurred. If the
put is exercised, the Fund must fulfill its obligation to purchase the
underlying investment at the exercise price. That price will usually exceed
the market value of the investment at that time. In that case, the Fund may
incur a loss if it sells the underlying investment. That loss will be equal
to the sum of the sale price of the underlying investment and the premium
received minus the sum of the exercise price and any transaction costs the
Fund incurred.

      When writing a put option on a security, to secure its obligation to
pay for the underlying security the Fund will identify liquid assets on its
books with a value equal to or greater than the exercise price of the
underlying securities. The Fund therefore forgoes the opportunity of
investing the segregated assets or writing calls against those assets.

      As long as the Fund's obligation as the put writer continues, it may be
assigned an exercise notice by the broker-dealer through which the put was
sold. That notice will require the Fund to take delivery of the underlying
security and pay the exercise price. The Fund has no control over when it may
be required to purchase the underlying security, since it may be assigned an
exercise notice at any time prior to the termination of its obligation as the
writer of the put. That obligation terminates upon expiration of the put. It
may also terminate if, before it receives an exercise notice, the Fund
effects a closing purchase transaction by purchasing a put of the same series
as it sold. Once the Fund has been assigned an exercise notice, it cannot
effect a closing purchase transaction.

      The Fund may decide to effect a closing purchase transaction to realize
a profit on an outstanding put option it has written or to prevent the
underlying security from being put. Effecting a closing purchase transaction
will also permit the Fund to write another put option on the security, or to
sell the security and use the proceeds from the sale for other investments.
The Fund will realize a profit or loss from a closing purchase transaction
depending on whether the cost of the transaction is less or more than the
premium received from writing the put option. Any profits from writing puts
are considered short-term capital gains for federal tax purposes, and when
distributed by the Fund, are taxable as ordinary income.

      |_|  Purchasing Calls and Puts.  The Fund may buy calls only on
securities, broadly-based municipal bond indices, municipal bond index
futures and interest rate futures.  It may 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, 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, interest rate future or municipal bond index future 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).

      |_|  Risks of Hedging with Options and Futures.  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 futures and
options positions were not correlated with is other investments.


      The Fund's option activities may affect its portfolio turnover rate and
brokerage commissions. The exercise of calls written by the Fund may 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 within 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 may 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 may 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 selling interest rate futures
and municipal bond index futures or 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 may
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 may 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.

      The ordinary spreads between prices in the cash and futures markets are
subject to distortions due to differences in the natures of those markets.
All participants in the futures markets are subject to margin deposit and
maintenance requirements.  Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets.  From the point of view of speculators, the deposit
requirements in the futures markets are less onerous than margin requirements
in the securities markets.  Therefore, increased participation by speculators
in the futures markets may cause temporary price distortions.

      The Fund may use hedging instruments to establish a position in the
municipal securities markets as a temporary substitute for the purchase of
individual securities (long hedging). It is possible that the market may
decline.  If the Fund then concludes not to invest in such securities because
of concerns that there may be further market decline or for other reasons,
the Fund will realize a loss on the hedging instruments that is not offset by
a reduction in the purchase price of the securities.

      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 incur losses.

      |_| 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 enters 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 will 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 may 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."


       |_|  Regulatory Aspects of Hedging Instruments. The Commodities
Futures Trading Commission (the "CFTC") recently 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.

      Under  interpretations  of staff members of the  Securities and Exchange
Commission  regarding  applicable  provisions of the  Investment  Company Act,
when the Fund  purchases  an  interest  rate  future or  municipal  bond index
future,  it  must  segregate  cash  or  readily  marketable   short-term  debt
instruments in an amount equal to the purchase  price of the future,  less the
margin deposit  applicable to it. The account must be a segregated  account or
accounts held by its custodian bank.

      |X|  Temporary  Defensive  Investments.  The  securities  the  Fund  may
invest in for temporary defensive purposes include the following:

          |_|   short-term municipal securities;
          |_| obligations  issued or guaranteed by the U.S.  Government or its
          agencies or instrumentalities;
          |_| corporate debt securities  rated within the three highest grades
          by a nationally recognized rating agency;
          |_| commercial  paper rated "A-1" by S&P, or a comparable  rating by
          another nationally recognized rating agency; and
          |_|  certificates  of deposit of  domestic  banks with  assets of $1
          billion or more.

      |X| Taxable Investments.  While the Fund can invest up to 20% of its net
assets (plus borrowings for investment  purposes) in investments that generate
income subject to income taxes, it 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, hedging instruments,  repurchase agreements,
and many of the  types of  securities  it would  buy for  temporary  defensive
purposes.


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:

      |_| 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
      |_| more than 50% of the outstanding shares.

      The  Fund's  investment   objective  is  a  fundamental  policy.   Other
policies   described  in  the  Prospectus  or  this  Statement  of  Additional
Information  are  "fundamental"  only if they  are  identified  as  such.  The
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
Statement  of  Additional  Information,   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:


      |_| 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 Pennsylvania municipal securities.

      |_| 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.

      |_| 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.

      |_| 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.


      |_|  The  Fund  cannot  underwrite  securities  of  other  companies.  A
permitted  exception  is in case it is deemed to be an  underwriter  under the
Securities  Act of  1933  when  reselling  any  securities  held  in  its  own
portfolio.


      |_| 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.



      |_| The Fund  invests  at least 80% of its net assets  (plus  borrowings
for investment purposes) in Pennsylvania  municipal securities.  This includes
securities that generate income subject to the alternative minimum tax.

      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  (except in the case of  borrowing  and
investments  in  illiquid  securities).  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  Other  Restrictions  That Are Not  Fundamental
Policies?

      The Fund has several additional  restrictions on its investment policies
that are not  fundamental,  which  means that they can be changed by the Board
of Trustees,  without obtaining shareholder approval, except that with respect
to the first policy stated below,  the Board of Trustees would not permit this
policy  to be  changed  to  permit  investments  in  physical  commodities  or
commodity  contracts without the vote of a majority of the Fund's  outstanding
voting securities:

      |_| The Fund cannot  invest in  securities  or other  investments  other
than  municipal  securities,   the  temporary  investments  described  in  its
Prospectus,  repurchase agreements,  covered calls, private activity municipal
securities  and  hedging  instruments  described  in  "About  the Fund" in the
Prospectus or this Statement of Additional Information.


      |_| The Fund can pledge,  mortgage or  otherwise  encumber,  transfer or
assign its assets to secure  borrowings  by or  indebtedness  of the Fund.  In
addition,  the use of escrow or other  collateral  arrangements  in connection
with borrowings and hedging instruments is permitted.


      |_| The Fund cannot purchase  securities other than hedging  instruments
on  margin.  However,  the  Fund may  obtain  short-term  credits  that may be
necessary for the clearance of purchases and sales of securities.

      |_| The Fund cannot sell securities short.

      |_| The Fund cannot buy or sell futures  contracts  other than  interest
rate futures and municipal bond index futures.

      |_| The  Fund  will  not  invest  more  than  10% of its net  assets  in
securities   which  are  restricted  as  to  disposition   under  the  federal
securities  laws,  except that the Fund may  purchase  without  regard to this
limitation  restricted  securities  which are eligible for resale  pursuant to
Rule 144A under the Securities Act of 1933.

      |_| The  Fund  cannot  invest  in the  securities  of  other  registered
investment  companies  or  registered  unit  investment  trusts in reliance on
sub-paragraph (F) or (G) of section 12(d)(1) of the Investment  Company Act of
1940.

Non-Diversification    of   the    Fund's    Investments.     The    Fund   is
"non-diversified,"  as defined in the  Investment  Company Act. Funds that are
diversified have  restrictions  against  investing too much of their assets in
the  securities of any one "issuer."  That means that the Fund can invest more
of its  assets  in the  securities  of a  single  issuer  than a fund  that is
diversified.

      Being  non-diversified poses additional investment risks, because if the
Fund invests more of its assets in fewer  issuers,  the value of its shares is
subject to greater  fluctuations from adverse conditions  affecting any one of
those issuers.  However, the Fund does limit its investments in the securities
of any one issuer to  qualify  for tax  purposes  as a  "regulated  investment
company" under the Internal  Revenue Code. By qualifying,  it does not have to
pay federal  income taxes if more than 90% of its earnings are  distributed to
shareholders.  To qualify,  the Fund must meet a number of conditions.  First,
not more  than 25% of the  market  value of the  Fund's  total  assets  may be
invested in the  securities of a single  issuer.  Second,  with respect to 50%
of the  market  value of its total  assets,  (1) no more than 5% of the market
value of its  total  assets  may be  invested  in the  securities  of a single
issuer,  and (2) the Fund must not own more than 10% of the outstanding voting
securities of a single issuer.

      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 such government or other entity.

Applying the Restriction  Against  Concentration.  To implement its policy not
to   concentrate   its   investments,   the  Fund  has  adopted  the  industry
classifications  set  forth in  Appendix  B to this  Statement  of  Additional
Information.  Those industry classifications are not a fundamental policy.

      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.  Although  this  application  of the  concentration
restriction  is not a  fundamental  policy of the Fund, it will not be changed
without  shareholder  approval.  The  Manager  has  no  present  intention  of
investing  more  than 25% of the  Fund's  total  assets in  securities  paying
interest from  revenues of similar type projects or in industrial  development
bonds.  This is not a  fundamental  policy  and  therefore  could  be  changed
without  shareholder  approval.   However,  if  that  change  were  made,  the
Prospectus or this Statement of Additional  Information  would be supplemented
to reflect the change.


      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 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 certified public accountants and 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-advisers 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 Research  Legg 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 LLCNomura Securities

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

          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 WassersteinPlexus

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

          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, a series of Multi-State Municipal
(referred to as the "Trust), is an open-end, non-diversified management
investment company with an unlimited number of authorized shares of
beneficial interest.  The Fund was organized as a Massachusetts business
trust in 1989.  Each of the three (3) series of the Trust is a separate fund
that issues its own shares, has its own investment portfolio, and has its own
assets and liabilities.

      |X| Classes of Shares.  The Trustees are authorized, without
shareholder approval, to create new series and classes of shares.  The
Trustees may reclassify unissued shares of the Fund into additional series or
classes of shares.  The Trustees also may 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 three classes of shares: Class A, Class B and
Class C.  All classes invest in the same investment portfolio.  Each class of
shares:
o     has its own dividends and distributions,
o     pays certain expenses which may be different for the different classes,
o     may have a different net asset value,
o     may 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 the 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.

      |X| 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 a vote or
declaration in writing 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"
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 Oversight Committees. The Fund is governed by a Board
of Trustees, which is responsible for protecting the interests of
shareholders under Massachusetts law. The Trustees meet periodically
throughout the year to oversee the Fund's activities, review its performance,
and review the actions of the Manager.

      The Board of Trustees has an Audit Committee, a Regulatory & Oversight
Committee, a Governance Committee and a Proxy Committee.  The Audit Committee
is comprised solely of Independent Trustees.  The members of the Audit
Committee are Joel Motley (Chairman), Kenneth A. Randall, Mary F. Miller and
Joseph M. Wikler. The Audit Committee held 6 meetings during the Fund's
fiscal year ended July 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 t he 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 Auditors 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
Trustees who are not "interested persons" under the Investment Company Act
(the "Independent Trustees"; (v) reviewing the independence of the Fund's
independent Auditors; (vi) pre-approving the provision of any 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 also 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 for the Audit Committee's consideration by
mailing such information, accompanied by complete and properly supported
resumes, to the Audit Committee in care of the Fund. The Audit Committee may
consider such persons at such time as it meets to consider possible nominees.
The Audit Committee, however, reserves sole discretion to determine the
candidates to present to the Board and/or shareholders when it meets for the
purpose of considering potential nominees.

The members of the Regulatory & Oversight Committee are Robert G. Galli
(Chairman), Joel W. Motley,  Phillip A. Griffiths and Peter I. Wold. The
Regulatory & Oversight Committee held __ meetings during the Fund's fiscal
year ended July 31, 2005. The Regulatory & Oversight Committee evaluates and
reports to the Board on the Fund's contractual arrangements, including the
Investment Advisory and Distribution Agreements, transfer and shareholder
service agreements and custodian agreements as well as the policies and
procedures adopted by the Fund to comply with the Investment Company Act and
other applicable law, among other duties as set forth in the Regulatory &
Oversight Committee's Charter.

      The members of the Governance Committee are, Phillip A. Griffiths
(Chairman), Russell S. Reynolds, Jr. and Kenneth A. Randall.  The Governance
Committee held __ meetings during the Fund's fiscal year ended July 31, 2005.
The Governance Committee reviews the Fund's governance guidelines, the
adequacy of the Fund's Codes of Ethics, and develops qualification criteria
for Board members consistent with the Fund's governance guidelines, among
other duties set forth in the Committee's Charter.

      The members of the Proxy Committee are, Russell S. Reynolds
Jr.(Chairman), Matthew P. Fink and Mary F. Miller.  The Proxy Committee held
_ meeting during the Fund's fiscal year ended July 31, 2005.  The Proxy
Committee provides the Board with recommendations for proxy voting of
portfolio securities held  by the Fund.

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 are also trustees or directors of the following Oppenheimer
funds (referred to as "Board I Funds"):


Oppenheimer AMT-Free Municipals           Oppenheimer International Value Fund
                                          Oppenheimer Limited Term California
Oppenheimer AMT-Free New York Municipals  Municipal Fund
Oppenheimer Balanced Fund                 Oppenheimer Money Market Fund, Inc.
                                          Oppenheimer Multi-State Municipal Trust,
                                          a series fund having the following three
Oppenheimer California Municipal Fund     series:
                                               Oppenheimer  New  Jersey   Municipal
Oppenheimer Capital Appreciation Fund     Fund
                                               Oppenheimer  Pennsylvania  Municipal
Oppenheimer Developing Markets Fund       Fund
                                               Oppenheimer    Rochester    National
Oppenheimer Discovery Fund                Municipals
Oppenheimer Dividend Growth Fund
Oppenheimer Emerging Growth Fund          Oppenheimer Portfolio Series
Oppenheimer Emerging Technologies Fund    Oppenheimer Real Estate Fund
Oppenheimer Enterprise Fund               Oppenheimer Select Value Fund
                                          Oppenheimer Series Fund, Inc., a series
Oppenheimer Global Fund                   fund having the following two series:
                                               Oppenheimer  Disciplined  Allocation
Oppenheimer Global Opportunities Fund     Fund
Oppenheimer Gold & Special Minerals Fund       Oppenheimer Value Fund
Oppenheimer Growth Fund                   OFI Tremont Core Strategies Hedge Fund
Oppenheimer   International   Diversified
Fund                                      OFI Tremont Market Neutral Hedge Fund
                                          Oppenheimer Tremont Market Neutral Fund
Oppenheimer International Growth Fund     LLC
Oppenheimer  International Large Cap Core
Fund                                      Oppenheimer Tremont Opportunity Fund LLC
Oppenheimer International Small Company
Fund                                      Oppenheimer U.S. Government Trust

      In addition to being a trustee or director of the Board I Funds, Mr.
Galli is also a director or trustee of 10 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, Murphy, Petersen, Vandehey, Vottiero, Wixted, Zack
and Mss. Bloomberg, and Ives who are officers of the Fund, hold the same
offices with one or more of the other Board I Funds.  As of August 31, 2005,
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 of the Fund 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),  own securities of either the Manager or Distributor of the
Board I Funds or of any entity directly or indirectly controlling, controlled
by or under common control with the Manager or Distributor.

|X|   Affiliated Transactions and Material Business Relationships. Mr.
Reynolds has reported he has a controlling interest in The Directorship
Group, Inc. ("The Directorship Group"), a director recruiting firm that
provided consulting services to Massachusetts Mutual Life Insurance Company
(which controls the Manager) for fees of $137,500 for calendar year ended
December 31, 2002. Mr. Reynolds reported that The Directorship Group did not
provide consulting services to Massachusetts Mutual Life Insurance Company
during the calendar years ended December 31, 2003 and 2004 and does not
expect to provide any such services in the calendar year ending December 31,
2005.

      The Independent Trustees have unanimously (except for Mr. Reynolds, who
abstained) determined that the consulting arrangements between The
Directorship Search Group and Massachusetts Mutual Life Insurance Company
were not material business or professional relationships that would
compromise Mr. Reynolds' status as an Independent Trustee. Nonetheless, to
assure certainty as to determinations of the Board and the Independent
Trustees as to matters upon which the Investment Company Act or the rules
thereunder require approval by a majority of Independent Trustees, Mr.
Reynolds will not be counted for purposes of determining whether a quorum of
Independent Trustees was present or whether a majority of Independent
Trustees approved the matter.

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 the past five years are listed in the charts
below. The information for each Trustee also includes the dollar range of
shares beneficially owned in the Fund and the aggregate dollar range of
shares beneficially owned in all funds in the Oppenheimer family of funds
that are overseen by the Trustee ("Supervised Funds"). The address of each
Trustee in the chart below is 6803 S. Tucson Way, Centennial, CO 80112-3924.
Each Trustee serves for an indefinite term, until his or her resignation,
retirement, death or removal. Ms. Miller was elected to certain Board I Funds
during 2004 and did not hold shares of Board I Funds during the calendar year
ended December 31, 2004. Mr. Fink was elected to the Board I Funds in 2005
and did not hold shares of Board I Funds during the calendar year ended
December 31, 2004.


-----------------------------------------------------------------------------------
                               Independent Trustees
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Name,              Principal Occupation(s) During Past 5    Dollar     Aggregate
                                                                       Dollar
                                                                       Range Of

                   Years;                                   Range of   Shares
Position(s) Held   Other Trusteeships/Directorships Held    Shares     Beneficially
with Fund,         by Trustee;                              BeneficiallOwned in
Length of Service, Number of Portfolios in Fund Complex     Owned in   Supervised
Age                Currently Overseen by Trustee            the Fund   Funds

-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
                                                              As of December 31,

                                                                     2004

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

Clayton K.         Director of American Commercial Lines    None       Over
Yeutter, Chairman  (barge company) (since January 2005);               $100,000
of the Board of    Attorney at Hogan & Hartson (law firm)
Trustees since     (since June 1993); Director of
2003;              Danielson Holding Corp.
Trustee since 1991 (waste-to-energy comp[any) (since
Age: 74            2002); Director of Weyerhaeuser Corp.
                   (1999-April 2004); Director of
                   Caterpillar, Inc. (1993-December 2002);
                   Director of ConAgra Foods (1993-2001);
                   Director of Texas Instruments
                   (1993-2001); Director of  FMC
                   Corporation (1993-2001). Oversees 38
                   portfolios in the OppenheimerFunds
                   complex.

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

Matthew P. Fink    Trustee of the Committee for Economic    None       None
Trustee since 2005 Development (policy research
Age: 64            foundation) (since 2005); Director of
                   ICI Education Foundation (education
                   foundation) (since October 1991);
                   President of the Investment Company
                   Institute (trade association)
                   (1991-2004); Director of ICI Mutual
                   Insurance Company (insurance company)
                   (1991-2004). Oversees 38 portfolios in
                   the OppenheimerFunds complex.

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

Robert G. Galli,   A trustee or director of other           $0         Over
Trustee since 1994 Oppenheimer funds. Oversees 48                      $100,000
Age: 72            portfolios in the OppenheimerFunds

                   complex.
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------

Joel W. Motley,    A Director of GSI Lumonics Inc.          None       Over
Trustee since 2002 (precision medical equipment supplier)              $100,000
Age: 66            (since 2001); Trustee of Woodward
                   Academy, (since 1983); Senior Advisor
                   of The Andrew W. Mellon Foundation
                   (since 2001);  Member of the National
                   Academy of Sciences (since 1979);
                   Member of the American Philosophical
                   Society (since 1996); Council on
                   Foreign Relations (since 2002);
                   Director of the Institute for Advanced
                   Study (1991-2004); Director  of Bankers
                   Trust New York Corporation (1994-1999).
                   Oversees 38 portfolios in the
                   OppenheimerFunds complex.

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

Mary F. Miller,    Trustee of the American Symphony         None       None
Trustee since 2004 Orchestra (not-for-profit) (since
Age: 62            October 1998); Senior Vice President
                   and General Auditor of American Express
                   Company (financial services company)
                   (July 1998-February 2003). Oversees 38

                   portfolios in the OppenheimerFunds
                   complex
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------

Joel W. Motley,    Director Columbia Equity Financial       None       Over
Trustee since 1993 Corp. (privately-held financial                     $100,000
Age: 53            adviser) (since January 2002); Managing
                   Director of Carmona Motley, Inc.
                   (privately-held financial adviser)
                   (since January 2002); Managing Director
                   of Carmona Motley Hoffman Inc.
                   (privately-held financial adviser)
                   (January 1998-December 2001). Oversees
                   38 portfolios in the OppenheimerFunds
                   complex.

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

Kenneth A.         Director of Dominion Resources, Inc.     None       Over
Randall, Trustee   (electric utility holding company)                  $100,000
since 1989         (since February 1972); Former Director
Age: 78            of Prime Retail, Inc. (real estate
                   investment trust), Dominion Energy Inc.
                   (electric power and oil & gas
                   producer), Lumbermens Mutual Casualty
                   Company, American Motorists Insurance
                   Company and American Manufacturers
                   Mutual Insurance Company; Former
                   President and Chief Executive Officer
                   of The Conference Board, Inc.
                   (international economic and business
                   research). Oversees 38 portfolios in
                   the OppenheimerFunds complex.

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

Russell S.         Chairman (since 1993) of The             None       Over
Reynolds, Jr.,     Directorship Search Group, Inc.                     $100,000
Trustee since 1989 (corporate governance consulting and
Age: 73            executive recruiting); a Life Trustee
                   of International House (non-profit
                   educational organization); a former
                   trustee of The Historical Society of
                   the Town of Greenwich. Oversees 25
                   portfolios in the OppenheimerFunds
                   complex.

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

Joseph M. Wikler,  Director of the following medical        None       $50,001-$100,000
Trustee since      device companies: Medintec (since 1992)
August 2005        and Cathco (since 1996); Director of
Age: 64            Lakes Environmental Association (since
                   1996); Member of the Investment
                   Committee of the Associated Jewish
                   Charities of Baltimore (since 1994);
                   Director of Fortis/Hartford mutual
                   funds (1994-December 2001). Oversees 15
                   portfolios in the OppenheimerFunds
                   complex.

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

Peter I. Wold      President of Wold Oil Properties, Inc.   None       Over
Trustee since      (oil and gas exploration and production             $100,000
September 2005     company) (since 1994); Vice President,
Age: 57            Secretary and Treasurer of Wold Trona
                   Company, Inc. (soda ash processing and
                   production) (since 1996); Vice
                   President of Wold Talc Company, Inc.
                   (talc mining) (since 1999); Managing
                   Member of Hole-in-the-Wall Ranch
                   (cattle ranching) (since 1979);
                   Director and Chairman of the Denver
                   Branch of the Federal Reserve Bank of
                   Kansas City (1993-1999); and Director
                   of PacifiCorp. (electric utility)
                   (1995-1999). Oversees 15 portfolios in
                   the OppenheimerFunds complex.

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


      The address of Mr. Murphy  is Two World Financial Center, 225 Liberty
Street, 11th Floor, New York, NY 10281-1008. Mr. Murphy serves as Trustee for
an indefinite term and as an Officer for an annual term, or until his
resignation, death or removal.


-------------------------------------------------------------------------------------
                           Interested Trustee and Officer
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Name,               Principal Occupation(s) During Past 5     Dollar     Aggregate
                                                                         Dollar
                                                                         Range Of

                    Years;                                    Range of   Shares
Position(s) Held    Other Trusteeships/Directorships Held by  Shares     Beneficially
with Fund,          Trustee;                                  BeneficiallOwned in
Length of Service   Number of Portfolios in Fund Complex      Owned in   Supervised
Age                 Currently Overseen by Trustee             the Fund   Funds

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
                                                                As of December 31,

                                                                       2004

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

John V. Murphy,     Chairman, Chief Executive Officer and     none          Over
President and       Director (since June 2001) and President              $100,000
Trustee,  since     (since September 2000) of the Manager;
2001                President and Director or Trustee of
Age: 55             other Oppenheimer funds; President and
                    Director of Oppenheimer Acquisition
                    Corp. ("OAC") (the Manager's parent

                    holding company) and 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 77 portfolios as a
                    Trustee or Director and 10 additional
                    portfolios as an officer in the
                    OppenheimerFunds complex.

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


     The addresses of the Officers in the chart below are as follows: for
Messrs. Gillespie and Zack and Ms. Bloomberg, Two World Financial Center, 225
Liberty Street, New York, NY 10281-1008, for Messrs. Petersen, Vandehey,
Vottiero,  and Wixted and Ms. Ives, 6803 S. Tucson Way, Centennial, CO
80112-3924 and for Mr. Fielding, 350 Linden Oaks, Rochester, NY  14625.  Each
Officer serves for an annual term or until his or her resignation, death or
removal.



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

                             Other 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  (since January 1996) of the Manager;
Vice President and      Chairman of the  Rochester  Division  of the Manager  (since
Portfolio Manager       January   1996);   an  officer  of  9   portfolios   in  the
since 1999              OppenheimerFunds complex.
Age: 55
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

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 87 portfolios in the OppenheimerFunds complex.

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

Brian W. Wixted,        Senior Vice  President and  Treasurer of the Manager  (since
Treasurer since 1999    March 1999);  Treasurer of the following:  HarbourView Asset
Age: 45                 Management  Corporation,   Shareholder  Financial  Services,
                        Inc.,  Shareholder  Services,  Inc.,  Oppenheimer Real Asset
                        Management   Corporation,    and   Oppenheimer   Partnership
                        Holdings,  Inc. (since March 1999), OFI Private Investments,
                        Inc.  (since  March  2000),  OppenheimerFunds  International
                        Ltd.  (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 87
                        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 87 portfolios in
Age: 35                 the OppenheimerFunds complex.

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

Philip Vottiero,        Vice  President/Fund  Accounting of the Manager (since March
Assistant Treasurer     2002);  Vice  President/Corporate  Accounting of the Manager
since 2002              (July 1999-March  2002);  Chief Financial Officer of Sovlink
Age: 42                 Corporation   (April  1996-June  1999).  An  officer  of  87

                        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 87  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: 39                 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:  37                Corporate   Vice  President   (May   1999-April   2001)  and
                        Assistant  General Counsel (May  1999-December  2000) of UBS
                        Financial    Services    Inc.     (formerly,     PaineWebber
                        Incorporated).   An   officer  of  87   portfolios   in  the
                        OppenheimerFunds complex.

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

Phillip S. Gillespie,   Senior  Vice  President  and Deputy  General  Counsel of the
Assistant Secretary     Manager  (since  September  2004);  Mr.  Gillespie  held the
since 2004              following positions at Merrill Lynch Investment  Management:
Age: 41                 First  Vice  President   (2001-September   2004);   Director
                        (2000-September  2004) and Vice  President  (1998-2000).  An
                        officer of 87 portfolios in the OppenheimerFunds complex.

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

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


      |X|                 Remuneration  of Trustees.  The Trustees of the Fund
who are  affiliated  with the Manager  receive no salary or fee from the Fund.
The  Independent  Trustees  received  the  compensation  shown  below from the
Fund for serving as a Trustee and member of a committee (if applicable),  with
respect  to  the  Fund's   fiscal  year  ended  July  31,   2004.   The  total
compensation,  including accrued retirement  benefits,  from the Fund and fund
complex represents  compensation  received 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, 2004.


------------------------------------------------------------------------------------
Trustee Name and Other    Aggregate      Retirement     Estimated        Total
                                          Benefits        Annual      Compensation

                                         Accrued as      Benefits    From the Fund
Fund Position(s)         Compensation   Part of Fund       Upon         and Fund
(as applicable)          From Fund(1)     Expenses    Retirement(2)     Complex

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

Clayton K. Yeutter           $(3)            $           $86,171        $173,700

Chairman of the Board
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------

Matthew P. Fink(4)            $              $            $2,641          None
Proxy Committee

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

Robert G. Galli
Regulatory & Oversight        $              $         $100,824(5)    $237,312(6)
Committee Chairman

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

Phillip A. Griffiths
Governance Committee
Chairman and                 $(7)            $           $34,972        $142,092
Regulatory & Oversight
Committee Member

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

Mary F. Miller                $             None          $7,128         $8,532
Audit Committee Member
and Proxy Committee
Member

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

Joel W. Motley               $(9)            $           $23,945        $150,760
Audit Committee and
Regulatory & Oversight
Committee Member

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

Kenneth A. Randall            $            $1(0)         $85,944        $134,080
Audit Committee Member
and Governance
Committee Member

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

Edward V. Regan(11)           $              $           $70,977        $118,788


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

Russell S. Reynolds,          $              $           $66,602        $106,792
Jr.
Proxy Committee
Chairman and
Governance Committee
Member

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

Donald Spiro (12)             $              $             None         $64,080


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

Eustis Walcott (14)                         None           None         $18,500

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

Joseph M. Wikler              $              $              -           $23,000
Audit Committee Member

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

Peter I. Wold
Regulatory & Oversight        $              $              -           $20,500
Committee Member

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

"Aggregate   Compensation   From  the  Fund"   includes   fees  and   deferred
   compensation, if any.
2.    "Estimated  Annual  Retirement  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."
3.    Includes  $___ deferred by Mr.  Yeutter under the Deferred  Compensation
   Plan described below.
4.    Mr.  Fink was  appointed  as a Director  or Trustee of 10 of the Board I
   Funds  effective  January 1, 2005 and was elected as Director or Trustee of
   all of the other Board I Funds during 2005.
5.    Includes  $45,840  estimated  to be paid to Mr.  Galli for  serving as a
   trustee  or  director  of 10 other  Oppenheimer  funds that are not Board I
   Funds.
6.    Includes  $111,000  for  serving  as  trustee  or  director  of 10 other
   Oppenheimer funds (at December 31, 2004) that are not Board I Funds.
7.    Includes   $____   deferred  by  Mr.   Griffiths   under  the  "Deferred
   Compensation Plan" described below.
8.    Ms. Miller was appointed as Director or Trustee of 13 of the Board I
   Funds effective August13, 2004 and of 9 of the Board I Funds effective
   October 26, 2004. She was elected as Director or Trustee of all of the
   other Board I Funds during 2005.
9.    Includes  $____deferred  by Mr. Motley under the "Deferred  Compensation
   Plan" described below.
10.   Due to actuarial considerations, no additional retirement benefits were
   accrued with respect to Mr. Randall.
11.   Mr. Regan retired as Trustee of the Board I funds effective June 30,
   2005.
12.   Mr. Spiro retired as Trustee of the Board I funds effective October 31,
   2004.
13.   Mr. Wold and Mr. Wikler were elected as Trustees of the Board I Funds
   as of August 17, 2005.
14.   Mr. Abdow and Mr. Walcott retired as Trustees of the Fund as of
   September 26, 2005.
1.    Includes  $61,333  compensation  paid  to Mr.  Abdow  for  serving  as a
   trustee for two open-end  investment  companies  (MassMutual  Institutional
   Funds and MML Series  Investment Fund) the investment  adviser for which is
   the indirect parent company of the Fund's Manager.  The Manager also serves
   as the  Sub-Advisor to the MassMutual  International  Equity Fund, a series
   of MassMutual Institutional Funds. In accordance with SEC regulations,  for
   purposes of this section  only,  "Fund  Complex"  includes the  Oppenheimer
   funds,  MassMutual  Institutional Funds and MML Series Investment Fund. The
   Manager does not  consider  MassMutual  Institutional  Funds and MML Series
   Investment Fund to be part of the OppenheimerFunds'  "Fund Complex" as that
   term may be otherwise interpreted.

      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 I 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 future
compensation, including future compensation and the length of his or her
service on the Board.

|X|   Deferred Compensation Plan.  The Board of Trustees has adopted a
Deferred Compensation Plan for Independent Trustees that enables them to
elect to defer receipt of all or a portion of the annual fees they are
entitled to receive from the 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 is 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 fee account.

      |X| Major  Shareholders.  As of August  31,  2005,  the only  persons or
entities  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:

      MLPF&S for the sole benefit of its customers,  Attn.  Fund  ADMN/#97HF6,
4800 Deer Lake Drive East Floor 3,  Jacksonville,  FL 32246-6484,  which owned
_____ Class C shares (_____% of the Class C shares then  outstanding)  for the
benefit of its customers.


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.


      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 Proxy  Voting  Guidelines  include  provisions  to address
conflicts of interest  that may arise between the Fund and the Manager where a
directly-controlled  affiliate  of the  Manager  manages  or  administers  the
assets of a  pension  plan of a  company  soliciting  the  proxy.  The  Fund's
Portfolio Proxy Voting  Guidelines on routine and non-routine  proxy proposals
are summarized below.

o     The Fund votes with the recommendation of the issuer's management on
            routine matters, including election of directors nominated by
            management and ratification of the independent registered public
            accounting firm, unless circumstances indicate otherwise.
o     In general, the Fund opposes anti-takeover proposals and supports the
            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.
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 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.

--------------------------------------------------------------------------------
                                                     Management Fee Paid to
   Fiscal Year             Management Fee            OppenheimerFunds, Inc.
    Ended 7/31       (Without Voluntary Waiver)          (after waiver)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
       2003                  $2,046,970                        N/A
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
       2004                  $2,465,343                        N/A
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

       2005                  $3,034,961                        N/A

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

      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.


       Portfolio Managers. The Fund's portfolio is managed by Ronald H.
      Fielding and a team of investment professionals including Daniel G.
      Loughran, Scott Cottier and Troy Willis (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 and
      Willis 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
      Messrs. Fielding, Loughran, Cottier and Willis as of July 31, 2005.  No
      account has a performance-based advisory fee:

   Portfolio     Registered  Total     Other      Total      Other   Total
                             Assets               Assets in
                             in                   Other
                             RegisteredPooled     Pooled               Assets
                 Investment  InvestmentInvestment Investment         in Other
                 Companies   Companies Vehicles   Vehicles   AccountsAccounts
   Manager        Managed    Managed*   Managed    Managed*  Managed  Managed*

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

   Ronald H.        10     $19,636.80     None        $0      None       $0
   Fielding

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

   Daniel G.        10     $19,636.80     None        $0      None       $0
   Loughran

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

   Scott Cottier    10     $19,636.80     None        $0      None       $0

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

   Troy Willis      10     $19,636.80     None        $0      None       $0

   *  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
      they 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 July 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
      - Pennsylvania 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 July 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 buy and sell
portfolio securities for the Fund. The investment advisory agreement allows
the Manager to use broker-dealers to effect the Fund's portfolio
transactions. The Manager is authorized by the advisory agreement to employ
broker-dealers, including, as that term is defined in the Investment Company
Act that, in the Manager's best judgment based on all relevant factors, will
implement the Fund's policy to obtain, at reasonable expense, the "best
execution" of portfolio transactions. "Best execution" refers to prompt and
reliable execution at the most favorable price obtainable. The Manager need
not seek competitive commission bidding. However, the Manager is expected to
minimize the commissions paid to the extent consistent with the interest 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 brokerage and/or research services to the Fund
and/or the other accounts over which the Manager or its affiliates have
investment discretion.  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.

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.


Brokerage Practices Followed by the Manager. The Manager allocates brokerage
for the Fund subject to the provisions of the investment advisory agreement
and the procedures and rules described above. Generally the Manager's
portfolio traders allocate brokerage upon recommendations from the Manager's
portfolio managers. 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.

      The Fund seeks to obtain prompt execution of orders at the most
favorable net prices.  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 funds advised by the Manager
have investment objectives and policies similar to those of the Fund.  Those
other funds 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.
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.

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

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

The research services provided by brokers broaden the scope and supplement
the research activities of the Manager.  That research provides additional
views and comparisons for consideration and helps the Manager 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 of the Fund 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.


In the  fiscal  years  ended  July 31,  2003,  2004 and  2005,  there  were no
transactions directed to brokers for research services,  and the amount of the
commissions  paid to  broker-dealers  for those  services was $0. As explained
above, in the fiscal years ended July 31, 2003,  2004 and 2005,  respectively,
the Fund did not pay any brokerage commissions.


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:

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

                        Class A
 Fiscal   Aggregate     Front-End    Concessions    Concessions  Concessions
 Year     Front-End     Sales        on Class A     on Class B   on Class C
 Ended    Sales         Charges      Shares         Shares       Shares
 7/31:    Charges on    Retained by  Advanced by    Advanced by  Advanced by
          Class A       Distributor(1Distributor(2) Distributor(2Distributor(2)
          Shares
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
   2003    $1,351,585     $238,281      $25,800      $2,138,403    $297,755
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
   2004    $1,552,600     $285,333      $56,886      $1,054,726    $195,943
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------

   2005    $3,260,915     $538,933      $93,658      $1,109,526    $479,669

 ------------------------------------------------------------------------------
   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   financial
      intermediaries  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.

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

             Class A Contingent   Class B Contingent    Class C Contingent
 Fiscal      Deferred Sales       Deferred Sales        Deferred Sales
 Year  Ended Charges Retained by  Charges Retained by   Charges Retained by
 7/31:       Distributor          Distributor           Distributor
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------

 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
    2003            $ 553               $252,776               $15,290
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
    2004            $2,555              $425,206               $18,275
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------

    2005            $4,305              $276,297               $16,742

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

      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.

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

      Unless 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 quarter 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.


      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. The Board has set the rate at that level. 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 quarterly at an annual rate
not to exceed 0.25% 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 July 31, 2005 payments under the Class A plan
totaled $418,901, all of which all was paid by the Distributor to recipients,
and included $16,961 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.


      Class B and Class C Service and Distribution Plan Fees. Under each
plan, service and distribution 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 quarterly 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 quarterly 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
classes.

      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 quarterly 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.


During a calendar year, 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
asset-based sales charges paid to the Distributor by the Fund under the
distribution and service plans. Those excess expenses are carried over on the
Distributor's books and may be recouped from asset-based sales charge
payments from the Fund in future years. However, the Distributor has
voluntarily agreed to cap the amount of expenses under the plans that may be
carried over from year to year and recouped that relate to (i) expenses the
Distributor has incurred that represent compensation and expenses of its
sales personnel and (ii) other direct distribution costs it has incurred,
such as sales literature, state registration fees, advertising and
prospectuses used to offer Fund shares. The cap on the carry-over of those
categories of expenses is set at 0.70% of annual gross sales of shares of the
Fund. If those categories of expenses exceed the capped amount, the
Distributor bears the excess costs. If the Class B or Class C plan were to be
terminated by the Fund, the Fund's Board of Trustees may allow the Fund to
continue payments of the asset-based sales charge to the Distributor for
distributing shares prior to the termination of the plan.



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

   Distribution Fees Paid to the Distributor in the Fiscal Year Ended 7/31/05

 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 Class:      Total Payments  Amount Retained  Distributor's    Distributor's
                                              Aggregate        Unreimbursed
                                              Unreimbursed     Expenses as %
                                              Expenses Under   of Net Assets
             Under Plan      by Distributor   Plan             of Class
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------

 Class B       $5,240,040     $1,337,641(1)      $5,240,040         1.07%

 Plan
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------

 Class C       $1,639,689      $267,839(2)       $1,639,689         1.23%

 Plan
 -------------------------------------------------------------------------------

1.    Includes $3,375 paid to an affiliate of the Distributor's parent
      company.
2.    Includes $29,287 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 National Association of
Securities Dealers, Inc. on payments of asset-based sales charges and service
fees.

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 its 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.
      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.


      |_| Standardized Yield.  The "standardized yield" (sometimes referred
to just as "yield") is shown for a class of shares for a stated thirty 30-day
period.  It is not based on actual distributions paid by the Fund to
shareholders in the thirty 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:

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

      The symbols above represent the following factors:
      a =  dividends and interest earned during the thirty (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 thirty (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.

      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.  The Class A dividend yield may
also be quoted without deducting the maximum initial sales charge.

      |_| 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 Federal 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 7/31/05

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
                                                           Tax-Equivalent Yield

               Standardized Yield      Dividend Yield        (37.00% Combined

                                                           Federal/Pennsylvania
                                                               Tax Bracket)
Class of
Shares
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
             Without    After       Without    After      Without     After
             Sales      Sales       Sales      Sales      Sales       Sales
             Charge     Charge      Charge     Charge     Charge      Charge
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Class A           4.58%       4.36%      4.86%      4.63%       7.26%      6.92%

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

Class B           3.80%         N/A      3.96%        N/A       6.02%        N/A

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

Class C           3.79%         N/A      3.96%        N/A       6.02%        N/A

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

      |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.

      |_| 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:

                     1/n
                (ERV)
                (---) - 1 = Average Annual Total Return
                ( P )

|_|   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:

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

|_|   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
-----
1/n         Distributions and Redemption)
  P


      |_| 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


      |_| 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.  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 7/31/05

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
          Cumulative Total              Average Annual Total Returns
             Returns (10
          years or life of
               class)
Class of
Shares
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
                                                                    10-Year
                                  1-Year            5-Year        (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 A   80.43%(1)89.43%(1) 9.95%    15.43%    7.85%    8.90%   6.08%   6.60%

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

Class B   81.05%(2)81.05%(2) 9.56%    14.56%    7.81%    8.10%  6.12%(2)6.12%(2)

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

Class C   75.28%(3)75.28%(3) 13.48%   14.48%    8.07%    8.07%  5.82%(3)5.82%(3)

---------------------------------------------------------------------------------
(1)   Inception of Class A:   9/18/89
(2)   Inception of Class B:   5/3/93
(3)   Inception of Class C:   8/29/95

 -------------------------------------------------------------------------------
         Average Annual Total Returns for Class A Shares (After Taxes)

                         For the Periods Ended 7/31/05

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

                                   1-Year           5-Year         10 Years
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------

 After Taxes on Distributions       9.95%           7.85%            6.08%

 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 After Taxes on Distributions

 and Redemption of Fund Shares      8.45%           7.58%            6.00%

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



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
Statement  of   Additional   Information.   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.

      |_| 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 their  specialized  market  sectors.  The Fund is ranked among
the municipal single state long category.

      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.


      |_|   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 Statement of Additional Information 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 Government Fund
Oppenheimer AMT-Free New York Municipals  Oppenheimer Limited Term Municipal Fund
Oppenheimer Balanced Fund                 Oppenheimer Main Street Fund
Oppenheimer Core Bond Fund                Oppenheimer Main Street Opportunity Fund
Oppenheimer California Municipal Fund     Oppenheimer Main Street Small Cap Fund
Oppenheimer Capital Appreciation Fund     Oppenheimer MidCap Fund
Oppenheimer Capital Income Fund           Oppenheimer New Jersey Municipal Fund
Oppenheimer Champion Income Fund          Oppenheimer Pennsylvania Municipal Fund

                                          Oppenheimer   Principal  Protected  Main

Oppenheimer Convertible Securities Fund   Street Fund

                                          Oppenheimer   Principal  Protected  Main

Oppenheimer Developing Markets Fund       Street Fund II
                                          Oppenheimer   Principal  Protected  Main
Oppenheimer Disciplined Allocation Fund   Street Fund III
Oppenheimer Discovery Fund                Oppenheimer Quest Balanced Fund
                                          Oppenheimer  Quest  Capital  Value Fund,
Oppenheimer Dividend Growth Fund          Inc.
                                          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 Asset Fund
Oppenheimer Global Fund                   Oppenheimer Real Estate Fund
                                          Oppenheimer      Rochester      National
Oppenheimer Global Opportunities Fund     Municipals
Oppenheimer Gold & Special Minerals Fund  Oppenheimer Select Value Fund
Oppenheimer Growth Fund                   Oppenheimer Senior Floating Rate Fund
Oppenheimer High Yield Fund               Oppenheimer Small- & Mid- Cap Value Fund
Oppenheimer International Bond Fund       Oppenheimer Strategic Income Fund
Oppenheimer International Growth Fund     Oppenheimer Total Return Bond Fund
Oppenheimer  International  Small Company
Fund                                      Oppenheimer U.S. Government Trust
Oppenheimer International Value Fund      Oppenheimer Value Fund
Oppenheimer   Limited   Term   California
Municipal Fund                            Limited-Term New York Municipal Fund
                                          Rochester Fund Municipals
                                          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 Government Trust
Oppenheimer Money Market Fund, Inc.       Centennial Money Market Trust
Centennial California Tax Exempt Trust    Centennial New York Tax Exempt Trust

                                          Centennial Tax Exempt 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 Statement of Additional
Information, 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 rage that applies to your purchase of Class A shares if you
purchases 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 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
the 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 distributions and purchases made at net asset
value (i.e. without a 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 applies 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 Statement of Additional Information 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 $100,000 or more 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 an 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.

      |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,
Statements of Additional Information 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
on or about the second to last business day of 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 Statement of Additional Information
mean "Eastern time." The NYSE's most recent annual announcement regarding
holidays and days when the market may close early is available on the NYSE's
website at www.nyse.com.

      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.

o     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 or put
written by the Fund is exercised, the proceeds are increased by the premium
received.  If a call or put 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 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 Statement of Additional
Information).

      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 Statement of Additional
Information.

      |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      Centennial New York Tax Exempt
      Trust                                 Trust
      Centennial Government Trust           Centennial Tax Exempt Trust


      Centennial Money Market Trust


      The following funds do not offer Class N shares:
      Oppenheimer AMT-Free Municipals           Oppenheimer Pennsylvania
                                                Municipal Fund
      Oppenheimer AMT-Free New York             Oppenheimer Rochester National
      Municipals                                Municipals
      Oppenheimer California Municipal Fund     Limited Term New York Municipal
                                                Fund

      Oppenheimer Limited Term Municipal        Oppenheimer Senior Floating Rate
      Fund                                      Fund
      Oppenheimer New Jersey Municipal Fund     Rochester Fund Municipals
      Oppenheimer Principal Protected Main      Oppenheimer Limited Term
      Street Fund II                            California Municipal Fund
      Oppenheimer International Value Fund      Oppenheimer International Value
                                                Fund
      Oppenheimer Money Market Fund, Inc.       Oppenheimer New Jersey Municipal
                                                Fund


      The following funds do not offer Class Y shares:
   Oppenheimer AMT-Free Municipals        Oppenheimer Limited Term Municipal Fund
   Oppenheimer AMT-Free New York          Oppenheimer New Jersey Municipal Fund
   Municipals
   Oppenheimer Balanced Fund              Oppenheimer Pennsylvania Municipal Fund
   Oppenheimer California Municipal Fund  Oppenheimer Principal Protected Main
                                          Street Fund
   Oppenheimer Capital Income Fund        Oppenheimer Principal Protected Main
                                          Street Fund II

   Oppenheimer Champion Income Fund       Oppenheimer Principal Protected Main
                                          Street Fund III
   Oppenheimer Convertible Securities     Oppenheimer Quest Capital Value Fund,
   Fund                                   Inc.
   Oppenheimer Disciplined Allocation     Oppenheimer Quest International Value
   Fund                                   Fund, Inc.
   Oppenheimer Developing Markets Fund    Oppenheimer Rochester National Municipals
   Oppenheimer Gold & Special Minerals    Oppenheimer Senior Floating Rate Fund
   Fund
   Oppenheimer International Bond Fund    Oppenheimer Small- & Mid- Cap Value Fund
   Oppenheimer International Growth Fund  Oppenheimer Total Return Bond Fund
   Oppenheimer International Small        Limited Term New York Municipal Fund
   Company Fund
   Oppenheimer Dividend Growth Fund       Oppenheimer Cash Reserves
o     Oppenheimer Money Market Fund, Inc. only offers Class A and Y shares.
      o   Class Y shares of Oppenheimer Real Asset Fund may not be exchanged
      for shares of any other fund.

o     Class B, Class C and Class N 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 except
      Class A share except Class A shares of Oppenheimer Money Market Fund 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
      any of the Oppenheimer funds.
o     Shares of Oppenheimer Principal Protected Main Street Fund may be
      exchanged at net asset value for shares of any of the Oppenheimer
      funds.  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 any of the Oppenheimer
      funds. 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 any of the Oppenheimer
      funds. 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
      (12/06/2011).


      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 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 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 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 Limited-Term Government Fund, 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.

            With respect to Class B shares of Cash Reserves that were
acquired through the exchange of Class B shares initially purchased in the
Oppenheimer Capital Preservation Fund, The Class Be 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
Statement of Additional Information, or would include shares covered by a
share certificate that is not tendered with the request. In those cases, only
the shares available for exchange without restriction will be exchanged.

      The different 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 Statement of Additional
Information is based on tax law in effect on the date of the Prospectus and
this Statement of Additional Information. Those laws and regulations may be
changed by legislative, judicial, or administrative action, 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. 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.

      Shares of the Fund will be exempt from Pennsylvania county personal
property taxes to the extent that on the annual assessment date the Fund's
portfolio securities consist of :
o     Pennsylvania municipal securities,
o     obligations of the U.S. government (and certain qualifying obligations
         of  governments of U.S. territories, agencies and
         instrumentalities), and
o     certain other obligations that are not subject to such personal
         property taxes.

      To the extent that distributions paid by the Fund are derived from
interest on Pennsylvania municipal securities, qualifying obligations of the
U.S. government and certain qualifying obligations of governments of U.S.
territories, agencies and instrumentalities, those distributions will also be
exempt from Pennsylvania personal income tax, and in the case of residents of
Philadelphia, exempt from the investment income tax of the School District of
Philadelphia. Distributions from the Fund attributable to income from sources
other than those will generally be subject to Pennsylvania personal income
tax.

      Corporations that are subject to the Pennsylvania corporate net income
tax will not be subject to tax on distributions received from the Fund
provided that such distributions are not included in federal taxable income
determined before net operating loss deductions and special deductions.  As a
result of a pronouncement by the Pennsylvania Department of Revenue, an
investment in the Fund by a corporate shareholder will apparently qualify as
an exempt asset for purposes of the single asset apportionment fraction
available in computing the Pennsylvania capital stock/foreign franchise tax
to the extent that the Fund's portfolio securities comprise investments in
Pennsylvania and/or U.S. government securities that would be exempt assets if
owned directly by the corporation.

      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.

      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 listed above. 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 served as an
Independent Registered Public Accounting Firm for the Fund.  KPMG LLP audits
the Fund's financial statements and perform other related audit services.
KPMG LLP also acts as an 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.










                                     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 example, waivers relating to
Retirement Plans do not apply to Oppenheimer municipal funds, because shares
of those funds are not available for purchase by or on behalf of retirement
plans. Other waivers apply only to shareholders of certain 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 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.








 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 $3 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).








            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.

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 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.




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.

   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 by the Social Security
         Administration.
      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.








   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 Cap Value
   Fund
   Oppenheimer Quest Balanced Value 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.

      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.

      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.

      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.

      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.

      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.

 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 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.

      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.







      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.

   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%.

      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.







Oppenheimer Pennsylvania Municipal Fund

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.CALL OPP(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
PX740.0905


--------
(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.

------------------------------------------------------------------------------
Oppenheimer Rochester National Municipals
------------------------------------------------------------------------------

6803 South Tucson Way, Centennial, Colorado 80112-3924
1.800.525.7048


Statement of Additional Information dated November 28, 2005,

      This Statement of Additional Information is not a Prospectus.  This
document contains additional information about the Fund and supplements
information in the Prospectus dated November 28, 2005.  It should be read
together with the Prospectus.  You can obtain the Prospectus 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................................................
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 Auditors' Report..................................................
Financial Statements .........................................................

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







------------------------------------------------------------------------------
ABOUT THE FUND
------------------------------------------------------------------------------

Additional Information About the Fund's Investment Policies and Risks

      The investment objective, the principal investment policies and the
main risks of the Fund are described in the Prospectus.  This Statement of
Additional Information contains supplemental information about those policies
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 may 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 in selecting portfolio
securities will vary over time.  The Fund is not required to use all of the
investment techniques and strategies described below at all times in seeking
its objective.  It may use some of the special investment techniques and
strategies at some times or not at all.

      The Fund does not make investments with the objective of seeking
capital growth, since that would be inconsistent with its goal of seeking tax
exempt income.  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 vary inversely
with changes in prevailing interest rates, if interest rates increased after
a security is purchased, that security will normally decline 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
may invest are described in the Prospectus under "What Does the Fund Invest
In?" and "About the Fund's Investments."  Municipal securities are generally
classified as general obligation bonds, revenue bonds and notes.  A
discussion of the general characteristics of these principal types of
municipal securities follows below.


      |X| Municipal Bonds.  The Fund has classified municipal securities
having a maturity (when the security is issued) of more than one (1) year as
"municipal bonds."  The principal classifications of long-term municipal
bonds are "general obligation" and "revenue" (including "industrial
development") bonds.  They may have fixed, variable or floating rates of
interest, as described below.

      Some bonds may be "callable," allowing the issuer to redeem them before
their maturity date.  To protect bondholders, callable bonds may be issued
with provisions that prevent them from being called for a period of time.
Typically, that is five (5) to ten (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.

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

            |_| 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.

            |_|  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.

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

      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 federal 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.  There are no limits on the
amount of assets the Fund may invest in private activity securities.

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

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

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

      The term "private business use" means any direct or indirect use in a
trade or business carried on by an individual or entity other than a state or
municipal governmental unit.  Under the private loan restriction, the amount
of bond proceeds that may be used to make private loans is limited to the
lesser of 5% or $5.0 million of the proceeds.  Thus, certain issues of
municipal securities could lose their tax-exempt status retroactively if the
issuer fails to meet certain requirements as to the expenditure of the
proceeds of that issue or the use of the bond-financed facility.  The 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 advisers 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 (1) 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.

            |_|  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.

            |_|  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.

            |_|  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.

            |_|  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.

            |_|  Tax-Exempt Commercial Paper. This type of short-term
obligation (usually having a maturity of 270 days or less), is issued by a
municipality to meet current working capital needs.

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

            Some municipal lease securities may be deemed to be "illiquid"
securities.  Their purchase by the Fund would be limited as described below
in "Illiquid Securities."  From time to time the Fund may invest more than 5%
of its net assets in municipal lease obligations that the Manager has
determined to be liquid under guidelines set by the Board of Trustees.  Those
guidelines require the Manager to evaluate:

      |_| the frequency of trades and price quotations for such securities;
      |_| the number of dealers or other potential buyers willing to purchase
      or sell such securities;
      |_| the availability of market-makers; and
      |_| the nature of the trades for such securities.

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

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

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


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 July 31, 2005, 23.5% 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 nearly all of the U.S. tobacco manufacturers (approximately 99% of the
current combined market share of tobacco manufacturers). 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. 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. A market share loss by the MSA companies to non-MSA
participating tobacco manufacturers would cause a downward adjustment in the
payment amounts. A participating manufacturer filing for bankruptcy also
could cause delays or reductions in bond payments. The MSA itself has been
subject to legal challenges and has, to date, withstood those challenges.

      On September 21, 2004, a civil trial (United States v. Philip Morris,
et. al.) began in U.S. district court nearly five years after the U.S.
Department of Justice first filed charges 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. However, on February 4, 2005, the U.S. Court of Appeals for the
District of Columbia dismissed the specific claim seeking the disgorgement of
$280 billion representing industry profits, and funding for cessation and
counter-advertising programs, and release of all industry documents. During
final arguments of the case before the U.S. Court of Appeals in June 2005,
the U.S. government reduced its demand for damages from the tobacco industry
to $14 billion - a significant reduction from the original claim for $280
billion. On July 18, 2005, the U.S. Department of Justice filed a petition
for certiorari with the U.S. Supreme Court seeking further review of the
dismissal of the specific claim seeking disgorgement.

      The named defendant tobacco companies represent approximately 98% of
the tobacco industry's market share. The tobacco industry denies any
wrongdoing and counters that it has greatly modified its practices, including
warning labels on cigarette packs since the 1960s and agreeing to the MSA
with the states. A negative outcome to the trial would adversely affect the
MSA companies and, in turn, could potentially cause delays or reductions in
bond payments by those companies. However, to date, it is not possible to
predict the outcome of the litigation.




      |X| Ratings of Municipal Securities.  Ratings by ratings organizations
such as Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Rating
Services, a division of the McGraw-Hill Companies, Inc. ("S&P") 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.
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.

      Lower grade securities (often referred to as "junk bonds") may have a
higher yield than securities rated in the higher 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
harder to sell at an acceptable price.  The additional risks mean that the
Fund may not receive the anticipated level of income from these securities,
and the Fund's net asset value may be affected by declines in the value of
lower-grade securities. While securities rated "Baa" by Moody's or "BBB" by
S&P are investment grade, they may be subject to special risks and have some
speculative characteristics.

      Subsequent to its purchase by the Fund, a municipal security may cease
to be rated or its rating may be reduced below the minimum required for
purchase by the Fund.  Neither event requires the Fund to sell the security,
but the Manager will consider such events in determining whether the Fund
should continue to hold the security.  To the extent that ratings given by
Moody's, S&P, or Fitch 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, S&P and Fitch for municipal
securities are contained in Appendix A to this Statement of Additional
Information.  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.

      |X|  Municipal Debt Securities. The Fund can invest in a variety of
municipal debt securities to seek its objective. Municipal debt securities
are subject to different types of risk, including credit risk and interest
rate risk.

         |_|  Credit Risk.  Credit risk relates to the ability of the issuer
to meet interest or principal payments or both as they become due.  In
general, lower-grade, higher-yield municipal bonds are subject to credit risk
to a greater extent than lower-yield, higher-quality civic bonds.

      The Fund's debt investments mainly include high yield,
non-investment-grade municipal bonds (commonly referred to as "junk bonds").
Investment-grade municipal bonds are bonds rated at least "Baa" by Moody's,
at least "BBB" by S&P or Fitch or that have comparable ratings by another
nationally-recognized rating organization.

      In making investments in debt securities, the Manager may rely to some
extent on the ratings of ratings organizations or it may use its own research
to evaluate a security's credit-worthiness.  If securities the Fund buys are
unrated, they are assigned a rating by the Manager of comparable quality to
bonds having similar yield and risk characteristics within a rating category
of a rating organization.

      The Fund does not have investment policies establishing specific
maturity ranges for the Fund's investments, and they may be within any
maturity range (short, medium or long) depending on the Manager's evaluation
of investment opportunities available within the debt securities markets.
Generally, however, it is expected that the Fund's average portfolio maturity
will be of a longer average maturity.  The Fund may shift its investment
focus to securities of longer maturity as interest rates decline and to
securities of shorter maturity as interest rates rise.

            |_|  Interest Rate Risk.  Interest rate risk refers to the
fluctuations in value of debt securities resulting from the inverse
relationship between price and yield.  For example, an increase in general
interest rates will tend to reduce the market value of already-issued debt
investments, and a decline in general interest rates will tend to increase
their value.  In addition, debt securities with longer maturities, which tend
to have higher yields, are subject to potentially greater fluctuations in
value from changes in interest rates than obligations with shorter
maturities.

      While the changes in value of the Fund's portfolio securities after
they are purchased will be reflected in the net asset value of the Fund's
shares, those changes normally do not affect the interest income paid by
those securities (unless the security's interest is paid at a variable rate
pegged to particular interest rate changes).  However, those price
fluctuations will be reflected in the valuations of the securities, and
therefore the Fund's net asset values will be affected by those fluctuations.

            |_|  Special Risks of Lower-Grade Municipal Securities.  The Fund
can invest without limit in lower-grade debt securities, and the Fund will
normally invest at least 50% to 70% of its net assets in these securities to
seek the Fund's main objective.  Lower-grade securities (often referred to as
"junk bonds") tend to offer higher yields than investment grade securities,
but also are subject to greater risks of default by the issuer in its
obligations to pay interest and/or repay principal on the maturity of the
security.

      "Lower-grade" debt securities are those rated below "investment grade,"
which means they have a rating lower than "Baa" by Moody's or lower than
"BBB" by S&P or Fitch, or similar ratings by other rating organizations.  If
they are unrated, and are determined by the Manager to be of comparable
quality to debt securities rated below investment grade, they are considered
part of the Fund's portfolio of lower-grade securities.  The Fund can invest
in securities rated as low as "C" or "D" or which may be in default at the
time the Fund buys them.

      Some of the special credit risks of lower-grade securities are
discussed below.  There is a greater risk that the issuer may default on its
obligation to pay interest or to repay principal than in the case of
investment grade securities.  The issuer's low creditworthiness may increase
the potential for its insolvency.  An overall decline in values in the high
yield bond market is also more likely during a period of a general economic
downturn.  An economic downturn or an increase in interest rates could
severely disrupt the market for high yield bonds, adversely affecting the
values of outstanding bonds as well as the ability of issuers to pay interest
or repay principal.

      To the extent they can be converted into stock, convertible securities
may be less subject to some of these risks than non-convertible high yield
bonds, since stock may be more liquid and less affected by some of these risk
factors.

      While securities rated "Baa" by Moody's or "BBB" by S&P or Fitch are
investment grade and are not regarded as junk bonds, those securities may be
subject to special risks, and have some speculative characteristics.
Definitions of the debt security ratings categories of the principal rating
organizations are included in Appendix A to this Statement of Additional
Information.

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 them.

      |X| Portfolio Turnover.  A change in the securities held by the Fund
from buying and selling investments is known as "portfolio turnover."  Active
and frequent 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 active and frequent 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 100%. The
Financial Highlights table at the end of the Prospectus shows the Fund's
portfolio turnover rates during the past five fiscal years.


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

      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 ninety-one (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 demand note is also based on a stated prevailing market rate
but is adjusted automatically at specified intervals of not less than one (1)
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 demand obligation meets the Fund's quality standards by reason of being
backed 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 (1) year may have features that permit the holder
to recover the principal amount of the underlying security at specified
intervals not exceeding one (1) year and upon no more than thirty (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's limitations on
investments in illiquid securities.


|X| Inverse Floaters.  "Inverse floaters" are municipal obligations on which
the interest rates typically fall as market rates increase and increase as
market rates fall. Inverse floaters are a form of derivative instruments.
Changes in market interest rates or the floating rate of the security
inversely affect the residual interest rate of an inverse floater. As a
result, the price of an inverse floater will be considerably more volatile
than that of a fixed-rate obligation when interest rates change.

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 20% of its total assets in inverse floaters.   Inverse
floaters may offer relatively high current income, reflecting the spread
between short-term and long-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.


Other Derivative Investments. 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, futures, indexed securities and entering into swap agreements, 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.


      |X| "When-Issued" and "Delayed Delivery" Transactions.  The Fund can
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 (6) 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 (6) months and
possibly as long as two (2) 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 will 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.  Their 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 for its portfolio 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 of any
type 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 may buy 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 to enhance
portfolio liquidity and to try to reduce the average effective portfolio
maturity. 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 may 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.

      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 Fund's Board of Trustees from time to time.

      The majority of these transactions run from day to day. Delivery
pursuant to resale typically will occur within one (1) to five (5) days of
the purchase.  Repurchase agreements having a maturity beyond seven (7) days
are subject to the Fund's limits on holding illiquid investments. There is no
limit on the amount of the Fund's net assets that may be subject to
repurchase agreements of seven (7) days or less.

      Repurchase agreements, considered "loans" under the Investment Company
Act of 1940 ("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 collateral's value 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 continuously monitor the
collateral's value.  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 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.  The Fund has percentage
limitations that apply to purchases of illiquid and restricted securities, as
stated in the Prospectus.  The Manager monitors holdings of illiquid and
restricted securities on an ongoing basis to determine whether to sell any
holdings to maintain adequate liquidity.

      |X| Borrowing for Leverage.  The Investment Company Act imposes certain
restrictions on the borrowing activities of mutual funds.  The restrictions
on borrowing are designed to protect shareholders and their investment in a
fund by limiting a fund's ability to leverage its assets.  Leverage exists
when a fund has the right to a return on an investment that exceeds the
amount the fund contributed to the investment.  Borrowing money to make an
investment is an example of how a fund leverages its assets.  The use of
leverage exposes shareholders and their investments in a fund to a greater
risk of loss.  For example, borrowing may cause the value of a fund's shares
to be more volatile than if the fund did not borrow.  A fund may not deviate
from its borrowing policy unless authorized by the vote of a "majority of its
outstanding voting securities" as defined in the Investment Company Act.
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 all liabilities and
indebtedness other than borrowing.  Notwithstanding the preceding sentence,
the Fund may also 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. If the value of the Fund's assets fails to meet the 300%
asset coverage (i.e., up to one-third of its total assets) requirement, the
Fund is required to reduce its bank debt within three (3) days to meet the
requirement.  To do so, the Fund might have to sell a portion of its
investments at a disadvantageous time.

      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| Loans of Portfolio Securities. To attempt to raise income or raise
cash for liquidity purposes, the Fund may lend its portfolio securities to
brokers, dealers and other financial institutions approved by the Fund's
Board of Trustees.  These loans are limited to not more than 25% of the value
of the Fund's total assets. Income from securities loans does not constitute
exempt-interest income for the purpose of paying tax-exempt dividends.

      There are risks in connection with securities lending.  The Fund might
experience a delay in receiving additional collateral to secure a loan, or a
delay in recovery of the loaned securities. The Fund must receive collateral
for a loan. Under current applicable regulatory requirements (which are
subject to change), on each business day the loan collateral must be at least
equal to the value of the loaned securities.  It must consist of cash, bank
letters of credit, securities of the U.S. government or its agencies or
instrumentalities, or other cash equivalents in which the Fund is permitted
to invest.  To be acceptable as collateral, letters of credit must obligate a
bank to pay amounts demanded by the Fund if the demand meets the terms of the
letter.  The terms of the letter of credit and the issuing bank both must be
satisfactory to the Fund.

      When it lends securities, the Fund receives amounts equal to the
dividends or interest on the loaned securities.  It also receives one or more
of (a) negotiated loan fees, (b) interest on securities used as collateral,
and (c) interest on short-term debt securities purchased with the loan
collateral.  Either type of interest may be shared with the borrower.  The
Fund may pay reasonable finder's, custodian and administrative or other fees
in connection with these loans.  The terms of the Fund's loans must meet
applicable tests under the Internal Revenue Code and must permit the Fund to
reacquire loaned securities on five (5) days' notice or in time to vote on
any important matter.

      |X| Hedging.  The Fund may 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:

      |_| sell interest rate futures or municipal bond index futures,
      |_| buy puts on such futures or securities, or
      |_| write covered calls on securities, broadly-based municipal bond
      indices, interest rate futures or municipal bond index futures.

      The Fund can also write covered calls 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 may also use hedging to establish a position in the debt
securities market as a temporary substitute for purchasing individual debt
securities.  In that case the Fund would normally seek to purchase the
securities, and then terminate that hedging position.  For this type of
hedging, the Fund could:

      |_| buy interest rate futures or municipal bond index futures, or
      |_| buy calls on such futures or on securities.

      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
Fund's strategy of hedging with futures and options on futures will be
incidental to the Fund's investment activities in the underlying cash market.
The particular hedging instruments the Fund can use are described below.  The
Fund may employ new hedging instruments and strategies when they are
developed, if those investment methods are consistent with the Fund's
investment objective, are approved by its Board, and are permissible under
applicable regulations governing the Fund.

      |_| Futures.  The Fund may buy and sell futures contracts relating to
debt securities (these are called "interest rate futures") and municipal bond
indices (these are referred to as "municipal bond index futures").

      An interest rate future obligates the seller to deliver (and the
purchaser to take) cash or a specific type of debt security to settle the
futures transaction. Either party could also enter into an offsetting
contract to close out the futures position.

      A "municipal bond index" assigns relative values to the municipal bonds
in the index, and is used as the basis for trading long-term municipal bond
futures contracts.  Municipal bond index futures are similar to interest rate
futures except that settlement is made only in cash.  The obligation under
the contract may also be satisfied by entering into an offsetting contract.
The strategies which the Fund employs in using municipal bond index futures
are similar to those with regard to interest rate futures.

      No money is paid or received by the Fund on the purchase or sale of a
futures contract.  Upon entering into a futures transaction, the Fund will be
required to deposit an initial margin payment in cash or U.S. government
securities with the futures commission merchant (the "futures broker").
Initial margin payments will be deposited with the Fund's Custodian bank in
an account registered in the futures broker's name.  However, the futures
broker can gain access to that account only under certain specified
conditions.  As the future is marked to market (that is, its value on the
Fund's books is changed) to reflect changes in its market value, subsequent
margin payments, called variation margin, will be paid to or by the futures
broker daily.

      At any time prior to the expiration of the future, the Fund may elect
to close out its position by taking an opposite position at which time a
final determination of variation margin is made and additional cash is
required to be paid by or released to the Fund.  Any gain or loss is then
realized by the Fund on the future for tax purposes.  Although interest rate
futures by their terms call for settlement by the delivery of debt
securities, in most cases the obligation is fulfilled without such delivery
by entering into an offsetting transaction.  All futures transactions are
effected through a clearing house associated with the exchange on which the
contracts are traded.

      The Fund may concurrently buy and sell futures contracts in a strategy
anticipating that the future the Fund purchased will perform better than the
future the Fund sold.  For example, the Fund might buy municipal bond futures
and concurrently sell U.S. Treasury Bond futures (a type of interest rate
future).  The Fund would benefit if municipal bonds outperform U.S. Treasury
Bonds on a duration-adjusted basis.

      Duration is a volatility measure that refers to the expected percentage
change in the value of a bond resulting from a change in general interest
rates (measured by each 1% change in the rates on U.S. Treasury securities).
For example, if a bond has an effective duration of three (3) years, a 1%
increase in general interest rates would be expected to cause the value of
the bond to decline about 3%.  There are risks that this type of futures
strategy will not be successful. U.S. Treasury bonds might perform better on
a duration-adjusted basis than municipal bonds, and the assumptions about
duration that were used might be incorrect (for example, the duration of
municipal bonds relative to U.S. Treasury Bonds might have been greater than
anticipated).

      |_| 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.

      |_|  Writing Covered Call Options.  The Fund can write (that is, sell)
call options.  The Fund's call writing is subject to a number of
restrictions:
(1)   After the Fund writes a call, not more than 25% of the Fund's total
         assets may be subject to calls.
(2)   Calls the Fund sells must be listed on a securities or commodities
         exchange or quoted on NASDAQ, the automated quotation system of The
         Nasdaq Stock Market, Inc. or traded in the over-the-counter market.
(3)   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.

      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 (9) 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.

      When the Fund writes a call on an index, it receives cash (a premium).
If the buyer of the call exercises it, the Fund will pay an amount of cash
equal to the difference between the closing price of the call and the
exercise price, multiplied by the specified multiple that determines the
total value of the call for each point of difference.  If the value of the
underlying investment does not rise above the call price, it is unlikely that
the call will lapse without being exercised.  In that case the Fund would
keep the cash premium.

      The Fund's custodian, 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.

      When the Fund writes an over-the-counter ("OTC") option, it will enter
into an arrangement with a primary U.S. Government securities dealer which
will establish a formula price at which the Fund will have the absolute right
to repurchase that OTC option.  The formula price would generally be based on
a multiple of the premium received for the option, plus the amount by which
the option is exercisable below the market price of the underlying security
(that is, the option is "in-the-money"). When the Fund writes an OTC option,
it will treat as illiquid (for purposes of its restriction on illiquid
securities) the mark-to-market value of any OTC option held by it, unless the
option is subject to a buy-back agreement by the executing broker.  The
Securities and Exchange Commission is evaluating whether OTC options should
be considered liquid securities.  The procedure described above could be
affected by the outcome of that evaluation.

      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.

      The Fund may also write calls on futures contracts without owning the
futures contract or securities deliverable under the contract.  To do so, at
the time the call is written, the Fund must cover the call by segregating in
escrow in all appropriate cases an equivalent dollar value of liquid assets
identified on the Fund's books.  The Fund will segregate additional liquid
assets if the value of the escrowed assets drops below 100% of the current
value of the future.  Because of this escrow requirement, in no circumstances
would the Fund's receipt of an exercise notice as to that future put the Fund
in a "short" futures position.

      |_| Writing Put Options. The Fund can sell put options on debt
securities, broadly-based securities indices, futures, or foreign currency
options. A put option on securities gives the purchaser the right to sell,
and the writer the obligation to buy, the underlying investment at the
exercise price during the option period. A put written on debt securities
must be covered by segregated liquid assets and the Fund cannot write puts
if, as a result, more than 50% of the Fund's net assets would be required to
be segregated to cover such put options.

      If the Fund writes a put, the put must be covered by liquid assets
identified on the Fund's books. The premium the Fund receives from writing a
put represents a profit, as long as the price of the underlying investment
remains equal to or above the exercise price of the put. However, the Fund
also assumes the obligation during the option period to buy the underlying
investment from the buyer of the put at the exercise price, even if the value
of the investment falls below the exercise price.

      If a put the Fund has written expires unexercised, the Fund realizes a
gain in the amount of the premium less the transaction costs incurred. If the
put is exercised, the Fund must fulfill its obligation to purchase the
underlying investment at the exercise price. That price will usually exceed
the market value of the investment at that time. In that case, the Fund may
incur a loss if it sells the underlying investment. That loss will be equal
to the sum of the sale price of the underlying investment and the premium
received minus the sum of the exercise price and any transaction costs the
Fund incurred.

      When writing a put option on a security, to secure its obligation to
pay for the underlying security the Fund will identify liquid assets on its
books with a value equal to or greater than the exercise price of the
underlying securities. The Fund therefore forgoes the opportunity of
investing the segregated assets or writing calls against those assets.

      As long as the Fund's obligation as the put writer continues, it may be
assigned an exercise notice by the broker-dealer through which the put was
sold. That notice will require the Fund to take delivery of the underlying
security and pay the exercise price. The Fund has no control over when it may
be required to purchase the underlying security, since it may be assigned an
exercise notice at any time prior to the termination of its obligation as the
writer of the put. That obligation terminates upon expiration of the put. It
may also terminate if, before it receives an exercise notice, the Fund
effects a closing purchase transaction by purchasing a put of the same series
as it sold. Once the Fund has been assigned an exercise notice, it cannot
effect a closing purchase transaction.

      The Fund may decide to effect a closing purchase transaction to realize
a profit on an outstanding put option it has written or to prevent the
underlying security from being put. Effecting a closing purchase transaction
will also permit the Fund to write another put option on the security, or to
sell the security and use the proceeds from the sale for other investments.
The Fund will realize a profit or loss from a closing purchase transaction
depending on whether the cost of the transaction is less or more than the
premium received from writing the put option. Any profits from writing puts
are considered short-term capital gains for federal tax purposes, and when
distributed by the Fund, are taxable as ordinary income.

            |_|  Purchasing Calls and Puts.  The Fund may buy calls only on
securities, 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, 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, interest rate future or municipal bond index future 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).

      |_| Risks of Hedging with Options and Futures.  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 futures and
options positions were not correlated with its other investments.

      The Fund's option activities may affect its portfolio turnover rate and
brokerage commissions.  The exercise of calls written by the Fund may 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 within 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 may 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 selling interest rate futures
and municipal bond index futures or 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 may
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 may 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.

      The ordinary spreads between prices in the cash and futures markets are
subject to distortions due to differences in the natures of those markets.
All participants in the futures markets are subject to margin deposit and
maintenance requirements.  Rather than meeting additional margin deposit
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets.  From the point of view of speculators, the deposit
requirements in the futures markets are less onerous than margin requirements
in the securities markets.  Therefore, increased participation by speculators
in the futures markets may cause temporary price distortions.

      The Fund may use hedging instruments to establish a position in the
municipal securities markets as a temporary substitute for the purchase of
individual securities (long hedging). It is possible that the market may
decline.  If the Fund then concludes not to invest in such securities because
of concerns that there may be further market decline or for other reasons,
the Fund will realize a loss on the hedging instruments that is not offset by
a reduction in the purchase price of the securities.

      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 incur losses.

      |_| 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 may not 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."


      |_| Regulatory Aspects of Hedging Instruments. The Commodities Futures
Trading Commission (the "CFTC") recently 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.

      Under interpretations of staff members of the Securities and Exchange
Commission regarding applicable provisions of the Investment Company Act,
when the Fund purchases an interest rate future or municipal bond index
future, it must segregate cash or readily marketable short-term debt
instruments in an amount equal to the purchase price of the future, less the
margin deposit applicable to it. The account must be a segregated account or
accounts held by its custodian bank.

      |X| Temporary Defensive Investments. The securities the Fund can invest
in for temporary defensive purposes include the following:

            |_|  short-term municipal securities;
            |_| obligations issued or guaranteed by the U.S. Government or
          its agencies or instrumentalities;
             |_| corporate debt securities rated within the three highest
          grades by a nationally recognized rating agency;
             |_| commercial paper rated "A-1" by S&P, or a comparable rating
          by another nationally recognized rating agency; and
             |_| certificates of deposit of domestic banks with assets of $1
          billion or more.

      |X| Taxable Investments. While the Fund can invest up to 20% of its net
assets (plus borrowings for investment purposes) in investments that generate
income subject to income taxes, it 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, hedging instruments, repurchase agreements,
and many of the types of securities it would buy for temporary defensive
purposes.


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:
      |_| 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
      |_| more than 50% of the outstanding shares.

      The Fund's investment objective is a fundamental policy. Other policies
described in the Prospectus or this Statement of Additional Information are
"fundamental" only if they are identified as such.  The 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 Statement of Additional
Information, 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:

      |_| The Fund cannot invest 25% or more of its total assets in any one
industry.  That limit does not apply to municipal securities in general, to
securities issued or guaranteed by the U.S. Government or its agencies and
instrumentalities or to securities issued by investment companies.


      |_| 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 that issuer's voting securities.  This 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.
      |_| 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.

      |_| 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.

      |_| The Fund may not borrow money, except to the extent permitted under
the 1940 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.

      |_| The Fund cannot underwrite securities of other companies.  A
permitted exception is in case it is deemed to be an underwriter under the
Securities Act of 1933 when reselling any securities held in its own
portfolio.


      |_| 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 (except in the case of borrowing and
investments in illiquid securities). 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 Other Restrictions that are Not Fundamental
Policies?

      The Fund has several additional restrictions on its investment policies
that are not fundamental, which means that they can be changed by the Board
of Trustees, without obtaining shareholder approval, except that with respect
to the first policy stated below, the Board of Trustees would not permit this
policy to be changed to permit investments in physical commodities or
commodity contracts without the vote of a majority of the Fund's outstanding
voting securities.

      |_| The Fund cannot invest in securities or other investments other
than municipal securities, the temporary investments described in its
Prospectus, repurchase agreements, covered calls, private activity municipal
securities and hedging instruments described in "About the Fund" in the
Prospectus or this Statement of Additional Information.

      |_| The Fund will not invest more than 10% of its net assets in
securities which are restricted as to disposition under the federal
securities laws, except that the Fund may purchase without regard to this
limitation restricted securities which are eligible for resale pursuant to
Rule 144A under the Securities Act of 1933.

      |_| The Fund can pledge, mortgage or otherwise encumber, transfer or
assign its assets to secure borrowings by or indebtedness of the Fund. In
addition, the use of escrow or other collateral arrangements in connection
with borrowings and hedging instruments is permitted.

      |_| The Fund cannot buy or sell futures contracts other than interest
rate futures and municipal bond index futures.

      |_| The Fund cannot purchase securities other than hedging instruments
on margin. However, the Fund may obtain short-term credits that may be
necessary for the clearance of purchases and sales of securities.

      |_| The Fund cannot sell securities short.


      |_|  The Fund cannot invest in other investment companies except to the
extent permitted by the Act. The Fund would be permitted under this policy to
invest its assets in the securities of one or more open-end management
investment company for which the Manager, one of its affiliates or a
successor is the investment advisor or sub-advisor. That fund or funds must
have substantially the same fundamental investment objective, policies and
limitations as the Fund. The Fund's policy not to concentrate its
investments, as described above, also would permit the Fund to adopt a
"master-feeder" structure. Under that structure, the Fund would be a "feeder"
fund and would invest all of its assets in a single pooled "master fund" in
which other feeder funds could also invest. This could enable the Fund to
take advantage of potential operational and cost efficiencies in the
master-feeder structure. The Fund has no present intention of adopting the
master-feeder structure. If it did so, the Prospectus and this Statement of
Additional Information would be revised accordingly.


Diversification.   The Fund intends to be "diversified" as defined in the
Investment Company Act and to satisfy the restrictions against investing too
much of its assets in any "issuer" as set forth in the restrictions above.

      The Fund limits its investments in the securities of any one issuer to
qualify for tax purposes as a "regulated investment company" under the
Internal Revenue Code.  By qualifying, it does not have to pay federal income
taxes if more than 90% of its earnings are distributed to shareholders.  To
qualify, the Fund must meet a number of conditions.  First, not more than 25%
of the market value of the Fund's total assets may be invested in the
securities of a single issuer.  Second, with respect to 50% of the market
value of its total assets, (1) no more than 5% of the market value of its
total assets may be invested in the securities of a single issuer, and (2)
the Fund must not own more than 10% of the outstanding voting securities of a
single issuer.

      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 such government or
other entity.

Applying the Restriction Against Concentration.  To implement its policy not
to concentrate its assets, the Fund has adopted the industry classifications
set forth in Appendix B to this Statement of Additional Information.  Those
industry classifications are not a fundamental policy.

      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.  Although this application of the concentration
restriction is not a fundamental policy of the Fund, it will not be changed
without shareholder approval. The Manager has no present intention of
investing more than 25% of the Fund's total assets in securities paying
interest from revenues of similar type projects or in industrial development
bonds. This is not a fundamental policy and therefore could be changed
without shareholder approval.  However, if that change were made, the
Prospectus or this Statement of Additional Information would be supplemented
to reflect the change.


      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 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 certified public accountants and 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-advisers 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 Research  Legg 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 LLCNomura Securities

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

          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 WassersteinPlexus

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

          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, a series Multi-State Municipal (referred
to as the "Trust), is an open-end, non-diversified management investment
company with an unlimited number of authorized shares of beneficial
interest.  The Fund was organized as a Massachusetts business trust in 1989.
Each of the three series of the Trust is a separate fund that issues its own
shares, has its own investment portfolio, and has its own assets and
liabilities.


      |X| Classes of Shares. The Trustees are authorized, without shareholder
approval, to create new series and classes of shares.  The Trustees may
reclassify unissued shares of the Fund into additional series or classes of
shares.  The Trustees also may 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 or preemptive or subscription rights.  Shares may be
voted in person or by proxy at shareholder meetings.

      The Fund currently has three classes of shares: Class A, Class B and
Class C.  All classes invest in the same investment portfolio.  Each class of
shares:
o     has its own dividends and distributions,
o     pays certain expenses which may be different for the different classes,
o     may have a different net asset value,
o     may 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 the 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.

      |X| 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 do so from  time  to  time on  important
matters  or when  required  to do so by the  Investment  Company  Act or other
applicable  law.  Shareholders  have the right,  upon a vote or declaration in
writing  of  two-thirds  of the  outstanding  shares of the 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 Oversight Committees. The Fund is governed by a Board
of Trustees, which is responsible for protecting the interests of
shareholders under Massachusetts law. The Trustees meet periodically
throughout the year to oversee the Fund's activities, review its performance,
and review the actions of the Manager.


      The Board of Trustees has an Audit Committee, a Regulatory & Oversight
Committee, a Governance Committee and a Proxy Committee.  The Audit Committee
is comprised solely of Independent Trustees.  The members of the Audit
Committee are Joel W. Motley (Chairman), Kenneth A. Randall, Mary F. Miller
and Joseph M. Wikler. The Audit Committee held 6 meetings during the Fund's
fiscal year ended July 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 Auditors 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 Trustees who
are not "interested persons" under the Investment Company Act (the
"Independent Trustees"; (v) reviewing the independence of the Fund's
independent Auditors; (vi) pre-approving the provision of any 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 also 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 for the Audit Committee's consideration by
mailing such information, accompanied by complete and properly supported
resumes, to the Audit Committee in care of the Fund. The Audit Committee may
consider such persons at such time as it meets to consider possible nominees.
The Audit Committee, however, reserves sole discretion to determine the
candidates to present to the Board and/or shareholders when it meets for the
purpose of considering potential nominees.

      The members of the Regulatory & Oversight Committee are Robert G. Galli
(Chairman), Joel W. Motley, Phillip A. Griffiths and Peter I. Wold.  The
Regulatory & Oversight Committee held __ meetings during the Fund's fiscal
year ended July 31, 2005.  The Regulatory & Oversight Committee evaluates and
reports to the Board on the Fund's contractual arrangements, including the
Investment Advisory and Distribution Agreements, transfer and shareholder
service agreements and custodian agreements as well as the policies and
procedures adopted by the Fund to comply with the Investment Company Act and
other applicable law, among other duties as set forth in the Regulatory &
Oversight Committee's Charter.

      The members of the Governance Committee are, Phillip A. Griffiths
(Chairman), Russell S. Reynolds, Jr. and Kenneth A. Randall.  The Governance
Committee held __ meetings during the Fund's fiscal year ended July 31,
2005.   The Governance Committee reviews the Fund's governance guidelines,
the adequacy of the Fund's Codes of Ethics, and develops qualification
criteria for Board members consistent with the Fund's governance guidelines,
among other duties set forth in the Governance Committee's Charter.

      The members of the Proxy Committee are Russell S. Reynolds Jr.,
(Chairman), Matthew P. Fink and Mary F. Miller.  The Proxy Committee held __
meetings during the Fund's fiscal year ended July 31, 2005.  The Proxy
Committee provides the Board with recommendations for proxy voting of
portfolio securities held by the Fund and monitors proxy voting by the Fund.

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 are also Trustees or directors of the following Oppenheimer
funds (referred to as "Board I Funds"):

Oppenheimer AMT-Free Municipals            Oppenheimer International Value Fund
                                           Oppenheimer Limited Term California
Oppenheimer AMT-Free New York Municipals   Municipal Fund
Oppenheimer Balanced Fund                  Oppenheimer Money Market Fund, Inc.
                                           Oppenheimer Multi-State Municipal Trust,
                                           a series fund having the following three
Oppenheimer California Municipal Fund      series:
                                                Oppenheimer New Jersey Municipal
Oppenheimer Capital Appreciation Fund      Fund
                                                Oppenheimer Pennsylvania Municipal
Oppenheimer Developing Markets Fund        Fund
                                                Oppenheimer Rochester National
Oppenheimer Discovery Fund                 Municipals
Oppenheimer Dividend Growth Fund
Oppenheimer Emerging Growth Fund           Oppenheimer Portfolio Series
Oppenheimer Emerging Technologies Fund     Oppenheimer Real Estate Fund
Oppenheimer Enterprise Fund                Oppenheimer Select Value Fund
                                           Oppenheimer Series Fund, Inc., a series
Oppenheimer Global Fund                    fund having the following two series:
                                                Oppenheimer Disciplined Allocation
Oppenheimer Global Opportunities Fund      Fund
Oppenheimer Gold & Special Minerals Fund        Oppenheimer Value Fund
Oppenheimer Growth Fund                    OFI Tremont Core Strategies Hedge Fund
Oppenheimer International Diversified Fund OFI Tremont Market Neutral Hedge Fund
                                           Oppenheimer Tremont Market Neutral Fund
Oppenheimer International Growth Fund      LLC
Oppenheimer International Large Cap Core
Fund                                       Oppenheimer Tremont Opportunity Fund LLC
Oppenheimer International Small Company
Fund                                       Oppenheimer U.S. Government Trust


      In addition to being a trustee or director of the Board I Funds, Mr.
Galli is also a director or trustee of 10 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, Gillespie, Murphy, Petersen, Vandehey, Vottiero,
Wixted, and Zack, and Mses. Bloomberg and Ives respectively hold the same
offices with one or more of the other Board I Funds.  As of August 31, 2005,
the Trustees and officers of the Fund, as a group, owned of record or
beneficially less than 1% of each class of shares of the Fund.  The foregoing
statement does not reflect ownership of shares of the Fund held of record by
an employee benefit plan for employees of the Manager, other than the shares
beneficially owned under the plan by the officers of the Fund listed above.
In addition, none of the Independent Trustees, (nor any of their immediate
family members) own securities of either the Manager or Distributor of the
Board I Funds or any entity directly or indirectly controlling, controlled by
or under common control with the Manager or Distributor.

|X|   Affiliated Transactions and Material Business Relationships. Mr.
Reynolds has reported he has a controlling interest in The Directorship
Group, Inc. ("The Directorship Group"), a director recruiting firm that
provided consulting services to Massachusetts Mutual Life Insurance Company
(which controls the Manager) for fees of $137,500 for calendar year ended
December 31, 2002. Mr. Reynolds reported that The Directorship Group did not
provide consulting services to Massachusetts Mutual Life Insurance Company
during the calendar years ended December 31, 2003 and 2004 and does not
expect to provide any such services in the calendar year ended December 31,
2005.


      The Independent Trustees have unanimously (except for Mr. Reynolds, who
abstained) determined that the consulting arrangements between The
Directorship Group and Massachusetts Mutual Life Insurance Company were not
material business or professional relationships that would compromise Mr.
Reynolds' status as an Independent Trustee. Nonetheless, to assure certainty
as to determinations of the Board and the Independent Trustees as to matters
upon which the Investment Company Act or the rules thereunder require
approval by a majority of Independent Trustees, Mr. Reynolds will not be
counted for purposes of determining whether a quorum of Independent Trustees
was present or whether a majority of Independent Trustees approved the matter.


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 the past five years are listed in the charts
below. The information for each Trustee also includes the dollar range of
shares beneficially owned in the Fund and the aggregate dollar range of
shares beneficially owned in all funds in the Oppenheimer family of funds
that are overseen by the Trustee ("Supervised Funds"). The address of each
Trustee in the chart below is 6803 S. Tucson Way, Centennial, CO 80112-3924.
Each Trustee serves for an indefinite term, until his or her resignation,
retirement, death or removal. Ms. Miller was elected to certain Board I Funds
during 2004 and did not hold shares of Board I Funds during the calendar year
ended December 31, 2004. Mr. Fink was elected to the Board I Funds in 2005
and did not hold shares of Board I Funds during the calendar year ended
December 31, 2004.

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

                               Independent Trustees

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

Name,              Principal Occupation(s) During Past 5    Dollar     Aggregate
                                                                       Dollar
                                                                       Range Of
                   Years;                                   Range of   Shares
Position(s) Held   Other Trusteeships/Directorships Held    Shares     Beneficially
with Fund,         by Trustee;                              BeneficiallOwned in
Length of Service, Number of Portfolios in Fund Complex     Owned in   Supervised
Age                Currently Overseen by Trustee            the Fund   Funds

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

                                                              As of December 31,
                                                                     2004

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

Clayton K.         Director of American Commercial Lines    None       Over
Yeutter, Chairman  (barge company) (since January 2005);               $100,000
of the Board of    Attorney at Hogan & Hartson (law firm)
Trustees since     (since June 1993); Director of
2003;              Danielson Holding Corp.
Trustee since 1991 (waste-to-energy comp[any) (since
Age: 74            2002); Director of Weyerhaeuser Corp.
                   (1999-April 2004); Director of
                   Caterpillar, Inc. (1993-December 2002);
                   Director of ConAgra Foods (1993-2001);
                   Director of Texas Instruments
                   (1993-2001); Director of  FMC
                   Corporation (1993-2001). Oversees 38
                   portfolios in the OppenheimerFunds
                   complex.

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

Matthew P. Fink    Trustee of the Committee for Economic    None       None
Trustee since 2005 Development (policy research
Age: 64            foundation) (since 2005); Director of
                   ICI Education Foundation (education
                   foundation) (since October 1991);
                   President of the Investment Company
                   Institute (trade association)
                   (1991-2004); Director of ICI Mutual
                   Insurance Company (insurance company)
                   (1991-2004). Oversees 38 portfolios in
                   the OppenheimerFunds complex.

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

Robert G. Galli,   A trustee or director of other           $0         Over
Trustee since 1994 Oppenheimer funds. Oversees 48                      $100,000
Age: 72            portfolios in the OppenheimerFunds
                   complex.

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

Phillip A.         A Director of GSI Lumonics Inc.          None       Over
Griffiths,         (precision medical equipment supplier)              $100,000
Trustee, since     (since 2001); Trustee of Woodward
1999               Academy, (since 1983); Senior Advisor
Age: 66            of The Andrew W. Mellon Foundation
                   (since 2001);  Member of the National
                   Academy of Sciences (since 1979);
                   Member of the American Philosophical
                   Society (since 1996); Council on
                   Foreign Relations (since 2002);
                   Director of the Institute for Advanced
                   Study (1991-2004); Director  of Bankers
                   Trust New York Corporation (1994-1999).
                   Oversees 38 portfolios in the
                   OppenheimerFunds complex.

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

Mary F. Miller,    Trustee of the American Symphony         None       None
Trustee since 2004 Orchestra (not-for-profit) (since
Age: 62            October 1998); Senior Vice President
                   and General Auditor of American Express
                   Company (financial services company)
                   (July 1998-February 2003). Oversees 38
                   portfolios in the OppenheimerFunds
                   complex

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

Joel W. Motley,    Director Columbia Equity Financial       None       Over
Trustee since 2002 Corp. (privately-held financial                     $100,000
Age: 53            adviser) (since January 2002); Managing
                   Director of Carmona Motley, Inc.
                   (privately-held financial adviser)
                   (since January 2002); Managing Director
                   of Carmona Motley Hoffman Inc.
                   (privately-held financial adviser)
                   (January 1998-December 2001). Oversees
                   38 portfolios in the OppenheimerFunds
                   complex.

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

Kenneth A.         Director of Dominion Resources, Inc.     None       Over
Randall, Trustee   (electric utility holding company)                  $100,000
since 1989         (since February 1972); Former Director
Age: 78            of Prime Retail, Inc. (real estate
                   investment trust), Dominion Energy Inc.
                   (electric power and oil & gas
                   producer), Lumbermens Mutual Casualty
                   Company, American Motorists Insurance
                   Company and American Manufacturers
                   Mutual Insurance Company; Former
                   President and Chief Executive Officer
                   of The Conference Board, Inc.
                   (international economic and business
                   research). Oversees 38 portfolios in
                   the OppenheimerFunds complex.

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

Russell S.         Chairman (since 1993) of The             None       Over
Reynolds, Jr.,     Directorship Search Group, Inc.                     $100,000
Trustee since 1989 (corporate governance consulting and
Age: 73            executive recruiting); a Life Trustee
                   of International House (non-profit
                   educational organization); a former
                   trustee of The Historical Society of
                   the Town of Greenwich. Oversees 25
                   portfolios in the OppenheimerFunds
                   complex.

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

Joseph M. Wikler,  Director of the following medical        None       $50,001-$100,000
Trustee since      device companies: Medintec (since 1992)
August 2005        and Cathco (since 1996); Director of
Age: 64            Lakes Environmental Association (since
                   1996); Member of the Investment
                   Committee of the Associated Jewish
                   Charities of Baltimore (since 1994);
                   Director of Fortis/Hartford mutual
                   funds (1994-December 2001). Oversees 15
                   portfolios in the OppenheimerFunds
                   complex.

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

Peter I. Wold      President of Wold Oil Properties, Inc.   None       Over
Trustee since      (oil and gas exploration and production             $100,000
September 2005     company) (since 1994); Vice President,
Age: 57            Secretary and Treasurer of Wold Trona
                   Company, Inc. (soda ash processing and
                   production) (since 1996); Vice
                   President of Wold Talc Company, Inc.
                   (talc mining) (since 1999); Managing
                   Member of Hole-in-the-Wall Ranch
                   (cattle ranching) (since 1979);
                   Director and Chairman of the Denver
                   Branch of the Federal Reserve Bank of
                   Kansas City (1993-1999); and Director
                   of PacifiCorp. (electric utility)
                   (1995-1999). Oversees 15 portfolios in
                   the OppenheimerFunds complex.

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

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


      The address of Mr. Murphy is, Two World Financial
Street, 11th Floor, New York, NY 10281-1008.  Mr. Murph
for an indefinite term and as an Officer for an annual
resignation, death or removal.                          Center, 225 Liberty
                                                       y serves as Trustee
                       Interested Trustee and Officer  term, or until his

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

Name,               Principal Occupation(s) During Past 5     Dollar     Aggregate
                                                                         Dollar
                                                                         Range Of
                    Years;                                    Range of   Shares
Position(s) Held    Other Trusteeships/Directorships Held by  Shares     Beneficially
with Fund,          Trustee;                                  BeneficiallOwned in
Length of Service   Number of Portfolios in Fund Complex      Owned in   Supervised
Age                 Currently Overseen by Trustee             the Fund   Funds

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

                                                                As of December 31,
                                                                       2004

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

John V. Murphy,     Chairman, Chief Executive Officer and     None          Over
President and       Director (since June 2001) and President              $100,000
Trustee,  since     (since September 2000) of the Manager;
2001                President and Director or Trustee of
Age: 55             other Oppenheimer funds; President and
                    Director of Oppenheimer Acquisition
                    Corp. ("OAC") (the Manager's parent
                    holding company) and 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 77 portfolios as a
                    Trustee or Director and 10 additional
                    portfolios as an officer in the
                    OppenheimerFunds complex.

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


The addresses of the Officers in the chart below are as follows: for Messrs.
Gillespie and Zack and Ms. Bloomberg, Two World Financial Center, 225 Liberty
Street, 11th Floor, New York, NY 10281-1008, for Messrs. Petersen, Vandehey,
Vottiero,  and Wixted and Ms. Ives, 6803 S. Tucson Way, Centennial, CO
80112-3924 and for Mr. Fielding, 350 Linden Oaks, Rochester, NY  14625.  Each
Officer serves for an annual term or until his or her resignation, death or
removal.




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

                             Other 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  (since January 1996) of the Manager;
Vice President and      Chairman of the  Rochester  Division  of the Manager  (since
Portfolio Manager       January   1996);   an  officer  of  9   portfolios   in  the
since 1999              OppenheimerFunds complex.
Age: 55

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

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 87 portfolios in the OppenheimerFunds complex

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

Brian W. Wixted,        Senior Vice  President and  Treasurer of the Manager  (since
Treasurer since 1999    March 1999);  Treasurer of the following:  HarbourView Asset
Age: 45                 Management  Corporation,   Shareholder  Financial  Services,
                        Inc.,  Shareholder  Services,  Inc.,  Oppenheimer Real Asset
                        Management   Corporation,    and   Oppenheimer   Partnership
                        Holdings,  Inc. (since March 1999), OFI Private Investments,
                        Inc.  (since  March  2000),  OppenheimerFunds  International
                        Ltd.  (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 87
                        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 87 portfolios in
Age: 35                 the OppenheimerFunds complex.

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

Philip Vottiero,        Vice  President/Fund  Accounting of the Manager (since March
Assistant Treasurer     2002);  Vice  President/Corporate  Accounting of the Manager
since 2002              (July 1999-March  2002);  Chief Financial Officer of Sovlink
Age: 42                 Corporation   (April  1996-June  1999).  An  officer  of  87
                        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 87  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: 39                 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:  37                Corporate   Vice  President   (May   1999-April   2001)  and
                        Assistant  General Counsel (May  1999-December  2000) of UBS
                        Financial    Services    Inc.     (formerly,     PaineWebber
                        Incorporated).   An   officer  of  87   portfolios   in  the
                        OppenheimerFunds complex.

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

Phillip S. Gillespie,   Senior  Vice  President  and Deputy  General  Counsel of the
Assistant Secretary     Manager  (since  September  2004);  Mr.  Gillespie  held the
since 2004              following positions at Merrill Lynch Investment  Management:
Age: 41                 First  Vice  President   (2001-September   2004);   Director
                        (2000-September  2004) and Vice  President  (1998-2000).  An
                        officer of 87 portfolios in the OppenheimerFunds complex.

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


      |X|                 Remuneration of Trustees. The Trustees of the Fund
who are affiliated with the Manager and receive no salary or fee from the
Fund. The Independent Trustees received the compensation shown below from the
Fund for serving as a Trustee and member of a committee (if applicable), with
respect to the Fund's fiscal year ended July 31, 2005. The total
compensation, including accrued retirement benefits, from the Fund and fund
complex  represents compensation received 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,
2004.


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

Trustee Name and Other    Aggregate      Retirement     Estimated        Total
                                          Benefits        Annual      Compensation
                                         Accrued as      Benefits    From the Fund
Fund Position(s)         Compensation   Part of Fund       Upon         and Fund
(as applicable)          From Fund(1)     Expenses    Retirement(2)     Complex

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

Clayton K. Yeutter           $(3)            $           $86,171        $173,700
Chairman of the Board

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

Matthew P. Fink(4)            $              $            $2,641          None
Proxy Committee

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

Robert G. Galli
Regulatory & Oversight        $              $         $100,824(5)    $237,312(6)
Committee Chairman

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

Phillip A. Griffiths
Governance Committee
Chairman and                 $(7)            $           $34,972        $142,092
Regulatory & Oversight
Committee Member

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

Mary F. Miller
Audit Committee Member
and Proxy Committee           $             None          $7,128         $8,532
Member

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

Joel W. Motley
Audit Committee
Chairman and                 $(9)            $           $23,945        $150,760
Regulatory & Oversight
Committee Member

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

Kenneth A. Randall            $            $(10)         $85,944        $134,080
Audit Committee Member
and Governance
Committee Member

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

Edward V. Regan(11)           $              $           $70,977        $118,788


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

Russell S. Reynolds,          $              $           $66,602        $106,792
Jr.
Proxy Committee
Chairman and
Governance Committee
Member

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

Donald Spiro (12)             $              $             None         $64,080


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

Eustis Walcott (14)                         None           None         $18,500

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

Joseph M. Wikler              $              $              -           $23,000
Audit Committee Member

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

Peter I. Wold
Regulatory & Oversight        $              $              -           $20,500
Committee Member

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

1....."Aggregate  Compensation  From the  Fund"  includes  fees  and  deferred
   compensation, if any.
2.    "Estimated  Annual  Retirement  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."
3.    Includes  $___ deferred by Mr.  Yeutter under the Deferred  Compensation
   Plan described below.
4.    Mr.  Fink was  appointed  as a Director  or Trustee of 10 of the Board I
   Funds  effective  January 1, 2005 and was elected as Director or Trustee of
   all of the other Board I Funds during 2005.
5.    Includes  $45,840  estimated  to be paid to Mr.  Galli for  serving as a
   trustee  or  director  of 10 other  Oppenheimer  funds that are not Board I
   Funds.
6.    Includes  $111,000  for  serving  as  trustee  or  director  of 10 other
   Oppenheimer funds (at December 31, 2004) that are not Board I Funds.
7.    Includes   $____   deferred  by  Mr.   Griffiths   under  the  "Deferred
   Compensation Plan" described below.
8.    Ms. Miller was appointed as Director or Trustee of 13 of the Board I
   Funds effective August13, 2004 and of 9 of the Board I Funds effective
   October 26, 2004. She was elected as Director or Trustee of all of the
   other Board I Funds during 2005.
9.    Includes  $____deferred  by Mr. Motley under the "Deferred  Compensation
   Plan" described below.
10.   Due to actuarial considerations, no additional retirement benefits were
   accrued with respect to Mr. Randall.
11.   Mr. Regan retired as Trustee of the Board I funds effective June 30,
   2005.
12.   Mr. Spiro retired as Trustee of the Board I funds effective October 31,
   2004.
13.   Mr. Wold and Mr. Wikler were elected as Trustees of the Board I Funds
   as of August 17, 2005.
14.   Mr. Abdow and Mr. Walcott retired as Trustees of the Fund as of
   September 26, 2005.
15.   Includes  $61,333  compensation  paid  to Mr.  Abdow  for  serving  as a
   trustee for two open-end  investment  companies  (MassMutual  Institutional
   Funds and MML Series  Investment Fund) the investment  adviser for which is
   the indirect parent company of the Fund's Manager.  The Manager also serves
   as the  Sub-Advisor to the MassMutual  International  Equity Fund, a series
   of MassMutual Institutional Funds. In accordance with SEC regulations,  for
   purposes of this section  only,  "Fund  Complex"  includes the  Oppenheimer
   funds,  MassMutual  Institutional Funds and MML Series Investment Fund. The
   Manager does not  consider  MassMutual  Institutional  Funds and MML Series
   Investment Fund to be part of the OppenheimerFunds'  "Fund Complex" as that
   term may be otherwise interpreted.

|X|   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 I Funds for at least seven years
in order 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 compensations and length of his or
her service on the Board.

|X|   Deferred Compensation Plan. The Board of Trustees has adopted a
Deferred Compensation Plan for Independent Trustees that enables them to
elect to defer receipt of all or a portion of the annual fees they are
entitled to receive from the 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 is 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 August 31, 2005, the only persons or
entities who owned of record or who were known by the Fund to own
beneficially 5% or more of any class of the Fund's outstanding shares were:

      Citigroup Global Mkts Inc. 109801250, Attn. Cindy Tempesta, 7th Floor
333 West 34th Street, New York, New York 10001-2483, which owned _____ Class
A shares (_____% of the Class A shares then outstanding) for the benefit of
its customers.

      Citigroup Global Mkts Inc. 109801250, Attn. Cindy Tempesta, 7th Floor
333 West 34th Street, New York, New York 10001-2483, which owned _____ Class
B shares (_____5% of the Class B shares then outstanding) for the benefit of
its customers.

      MLPF&S for the sole benefit of its customers, Attn. Fund ADMN/#97CM4,
4800 Deer Lake Drive East Floor 3, Jacksonville, FL 32246-6484, which owned
_____ Class B shares (_____% of the Class B shares then outstanding) for the
benefit of its customers.

      MLPF&S for the sole benefit of its customers, Attn. Fund ADMN/#97HF7,
4800 Deer Lake Drive East Floor 3, Jacksonville, FL 32246-6484, which owned
_____ Class C shares (_____% of the Class C shares then outstanding) for the
benefit of its customers.

      Citigroup Global Mkts Inc. 109801250, Attn. Cindy Tempesta, 7th Floor
333 West 34th Street, New York, New York 10001-2483, which owned _____ Class
C shares (_____% of the Class C shares then outstanding) for the benefit of
its customers.


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 held by the Fund ("portfolio proxies").  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 Proxy Voting Guidelines include provisions to address
conflicts of interest that may arise between the Fund and the Manager where a
directly-controlled affiliate of the Manager manages or administers the
assets of a pension plan of the company soliciting the proxy. The Fund's
Portfolio Proxy Voting Guidelines on routine and non-routine proxy proposals
are summarized below.

o     The Fund votes with the recommendation of the issuer's management on
         routine matters, including election of directors nominated by
         management and ratification of the independent registered public
         accounting firm, unless circumstances indicate otherwise.

o     In general, the Fund opposes anti-takeover proposals and supports
         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 support proposals to eliminate cumulative voting.
o     The Fund opposes re-pricing of stock options.
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 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 it's last three
fiscal years are listed below.


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

        Fiscal Year               Management Fee        Management Fee Paid to
        Ended 7/31          (Without Voluntary Waiver)  OppenheimerFunds, Inc.
                                                            (after waiver)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
           2003                     $2,636,346                    N/A
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
           2004                     $4,646,275                    N/A
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

           2005                     $9,270,643                    N/A

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

      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 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 adviser to the Fund, the Manager can withdraw its permission to
the Fund to use the name "Oppenheimer" as part of its name.


       Portfolio Managers. The Fund's portfolio is managed by Ronald H.
      Fielding and a team of investment professionals including Daniel G.
      Loughran, Scott Cottier and Troy Willis (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 and
      Willis 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
      Messrs. Fielding, Loughran, Cottier and Willis as of July 31, 2005.  No
      account has a performance-based advisory fee:

   Portfolio       RegistereTotal      Other        Total    Other   Total
                            tAssets               Assets in
                             in                     Other
                             RegisteredPooled      Pooled              Assets
                   Investmen InvestmentInvestmentInvestment          in Other
                   Companies Companies Vehicles   Vehicles   AccountsAccounts
   Manager         Managed   Managed*   Managed   Managed*   Managed  Managed*

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

   Ronald H.          10    $19,636.8    None        $0       None       $0
   Fielding

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

   Daniel G.          10    $19,636.8    None        $0       None       $0
   Loughran

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

   Scott Cottier      10    $19,636.8    None        $0       None       $0

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

   Troy Willis        10    $19,636.8    None        $0       None       $0

   *  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
      accounts 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
      they 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 July 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
      - High Yield 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 July 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 buy and sell
portfolio securities for the Fund. The investment advisory agreement allows
the Manager to use broker-dealers to effect the Fund's portfolio
transactions. The Manager is authorized by the advisory agreement to employ
broker-dealers, including, as that term is defined in the Investment Company
act that, in the Manager's best judgment based on all relevant factors, will
implement the Fund's policy to obtain, at reasonable expense, the "best
execution" of portfolio transactions. "Best execution" refers to prompt and
reliable execution at the most favorable price obtainable. The Manager need
not seek competitive commission bidding. However, the Manager is expected to
minimize the commissions paid to the extent consistent with the interest 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 brokerage and/or research services to the Fund
and/or the other accounts over which the Manager or its affiliates have
investment discretion.  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.


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.


Brokerage Practices Followed by the Manager.  The Manager allocates brokerage
for the Fund subject to the provisions of the investment advisory agreement
and the procedures and rules described above.  Generally the Manager's
portfolio traders allocate brokerage upon recommendations from the Manager's
portfolio managers.  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 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.

      The Fund seeks to obtain prompt execution of orders at the most
favorable net prices.  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 funds advised by the Manager
have investment objectives and policies similar to those of the Fund.  Those
other funds 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.
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.

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

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

      The research services provided by brokers broaden the scope and
supplement the research activities of the Manager.  That research provides
additional views and comparisons for consideration and helps the Manager 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 of the Fund 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.


In the  fiscal  years  ended  July 31,  2003,  2004 and  2005,  there  were no
transactions directed to brokers for research services,  and the amount of the
commissions  paid to  broker-dealers  for those  services was $0. As explained
above, in the fiscal years ended July 31, 2003,  2004 and 2005,  respectively,
the Fund did not pay any brokerage commissions.


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.

 ------------------------------------------------------------------------------
          Aggregate     Class A                     Concessions  Concessions
 Fiscal   Front-End     Front-End    Concessions    on Class B   on Class C
 Year     Sales         Sales        on Class A     Shares       Shares
 Ended    Charges on    Charges      Shares         Advanced by  Advanced by
 7/31:    Class A       Retained by  Advanced by    Distributor(2Distributor(2)
          Shares        Distributor(1Distributor(2)
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
   2003      $4,232,170   $742,361      $322,613     $4,840,008    $782,185
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
   2004    $9,301,500    $1,470,397    $1,042,717    $5,141,582   $1,680,449
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------

   2005    $27,469,020   $4,232,112    $3,771,254    $7,183,977   $4,926,868

 ------------------------------------------------------------------------------
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 financial  intermediaries
   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.


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

             Class A Contingent   Class B Contingent    Class C Contingent
 Fiscal      Deferred Sales       Deferred Sales        Deferred Sales
 Year  Ended Charges Retained by  Charges Retained by   Charges Retained by
 7/31:       Distributor          Distributor           Distributor
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------

 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
    2003           $16,995              $606,720               $109,266
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------
    2004           $60,920              $641,845               $108,492
 ------------------------------------------------------------------------------
 ------------------------------------------------------------------------------

    2005           $76,961             $1,058,377              $176,463

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



Distribution and Service Plans.  The Fund has adopted a Service Plan for its
Class A shares and Distribution and Service Plans for its Class B and Class C
shares under Rule 12b-1 of the Investment Company Act.  Under those plans,
the Fund makes payments to 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 of the Fund, 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.

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

      Unless 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 Fund's 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 quarter 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.

      |_|  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. The Board has set the rate at that level. 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 quarterly at an annual rate
not to exceed 0.25% 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 July 31, 2005, payments under the Class A
plan totaled $2,023,635, all of which was paid by the Distributor to
recipients and included $54,322 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.

|_|   Class B and Class C Service and Distribution Plans. 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 for the service fee are similar to the
services provided under 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 quarterly 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 quarterly 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
classes.

      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 dealer 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 fees and the asset-based sales charge to the dealer quarterly 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:


      |_|         pays sales concessions to authorized brokers and dealers at
      the time of sale and pays service fees as described in the Prospectus,
      |_|         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,
      |_|         employs personnel to support distribution of Class B and
Class C shares,

      |_|         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,
|_|   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,
|_|   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,
|_|   may use the payments under the plan to include the Fund in various
      third-party distribution programs that may increase sales of Fund
      shares,
|_|   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
|_|   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.


During a calendar year, 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
asset-based sales charges paid to the Distributor by the Fund under the
distribution and service plans. Those excess expenses are carried over on the
Distributor's books and may be recouped from asset-based sales charge
payments from the Fund in future years. However, the Distributor has
voluntarily agreed to cap the amount of expenses under the plans that may be
carried over from year to year and recouped that relate to (i) expenses the
Distributor has incurred that represent compensation and expenses of its
sales personnel and (ii) other direct distribution costs it has incurred,
such as sales literature, state registration fees, advertising and
prospectuses used to offer Fund shares. The cap on the carry-over of those
categories of expenses is set at 0.70% of annual gross sales of shares of the
Fund. If those categories of expenses exceed the capped amount, the
Distributor bears the excess costs. If the Class B or Class C plan were to be
terminated by the Fund, the Fund's Board of Trustees may allow the Fund to
continue payments of the asset-based sales charge to the Distributor for
distributing shares prior to the termination of the plan.



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

   Distribution Fees Paid to the Distributor in the Fiscal Year Ended 7/31/05

 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 Class:      Total Payments  Amount          Distributor's      Distributor's
                                             Aggregate          Unreimbursed
                                             Unreimbursed       Expenses as %
                             Retained by     Expenses Under     of Net Assets
             Under Plan      Distributor     Plan               of Class
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 Class B

 Plan          $3,680,913     $3,253,770(1)     $17,018,319          3.22%

 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
 Class C

 Plan          $4,378,928     $2,531,873(2)     $10,097,129          1.16%

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

1.    Includes $3,218 paid to an affiliate of the Distributor's parent
      company.
2.    Includes $23,733_paid to an affiliate of the Distributor's parent
      company.


      All payments under the Class B and Class C plans are subject to the
limitations imposed by the Conduct Rules of the National Association of
Securities Dealers, Inc. on payments of asset-based sales charges and service
fees.

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 its 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:

      |_| 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.

      |_|  The Fund's performance returns may not reflect the effect of taxes
         on dividends and capital gains distributions.

      |_| An investment in the Fund is not insured by the FDIC or any other
government agency.
      |_| 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.
      |_| When an investor's shares are redeemed, they may be worth more or
less than their original cost.
      |_|  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.

      |_| 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 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:

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


      The symbols above represent the following factors:
      a =  dividends and interest earned during the thirty (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 thirty (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 day period may differ
from the yield for other periods.  The SEC formula assumes that the
standardized yield for a 30-day 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 thirty-day day period.


      |_| 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 twelve 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.  The Class A dividend yield may
also be quoted without deducting the maximum initial sales charge.

      |_| 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 Federal 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 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 income tax after deductions
and exemptions).


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


             The Fund's Yields for the 30-Day Periods Ended 7/31/05

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
                                                           Tax-Equivalent Yield
                Dividend Yield       Standardized Yield      (35.00% Fed. Tax
                                                                 Bracket)
Class of
Shares
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

           Without     After Sales  Without    After      Without     After
           Sales       Charge       Sales      Sales      Sales       Sales
           Charge                   Charge     Charge     Charge      Charge
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Class A       5.68%       5.41%       5.37%      5.12%       8.27%      7.87%

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

Class B       4.77%        N/A        4.59%       N/A        7.06%       N/A

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

Class C       4.80%        N/A        4.59%       N/A        7.06%       N/A

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

      |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% contingent
deferred sales charge is deducted for returns for the one-year period.

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

                            1/n
                       (ERV)
                       (---)  -1 = Average Annual Total Return
                       ( P )

|_|   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:

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

|_|   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:

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

      |_| 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

      |_| 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 Class A, Class B or Class C
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 7/31/05

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
          Cumulative Total              Average Annual Total Returns
             Returns (10
          years or life of
               class)
Class of
Shares
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
                                                                    10-Year
                                 1-Year            5-Year         (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 A   101.07%(1111.10%(1)16.18%   21.97%   9.54%    10.61%  7.23%(1)7.76%(1)

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

Class B   101.83%(2101.83%(2)16.09%   21.09%   9.49%    9.77%   7.28%(2)7.28%(2)

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

Class C   95.10%(3)95.10%(3) 20.08%   21.08%   9.77%    9.77%   6.97%(3)6.97%(3)

---------------------------------------------------------------------------------
(1)   Inception of Class A:   10/1/93
(2)   Inception of Class B:   10/1/93
(3)   Inception of Class C:   8/29/95






----------------------------------------------------------------------------------
        Average Annual Total Returns for Class A Shares(1) (After Taxes)

                          For the Periods Ended 7/31/05

----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
                                 1-Year            5-Year        10-Year or Life
                                                                     of Class
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
After Taxes on Distributions

                                 16.18%            9.54%              7.23%

----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
After Taxes on Distributions

and Redemption of Fund Shares    13.02%            9.16%              7.05%

----------------------------------------------------------------------------------
1.    Inception of Class A shares: 10/1/93.

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
Statement of Additional Information.  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.

      |_| 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.

      |_|   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 their specialized market sectors.  The Fund is rated among
the municipal national long category.

      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.


      |_|  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 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 NYSE (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 Statement of Additional Information 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 Government Fund
Oppenheimer AMT-Free New York Municipals  Oppenheimer Limited Term Municipal Fund
Oppenheimer Balanced Fund                 Oppenheimer Main Street Fund
Oppenheimer Core Bond Fund                Oppenheimer Main Street Opportunity Fund
Oppenheimer California Municipal Fund     Oppenheimer Main Street Small Cap Fund
Oppenheimer Capital Appreciation Fund     Oppenheimer MidCap Fund
Oppenheimer Capital Income Fund           Oppenheimer New Jersey Municipal Fund
Oppenheimer Champion Income Fund          Oppenheimer Pennsylvania Municipal Fund

                                          Oppenheimer   Principal  Protected  Main
Oppenheimer Convertible Securities Fund   Street Fund
                                          Oppenheimer   Principal  Protected  Main
Oppenheimer Developing Markets Fund       Street Fund II

                                          Oppenheimer   Principal  Protected  Main
Oppenheimer Disciplined Allocation Fund   Street Fund III
Oppenheimer Discovery Fund                Oppenheimer Quest Balanced Fund

                                          Oppenheimer  Quest  Capital  Value Fund,

Oppenheimer Dividend Growth Fund          Inc.

                                          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 Asset Fund
Oppenheimer Global Fund                   Oppenheimer Real Estate Fund
                                          Oppenheimer      Rochester      National

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


Oppenheimer Cash Reserves

Oppenheimer Money Market Fund, Inc.       Centennial Money Market Trust
Centennial California Tax Exempt Trust    Centennial New York Tax Exempt Trust
Centennial Government Trust               Centennial Tax Exempt 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 Statement of Additional
Information, 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 that applies to
your Class A share purchases during that period. You can choose to include
purchases made up to 90 days before the date of the Letter. Class A shares of
Oppenheimer Money Market Fund 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 of Intent is an investor's statement in writing to the
Distributor of the 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 a 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 of
Intent 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 Statement of Additional Information 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 of
Intent period will be deducted.  It is the responsibility of the dealer of
record and/or the investor to advise the Distributor about the Letter in
placing any purchase orders for the investor during the Letter of Intent
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 of Intent period, the escrowed shares
will be promptly released to the investor.


         3. If, at the end of the 13-month Letter of Intent 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 $100,000 or more
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 an 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.

      |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,
Statements of Additional Information 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
on or about the second to last business day of 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 Exchange 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 Statement of
Additional Information mean "Eastern time." The NYSE's most recent annual
announcement regarding holidays and days when the market may close early is
available on the NYSE's website at www.nyse.com.

      Dealers other than Exchange 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.

o     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 on the valuation date. If not, the value shall be the
closing bid price on the principal exchange or on Nasdaq on the valuation
date. If the put, call or future is not traded on an exchange or on Nasdaq,
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 or put
written by the Fund is exercised, the proceeds are increased by the premium
received. If a call or put 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 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 Statement of Additional
Information).

      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 Statement of Additional
Information.

      |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      Centennial New York Tax Exempt
      Trust                                 Trust
      Centennial Government Trust           Centennial Tax Exempt Trust
      Centennial Money Market Trust


      The following funds do not offer Class N shares:
    Oppenheimer AMT-Free Municipals           Oppenheimer Pennsylvania Municipal
                                              Fund
    Oppenheimer AMT-Free New York             Oppenheimer Rochester National
    Municipals                                Municipals
    Oppenheimer California Municipal Fund     Limited Term New York Municipal
                                              Fund

    Oppenheimer Limited Term Municipal        Oppenheimer Senior Floating Rate
    Fund                                      Fund
    Oppenheimer New Jersey Municipal Fund     Rochester Fund Municipals
    Oppenheimer Principal Protected Main      Oppenheimer Limited Term
    Street Fund II                            California Municipal Fund
    Oppenheimer International Value Fund      Oppenheimer Money Market Fund, Inc.


      The following funds do not offer Class Y shares:
   Oppenheimer AMT-Free Municipals         Oppenheimer Balanced Fund
   Oppenheimer AMT-Free New York           Oppenheimer New Jersey Municipal Fund
   Municipals
   Oppenheimer California Municipal Fund   Oppenheimer Pennsylvania Municipal Fund
   Oppenheimer Capital Income Fund         Oppenheimer Principal Protected Main
                                           Street Fund
   Oppenheimer Champion Income Fund        Oppenheimer Principal Protected Main
                                           Street Fund II

   Oppenheimer Convertible Securities Fund Oppenheimer Principal Protected Main
                                           Street Fund III

   Oppenheimer Disciplined Allocation Fund Oppenheimer Quest Capital Value Fund,
                                           Inc.
   Oppenheimer Developing Markets Fund     Oppenheimer Quest International Value
                                           Fund, Inc.

   Oppenheimer Gold & Special Minerals     Oppenheimer Rochester National
   Fund                                    Municipals
   Oppenheimer International Growth Fund   Oppenheimer Senior Floating Rate Fund
   Oppenheimer International Small         Oppenheimer Small- & Mid- Cap Value Fund
   Company Fund
   Oppenheimer Limited Term Municipal Fund Oppenheimer Total Return Bond Fund
   Oppenheimer Cash Reserves               Limited Term New York Municipal Fund
   Oppenheimer Dividend Growth Fund
o     Oppenheimer Money Market Fund, Inc. only offers Class A and Y shares.
      o   Class Y shares of Oppenheimer Real Asset Fund may not be exchanged
      for shares of any other fund.

o     Class B, Class C and Class N 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 or Oppenheimer Cash Reserves acquired by exchange of Class M
      shares.o

   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
      any of the Oppenheimer funds.
o     Shares of Oppenheimer Principal Protected Main Street Fund may be
      exchanged at net asset value for shares of any of the Oppenheimer
      funds.  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 any of the Oppenheimer
      funds. 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 any of the Oppenheimer
      funds. 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
      (12/06/2011).


      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 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 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 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 Limited-Term Government Fund, Limited
Term Municipal Fund, Limited Term New York Municipal Fund, Oppenheimer
Capital Preservation Fund and Oppenheimer Senior Floating Rate Fund, the
Class B contingent deferred sales charge is imposed on Class B shares
acquired by exchange 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 the 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
Statement of Additional Information, or would include shares covered by a
share certificate that is not tendered with the request. In those cases, only
the shares available for exchange without restriction will be exchanged.

      The different 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 Statement of Additional
Information is based on tax law in effect on the date of the Prospectus and
this Statement of Additional Information. Those laws and regulations may be
changed by legislative, judicial, or administrative action, 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. Losses realized by shareholders on the
redemption of Fund shares within six months of purchase will be disallowed
for federal income tax purposes to the extent of exempt-interest dividends
received on such shares.

      The 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 (including short-term and long-term) and the proceeds of the
                                                 -
redemption of shares, paid to any shareholder (1) who has failed to provide a
correct taxpayer identification number or to properly certify that number
-------
when required, (2) who is subject to backup withholding for failure to report
the receipt of interest or dividend income properly, or (3) who has failed to
certify to the 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.

      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 listed above. 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 served 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 an 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.







                                     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-12
                                  Appendix C

OppenheimerFunds Special Sales Charge Arrangements and Waivers
--------------------------------------------------------------

In certain cases, the initial sales charge that applies to purchases of Class
A shares(2) 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.(3)  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 example, waivers relating to
Retirement Plans do not apply to Oppenheimer municipal funds, because shares
of those funds are not available for purchase by or on behalf of retirement
plans. Other waivers apply only to shareholders of certain 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 qualified under Sections 401(a) or 401(k) of the Internal
            Revenue Code,
         2) non-qualified deferred compensation plans,
         3) employee benefit plans(4)
         4) Group Retirement Plans(5)
         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.








 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."(6) 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 $3 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).








            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.

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 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.



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.(7)
         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.(8)
         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.

   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 by the Social Security
         Administration.
      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(9) 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.(10)
         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.(11)
         9) On account of the participant's separation from service.(12)
         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.








   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 Cap Value
   Fund
   Oppenheimer Quest Balanced Value 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.

      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.

      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.

      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.

      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.

      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.

 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 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.

      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.







      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.

   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%.

      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.










Oppenheimer Rochester National 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.CALL OPP(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
PX795.001.0905



--------
(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 the Trust and
who do not have any direct or indirect financial interest in the operation of
the distribution plan or any agreement under the plan.

(2) Certain waivers also apply to Class M shares of Oppenheimer Convertible
Securities Fund.
(3) 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.
(4) 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.
(5) 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.
(6) 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.
(7) This provision does not apply to IRAs.
(8) 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.
(9) The distribution must be requested prior to Plan termination or the
elimination of the Oppenheimer funds as an investment option under the Plan.
(10) This provision does not apply to IRAs.
(11) This provision does not apply to loans from 403(b)(7) custodial plans
and loans from the OppenheimerFunds-sponsored Single K retirement plan.
(12) This provision does not apply to 403(b)(7) custodial plans if the
participant is less than age 55, nor to IRAs.

                   OPPENHEIMER MULTI-STATE MUNICIPAL TRUST

                                  FORM N-1A

                                    PART C

                              OTHER INFORMATION



Item 23. Exhibits
-----------------


(a)   Amended  and  Restated  Declaration  of  Trust  dated  August  1,  2002:
Previously filed with Registrant's  Post-Effective Amendment No. 27 (September
27, 2002), and incorporated herein by reference.

 (b)  Amended and Restated  By-Laws dated as of December 14, 2000:  Previously
filed with Registrant's  Post-Effective Amendment No. 27 (September 27, 2002),
and incorporated herein by reference.

(c)   (i)  Oppenheimer  Pennsylvania  Municipal  Fund  Specimen  Class A Share
Certificate:  Previously filed with Registrant's  Post-Effective Amendment No.
26 (November 21, 2001), and incorporated herein by reference.

      (ii)  Oppenheimer  Pennsylvania  Municipal  Fund Specimen  Class B Share
Certificate:  Previously filed with Registrant's  Post-Effective Amendment No.
26 (November 21, 2001), and incorporated herein by reference.

      (iii)  Oppenheimer  Pennsylvania  Municipal  Fund Specimen Class C Share
Certificate:  Previously filed with Registrant's  Post-Effective Amendment No.
26 (November 21, 2001), and incorporated herein by reference.


      (iv)   Oppenheimer  Rochester National Municipals Specimen Class A Share
Certificate:  Previously filed with Registrant's  Post-Effective Amendment No.
26 (November 21, 2001), and incorporated herein by reference.


      (v) Oppenheimer  Rochester  National  Municipals  Specimen Class B Share
Certificate:  Previously filed with Registrant's  Post-Effective Amendment No.
26 (November 21, 2001), and incorporated herein by reference.

      (vi) Oppenheimer  Rochester National  Municipals  Specimen Class C Share
Certificate:  Previously filed with Registrant's  Post-Effective Amendment No.
26 (November 21, 2001), and incorporated herein by reference.

      (vii)  Oppenheimer  New Jersey  Municipal  Fund  Specimen  Class A Share
Certificate:  Previously filed with Registrant's  Post-Effective Amendment No.
26 (November 21, 2001), and incorporated herein by reference.

      (viii)  Oppenheimer  New Jersey  Municipal  Fund Specimen  Class B Share
Certificate:  Previously filed with Registrant's  Post-Effective Amendment No.
26 (November 21, 2001), and incorporated herein by reference.

      (ix)  Oppenheimer  New  Jersey  Municipal  Fund  Specimen  Class C Share
Certificate:  Previously filed with Registrant's  Post-Effective Amendment No.
26 (November 21, 2001), and incorporated herein by reference.


(d)   (i) Amended and Restated Investment Advisory Agreement for Oppenheimer
Pennsylvania Municipal Fund dated January 1, 2005: Filed herewith.

      (ii) Amended and Restated Investment Advisory Agreement for Oppenheimer
Rochester National Municipals, dated January 1, 2005: Filed herewith.

      (iii)   Investment   Advisory   Agreement  for  Oppenheimer  New  Jersey
Municipal Fund dated January 1, 2005: Filed herewith.


(e)   (i) General Distributor's Agreement dated August 19, 1993:  Previously
filed with Registrant's Post-Effective Amendment No. 12 (April 25, 1995), and
incorporated herein by reference.

      (ii) Form of Dealer Agreement of OppenheimerFunds Distributor, Inc.:
Previously filed with Post-Effective Amendment No. 45 to the Registration
Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076), 10/26/01, and
incorporated herein by reference.

      (iii) Form of Broker Agreement of OppenheimerFunds Distributor, Inc.:
Previously filed with Post-Effective Amendment No. 45 to the Registration
Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076), 10/26/01, and
incorporated herein by reference.

      (iv) Form of Agency Agreement of OppenheimerFunds Distributor, Inc.:
Previously filed with Post-Effective Amendment No. 45 to the Registration
Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076), 10/26/01, and
incorporated herein by reference.

      (v) Form of Trust Company Fund/SERV Purchase Agreement of
OppenheimerFunds Distributor, Inc.: Previously filed with Post-Effective
Amendment No. 45 to the Registration Statement of Oppenheimer High Yield Fund
(Reg. No. 2-62076), 10/26/01, and incorporated herein by reference.

      (vi) Form of Trust Company Agency Agreement of OppenheimerFunds
Distributor, Inc.: Previously filed with Post-Effective Amendment No. 45 to
the Registration Statement of Oppenheimer High Yield Fund (Reg. No. 2-62076),
10/26/01, and incorporated herein by reference.

(f)   (i) Amended and Restated Retirement Plan for Non-Interested Trustees or
Directors dated 8/9/01: Previously filed with Post-Effective Amendment No. 34
to the Registration Statement of Oppenheimer Gold & Special Minerals Fund
(Reg. No. 2-82590), 10/25/01, and incorporated herein by reference.

      (ii) Form of Deferred Compensation Plan for Disinterested
Trustees/Directors: Previously filed with Post-Effective Amendment No. 26 to
the Registration Statement of Oppenheimer Gold & Special Minerals Fund (Reg.
No. 2-82590), 10/28/98, and incorporated by reference.


(g)   (i) Global Custodial Services Agreement as amended June 9, 2005,
between Registrant and Citibank, N.A.: Previously filed with the Initial
Registration Statement of Oppenheimer International Diversified Fund (Reg.
No. 333-125805), 6/1405, and incorporated herein by reference.


      (ii) Global Custodial Services Agreement dated May 3, 2001 between
Registrant and Citibank, N.A.: Previously filed with Post-Effective Amendment
No. 33 to the Registration Statement of Centennial Money Market Trust (Reg.
No. 2-65245), 10/25/01, and incorporated herein by reference.

      (iii) Amended and Restated  Foreign Custody Manager  Agreement dated May
31, 2001, as amended July 15, 2003,  between  Registrant  and Citibank,  N.A.:
Previously  filed with the  Pre-Effective  Amendment No. 1 to the Registration
Statement  of  Oppenheimer   International  Large-Cap  Core  Trust  (Reg.  No.
333-106014), 8/5/03, and incorporated herein by reference.

(h)   Not applicable.

(i)   Opinion and Consent of Counsel  dated  September  15,  1989:  Previously
filed  with  Registrant's   Pre-Effective  Amendment  No.  2  to  Registrant's
Registration   Statement  (September  18,  1989),  refiled  with  Registrant's
Post-Effective  Amendment  No. 12,  (April 25,  1995)  pursuant to Item 102 of
Regulation S-T and incorporated herein by reference.


(j)   Independent Auditors' Consent: To be filed by amendment.


(k)   Not applicable.


(l)   Investment  Letter  from  OppenheimerFunds,  Inc.  to  Registrant  dated
August 29, 1989: Previously filed with Registrant's  Post-Effective  Amendment
No. 3 (April 30, 1991, refiled with Registrant's  Post-Effective Amendment No.
12, (April 25, 1995) pursuant to Item 102 of Regulation  S-T and  incorporated
herein by reference.


(m)   (i)  Service  Plan  and  Agreement  for  Class A shares  of  Oppenheimer
Pennsylvania  Municipal  Fund  dated  July  1,  1993:  Previously  filed  with
Registrant's  Post-Effective  Amendment  No. 6 (July 16,  1993),  refiled with
Registrant's  Post-Effective  Amendment No. 12,  (April 25, 1995)  pursuant to
Item 102 of Regulation S-T and incorporated herein by reference.

(ii)  Amended and Restated  Distribution  and Service Plan and  Agreement  for
Class B shares of Oppenheimer  Pennsylvania  Municipal Fund dated February 12,
1998:  Previously  filed with  Registrant's  Post-Effective  Amendment  No. 21
(November 25, 1998) and incorporated herein by reference.


      (iii) Amended and Restated  Distribution  and Service Plan and Agreement
for Class C shares of Oppenheimer  Pennsylvania  Municipal Fund dated February
18, 2004: Previously filed with Registrant's  Post-Effective  Amendment No. 30
(September 28, 2004) and incorporated herein by reference.


      (iv)  Service  Plan and  Agreement  for  Class A shares  of  Oppenheimer
Florida   Municipal  Fund  dated  October  1,  1993:   Previously  filed  with
Registrant's   Post-Effective   Amendment   No.  7  (October  1,  1993),   and
incorporated herein by reference.

      (v)  Distribution  and Service Plan and  Agreement for Class B shares of
Oppenheimer Florida Municipal Fund dated September 14, 2001:  Previously filed
with  Registrant's  Post-Effective  Amendment No. 25 (September 28, 2001), and
incorporated herein by reference.


      (vi) Amended and Restated Distribution and Service Plan and Agreement
for Class C shares of Rochester National Municipals (formerly, Oppenheimer
Florida Municipal Fund) dated February 18, 2004: Previously filed with
Registrant's Post-Effective Amendment No. 3 (September 28, 2004) and
incorporated herein by reference.


      (vii) Service Plan and Agreement for Class A shares of Oppenheimer New
Jersey Municipal Fund dated December 9, 1993: Previously filed with
Registrant's Post-Effective Amendment No. 9 (February 25, 1994), and
incorporated herein by reference.

      (viii) Amended and Restated Distribution and Service Plan and Agreement
for Class B shares of Oppenheimer New Jersey Municipal Fund dated August 30,
2002: Previously filed with Registrant's Post-Effective Amendment No. 27
(September 27, 2002), and incorporated herein by reference.


      (ix) Amended and Restated Distribution and Service Plan and Agreement
for Class C shares of Oppenheimer New Jersey Municipal Fund dated February
18, 2004: Previously filed with Registrant's Post-Effective Amendment No. 3
(September 28, 2004) and incorporated herein by reference.


      (n)   Oppenheimer Funds Multiple Class Plan under Rule 18f-3 updated
      through 9/15/04: Previously filed with Post-Effective Amendment No. 24
      to the Registration Statement of Oppenheimer Cash Reserves (Reg. No.
      33-23223), 09/27/04, and incorporated herein by reference.

(o)   (i) Powers of Attorney for all Trustees/Directors and Principal
Officers except for Joel W. Motley and John V. Murphy (including Certified
Board Resolutions): Previously filed with Pre-Effective Amendment No. 1 to
the Registration Statement of Oppenheimer Emerging Growth Fund (Reg. No.
333-44176), 10/5/00, and incorporated herein by reference.

      (ii) Power of Attorney for John Murphy (including Certified Board
Resolution): Previously filed with Post-Effective Amendment No. 41 to the
Registration Statement of Oppenheimer U.S. Government Trust (Reg. No.
2-76645), 10/22/01, and incorporated herein by reference.

      (iii) Power of Attorney for Joel W. Motley (including Certified Board
Resolution): Previously filed with Post-Effective Amendment No. 8 to the
Registration Statement of Oppenheimer International Small Company Fund (Reg.
333-31537), 10/22/02, and incorporated herein by reference.

(p)   Amended and Restated Code of Ethics of the Oppenheimer Funds dated May
15, 2002 under Rule 17j-1 of the Investment Company Act of 1940: Previously
filed with Post-Effective Amendment No. 29 to the Registration Statement of
Oppenheimer Discovery Fund (Reg. No. 33-371), 11/21/02, and incorporated
herein by reference.


Item 24. - Persons Controlled by or Under Common Control with the Fund
----------------------------------------------------------------------


None.


Item 25. - Indemnification
--------------------------


Reference is made to the provisions of Article Seven of Registrant's Amended
and Restated Declaration of Trust filed as Exhibit 23(a) to this Registration
Statement, and incorporated herein by reference.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of
Registrant pursuant to the foregoing provisions or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be governed
by the final adjudication of such issue.


Item 26. - Business and Other Connections of the Investment Adviser
-------------------------------------------------------------------


(a)   OppenheimerFunds,  Inc. is the investment adviser of the Registrant;  it
and certain  subsidiaries  and  affiliates  act in the same  capacity to other
investment companies,  including without limitation those described in Parts A
and B hereof and listed in Item 26(b) below.

(b)   There  is  set  forth  below  information  as  to  any  other  business,
profession,  vocation  or  employment  of a  substantial  nature in which each
officer and director of  OppenheimerFunds,  Inc. is, or at any time during the
past two fiscal  years has been,  engaged  for  his/her  own account or in the
capacity of director, officer, employee, partner or trustee.

---------------------------------------------------------------------------------
Name  and   Current   Position
with OppenheimerFunds, Inc.    Other Business and Connections During the Past
                               Two Years
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Timothy L. Abbuhl,             Vice President of  OppenheimerFunds  Distributor,
Vice President                 Inc.

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

Emeline S. Adwers,             None
Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert Agan,                   Vice President of  OppenheimerFunds  Distributor,
Vice President                 Inc.,  Shareholder Financial Services,  Inc., OFI
                               Private  Investments,  Inc. and Centennial  Asset
                               Management Corporation;  Senior Vice President of
                               Shareholders Services, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Carl Algermissen,              Formerly  Associate  Counsel and Legal Compliance
Vice President & Associate     Officer at Great  West-Life  & Annuity  Insurance
Counsel                        Co.  (February  2004-October  2004);   previously
                               with   INVESCO    Funds   Group,    Inc.    (June
                               1993-December  2003),  most  recently  as  Senior
                               Staff Attorney.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael Amato,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Erik Anderson,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Tracey Beck Apostolopoulos,    None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Janette Aprilante,             Secretary     (since     December    2001)    of:
Vice President & Secretary     OppenheimerFunds  Distributor,  Inc.,  Centennial

                               Asset   Management    Corporation,    Oppenheimer
                               Partnership  Holdings,   Inc.,  Oppenheimer  Real
                               Asset  Management,  Inc.,  Shareholder  Financial
                               Services,  Inc.,  Shareholder Services,  Inc. and
                               OppenheimerFunds  Legacy Program;  (since January
                               2005)   of    Trinity    Investment    Management
                               Corporation.  Secretary  (since  June  2003)  of:
                               HarbourView  Asset  Management  Corporation,  OFI
                               Private  Investments,  Inc. and OFI Institutional
                               Asset  Management,   Inc.   Assistant   Secretary
                               (since December 2001) of OFI Trust Company.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Hany S. Ayad,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert Baker,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Michael Baldwin,               Formerly   Managing  Director  at  Deutsche  Bank
Executive Vice President       (March 2001 - March 2005)s

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Michael Banta,            None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Joanne Bardell,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kevin Baum,                    None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jeff Baumgartner,              None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Todd Becerra,                  None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lalit K. Behal                 Assistant    Secretary   of   HarbourView   Asset
Assistant Vice President       Management Corporation.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kathleen Beichert,             Vice President of  OppenheimerFunds  Distributor,
Vice President                 Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Gerald Bellamy,                Assistant  Vice  President  of OFI  Institutional
Assistant Vice President       Asset Management, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Erik S. Berg,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Robert Bertucci                None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Rajeev Bhaman,                 None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Craig Billings,                None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mark Binning,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert J. Bishop,              Treasurer     (since     October     2003)     of
Vice President                 OppenheimerFunds     Distributor,     Inc.    and
                               Centennial Asset Management Corporation.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John R. Blomfield,             None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lisa I. Bloomberg,             Formerly   First  Vice  President  and  Associate
Vice President & Associate     General  Counsel of UBS  Financial  Services Inc.
Counsel                        (May 1999-May 2004).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Veronika Boesch,               Formerly  (until  February  2004) an  independent
Assistant Vice President       consultant/coach in organizational development.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Chad Boll,                     None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Antulio N. Bomfim,             A  senior  economist  with  the  Federal  Reserve
Vice President                 Board (June 1992-October 2003).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

John C. Bonnell,               Vice  President of  Centennial  Asset  Management
Vice President                 Corporation.  Formerly  a  Portfolio  Manager  at

                               Strong Financial Corporation (May 1999-May 2004).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michelle Borre Massick,        None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Lori E. Bostrom,               Formerly Vice President and Corporate  Counsel at
Vice President & Senior        Prudential   Financial   Inc.   (October  2002  -
Counsel                        November 2004).

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

Lisa Bourgeois,                Assistant    Vice    President   of   Shareholder
Assistant Vice President       Services, Inc.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Boydell,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael Bromberg,              None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lowell Scott Brooks,           Vice President of  OppenheimerFunds  Distributor,
Vice President                 Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Joan Brunelle,                 None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Kristine Bryan-Levin,          Formerly  Senior Vice President at Brown Brothers
Vice President                 Harriman (November 2002 - May 2005)

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Paul Burke,                    None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mark Burns,                    None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Geoffrey Caan,                 None
Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Catherine Carroll,             None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Debra Casey,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Maria Castro,                  None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lisa Chaffee,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

May Chen,                      Formerly  Assistant  Vice President of Enterprise
Assistant Vice President       Services at MassMutual  Financial Group (May 2002
                               - April 2005)

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Charles Chibnik,               None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brett Clark,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
H.C. Digby Clements,           None
Vice President: Rochester
Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Peter V. Cocuzza,              None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Gerald James Concepcion,       Formerly  (until  November 2004) an RIA Marketing
Assistant Vice President       Associate of OppenheimerFunds, Inc.

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

Robert Corbett,                None
Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Susan Cornwell,                Vice  President of  Centennial  Asset  Management
Vice President                 Corporation,   Shareholder   Financial  Services,
                               Inc. and OppenheimerFunds  Legacy Program; Senior
                               Vice President of Shareholder Services, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Scott Cottier,                 None
Vice President: Rochester
Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Laura Coulston,                None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Julie C. Cusker,               None
Assistant Vice President:
Rochester Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

George Curry,                  Vice President of  OppenheimerFunds  Distributor,
Vice President                 Inc.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Damian,                   None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John M. Davis,                 Assistant  Vice  President  of   OppenheimerFunds
Assistant Vice President       Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Craig P. Dinsell,              None
Executive Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Randall C. Dishmon,            None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Rebecca K. Dolan               None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Steven D. Dombrower,           Senior    Vice    President    of   OFI   Private
Vice President                 Investments,     Inc.;    Vice    President    of
                               OppenheimerFunds Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Thomas Doyle,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Bruce C. Dunbar,               None
Senior Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian Dvorak,                  None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Richard Edmiston,              None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Daniel R. Engstrom,            None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
James Robert Erven             None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
George R. Evans,               None
Senior Vice President and
Director of International
Equities
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Edward N. Everett,             None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kathy Faber,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David Falicia,                 Assistant   Secretary   (as  of  July   2004)  of
Assistant Vice President       HarbourView Asset Management Corporation.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Thomas Farrell,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Emmanuel Ferreira,             None
Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Ronald H. Fielding,            Vice President of  OppenheimerFunds  Distributor,
Senior Vice President;         Inc.;  Director of ICI Mutual Insurance  Company;
Chairman of the Rochester      Governor of St. John's  College;  Chairman of the
Division                       Board of  Directors  of  International  Museum of
                               Photography at George Eastman House.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Bradley G. Finkle,             Formerly Head of Business  Management/Proprietary
Vice President                 Distribution   at  Citigroup   Asset   Management
                               (August 1986-September 2004).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian Finley,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John E. Forrest,               Senior   Vice   President   of   OppenheimerFunds
Senior Vice President          Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jordan Hayes Foster,           Vice   President  of  OFI   Institutional   Asset
Vice President                 Management, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David Foxhoven,                Assistant  Vice  President  of   OppenheimerFunds
Vice President                 Legacy Program.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Colleen M. Franca,             None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Dominic Freud,                 None
Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Dan Gagliardo,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Hazem Gamal,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Seth Gelman,                   Formerly  an  Associate  in the Asset  Management
Vice President                 Legal   Department   at   Goldman   Sachs  &  Co.
                               (February 2003-August 2004).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Subrata Ghose,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Charles W. Gilbert,            None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Phillip S. Gillespie,          Formerly  First Vice  President of Merrill  Lynch
Senior Vice President &        Investment Management (2001 to September 2004).
Deputy General Counsel

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Alan C. Gilston,               None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Jill E. Glazerman,             None
Senior Vice President

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

Benjamin J. Gord,              Vice  President of HarbourView  Asset  Management
Vice President                 Corporation  and  of  OFI   Institutional   Asset

                               Management, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Laura Granger,                 None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert B. Grill,               None
Senior Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert Haley,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Marilyn Hall,                  None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kelly Haney,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Steve Hauenstein,              None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Thomas B. Hayes,               None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Jennifer Heathwood,            None
Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Dennis Hess,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Joseph Higgins,                Vice   President  of  OFI   Institutional   Asset
Vice President                 Management, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Dorothy F. Hirshman,           None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Daniel Hoelscher,              None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Edward Hrybenko,               Vice President of  OppenheimerFunds  Distributor,
Vice President                 Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Scott T. Huebl,                Assistant  Vice  President  of   OppenheimerFunds
Vice President                 Legacy Program.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Margaret Hui,                  None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Huttlin,                  Senior   Vice   President    (Director   of   the
Vice President                 International  Division)  (since January 2004) of
                               OFI   Institutional   Asset   Management,   Inc.;
                               Director  (since  June 2003) of  OppenheimerFunds
                               (Asia) Limited
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
James G. Hyland,               None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Steve P. Ilnitzki,             Vice President of  OppenheimerFunds  Distributor,
Senior Vice President          Inc.;   Senior  Vice  President  of  OFI  Private
                               Investments, Inc.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kelly Bridget Ireland,         Vice   President    (since   January   2004)   of
Vice President                 OppenheimerFunds   Distributor   Inc.   Formerly,
                               Director  of  INVESCO  Distributors  Inc.  (April
                               2000-December 2003).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kathleen T. Ives,              Vice   President  and   Assistant   Secretary  of
Vice President, Senior         OppenheimerFunds     Distributor,     Inc.    and
Counsel and Assistant          Shareholder  Services,  Inc.; Assistant Secretary
Secretary                      of  Centennial  Asset   Management   Corporation,
                               OppenheimerFunds  Legacy Program and  Shareholder
                               Financial Services, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
William Jaume,                 Senior  Vice  President  of   HarbourView   Asset
Vice President                 Management   Corporation  and  OFI  Institutional
                               Asset  Management,  Inc.;  Director  of OFI Trust
                               Company.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Frank V. Jennings,             None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Jennings,                 None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Michael Johnson,          None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Lisa Kadehjian,                Formerly Vice President,  Compensation Manager at
Assistant Vice President       The  Bank  of New  York  (November  1996-November
                               2004).

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

Charles Kandilis,              None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lynn O. Keeshan,               Assistant  Treasurer of  OppenheimerFunds  Legacy
Senior Vice President          Program
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Thomas W. Keffer,              None
Senior Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Cristina J. Keller,            Vice President of  OppenheimerFunds  Distributor,
Vice President                 Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael Keogh,                 Vice President of  OppenheimerFunds  Distributor,
Vice President                 Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Martin S. Korn,                Formerly  a  Senior  Vice  President  at  Bank of
Senior Vice President          America   (Wealth   and   Investment   Management
                               Technology Group) (March 2002-August 2004).

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

Dimitrios Kourkoulakos,        None
Senior Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian Kramer,                  None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Paul Kunz,                     None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lisa Lamentino,                None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Tracey Lange,                  Vice President of  OppenheimerFunds  Distributor,
Vice President                 Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Jeffrey P. Lagarce,            President  and  Chief  Marketing  Officer  of OFI
Senior Vice President          Institutional   Asset  Management,   Inc.  as  of
                               January    2005.    Formerly    Executive    Vice
                               President-Head  of Fidelity  Tax-Exempt  Services
                               Business   at   Fidelity    Investments   (August
                               1996-January 2005).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Latino,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kristina Lawrence,             Formerly     Assistant    Vice    President    of
Vice President                 OppenheimerFunds,   Inc.   (November   2002-March
                               2004).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Gayle Leavitt,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Christopher M. Leavy,          None
Senior Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Randy Legg,                    Formerly   an   associate    with   Dechert   LLP
Vice President & Assistant     (September 1998-January 2004).
Counsel

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Laura Leitzinger,              Senior Vice  President of  Shareholder  Services,
Vice President                 Inc.;  Vice  President of  Shareholder  Financial
                               Services, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Justin Leverenz,               Formerly,   a   research/technology   analyst  at
Vice President                 Goldman Sachs, Taiwan (May 2002-May 2004)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael S. Levine,             None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Gang Li,                       None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Shanquan Li,                   None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Julie A. Libby,                Formerly   Executive  Vice  President  and  Chief
Senior Vice President          Operating Officer at Fred Alger Management,  Inc.
                               (July 1996 - February 2005)

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

Daniel Lifshey,                Formerly a  Marketing  Manager at PIMCO  Advisors
Assistant Vice President       (January 2002-September 2004).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mitchell J. Lindauer,          None
Vice President & Assistant
General Counsel
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Bill Linden,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Malissa B. Lischin,            Assistant  Vice  President  of   OppenheimerFunds
Vice President                 Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David P. Lolli,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Daniel G. Loughran             None
Vice President: Rochester
Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Patricia Lovett,               Vice   President   of    Shareholder    Financial
Vice President                 Services,  Inc.  and  Senior  Vice  President  of
                               Shareholder Services, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Steven Lucaccini,              Formerly  Director and High Yield  Analyst at UBS
Assistant Vice President       Global Asset  Management  (November  2001 - April
                               2005)

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Dongyan Ma,                    Formerly  an  Assistant   Vice   President   with
Assistant Vice President       Standish   Mellon   Asset   Management   (October
                               2001-October 2003).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Steve Macchia,                 None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Mark H. Madden,                Formerly   Senior  Vice   President   and  Senior
Vice President                 Portfolio Manager with Pioneer Investments,  Inc.
                               (July 1990-July 2004).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kathleen Mandzij,              Formerly   Marketing   Manager   -  Sales   Force
Assistant Vice President       Marketing     (March     2003-June    2004)    of
                               OppenheimerFunds, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jerry Mandzij,                 None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Angelo G. Manioudakis          Senior  Vice  President  of   HarbourView   Asset
Senior Vice President          Management  Corporation and of OFI  Institutional
                               Asset Management, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
LuAnn Mascia,                  Vice President of  OppenheimerFunds  Distributor,
Vice President                 Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Susan Mattisinko,              Assistant    Secretary   of   HarbourView   Asset
Vice President & Associate     Management  Corporation,  OppenheimerFunds Legacy
Counsel                        Program,  OFI  Private  Investments,   Inc.,  OFI
                               Institutional Asset Management,  Inc., Centennial
                               Asset  Management  Corporation,  Oppenheimer Real
                               Asset  Management,  Inc.  and Trinity  Investment
                               Management Corporation.  Formerly an Associate at
                               Sidley  Austin Brown and Wood LLP (1995 - October
                               2003).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Elizabeth McCormack,           Vice   President  and   Assistant   Secretary  of
Vice President                 HarbourView Asset Management Corporation.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Joseph McGovern,               None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Charles L. McKenzie,           Chairman of the Board, Director,  Chief Executive
Senior Vice President          Officer  and  President  of  OFI  Trust  Company;
                               Chairman,   Chief   Executive   Officer,   Senior
                               Managing    Director    and   Director   of   OFI
                               Institutional   Asset  Management,   Inc.;  Chief
                               Executive  Officer,  President,  Senior  Managing
                               Director  and  Director  of   HarbourView   Asset
                               Management Corporation;  Chairman,  President and
                               Director   of   Trinity   Investment   Management
                               Corporation

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

Michael Medev,                 None
Assistant Vice President

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

Lucienne Mercogliano,          None
Assistant Vice President

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

Jason Meshnick,                Formerly  Financial  Analyst  at Wall  Street  On
Assistant Vice President       Demand (April 2003 - May 2005)

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Andrew J. Mika,                None
Senior Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Nikolaos D. Monoyios,          None
Senior Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Charles Moon,                  Vice  President of HarbourView  Asset  Management
Vice President                 Corporation  and  of  OFI   Institutional   Asset
                               Management, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

John V. Murphy,                President and Management  Director of Oppenheimer
Chairman, President, Chief     Acquisition  Corp.;  President  and  Director  of
Executive Officer & Director   Oppenheimer   Partnership   Holdings,   Inc.  and
                               Oppenheimer   Real   Asset   Management,    Inc.;
                               Chairman  and Director of  Shareholder  Services,
                               Inc. and Shareholder  Financial  Services,  Inc.;
                               Director   of   Centennial    Asset    Management
                               Corporation,  OppenheimerFunds Distributor, Inc.,
                               Institutional  Asset  Management,  Inc.,  Trinity
                               Investment   Management   Corporation,    Tremont
                               Capital  Management,   Inc.,   HarbourView  Asset
                               Management    Corporation    and   OFI    Private
                               Investments,  Inc.;  Executive  Vice President of
                               Massachusetts   Mutual  Life  Insurance  Company;
                               Director  of  DLB  Acquisition   Corporation;   a
                               member  of  the  Investment  Company  Institute's
                               Board of Governors.

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

Meaghan Murphy,                Formerly  Marketing  Professional,  RFP Writer at
Assistant Vice President       JP Morgan  Fleming Asset  Management  (May 2002 -
                               October 2004).

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

Suzanne Murphy,                Formerly  (until December 2003) a Vice President,
Vice President                 Senior Marketing Manager with Citigroup.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Thomas J. Murray,              None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kenneth Nadler,                None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Christina Nasta,               Vice President of  OppenheimerFunds  Distributor,
Vice President                 Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Richard Nichols,               None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
William Norman,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

James B. O'Connell,            Formerly   a   Senior    Designer    Manager   of
Assistant Vice President       OppenheimerFunds,  Inc.  (April  2002 -  December
                               2004).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Matthew O'Donnell,             None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

John O'Hare,                   None
Vice President

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

John J. Okray,                 Formerly   Vice   President,    Head   of   Trust
Vice President                 Operations at Lehman Brothers (June  2004-October
                               2004)  prior to which  he was an  Assistant  Vice
                               President,   Director   of  Trust   Services   at
                               Cambridge Trust Company (October 2002-June 2004).

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

Lerae A. Palumbo,              None
Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David P. Pellegrino,           None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Allison C. Pells,              None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert H. Pemble,              None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Lori L. Penna,                 Formerly  an RFP  Manager/Associate  at  JPMorgan
Assistant Vice President       Chase & Co. (June 2001-September 2004).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian Petersen,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Marmeline Petion-Midy,         Formerly a Senior Financial  Analyst with General
Assistant Vice President       Motors,  NY Treasurer's  Office (July  2000-Augut
                               2004).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David Pfeffer,                 Senior  Vice  President  of   HarbourView   Asset
Senior Vice President and      Management   Corporation   since  February  2004.
Chief Financial Officer        Formerly,  Director and Chief  Financial  Officer
                               at   Citigroup   Asset    Management    (February
                               2000-February 2004).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
James F. Phillips,             None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Scott Phillips,                Formerly   Vice   President   at  Merrill   Lynch
Vice President                 Investment Management (June 2000-July 2004).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Gary Pilc,                     None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Nicolas Pisciotti,             Formerly  Assistant  Vice President at ING (April
Assistant Vice President       2002 - May 2005)

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

Jason Pizzorusso,              None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David Poiesz,                  Formerly  a Senior  Portfolio  Manager at Merrill
Senior Vice President, Head    Lynch (October  2002-May 2004).  Founding partner
of Growth Equity Investments   of  RiverRock,   a  hedge  fund  product   (April
                               1999-July 2001).
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Jeffrey Portnoy,               None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Raghaw Prasad,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David Preuss,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jane C. Putnam,                None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael E. Quinn,              None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Julie S. Radtke,               None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Norma J. Rapini,               None
Assistant Vice President:
Rochester Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Corry E. Read,                 None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian N. Reid,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Marc Reinganum,                None
Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jill Reiter,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Claire Ring,                   None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David Robertson,               Senior   Vice   President   of   OppenheimerFunds
Senior Vice President          Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Antoinette Rodriguez,          None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Stacey Roode,                  None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jeffrey S. Rosen,              None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Stacy Roth,                    None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
James H. Ruff,                 President   and   Director  of   OppenheimerFunds
Executive Vice President       Distributor,    Inc.   and    Centennial    Asset
                               Management Corporation;  Executive Vice President
                               of OFI Private Investments, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Adrienne Ruffle,               Formerly an Associate  with Sidley Austin Brown &
Assistant Vice President and   Wood LLP (September 2002-February 2005).
Assistant Counsel

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kim Russomanno,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Timothy Ryan,                  Formerly   a   research   analyst  in  the  large
Vice President                 equities group at Credit Suisse Asset  Management
                               (August 2001-June 2004)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Rohit Sah,                     None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Valerie Sanders,               None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Karen Sandler,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Rudi W. Schadt,                None
Assistant Vice President

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Ellen P. Schoenfeld,           None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Maria Schulte,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Scott A. Schwegel,             None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Allan P. Sedmak                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jennifer L. Sexton,            Senior    Vice    President    of   OFI   Private
Vice President                 Investments, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Navin Sharma,                  None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Bonnie Sherman,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David C. Sitgreaves,           None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Edward James Sivigny           None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Enrique H. Smith,              None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Louis Sortino,                 None
Assistant Vice President:
Rochester Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Keith J. Spencer,              None
Senior Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Marco Antonio Spinar,          None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Richard A. Stein,              None
Vice President: Rochester
Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Arthur P. Steinmetz,           Senior  Vice  President  of   HarbourView   Asset
Senior Vice President          Management Corporation.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jennifer Stevens,              None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John P. Stoma,                 Senior   Vice   President   of   OppenheimerFunds
Senior Vice President          Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael Stricker,              Vice President of Shareholder Services, Inc.
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Deborah A. Sullivan,           Secretary of OFI Trust Company.
Vice President & Assistant
Counsel
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael Sussman,               Vice President of  OppenheimerFunds  Distributor,
Vice President                 Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Brian C. Szilagyi,             Director of Financial  Reporting  and  Compliance
Assistant Vice President       at First Data Corporation (April 2003-June 2004).

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Martin Telles,                 Senior   Vice   President   of   OppenheimerFunds
Senior Vice President          Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Paul Temple,                   None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jeaneen Terrio,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Vincent Toner,                 None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Keith Tucker,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Cameron Ullyat,                None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Angela Uttaro,                 None
Assistant Vice President:
Rochester Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Mark S. Vandehey,              Vice President of  OppenheimerFunds  Distributor,
Senior Vice President and      Inc.,  Centennial  Asset  Management  Corporation
Chief Compliance Officer       and Shareholder  Services,  Inc.; Chief Financial
                               Officer   of   HarbourView    Asset    Management
                               Corporation,  Oppenheimer  Partnership  Holdings,
                               Inc.,  Oppenheimer Real Asset  Management,  Inc.,
                               Shareholder     Financial     Services,     Inc.,
                               OppenheimerFunds   Legacy  Program,  OFI  Private
                               Investments,  Inc.,  OFI  Trust  Company  and OFI
                               Institutional  Asset  Management,  Inc.  Formerly
                               (until    March   2004)   Vice    President    of
                               OppenheimerFunds, Inc.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Maureen Van Norstrand,         None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Nancy Vann,                    Formerly  Assistant  General  Counsel  at Reserve
Vice President and Assistant   Management  Company,   Inc.  (April  to  December
Counsel                        2004);  attorney  at Sidley  Austin  Brown & Wood
                               LLP (October 1997 - April 2004).

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

Rene Vecka,                    None
Assistant Vice President,
Rochester Division

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

Vincent Vermette,              Assistant  Vice  President  of   OppenheimerFunds
Assistant Vice President       Distributor, Inc.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Phillip F. Vottiero,           None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lisa Walsh,                    None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Teresa M. Ward,                Vice President of  OppenheimerFunds  Distributor,
Vice President                 Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jerry A. Webman,               Senior  Vice  President  of   HarbourView   Asset
Senior Vice President          Management Corporation.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Christopher D. Weiler,         None
Vice President: Rochester
Division
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Adam Weiner,                   None
Assistant Vice President

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

Barry D. Weiss,                Vice  President of HarbourView  Asset  Management
Vice President                 Corporation  and of Centennial  Asset  Management
                               Corporation.

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

Melissa Lynn Weiss,            None
Vice President & Associate
Counsel

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Christine Wells,               None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Joseph J. Welsh,               Vice  President of HarbourView  Asset  Management
Vice President                 Corporation.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Diederick Wermolder,           Director of  OppenheimerFunds  International Ltd.
Senior Vice President          and  OppenheimerFunds  plc  and  OppenheimerFunds
                               (Asia) Limited;  Senior Vice President  (Managing
                               Director of the  International  Division)  of OFI
                               Institutional Asset Management, Inc..

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Catherine M. White,            Assistant  Vice  President  of   OppenheimerFunds
Assistant Vice President       Distributor,   Inc.;   member  of  the   American
                               Society of Pension Actuaries (ASPA) since 1995.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Annabel Whiting,               None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
William L. Wilby,              None
Senior Vice President and
Senior Investment Officer,
Director of Equities
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Donna M. Winn,                 President,  Chief Executive  Officer and Director
Senior Vice President          of OFI Private  Investments,  Inc.;  Director and
                               President  of  OppenheimerFunds  Legacy  Program;
                               Senior   Vice   President   of   OppenheimerFunds
                               Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Philip Witkower,               Senior   Vice   President   of   OppenheimerFunds
Senior Vice President          Distributor, Inc.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian W. Wixted,               Treasurer   of   HarbourView   Asset   Management
Senior Vice President and      Corporation;    OppenheimerFunds    International
Treasurer                      Ltd.,  Oppenheimer  Partnership  Holdings,  Inc.,
                               Oppenheimer   Real   Asset   Management,    Inc.,
                               Shareholder    Services,     Inc.,    Shareholder
                               Financial    Services,    Inc.,    OFI    Private
                               Investments,   Inc.,  OFI   Institutional   Asset
                               Management,   Inc.,   OppenheimerFunds   plc  and
                               OppenheimerFunds  Legacy  Program;  Treasurer and
                               Chief  Financial  Officer  of OFI Trust  Company;
                               Assistant  Treasurer of  Oppenheimer  Acquisition
                               Corp.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Carol E. Wolf,                 Senior  Vice  President  of   HarbourView   Asset
Senior Vice President          Management  Corporation  and of Centennial  Asset
                               Management  Corporation;  serves  on the Board of
                               the Colorado Ballet.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kurt Wolfgruber,               Director  of Tremont  Capital  Management,  Inc.,
Executive Vice President,      HarbourView Asset Management  Corporation and OFI
Chief Investment Officer and   Institutional Asset Management,  Inc. (since June
Director                       2003)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Caleb C. Wong,                 None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Edward C. Yoensky,             None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lucy Zachman,                  None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert G. Zack                 General Counsel and Director of  OppenheimerFunds
Executive Vice President and   Distributor,  Inc.; General Counsel of Centennial
General Counsel                Asset   Management   Corporation;   Senior   Vice

                               President  and  General  Counsel  of  HarbourView
                               Asset    Management     Corporation    and    OFI
                               Institutional  Asset  Management,   Inc.;  Senior
                               Vice  President,  General Counsel and Director of
                               Shareholder     Financial     Services,     Inc.,
                               Shareholder    Services,    Inc.,   OFI   Private
                               Investments,  Inc.  and OFI Trust  Company;  Vice
                               President    and    Director    of    Oppenheimer
                               Partnership   Holdings,    Inc.;   Director   and
                               Assistant Secretary of  OppenheimerFunds  plc and
                               OppenheimerFunds  International  Ltd.;  Secretary
                               and General  Counsel of  Oppenheimer  Acquisition
                               Corp.;   Director  of   Oppenheimer   Real  Asset
                               Management,   Inc.  and  OppenheimerFunds  (Asia)
                               Limited);   Vice  President  of  OppenheimerFunds
                               Legacy Program.

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Neal A. Zamore,                None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mark D. Zavanelli,             None
Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Alex Zhou,                     None
Assistant Vice President
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Arthur J. Zimmer,              Senior  Vice  President  of   HarbourView   Asset
Senior Vice President          Management Corporation.
---------------------------------------------------------------------------------


The Oppenheimer Funds include the following:

Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust

Limited Term New York Municipal Fund (a series of Rochester Portfolio Series)
OFI Tremont Core Strategies Hedge Fund
OFI Tremont Market Neutral Hedge Fund
Oppenheimer AMT-Free Municipals
Oppenheimer AMT-Free New York Municipals
Oppenheimer Balanced Fund
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Capital Income Fund
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Convertible Securities Fund (a series of Bond Fund Series)
Oppenheimer Core Bond Fund (a series of Oppenheimer Integrity Funds)
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Dividend Growth Fund
Oppenheimer Emerging Growth Fund
Oppenheimer Emerging Technologies Fund
Oppenheimer Enterprise Fund
Oppenheimer Equity Fund, Inc.

Oppenheimer Global Fund
Oppenheimer Global Opportunities Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer High Yield Fund
Oppenheimer International Bond Fund
Oppenheimer International Growth Fund
Oppenheimer International Large-Cap Core Fund (a series of Oppenheimer
International Large-

     Cap Core Trust)

Oppenheimer International Small Company Fund
Oppenheimer International Value Fund (a series of Oppenheimer International
Value Trust)
Oppenheimer Limited Term California Municipal Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Limited Term Municipal Fund (a series of Oppenheimer Municipal
Fund)
Oppenheimer Main Street Fund (a series of Oppenheimer Main Street Funds, Inc.)
Oppenheimer Main Street Opportunity Fund
Oppenheimer Main Street Small Cap Fund
Oppenheimer MidCap Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-State Municipal Trust (3 series):
     Oppenheimer New Jersey Municipal Fund
     Oppenheimer Pennsylvania Municipal Fund
     Oppenheimer Rochester National Municipals

Oppenheimer Portfolio Series (4 series)
     Active Allocation Fund
     Aggressive Investor Fund
     Conservative Investor Fund
     Moderate Investor Fund

Oppenheimer Principal Protected Main Street Fund (a series of Oppenheimer
Principal
     Protected Trust)
Oppenheimer Principal Protected Main Street Fund II (a series of Oppenheimer
Principal
     Protected Trust II)
Oppenheimer Principal Protected Main Street Fund III (a series of Oppenheimer
Principal
     Protected Trust III)
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest For Value Funds (3 series)

     Oppenheimer Quest Balanced Fund
     Oppenheimer Quest Opportunity Value Fund
     Oppenheimer Small- & Mid- Cap Value Fund

Oppenheimer Quest International Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Real Asset Fund
Oppenheimer Real Estate Fund
Oppenheimer Select Value Fund
Oppenheimer Senior Floating Rate Fund
Oppenheimer Series Fund, Inc. (2 series):
     Oppenheimer Disciplined Allocation Fund
     Oppenheimer Value Fund

Oppenheimer Strategic Income Fund
Oppenheimer Total Return Bond Fund
Oppenheimer Tremont Market Neutral Fund, LLC
Oppenheimer Tremont Opportunity Fund, LLC
Oppenheimer U.S. Government Trust
Oppenheimer Variable Account Funds (11 series):
     Oppenheimer Aggressive Growth Fund/VA
     Oppenheimer Balanced Fund/VA
     Oppenheimer Capital Appreciation Fund/VA
     Oppenheimer Core Bond Fund/VA
     Oppenheimer Global Securities Fund/VA
     Oppenheimer High Income Fund/VA
     Oppenheimer Main Street Fund/VA
     Oppenheimer Main Street Small Cap Fund/VA
     Oppenheimer Money Fund/VA
     Oppenheimer Strategic Bond Fund/VA
     Oppenheimer Value Fund/VA

Panorama Series Fund, Inc. (4 series):
     Government Securities Portfolio
     Growth Portfolio
     Oppenheimer International Growth Fund/VA
     Total Return Portfolio
Rochester Fund Municipals

The address of the  Oppenheimer  funds  listed  above,  Shareholder  Financial
Services,  Inc.,  Shareholder  Services,  Inc.,   OppenheimerFunds   Services,
Centennial   Asset   Management   Corporation,   Centennial   Capital   Corp.,
Oppenheimer Real Asset Management,  Inc. and  OppenheimerFunds  Legacy Program
is 6803 South Tucson Way, Centennial, Colorado 80112-3924.

The address of OppenheimerFunds,  Inc.,  OppenheimerFunds  Distributor,  Inc.,
HarbourView Asset Management  Corporation,  Oppenheimer  Partnership Holdings,
Inc.,  Oppenheimer  Acquisition  Corp.,  OFI Private  Investments,  Inc.,  OFI
Institutional  Asset  Management,  Inc. and  Oppenheimer  Trust Company is Two
World Financial Center, 225 Liberty Street, New York, NY 10281-1008.

The address of Tremont  Advisers,  Inc. is 555 Theodore  Fremd  Avenue,  Suite
206-C, Rye, New York 10580.

The  address  of  OppenheimerFunds  International  Ltd.  is Bloc C, Irish Life
Center, Lower Abbey Street, Dublin 1, Ireland.

The address of Trinity Investment  Management  Corporation is 301 North Spring
Street, Bellefonte, Pennsylvania 16823.



Item 27. Principal Underwriter
------------------------------


(a)   OppenheimerFunds Distributor, Inc. is the Distributor of the
Registrant's shares. It is also the Distributor of each of the other
registered open-end investment companies for which OppenheimerFunds, Inc. is
the investment adviser, as described in Part A and B of this Registration
Statement and listed in Item 26(b) above (except Oppenheimer Multi-Sector
Income Trust and Panorama Series Fund, Inc.) and for MassMutual Institutional
Funds.

(b)   The directors and officers of the Registrant's principal underwriter
are:
---------------------------------------------------------------------------------
Name & Principal                Position & Office         Position and Office
Business Address                with Underwriter          with Registrant
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Timothy Abbhul(1)               Vice President            None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert Agan(1)                  Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Janette Aprilante(2)            Secretary                 None

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

James Barker                    Vice President            Nones
2901B N. Lakewood Avenue

Chicago, IL 60657
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kathleen Beichert(1)            Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Rocco Benedetto(2)              Assistant Vice President  None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert J. Bishop(1)             Treasurer                 None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Douglas S. Blankenship          Vice President            None
10407 Cromdale Manor Ct.

Springs, TX 77379
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Tracey Blinzler(1)              Assistant Vice President  None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

David A. Borrelli               Vice President            None
105 Black Calla Ct.

San Ramon, CA 94583
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Jeffrey R. Botwinick(2)         Vice President            None

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

Michelle Brennan(2)             Vice President            None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
L. Scott Brooks(2)              Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kevin E. Brosmith               Senior Vice President     None
5 Deer Path
South Natlick, MA 01760
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jeffrey W. Bryan                Vice President            None
1048 Malaga Avenue
Coral Gables, FL 33134
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Patrick Campbell(1)             Assistant Vice President  None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Andrew Chonofsky                Vice President            None
300 West Fifth Street, Apt. 118
Charlotte, NC 28202

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Melissa Clayton(2)              Assistant Vice President  None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Neev Crane                      Vice President            None
1530 Beacon Street, Apt. #1403
Brookline, MA 02446

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

Julian C. Curry                 Vice President            None
5801 Nicholson Lane, Suite 420
North Bethesda, MD 20852

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jeffrey D. Damia(2)             Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Davis(2)                   Assistant Vice President  None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Stephen J. Demetrovits(2)       Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Joseph A. DiMauro               Vice President            None
522 Lakeland Avenue
Grosse Pointe, MI 48230
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Steven Dombrower(2)             Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
George P. Dougherty             Vice President            None
328 Regency Drive
North Wales, PA 19454
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Ryan C. Drier                   Vice President            None
3307 Park Ridge Lane NE
Grand Rapids, MI 49525

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

Cliff H. Dunteman               Vice President            None
N 53 W 27761 Bantry Road
Sussex, WI 53089-45533

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

Hillary Eigen(2)                Assistant Vice President  None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Eiler(2)                   Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kent M. Elwell                  Vice President            None
35 Crown Terrace
Yardley, PA 19067
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Gregg A. Everett                Vice President            None
4328 Auston Way
Palm Harbor, FL 34685-4017
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

George R. Fahey(1)              Senior Vice President     None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Eric C. Fallon                  Vice President            None
10 Worth Circle
Newton, MA 02458
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Deanna Farrugia(1)              Vice President            None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Joseph Fernandez                Vice President            None
1717 Richbourg Park Drive
Brentwood, TN 37027
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mark J. Ferro(2)                Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Ronald H. Fielding(3)           Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Eric P. Fishel                  Vice President            None
725 Boston Post Rd., #12
Sudbury, MA 01776

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Patrick W. Flynn (1)            Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John E. Forrest(2)              Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

John ("J") Fortuna(2)           Vice President            None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lucio Giliberti                 Vice President            None
6 Cyndi Court
Flemington, NJ 08822
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Raquel Granahan(2)              Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Ralph Grant                     Senior Vice President     None
10 Boathouse Close
Mt. Pleasant, SC 29464
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Kahle Greenfield(2)             Vice President            None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael D. Guman                Vice President            None
3913 Pleasant Avenue
Allentown, PA 18103
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

James E. Gunther                Vice President            None
178 Canterbury Turn
Lancaster, PA 17601

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kevin J. Healy(2)               Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Kevin Hennessey                 Vice President            None
8634 Forest Run Lane
Orlando, FL 32836

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

Elyse R. Jurman Herman          Vice President            None
5486 NW 42 Avenue
Boca Raton, FL 33496

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

Suzanne Heske                   Vice President            None
4146 22nd Street
San Francisco, CA 94114

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

Wendy G. Hetson(2)              Vice President            None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
William E. Hortz(2)             Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Edward Hrybenko(2)              Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian F. Husch(2)               Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Stephen Ilnitzki(2)             Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kathleen T. Ives(1)             Vice President &          Assistant Secretary
                                Assistant Secretary
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Shonda Rae Jaquez(2)            Assistant Vice President  None

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

Nivan Jaleeli                   Vice President            None
13622 E. Geronimo Rd.
Scottsdale, AZ 85259

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Eric K. Johnson(1)              Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mark D. Johnson                 Vice President            None
15792 Scenic Green Court
Chesterfield, MO 63017
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Christina J. Keller(2)          Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael Keogh(2)                Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lisa Klassen(1)                 Assistant Vice President  None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Richard Klein                   Senior Vice President     None
4820 Fremont Avenue South
Minneapolis, MN 55419

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Richard Knott(1)                Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Brent A. Krantz                 Senior Vice President     None
61500 Tam McArthur Loop
Bend, OR 97702

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David T. Kuzia                  Vice President            None
19102 Miranda Circle
Omaha, NE 68130
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Tracey Lange(2)                 Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Paul R. LeMire                  Vice President            None
7 Cormorant Drive
Middletown, NJ 07748

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Eric J. Liberman(2)             Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Malissa Lischin(2)              Assistant Vice President  None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

James V. Loehle(2)              Vice President            None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Thomas Loncar(1)                Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Montana W. Low                  Vice President            None
1636 N. Wells Street, Apt. 3411

Chicago, IL 60614
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Craig Lyman                     Vice President            None
3930 Swenson St. #502
Las Vegas, NV 89119

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John J. Lynch                   Vice President            None
6325 Bryan Parkway
Dallas, TX 75214
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Michael Malik                   Vice President            None
546 Idylberry Road
San Rafael, CA 94903

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Steven C. Manns                 Vice President            None
1627 N. Hermitage Avenue
Chicago, IL 60622
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Todd A. Marion(2)               Vice President            None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
LuAnn Mascia(2)                 Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Theresa-Marie Maynier           Vice President            None
2421 Charlotte Drive
Charlotte, NC 28203
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

John C. McDonough               Vice President            None
2 Leland Ct.
Chevy Chase, MD 20815

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

Kent C. McGowan                 Vice President            None
9510 190th Place SW
Edmonds, WA 98020

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

Brian F. Medina(1)              Vice President            None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Daniel Melehan                  Vice President            None
906 Bridgeport Court
San Marcos, CA 92069
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mark Mezzanotte                 Vice President            None
16 Cullen Way
Exeter, NH 03833
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Clint Modler(1)                 Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert Moser(1)                 Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David W. Mountford              Vice President            None
7820 Banyan Terrace
Tamarac, FL 33321
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Gzim Muja                       Vice President            None
269 S. Beverly Dr. #807
Beverly Hills, CA 90212

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

John V. Murphy(2)               Director                  President & Trustee

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Wendy Jean Murray               Vice President            None
32 Carolin Road
Upper Montclair, NJ 07043
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

John S. Napier                  Vice President            None
17 Hillcrest Ave.
Darien, CT 06820

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Christina Nasta(2)              Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kevin P. Neznek(2)              Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Bradford Norford                Vice President            None
3914 Easton Sq. Pl.
Columbus, OH 43219

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Alan Panzer                     Vice President            None
6755 Ridge Mill Lane
Atlanta, GA 30328
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Michael Park(2)                 Vice President            None

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

Brian C. Perkes                 Vice President            None
6 Lawton Ct.
Frisco, TX 75034

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

Charles K. Pettit(2)            Vice President            None

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

Andrew Pizza(2)                 Vice President            None

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

Elaine M. Puleo-Carter(2)       Senior Vice President     None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Minnie Ra                       Vice President            None
100 Dolores Street, #203
Carmel, CA 93923
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Dusting Raring                  Vice President            None
27 Blakemore Drive

Ladera Ranch, CA 92797
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Michael A. Raso(2)              Vice President            None

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

Richard Rath                    Vice President            None
46 Mt. Vernon Ave.

Alexandria, VA 22301
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Ruxandra Risko(2)               Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David R. Robertson(2)           Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Nicole Robbins(2)               Vice President            None

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

Ian M. Roche                    Vice President            None
7070 Bramshill Circle
Bainbridge, OH 44023

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kenneth A. Rosenson             Vice President            None
24753 Vantage Pt. Terrace
Malibu, CA 90265
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
James H. Ruff(2)                President & Director      None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Matthew Rutig                   Vice President            None
199 North Street
Ridgefield, CT 06877
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
William R. Rylander             Vice President            None
85 Evergreen Road
Vernon, CT 06066
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Thomas Sabow                    Vice President            None
6617 Southcrest Drive
Edina, MN 55435
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Saunders                   Vice President            None
911 North Orange Avenue #401
Orlando, FL 32801
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jill Schmitt(2)                 Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Thomas Schmitt(2)               Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
William Schories(2)             Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Charles F. Scully               Vice President            None
125 Cypress View Way
Apex, NC 27502

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Eric Sharp                      Vice President            None
862 McNeill Circle
Woodland, CA 95695
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

William Sheluck(2)              Vice President            None

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

Debbie A. Simon                 Vice President            None
55 E. Erie St., #4404
Chicago, IL 60611

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

Bryant Smith                    Vice President            None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Douglas Bruce Smith             Vice President            None
8927 35th Street W.
University Place, WA 98466
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

John Spensley                   Vice President            None
2000 Rhettsbury Street

Carmel, IN 46032
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Alfred St. John(2)              Vice President            None

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

Bryan Stein                     Vice President            None
8 Longwood Rd.
Voorhees, NJ 08043

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Stoma(2)                   Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Wayne Strauss(3)                Assistant Vice President  None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian C. Summe                  Vice President            None
2479 Legends Way
Crestview Hills, KY 41017
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael Sussman(2)              Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

George T. Sweeney               Senior Vice President     None
5 Smokehouse Lane

Hummelstown, PA 17036
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
James Taylor(2)                 Assistant Vice President  None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Martin Telles(2)                Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David G. Thomas                 Vice President            None
16628 Elk Run Court
Leesburg, VA 20176
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Barrie L. Tiedemann             Vice President            None
2592 S. Belvoir Blvd.
University Heights, OH 44118
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Mark S. Vandehey(1)             Vice President and Chief  Vice President and
                                Compliance Officer        Chief Compliance
                                                          Officer

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

Vincent Vermete(2)              Assistant Vice President  None

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

Elaine Villas(2)                Assistant Vice President  None

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

Rachel Walkey(2)                Assistant Vice President  None

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

Cynthia Walloga(2)              Vice President            None

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kenneth Lediard Ward            Vice President            None
1400 Cottonwood Valley Circle
N.
Irving, TX 75038
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Teresa Ward(1)                  Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael J. Weigner              Vice President            None
4905 W. San Nicholas Street
Tampa, FL 33629
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Donn Weise                      Vice President            None
3249 Earlmar Drive
Los Angeles, CA 90064
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Chris Werner(1)                 Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Catherine White(2)              Assistant Vice President  None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Donna Winn(2)                   Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Philip Witkower(2)              Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Cary Patrick Wozniak            Vice President            None
18808 Bravata Court
San Diego, CA 92128
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John Charles Young              Vice President            None
3914 Southwestern
Houston, TX 77005
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jill Zachman(2)                 Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert G. Zack(2)               General Counsel &         Secretary
                                Director
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Steven Zito(1)                  Vice President            None

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


(1)6803 South Tucson Way, Centennial, CO 80112-3924
(2)Two World Financial  Center,  225 Liberty Street,  11th Floor, New York, NY
10281-1008
(3)350 Linden Oaks, Rochester, NY 14623

(c)   Not applicable.


Item 28. Location of Accounts and Records
-----------------------------------------


The  accounts,  books  and  other  documents  required  to  be  maintained  by
Registrant  pursuant to Section  31(a) of the  Investment  Company Act of 1940
and rules  promulgated  thereunder are in the possession of  OppenheimerFunds,
Inc. at its offices at 6803 South Tucson Way, Centennial, Colorado 80112-3924.


Item 29. Management Services
----------------------------


Not applicable


Item 30. Undertakings
---------------------


Not applicable.






                                  SIGNATURES


Pursuant to the requirements of (the Securities Act and) the Investment
Company Act, the Fund  has duly caused this registration statement to be
signed on its behalf by the undersigned, duly authorized, in the City of New
York and State of New York on the 28th day of November, 2005.


                              Oppenheimer Multi-State Municipal Trust


                              By:  /s/ John V. Murphy*
                              ----------------------------------------------
                              John V. Murphy, President,
                              Principal Executive Officer & Trustee


Pursuant to the requirements of the Securities Act, this registration
statement has been signed below by the following persons in the capacities on
the dates indicated:


Signatures                   Title                       Date
----------                   -----                       ----

/s/ Clayton K. Yeutter*      Chairman of the

------------------           Board of Trustees           November 28, 2005
Clayton K. Yeutter

/s/Joseph Wikler             Vice Chairman of the        November 28, 2005
-------------------------    Board and Trustee
Joseph Wikler


/s/ John V. Murphy*          President, Principal

--------------------------   Executive Officer           November 28, 2005
John V. Murphy               & Trustee

/s/ Brian W. Wixted*         Treasurer, Principal        November 28, 2005
-------------------------    Financial and
Brian W. Wixted              Accounting Officer

/s/ Robert G. Galli*         Trustee                     November 28, 2005

-----------------------
Robert G. Galli


/s/ Phillip A. Griffiths*    Trustee                     November 28, 2005

---------------------------
Phillip A. Griffiths


/s/ Joel W. Motley*          Trustee                     November 28, 2005

------------------------
Joel W. Motley


/s/ Kenneth A. Randall*      Trustee                     November 28, 2005

----------------------------
Kenneth A. Randall


/s/ Peter I. Wold*           Trustee                     November 28, 2005

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

Peter I. Wold

/s/ Russell S. Reynolds, Jr.*                            Trustee  November
28, 2005

---------------------------------
Russell S. Reynolds, Jr.


*By: /s/ Mitchell J. Lindauer

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

Mitchell J. Lindauer, Attorney-in-Fact








                    Oppenheimer Multi-State Municipal Trust



                       Post-Effective Amendment No. 31

                          Registration No. 33-30198

EXHIBIT INDEX
-------------


Exhibit No.       Description
-----------       -----------




23 (d) (i)        Amended and Restated Investment Advisory Agreement

23 (d)(ii)        Amended and Restated Investment Advisory Agreement

23 (d)(iii)       Amended and Restated Investment Advisory Agreement