Oppenheimer Multi-State Municipal Trust

485BPOS 1 body.htm FORM N1-A, PROSPECTUSES, SAIS, PART C Oppenheimer Multi-State Municipal 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  /


                                    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)
[ X ] On November 28, 2005, pursuant to paragraph (b)
[   ] 60 days after filing pursuant to paragraph (a)(1)
[   ] On _________________, 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 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
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 Investment 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 Mainly 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 managers may consider selling a security if any of these
factors no longer applies 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 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
total 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 interest rates fall, the income the Fund
earns on its investments, and the Fund's distributions to shareholders, may
decline. 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.
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.
The Fund currently focuses on longer-term securities to seek higher income.
Therefore, its share prices may fluctuate more when interest rates change.

|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 by 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 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 investment objective.

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 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 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 9/30/05, the cumulative return (not
annualized) before taxes for Class A shares was 9.10%.
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 (or 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
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Lehman Brothers Municipal Bond
Index (reflects no deductions
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 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
shares, the contingent deferred sales charge of 5% (1-year) and 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 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 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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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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Expenses may vary in future years. "Other Expenses" include transfer agent
fees, custodial fees, accounting and legal expenses that the Fund pays. The
Transfer Agent has undertaken to voluntarily limit transfer agent 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 Fund's actual
expenses did not exceed this fee limitation during the fiscal year.

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.
2. 4. The Manager has voluntarily agreed to waive a portion of its
management fee so that "Management Fees" will not exceed 0.40% for each
class of shares. That voluntary undertaking will be withdrawn effective
January 1, 2006. After giving effect to the Manager's waiver, "Management
Fees" for the fiscal year ended July 31, 2005 were 0.39% for all classes
and the "Total Annual Operating Expenses" were 0.71% for Class A, 1.48%
for Class B and 1.47% for Class C.

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. The Fund selects
investments without regard to this type of tax treatment.

|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 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. Although the obligation may be secured by the leased equipment or
facilities, the disposition of the property in the event of non-appropriation
or foreclosure might prove difficult, time consuming and costly, and may
result in a delay in recovering or the failure to recover the original
investment. Some lease obligations may not have an active trading market,
making it difficult for the Fund to sell them quickly at an acceptable price
in a timely manner.

|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. These are referred to as interim investments.

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 Fund's 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 been an investment advisor since 1960. The Manager and
its subsidiaries and controlled affiliates managed more than $190 billion in
assets as of September 30, 2005, including other Oppenheimer funds with more
than 6 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, the Fund's management fee for its last fiscal year
ended July 31, 2005 was 0.39% of average annual net assets for each
class of shares. That waiver will be withdrawn effective January 1, 2006.

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, Troy Willis, Mark DeMitry, and Marcus Franz,
who are primarily responsible for the day-to-day management of the
Fund's investments.

Mr. Fielding has been a Vice President of the Fund and 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 manager and a trader for
the Fund.

Mr. Loughran has been a Vice President of the Fund since 2005 and has
been a Portfolio Manager of the Fund since July 2002. Mr. Loughran has
been a Senior Portfolio Manager since July 2005 and 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 the lead manager and a trader
for the Fund.

Mr. Cottier has been a Vice President of the Fund since 2005 and 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 a Vice President of the Fund since October 2005 and
a Portfolio Manager of the Fund since 2003. Mr. Willis has been an
Assistant Vice President of the Manager since July 2005 and an Associate
Portfolio Manager of the Manger 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.

Mr. DeMitry has been a research analyst of the Manager since June 2003;
a credit analyst of the Manager from July 2001 to May 2003; an Associate
Regional Sales Representative of the Manager from December 2000 to June
2001.

Mr. Franz has been a research analyst of the Manager since June 2003.
Prior to joining the Manager, Mr. Franz was a summer intern in the
Securities Division at TIAA-CREF from June 2002 to September 2002; and
Senior Commercial Credit Analyst at M&T Bank from June 1999 to September
2001.

Additional information about the Fund's Portfolio Management Team,
including compensation, other accounts managed and 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 of 1940 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, in good
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.

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

------------------------------------------------------------------------------
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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.
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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. For that reason, the Distributor normally will not
accept purchase orders of more than $100,000 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:

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Amount of Purchase Front-End Sales Front-End Sales Concession As a
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%
------------------------------------------------------------------------------
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$50,000 or more but 4.50% 4.71% 4.00%
less than $100,000
------------------------------------------------------------------------------
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$100,000 or more but 3.50% 3.63% 3.00%
less than $250,000
------------------------------------------------------------------------------
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$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
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 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. 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
periodically 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 periodically.

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. Eastern time, 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.)

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

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. Eastern time 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 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 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.
The portion of the Fund's exempt-interest dividends that was a tax preference
item for the most recent calendar year, is available on the OppenheimerFunds
website at www.oppenheimerfunds.com. Follow the links: Access Accounts &
Services/Investor Service Center/Access the Tax Center/Tax Credit
Info/Municipal Income/Tax Preference Percentage. This amount will vary from
year to year.

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.

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

CLASS A YEAR ENDED JULY 31, 2005 2004 2003 2002 2001
----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.76 $ 10.51 $ 10.99 $ 10.89 $ 10.36
----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .62 1 .67 .67 .53 .55
Net realized and unrealized gain (loss) 1.32 .23 (.52) .08 .51
-----------------------------------------------------------------------
Total from investment operations 1.94 .90 .15 .61 1.06
----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.67) (.65) (.63) (.51) (.53)
----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.03 $ 10.76 $ 10.51 $ 10.99 $ 10.89
=======================================================================

----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 18.46% 8.63% 1.21% 5.79% 10.42%
----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 200,831 $ 94,214 $ 61,825 $ 47,305 $ 39,185
----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 133,634 $ 78,828 $ 54,811 $ 42,809 $ 35,710
----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 5.41% 6.28% 6.24% 4.88% 5.08%
Total expenses 0.91% 0.98% 1.02% 0.84% 0.87%
Expenses after payments and waivers and
reduction to custodian expenses 0.71% 0.78% 0.82% 0.63% 4 0.67% 4
----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 8% 25% 93% 26% 27%

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

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

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

4. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

33 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

CLASS B YEAR ENDED JULY 31, 2005 2004 2003 2002 2001
----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.78 $ 10.52 $ 11.00 $ 10.90 $ 10.37
----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .54 1 .60 .59 .45 .47
Net realized and unrealized gain (loss) 1.31 .23 (.53) .08 .51
-----------------------------------------------------------------------
Total from investment operations 1.85 .83 .06 .53 .98
----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.58) (.57) (.54) (.43) (.45)
----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.05 $ 10.78 $ 10.52 $ 11.00 $ 10.90
=======================================================================

----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 17.53% 7.92% 0.46% 4.99% 9.58%
----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 62,399 $ 51,329 $ 46,912 $ 43,888 $ 39,164
----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 56,755 $ 50,920 $ 45,226 $ 41,532 $ 36,447
----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.74% 5.54% 5.46% 4.12% 4.34%
Total expenses 1.68% 1.73% 1.78% 1.60% 1.62%
Expenses after payments and waivers and
reduction to custodian expenses 1.48% 1.53% 1.58% 1.39% 4 1.42% 4
----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 8% 25% 93% 26% 27%

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

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

4. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

34 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

CLASS C YEAR ENDED JULY 31, 2005 2004 2003 2002 2001
----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.77 $ 10.51 $ 10.99 $ 10.89 $ 10.36
----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .53 1 .59 .59 .44 .47
Net realized and unrealized gain (loss) 1.32 .24 (.53) .09 .51
-----------------------------------------------------------------------
Total from investment operations 1.85 .83 .06 .53 .98
----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.58) (.57) (.54) (.43) (.45)
----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.04 $ 10.77 $ 10.51 $ 10.99 $ 10.89
=======================================================================

----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 17.54% 7.91% 0.45% 4.99% 9.59%
----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 70,128 $ 23,795 $ 17,784 $ 12,664 $ 8,622
----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 40,717 $ 20,470 $ 16,770 $ 9,831 $ 7,301
----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.57% 5.53% 5.49% 4.10% 4.33%
Total expenses 1.67% 1.73% 1.78% 1.60% 1.62%
Expenses after payments and waivers and
reduction to custodian expenses 1.47% 1.53% 1.58% 1.39% 4 1.42% 4
----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 8% 25% 93% 26% 27%

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

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

4. Excludes interest expense.

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

PR0395.001.1105
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
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 Mainly 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 of 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.

The portfolio managers may consider selling a security if any of these
factors no longer applies 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 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

|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 interest rates fall, the income the Fund
earns on its investments, and the Fund's distributions to shareholders, may
decline. 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.
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.
The Fund currently focuses on longer-term securities to seek higher income.
Therefore, its share prices may fluctuate more when interest rates change.

|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.

|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.

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 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 9/30/05, the cumulative return (not
annualized) before taxes for Class A shares was 8.48%.
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 12/31/94.
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-year); 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.

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

|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.

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. The Fund
selects investments without regard to this type of tax treatment.

|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.

|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.

|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| 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.

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.

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

|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 fee
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, Troy Willis, Mark DeMitry and Marcus Franz, who
are primarily responsible for the day-to-day management of the Fund's
investments.

Mr. Fielding has been a Vice President and a Senior Portfolio Manager of
the Fund since January 1999. 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 manager and a trader for the Fund.

Mr. Loughran has been a Vice President of the Fund since October 2005
and has been a Portfolio Manager of the Fund since January 1999. Mr.
Loughran has been a Senior Portfolio Manager since July 2005, 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 Vice President of the Fund since October 2005 and
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 a Vice President of the Fund since October 2005, a
Portfolio Manager of both the Fund and the Manager since 2003 and an
Assistant Vice President of the Manager since July 2005. Mr. Willis is
the lead Manager and a trader for the Fund. 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 the lead portfolio
manager and a trader for the Fund.

Additional information about the Fund's Portfolio Management Team,
including compensation, other accounts managed and 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 of 1940 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

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 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.

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

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. For that reason, the Distributor normally will not accept
purchase orders of more than $100,000 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.

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

Amount of Purchase Front-End Sales Front-End Sales Concession As a
Charge As a

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 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, or any of the other Oppenheimer
funds into which shares of the Fund may be exchanged, without
a 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 or financial intermediary 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.

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

Special Investor Services

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.

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.

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.

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.

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.

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.

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.

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

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?

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.

Dividends, Capital Gains and Taxes

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 its
fiscal year 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.

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.

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.

Financial Highlights

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

CLASS A YEAR ENDED JULY 31, 2005 2004 2003 2002 2001
--------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.76 $ 11.48 $ 11.57 $ 11.46 $ 11.28
--------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .67 1 .73 .75 .70 .67
Net realized and unrealized gain (loss) 1.10 .25 (.11) .11 .21
-------------------------------------------------------------------------
Total from investment operations 1.77 .98 .64 .81 .88
--------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.68) (.70) (.73) (.70) (.70)
--------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.85 $ 11.76 $ 11.48 $ 11.57 $ 11.46
=========================================================================

--------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 15.43% 8.53% 5.36% 7.36% 8.10%
--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 384,863 $ 229,450 $ 184,638 $ 144,592 $ 100,222
--------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 295,002 $ 211,061 $ 172,228 $ 120,251 $ 77,048
--------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 5.35% 6.01% 6.11% 6.03% 5.84%
Total expenses 0.81% 0.86% 0.86% 0.85% 0.94%
Expenses after payments and waivers and
reduction to custodian expenses N/A 4 N/A 4,5 N/A 4 0.82% 6 0.87% 6
--------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 30% 37% 33% 39% 58%

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

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

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

4. Reduction to custodian expenses less than 0.01%.

5. Voluntary waiver of transfer agent fees less than 0.01%.

6. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

38 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

CLASS B YEAR ENDED JULY 31, 2005 2004 2003 2002 2001
--------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.76 $ 11.48 $ 11.57 $ 11.46 $ 11.27
--------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .57 1 .63 .65 .62 .59
Net realized and unrealized gain (loss) 1.11 .25 (.11) .11 .22
-------------------------------------------------------------------------
Total from investment operations 1.68 .88 .54 .73 .81
--------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.59) (.60) (.63) (.62) (.62)
--------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.85 $ 11.76 $ 11.48 $ 11.57 $ 11.46
=========================================================================

--------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 14.56% 7.71% 4.56% 6.55% 7.40%
--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 189,643 $ 157,338 $ 146,369 $ 101,126 $ 52,926
--------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 173,663 $ 156,689 $ 127,280 $ 75,772 $ 32,037
--------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.62% 5.26% 5.34% 5.26% 5.03%
Total expenses 1.59% 1.62% 1.63% 1.61% 1.68%
Expenses after payments and waivers and
reduction to custodian expenses N/A 4 N/A 4,5 N/A 4 1.58% 6 1.62% 6
--------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 30% 37% 33% 39% 58%

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

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

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

4. Reduction to custodian expenses less than 0.01%.

5. Voluntary waiver of transfer agent fees less than 0.01%.

6. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

39 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

CLASS C YEAR ENDED JULY 31, 2005 2004 2003 2002 2001
--------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.75 $ 11.47 $ 11.56 $ 11.45 $ 11.27
--------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .57 1 .63 .65 .61 .57
Net realized and unrealized gain (loss) 1.10 .25 (.11) .12 .23
-------------------------------------------------------------------------
Total from investment operations 1.67 .88 .54 .73 .80
--------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.59) (.60) (.63) (.62) (.62)
--------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.83 $ 11.75 $ 11.47 $ 11.56 $ 11.45
=========================================================================

--------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 14.48% 7.71% 4.57% 6.55% 7.30%
--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 133,569 $ 76,489 $ 69,916 $ 47,163 $ 19,494
--------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 96,508 $ 74,956 $ 60,202 $ 33,327 $ 10,913
--------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.56% 5.25% 5.34% 5.26% 5.01%
Total expenses 1.59% 1.63% 1.63% 1.61% 1.68%
Expenses after payments and waivers and
reduction to custodian expenses N/A 4 N/A 4,5 N/A 4 1.58% 6 1.62% 6
--------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 30% 37% 33% 39% 58%

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

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

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

4. Reduction to custodian expenses less than 0.01%.

5. Voluntary waiver of transfer agent fees less than 0.01%.

6. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

INFORMATION AND SERVICES

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

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

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

PR0740.001.1105
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
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 Mainly 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 in 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.

The portfolio managers may consider selling a security if any of these
factors no longer applies to a security purchased for the Fund.

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.

|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.

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.
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.
The Fund currently focuses on longer-term securities to seek higher income.
Therefore, its share prices may fluctuate more when interest rates change.

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 by 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 20% of its total
assets in inverse floaters.

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 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 9/30/05, the cumulative return (not
annualized) before taxes for Class A shares was 7.98%.
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 (or
31, 2004 Life 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-year); 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 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

---------------------------------------------------------------------------------
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%
---------------------------------------------------------------------------------

---------------------------------------------------------------------------------
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 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. For purposes of this
Prospectus, 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. The Fund
selects investments without regard to this type of tax treatment.

|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.

|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 S&P'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.

|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.

|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| 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 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.

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 Fund's 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 been an investment advisor since 1960. The Manager and
its subsidiaries and controlled affiliates managed more than $190 billion in
assets as of September 30, 2005, including other Oppenheimer funds with more
than 6 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, Troy Willis, Marcus Franz, and Mark DeMitry,
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 Vice President of the Fund since October 2005
and 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 Vice President of the Fund since October 2005 and
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 a Vice President of the Fund since October 2005 and
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,
including compensation, other accounts managed and 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 of 1940 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

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.

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.

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

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. For that reason, the Distributor normally will not accept
purchase orders of more than $100,000 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.

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

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

Amount of Purchase Front-End Sales Front-End Sales Concession As a

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

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.

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, or any of the other Oppenheimer
funds into which shares of the Fund may be exchanged, without
a 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 or financial intermediary 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. 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.

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

DISTRIBUTION AND SERVICE (12b-1) PLANS.

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.

Special Investor Services

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.

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 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.

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

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.

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?

Shareholder Account Rules and Policies

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 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.

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.

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.

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

CLASS A YEAR ENDED JULY 31, 2005 2004 2003 2002 2001
-------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
-------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.13 $ 10.64 $ 11.28 $ 11.25 $ 10.76
-------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .78 1 .85 .92 .71 .58
Net realized and unrealized gain (loss) 1.59 .50 (.67) .03 .48
-----------------------------------------------------------------------
Total from investment operations 2.37 1.35 .25 .74 1.06
-------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.81) (.86) (.89) (.71) (.57)
-------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.69 $ 11.13 $ 10.64 $ 11.28 $ 11.25
=======================================================================

-------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 21.97% 12.78% 2.36% 6.89% 10.03%
-------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $2,309,856 $731,565 $306,857 $193,452 $ 38,827
-------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,366,113 $506,440 $252,496 $ 73,877 $ 36,900
-------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 6.46% 7.54% 8.44% 6.61% 5.21%
Total expenses 0.69% 0.80% 1.04% 1.06% 0.87%
Expenses after payments and waivers and
reduction to custodian expenses N/A 4 N/A 4,5 N/A 4 0.89% 6 0.78% 6
-------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 22% 44% 57% 127% 37%

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

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

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

4. Reduction to custodian expenses less than 0.01%.

5. Voluntary waiver of transfer agent fees less than 0.01%.

6. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

48 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS

CLASS B YEAR ENDED JULY 31, 2005 2004 2003 2002 2001
----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.15 $ 10.66 $ 11.30 $ 11.27 $ 10.78
----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .70 1 .77 .83 .63 .49
Net realized and unrealized gain (loss) 1.59 .49 (.66) .02 .48
--------------------------------------------------------------------
Total from investment operations 2.29 1.26 .17 .65 .97
----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.72) (.77) (.81) (.62) (.48)
----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.72 $ 11.15 $ 10.66 $ 11.30 $ 11.27
====================================================================

----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 21.09% 11.89% 1.57% 6.07% 9.19%
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $528,192 $308,778 $188,645 $90,547 $20,279
----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $410,031 $256,425 $141,819 $36,100 $18,445
----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 5.80% 6.80% 7.67% 5.85% 4.45%
Total expenses 1.48% 1.56% 1.81% 1.80% 1.62%
Expenses after payments and waivers and
reduction to custodian expenses N/A 4 N/A 4,5 N/A 4 1.63% 6 1.53% 6
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 22% 44% 57% 127% 37%

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

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

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

4. Reduction to custodian expenses less than 0.01%.

5. Voluntary waiver of transfer agent fees less than 0.01%.

6. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

49 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS

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

CLASS C YEAR ENDED JULY 31, 2005 2004 2003 2002 2001
----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.11 $ 10.63 $ 11.27 $ 11.24 $ 10.75
----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .68 1 .76 .83 .61 .50
Net realized and unrealized gain (loss) 1.60 .49 (.66) .04 .48
-------------------------------------------------------------------
Total from investment operations 2.28 1.25 .17 .65 .98
----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.72) (.77) (.81) (.62) (.49)
----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.67 $ 11.11 $ 10.63 $ 11.27 $ 11.24
====================================================================

----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 21.08% 11.83% 1.59% 6.09% 9.22%
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $868,108 $265,340 $111,710 $49,248 $ 3,410
----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $488,562 $193,845 $ 85,483 $13,453 $ 2,552
----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 5.68% 6.76% 7.68% 5.88% 4.45%
Total expenses 1.46% 1.56% 1.80% 1.80% 1.62%
Expenses after payments and waivers and
reduction to custodian expenses N/A 4 N/A 4,5 N/A 4 1.63% 6 1.53% 6
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 22% 44% 57% 127% 37%

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

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

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

4. Reduction to custodian expenses less than 0.01%.

5. Voluntary waiver of transfer agent fees less than 0.01%.

6. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

INFORMATION AND SERVICES

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

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

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

PR0795.001.1105
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 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%

------------------------------------------------------------------------------
Oppenheimer New Jersey 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...........................................
     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 Registered Public Accounting Firm's 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 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 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 because 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 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 net assets (plus borrowings for investment
purposes) in New Jersey municipal securities. This includes securities that
generate income subject to the alternative minimum tax. 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" bonds (including "industrial
development" and "private activity" bonds). They may have fixed, variable or
floating rates of interest or may be "zero-coupon" bonds, as described below.


      Some bonds may be "callable," allowing the issuer to redeem them before
their maturity date. To protect bondholders, callable bonds may be issued
with provisions that prevent them from being called for a period of time.
Typically, that is five (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 past 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. District Court 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 October 17, 2005, the U.S. Supreme Court denied the U.S.
Department of Justice's petition for certiorari 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 could 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.


      After the Funds buys, a municipal security, it 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, improvement, 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 was $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.


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

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



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

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

      |X| 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|   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| 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| 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(R), the automated quotation system of The
         NASDAQ(R)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.
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.


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


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

      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|   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| Temporary Defensive and Interim 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.


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

      |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 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.


      The Fund's policy on senior securities 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.


      |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 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.


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 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
    Fund 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 LLC Nomura Securities
         ------------------------------------------------------------
         ------------------------------------------------------------
         Credit Agricole Cheuvreux N.A. Pacific Crest
         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 Wasserstein Plexus
         ------------------------------------------------------------
         ------------------------------------------------------------
         Emmet & Co                     Prager Sealy & Co.
         ------------------------------------------------------------
         ------------------------------------------------------------
         Empirical Research             Prudential Securities
         ------------------------------------------------------------
         ------------------------------------------------------------
         Enskilda Securities            Ramirez & Co.
         ------------------------------------------------------------
         ------------------------------------------------------------
         Essex Capital Markets          Raymond James
         ------------------------------------------------------------
         ------------------------------------------------------------
         Exane BNP Paribas              RBC Capital Markets
         ------------------------------------------------------------
         ------------------------------------------------------------
         Factset                        RBC Dain Rauscher
         ------------------------------------------------------------
         ------------------------------------------------------------
         Fidelity Capital Markets       Research Direct
         ------------------------------------------------------------
         ------------------------------------------------------------
         Fimat USA Inc.                 Robert W. Baird
         ------------------------------------------------------------
         ------------------------------------------------------------
         First Albany                   Roosevelt & Cross
         ------------------------------------------------------------
         ------------------------------------------------------------
         First Albany Corporation       Russell Mellon
         ------------------------------------------------------------
         ------------------------------------------------------------
         Fixed Income Securities        Ryan Beck & Co.
         ------------------------------------------------------------
         ------------------------------------------------------------
         Fortis Securities              Sanford C. Bernstein
         ------------------------------------------------------------
         ------------------------------------------------------------
         Fox-Pitt, Kelton               Scotia Capital Markets
         ------------------------------------------------------------
         ------------------------------------------------------------
         Friedman, Billing, Ramsey      SG Cowen & Co.
         ------------------------------------------------------------
         ------------------------------------------------------------
         Fulcrum Global Partners        SG Cowen Securities
         ------------------------------------------------------------
         ------------------------------------------------------------
         Garp Research                  Soleil Securities Group
         ------------------------------------------------------------
         ------------------------------------------------------------
         George K Baum & Co.            Standard & Poors
         ------------------------------------------------------------
         ------------------------------------------------------------
         Goldman                        Stone & Youngberg
         ------------------------------------------------------------
         ------------------------------------------------------------
         Goldman Sachs                  SWS Group
         ------------------------------------------------------------
         ------------------------------------------------------------
         HSBC                           Taylor Rafferty
         ------------------------------------------------------------
         ------------------------------------------------------------
         HSBC Securities Inc            Think Equity Partners
         ------------------------------------------------------------
         ------------------------------------------------------------
         ING Barings                    Thomas Weisel Partners
         ------------------------------------------------------------
         ------------------------------------------------------------
         ISI Group                      UBS
         ------------------------------------------------------------
         ------------------------------------------------------------
         Janney Montgomery              Wachovia
         ------------------------------------------------------------
         ------------------------------------------------------------
         Jefferies                      Wachovia Corp
         ------------------------------------------------------------
         ------------------------------------------------------------
         Jeffries & Co.                 Wachovia Securities
         ------------------------------------------------------------
         ------------------------------------------------------------
         JP Morgan                      Wescott Financial
         ------------------------------------------------------------
         ------------------------------------------------------------
         JP Morgan Securities           William Blair
         ------------------------------------------------------------
         ------------------------------------------------------------
         JPP Eurosecurities             Yieldbook
         ------------------------------------------------------------
         ------------------------------------------------------------
         Keefe, Bruyette & Woods
         ------------------------------------------------------------


How the Fund Is Managed


Organization and History.  The Fund is a series of Oppenheimer Multi-State
Municipal Trust (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 Trust was organized as a single-series
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. 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 into  additional  series or classes and 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 who are not "interested persons"
under the Investment Company Act (the "Independent Trustees").  The members
of the Audit Committee are Joel W. Motley (Chairman), Mary F. Miller, Kenneth
A. Randall, 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
Independent Trustees; (v) reviewing the independence of the Fund's
independent Auditors; and (vi) pre-approving the provision of any audit and
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 members of the Regulatory & Oversight Committee are Robert G. Galli
(Chairman), Matthew P. Fink, Phillip A. Griffiths, Joel W. Motley and Brian
F. Wruble.  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
agency 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), Kenneth A. Randall, Russell S. Reynolds, Jr. and Peter I. Wold.
The Governance Committee held 7 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 Governance 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 Governance
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 Governance Committee has been able to identify from its
own resources an ample number of qualified candidates.  Nonetheless, under
the current policy of the Board, if the Board determines that a vacancy
exists or is likely to exist on the Board, the Governance Committee will
consider candidates for Board membership including those recommended by the
Fund's shareholders.  The Governance Committee will consider nominees
recommended by Independent Board members or recommended by any other Board
members including Board members affiliated with the Fund's Manager.  The
Committee may, upon Board approval, retain an executive search firm to assist
in screening potential candidates.  Upon Board approval, the Committee may
also use the services of legal, financial, or other external counsel that it
deems necessary or desirable in the screening process.  Shareholders wishing
to submit a nominee for election to the Board may do so by mailing their
submission to the offices of OppenheimerFunds, Inc., Two World Financial
Center, 225 Liberty Street, 11th Floor, New York, NY 10281-1008, to the
attention of the Board of Trustees of Oppenheimer New Jersey Municipal Fund,
c/o the Secretary of the Fund.

      Submissions should, at a minimum, be accompanied by the following:  (1)
the name, address, and business, educational, and/or other pertinent
background of the person being recommended; (2) a statement concerning
whether the person is an "interested person" as defined in the Investment
Company Act; (3) any other information that the Fund would be required to
include in a proxy statement concerning the person if he or she was
nominated; and (4) the name and address of the person submitting the
recommendation and, if that person is a shareholder, the period for which
that person held Fund shares.  Shareholders should note that a person who
owns securities issued by Massachusetts Mutual Life Insurance Company (the
parent company of the Manager) would be deemed an "interested person" under
the Investment Company Act.  In addition, certain other relationships with
Massachusetts Mutual Life Insurance Company or its subsidiaries, with
registered broker-dealers, or with the Funds' outside legal counsel may cause
a person to be deemed an "interested person."

      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 the 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. All of the Trustees are also directors or
trustees of the following Oppenheimer funds (referred to as "Board I Funds"):

Oppenheimer AMT-Free Municipals           Oppenheimer International Large Cap Core
                                          Fund
                                          Oppenheimer International Small Company
Oppenheimer AMT-Free New York Municipals  Fund
Oppenheimer Balanced Fund                 Oppenheimer International Value Fund
                                          Oppenheimer Limited Term California
Oppenheimer California Municipal Fund     Municipal Fund
Oppenheimer Capital Appreciation Fund     Oppenheimer Money Market Fund, Inc.
Oppenheimer Developing Markets Fund       Oppenheimer Multi-State Municipal Trust
Oppenheimer Discovery Fund                Oppenheimer Portfolio Series
Oppenheimer Dividend Growth Fund          Oppenheimer Real Estate Fund
Oppenheimer Emerging Growth Fund          Oppenheimer Select Value Fund
Oppenheimer Emerging Technologies Fund    Oppenheimer Series Fund, Inc.
Oppenheimer Enterprise Fund               OFI Tremont Core Strategies Hedge Fund
Oppenheimer Global Fund                   OFI Tremont Market Neutral Hedge Fund
                                          Oppenheimer Tremont Market Neutral Fund
Oppenheimer Global Opportunities Fund     LLC
Oppenheimer Gold & Special Minerals Fund  Oppenheimer Tremont Opportunity Fund LLC
Oppenheimer Growth Fund                   Oppenheimer U.S. Government Trust
Oppenheimer International Diversified
Fund
Oppenheimer International Growth Fund



      In addition to being a director or trustee of the Board I Funds,
Messrs. Galli and Wruble are directors or trustees of ten other portfolios,
and Messrs. Wikler and Wold are trustees of one other portfolio, 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, Cottier, Loughran, Willis, 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 November 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 held of record by an employee benefit plan for employees
of the Manager, other than the shares beneficially owned under that plan by
the officers of the Fund listed above.  In addition, none of the Independent
Trustees (nor any of their immediate family members), owns securities of
either the Manager or the Distributor of the Board I Funds or of any entity
directly or indirectly controlling, controlled by or under common control
with the Manager or the 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 at least the past five years are
listed in the charts below. The charts also include information about each
Trustee's beneficial share ownership in the Fund and in all of the registered
investment companies that the Trustee oversees in the Oppenheimer family of
funds "Supervised Funds"). 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.  The address of each Trustee in the chart below is 6803 S.
Tucson Way, Centennial, Colorado 80112-3924. Each Trustee serves for an
indefinite term or until his or her resignation, retirement, death or
removal.






-----------------------------------------------------------------------------------
                               Independent Trustees
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Name,              Principal Occupation(s) During Past 5    Dollar     Aggregate
                                                                       Dollar
                                                                       Range Of

                   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 Covanta
2003;              Holding Corp. (waste-to-energy company)
Trustee since 1994 (since 2002); Director of Weyerhaeuser
Age: 74            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: 67            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: 63            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 of Columbia Equity Financial    None       Over
Trustee since 2002 Corp. (privately-held financial                     $100,000
Age: 53            adviser) (since 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);  Member
                   of the Finance and Budget Committee of
                   the Council on Foreign Relations, the
                   Investment Committee of the Episcopal
                   Church of America, the Investment
                   Committee of Human Rights Watch and the
                   Investment Committee of Historic Hudson
                   Valley. Oversees 38 portfolios in the
                   OppenheimerFunds complex.

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

Kenneth A. Randall Director of Dominion Resources, Inc.     None       Over
Trustee since 1989 (electric utility holding company)                  $100,000
Age: 78            (since February 1972); Former Director
                   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 of The Directorship Search      None       Over
Reynolds, Jr.,     Group, Inc. (corporate governance                   $100,000
Trustee since 1994 consulting and executive recruiting)

Age: 73            (since 1993); Life Trustee of
                   International House (non-profit
                   educational organization); Former
                   Trustee of The Historical Society of
                   the Town of Greenwich. Oversees 38
                   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 39
                   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 39 portfolios in
                   the OppenheimerFunds complex.

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

Brian F. Wruble    General Partner of Odyssey Partners,     None       Over
Trustee since 2005 L.P. (hedge fund) (since September                  $100,000
Age: 62            1996); Director of Special Value
                   Opportunities Fund, LLC (registered
                   investment company) (since September
                   2004); Director of Zurich Financial
                   Investment Advisory Board (affiliate of
                   the Manager's parent company) (since
                   October 2004); Board of Governing
                   Trustees of The Jackson Laboratory
                   (non-profit) (since August 1990);
                   Trustee of the Institute for Advanced
                   Study (non-profit educational
                   institute) (since May 1992); Special
                   Limited Partner of Odyssey Investment
                   Partners, LLC (private equity
                   investment) (January 1999-September
                   2004); Trustee of Research Foundation
                   of AIMR  (2000-2002) (investment
                   research, non-profit); Governor, Jerome
                   Levy Economics Institute of Bard
                   College (August 1990-September 2001)
                   (economics research); Director of Ray &
                   Berendtson, Inc. (May 2000-April 2002)
                   (executive search firm). Oversees 48
                   portfolios in the OppenheimerFunds
                   complex

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

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

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

      The address of Mr. Murphy is Two World Financial Center, 225 Liberty
Street, 11th Floor, New York, New York 10281-1008. Mr. Murphy serves as a
Trustee  and an officer for an indefinite term, or until his resignation,
retirement, death or removal. Mr. Murphy is an "Interested Trustee" because
he is affiliated with the Manager by virtue of his positions as an officer
and director of the Manager, and as a shareholder of its parent company.


-------------------------------------------------------------------------------------
                           INTERESTED TRUSTEE AND OFFICER
-------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Name, Position(s)  Principal Occupation(s) During the Past 5      Dollar      Aggregate
                                                                            Dollar Range
                                                                 Range of     Of Shares
                                                                  Shares    Beneficially
Held with Fund,    Years; Other Trusteeships/Directorships      Beneficially  Owned in
Length of          Held; Number of Portfolios in the Fund        Owned in    Supervised
Service, Age       Complex Currently Overseen                    the Fund       Funds
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
                                                                 As of December 31, 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 in
                   the OppenheimerFunds complex as a Trustee
                   or Director and officer and an additional
                   10 portfolios as an officer.

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


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


  ------------------------------------------------------------------------------------
                              Other Officers of the Fund
  ------------------------------------------------------------------------------------
  ------------------------------------------------------------------------------------
  Name, Position(s)    Principal Occupation(s) During Past 5 Years
  Held with Fund,
  Length of Service,
  Age
  ------------------------------------------------------------------------------------
  ------------------------------------------------------------------------------------

  Ronald H. Fielding,  Senior Vice President of the Manager since January 1996;

  Vice President       Chairman of the Rochester Division of the Manager since

  since 2002           January 1996; an officer of 10 portfolios in the
  Age: 56              OppenheimerFunds complex.

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

  Daniel G.            Vice President of the Manager since April 2001; an officer
  Loughran, Vice       of 8 portfolios in the OppenheimerFunds complex.
  President since
  2005
  Age: 42

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

  Scott Cottier,       Vice President of the Manager since 2002; portfolio manager
  Vice President       and trader at Victory Capital Management (1999-2002); an
  since 2005           officer of 8 portfolios in the OppenheimerFunds complex.
  Age: 34

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

  Troy Willis, Vice    Assistant Vice President of the Manager since July 2005;
  President since      Associate Portfolio Manager of the Manager since 2003;
  2005                 corporate attorney for Southern Resource Group (1999-2003);
  Age: 33              an officer of 8 portfolios in the OppenheimerFunds complex.

  ------------------------------------------------------------------------------------
  ------------------------------------------------------------------------------------
  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: 46              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: 40              October 2003) of the Distributor; Assistant Secretary of

                       Centennial Asset Management Corporation (since October
                       2003); Vice President and Assistant Secretary of Shareholder
                       Services, Inc. (since 1999); Assistant Secretary of
                       OppenheimerFunds Legacy Program and Shareholder Financial
                       Services, Inc. (since December 2001); Assistant Counsel of
                       the Manager (August 1994-October 2003). An officer of 87
                       portfolios in the OppenheimerFunds complex.
  ------------------------------------------------------------------------------------
  ------------------------------------------------------------------------------------
  Lisa I. Bloomberg,   Vice President and Associate Counsel of the Manager (since
  Assistant Secretary  May 2004); First Vice President (April 2001-April 2004),
  since 2004           Associate General Counsel (December 2000-April 2004),
  Age: 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.           Senior Vice President and Deputy General Counsel of the
  Gillespie,           Manager (since September 2004); Mr. Gillespie held the
  Assistant Secretary  following positions at Merrill Lynch Investment Management:
  since 2004           First Vice President (2001-September 2004); Director
  Age: 41              (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' compensation from the Fund, shown below, is for
 serving as a Trustee and member of a committee (if applicable), with respect
 to the Fund's fiscal year ended July 31, 2005. The total compensation from
 the Fund and fund complex represents compensation, including accrued
 retirement benefits, for serving as a Trustee and member of a committee (if
 applicable) of the Boards of the Fund and other funds in the
 OppenheimerFunds complex during the calendar year ended December 31, 2004.




------------------------------------------------------------------------------------
Name and Other Fund       Aggregate      Retirement     Estimated        Total
                                          Benefits        Annual      Compensation
                         Compensation    Accrued as      Benefits    From the Fund

Position(s)                From the     Part of Fund       Upon         and Fund
(as applicable)           Fund((1))       Expenses    Retirement((2))   Complex

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

Clayton K. Yeutter         $854(3)          $213         $86,171        $173,700

Chairman of the Board
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------

Matthew P. Fink(4)           None           None          $2,641          None
Proxy Committee Member
and Regulatory &
Oversight Committee
Member

------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Robert G. Galli

Regulatory & Oversight       $635           None       $100,824(5)    $237,312(6)
Committee Chairman

------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Phillip A. Griffiths
Governance Committee

Chairman and               $737(7)         $1,937        $34,972        $142,092
Regulatory & Oversight
Committee Member

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

Mary F. Miller(8)

Audit Committee Member

and Proxy Committee          $341           None          $7,128         $8,532
Member

------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Joel W. Motley
Audit Committee

Chairman and               $741(9)          $296         $23,945        $150,760
Regulatory & Oversight
Committee Member

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

Kenneth A. Randall           $659         None(10)       $85,944        $134,080

Audit Committee Member
and Governance
Committee Member
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------

Edward V. Regan((11))        $542           None         $70,977        $118,788


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

Russell S. Reynolds,         $526           None         $66,602        $106,792
Jr.
Proxy Committee
Chairman and
Governance Committee
Member

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

Donald Spiro ((12))          $51            None           None         $64,080


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

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

Joseph M. Wikler             None           None            --          $23,000

Audit Committee Member
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------

Peter I. Wold(13)
Governance Committee         None           None            --          $20,500
Member

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

Brian F. Wruble((1)(4))
Regulatory & Oversight       None           None      $22,238(1(5))  $111,000(1(6))
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  $597 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   $2,063   deferred  by  Mr.   Griffiths  under  the  "Deferred
   Compensation Plan" described below.
8.    Ms. Miller was appointed as a Board member 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 a Board member of all of the Board I
   Funds during 2005.
9.    Includes $830  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.

1.    Mr. Wikler and Mr. Wold were elected as Board members of 23 of the
   Board I Funds as of August 17, 2005. They had served as Board members of
   the other 11 Board I Funds prior to that date.
14.         Mr. Wruble was appointed as Trustee of the Board I Funds
   effective October 10, 2005.
15.   Estimated benefits to be paid to Mr. Wruble for serving as a director
   or trustee of 10 other Oppenheimer funds that are not Board I Funds. Mr.
   Wruble's service as a director or trustee of such funds will not be
   counted towards the fulfillment of his eligibility requirements for
   payments under the Board I retirement plan, described below.
16.   For serving as a director or trustee of 10 other Oppenheimer funds (at
   December 31, 2004) that are not Board I Funds.

      |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
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 October 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/#, 4800
Deer Lake Drive East Floor 3, Jacksonville, FL 32246-6484, which owned
1,041,612.898 Class A shares (5.09% 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
1,180,096.745 Class A shares (5.77% 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 452,421.611
Class B shares (8.35% 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/#, 4800
Deer Lake Drive East Floor 3, Jacksonville, FL 32246-6484, which owned
1,225,451.630 Class C shares (16.79% 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 522,762.707
Class C shares (7.16% 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 Portfolio Proxy Voting Policies and Procedures include
provisions to address conflicts of interest that may arise between the Fund
and the Manager or the Manager's affiliates or business relationships.  Such
a conflict of interest may arise, for example, where the Manager or an
affiliate of the Manager manages or administers the assets of a pension plan
or other investment account of the portfolio company soliciting the proxy or
seeks to serve in that capacity.  The Manager and its affiliates generally
seek to avoid such conflicts by maintaining separate investment decision
making processes to prevent the sharing of  business objectives with respect
to proposed or actual actions regarding portfolio proxy voting decisions.
Additionally, the Manager employs the following two procedures:  (1) if the
proposal that gives rise to the conflict is specifically addressed in the
Guidelines, the Manager will vote the portfolio proxy in accordance with the
Guidelines, provided that they do not provide discretion to the Manager on
how to vote on the matter; and (2) if such proposal is not specifically
addressed in the Guidelines or the Guidelines provide discretion to the
Manager on how to vote, the Manager will vote in accordance with the
third-party proxy voting agent's general recommended guidelines on the
proposal provided that the Manager has reasonably determined that there is no
conflict of interest on the part of the proxy voting agent.  If neither of
the previous two procedures provides an appropriate voting recommendation,
the Manager may retain an independent fiduciary to advise the Manager on how
to vote the proposal or may abstain from voting.  The Guidelines' provisions
with respect to certain routine and non-routine proxy proposals are
summarized below:

o     The Fund generally votes with the recommendation of the issuer's
      management on routine matters, including ratification of the
      independent registered public accounting firm, unless circumstances
      indicate otherwise.
o     The Fund evaluates nominees for director nominated by management on a
      case-by-case basis, examining the following factors, among others:
      Composition of the board and key board committees, attendance at board
      meetings, corporate governance provisions and takeover activity,
      long-term company performance and the nominee's investment in the
      company.
o     In general, the Fund opposes anti-takeover proposals and supports the
      elimination, or the ability of shareholders to vote on the preservation
      or elimination, of anti-takeover proposals, absent unusual
      circumstances.
o     The Fund supports shareholder proposals to reduce a super-majority vote
      requirement, and opposes management proposals to add a super-majority
      vote requirement.
o     The Fund opposes proposals to classify the board of directors.
o     The Fund supports proposals to eliminate cumulative voting.
   The Fund opposes re-pricing of stock options without shareholder approval.
o     The Fund generally considers executive compensation questions such as

      stock option plans and bonus plans to be ordinary business activity.
      The Fund analyzes stock option plans, paying particular attention to
      their dilutive effect. While the Fund generally supports management
      proposals, the Fund opposes plans it considers to be excessive

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

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

      The Fund pays expenses not expressly assumed by the Manager under the
advisory agreement.  The 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                the Manager
    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 team of
investment professionals including Daniel G. Loughran, Ronald H. Fielding,
Scott Cottier, Troy Willis, Mark DeMitry and Marcus Franz 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. Loughran, Fielding, Cottier, Willis, DeMitry and Franz
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. Loughran, Fielding,
Cottier, Willis, DeMitry and Franz 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          18     $193
    Fielding                     $19,636.80

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

    Daniel G.           10                  None      $0          10     $0.466
    Loughran                     $19,636.80

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

    Scott Cottier       10                  None      $0           7     $0.240

                                 $19,636.80
   -------------------------------------------------------------------------------
   -------------------------------------------------------------------------------

    Troy Willis         10                  None      $0           2     $0.104

                                 $19,636.80
   -------------------------------------------------------------------------------
   -------------------------------------------------------------------------------

    Mark DeMitry        10                  None      $0           6     $0.122
                                 $19,636.80

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

    Marcus Franz        10                  None      $0          10     $0.170
                                 $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
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 - 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 September 30, 2005, the
Portfolio Manager beneficially owned shares of the Fund as follows:


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

                                                Range of Shares
            ------------------------------        Beneficially
                  Portfolio Manager            Owned in the Fund

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

            Daniel G. Loughran                      770.160

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

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

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 "affiliated" brokers, 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, analytical
software and similar products and services.  If a research service also
assists the Manager in a non-research capacity (such as bookkeeping or other
administrative functions), then only the percentage or component that
provides assistance to the Manager in the investment decision-making process
may be paid in commission dollars.


      The 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 0.15% 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 periodically at an annual
rate not to exceed 0.15% 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 Distribution and Service 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 periodic basis, without payment in advance.  However, the Distributor
currently intends to pay the service fee to recipients in advance for the
first year after Class B and Class C shares are purchased.  After the first
year shares are outstanding, after their purchase, the Distributor makes
service fee payments periodically on those shares.  The advance payment is
based on the net asset value of shares sold.  Shares purchased by exchange do
not qualify for 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 periodically in
lieu of paying the sales concession and service fee in advance at the time of
purchase.


      The asset-based sales charge on Class B and Class C shares allows
investors to buy shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell those shares.  The Fund pays the
asset-based sales charge to the Distributor for its services rendered in
distributing Class B and Class C shares. The payments are made to the
Distributor in recognition that the Distributor:
|_|   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 may not carry the excess over to subsequent fiscal years. 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 and Service 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 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 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 30 day period.
      b =  expenses accrued for the period (net of any expense assumptions).
      c =  the average daily number of shares of that class outstanding
           during the 30 day period that were entitled to receive dividends.
      d =  the maximum offering price per share of that class on the last day
           of the period, adjusted for undistributed net investment income.

      The standardized yield for a particular 30-day period may differ from
the yield for other periods.  The SEC formula assumes that the standardized
yield for a 30-day period occurs at a constant rate for a six-month period
and is annualized at the end of the six-month period.  Additionally, because
each class of shares is subject to different expenses, it is likely that the
standardized yields of the Fund's classes of shares will differ for any
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 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
                 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-Years
                                 1-Year            5-Years        (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 Shares (After Taxes)
                         For the Periods Ended 7/31/05
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

                                      1-Year        5-Years         10-Years

                                                                  (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
---------------------------------------------------------------------------------


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


      Class B or Class C shares may not be purchased by 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. Investors should consult their tax
advisers regarding the state and local tax consequences of the conversion of
exchange of classes of shares.


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

      The methodology for calculating the net asset value, dividends and
distributions of the Fund's share classes recognizes two types of expenses.
General expenses that do not pertain specifically to any one class are
allocated pro rata to the shares of all classes. The allocation is based on
the percentage of the Fund's total assets that is represented by the assets
of each class, and then equally to each outstanding share within a given
class. Such general expenses include management fees, legal, bookkeeping and
audit fees, printing and mailing costs of shareholder reports, Prospectuses,
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
in September.


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

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

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(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 Money Market Fund,
                                                Inc.


      The following funds do not offer Class Y shares:

      Limited Term New York Municipal Fund   Oppenheimer Limited Term California
                                             Municipal Fund
      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 Cash Reserves              Oppenheimer Principal Protected Main
                                             Street Fund III
      Oppenheimer Champion Income Fund       Oppenheimer Quest Capital Value Fund,
                                             Inc.
      Oppenheimer Convertible Securities     Oppenheimer Quest International Value
      Fund                                   Fund, Inc.
      Oppenheimer Disciplined Allocation     Oppenheimer Rochester National
      Fund                                   Municipals
      Oppenheimer Dividend Growth Fund       Oppenheimer Senior Floating Rate Fund
      Oppenheimer Gold & Special Minerals    Oppenheimer Total Return Bond Fund
      Fund


     o  Oppenheimer  Money  Market  Fund,  Inc.  only offers Class A and Class Y
shares.

     o Class Y shares of  Oppenheimer  Real Asset Fund may not be exchanged  for
shares of any other fund.

     o Class B and Class C shares of  Oppenheimer  Cash  Reserves are  generally
available  only by exchange  from the same class of shares of other  Oppenheimer
funds or through OppenheimerFunds-sponsored 401(k) plans.

     o  Class  M  shares  of  Oppenheimer  Convertible  Securities  Fund  may be
exchanged only for Class A shares of other  Oppenheimer  funds.  They may not be
acquired  by  exchange  of shares of any  class of any other  Oppenheimer  funds
except  Class A shares of  Oppenheimer  Money  Market Fund 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 (12/16/2011).



     The Fund may amend,  suspend or  terminate  the  exchange  privilege at any
time.  Although the Fund may impose these  changes at any time,  it will provide
you with notice of those changes  whenever it is required to do so by applicable
law. It may be required to provide 60 days' notice prior to materially  amending
or  terminating  the exchange  privilege.  That 60 day notice is not required in
extraordinary circumstances.

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

     o When  Class A  shares  of any  Oppenheimer  fund  (other  than  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  Oppenheimer  Limited  Term  California
Municipal Fund,  Oppenheimer  Limited-Term  Government Fund, Oppenheimer Limited
Term  Municipal  Fund,  Oppenheimer  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.

     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.


     Tax Effects of  Redemptions  of Shares.  If a shareholder  redeems all or a
portion of his/her shares,  the shareholder will recognize a gain or loss on the
redeemed shares in an amount equal to the difference between the proceeds of the
redeemed shares and the shareholder's adjusted tax basis in the shares. All or a
portion  of  any  loss  recognized  in  that  manner  may be  disallowed  if the
shareholder  purchases  other  shares of the Fund within 30 days before or after
the redemption. Losses realized by shareholders on the redemption of Fund shares
within six months of purchase will be disallowed for federal income tax purposes
to the extent of exempt-interest dividends received on such shares.


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

     |X| Foreign Shareholders. Under U.S. tax law, taxation of a shareholder who
is a foreign  person  (to  include,  but not  limited  to, a  nonresident  alien
individual,  a foreign  trust, a foreign  estate,  a foreign  corporation,  or a
foreign  partnership)  primarily  depends on whether the foreign person's income
from the Fund is  effectively  connected  with the  conduct  of a U.S.  trade or
business.   Typically,   ordinary   income   dividends   paid   (not   including
exempt-interest  dividends  paid  by  the  Fund)  from a  mutual  fund  are  not
considered "effectively connected" income.

     Ordinary  income  dividends  that are paid by the Fund (and are  deemed not
"effectively connected income") to foreign persons will be subject to a U.S. tax
withheld  by the Fund at a rate of 30%,  provided  the Fund  obtains a  properly
completed and signed  Certificate of Foreign Status. The tax rate may be reduced
if the  foreign  person's  country of  residence  has a tax treaty with the U.S.
allowing for a reduced tax rate on ordinary  income  dividends paid by the Fund.
Any tax  withheld by the Fund is remitted by the Fund to the U.S.  Treasury  and
all income and any tax withheld is identified in reports mailed to  shareholders
in March of each year with a copy sent to the IRS.

     If the ordinary income  dividends from the Fund are  effectively  connected
with the conduct of a U.S. trade or business,  then the foreign person may claim
an  exemption  from the U.S.  tax  described  above  provided the Fund obtains a
properly  completed and signed  Certificate  of Foreign  Status.  If the foreign
person fails to provide a certification of his/her foreign status, the Fund will
be required to withhold U.S. tax at a rate of 28% on ordinary  income  dividends
(not  including  "exempt-interest   dividends"),   capital  gains  distributions
(including  short-term  and  long-term)  and the proceeds of the  redemption  of
shares,  paid to any foreign person. Any tax withheld by the Fund is remitted by
the Fund to the U.S.  Treasury and all income and any tax withheld is identified
in reports  mailed to  shareholders  in January of each year with a copy sent to
the IRS.

     The tax  consequences to foreign persons  entitled to claim the benefits of
an applicable tax treaty may be different from those described  herein.  Foreign
shareholders  are urged to consult  their own tax advisors or the U.S.  Internal
Revenue  Service with respect to the particular tax  consequences  to them of an
investment in the Fund,  including  the  applicability  of the U.S.  withholding
taxes described above.

     Dividend  Reinvestment in Another Fund.  Shareholders of the Fund may elect
to reinvest all dividends  and/or capital gains  distributions  in shares of the
same class of any of the other Oppenheimer funds 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 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.





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

--------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER MULTI-STATE MUNICIPAL
TRUST:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer New Jersey Municipal Fund (one of the portfolios constituting the
Oppenheimer Multi-State Municipal Trust), including the statement of
investments, as of July 31, 2005, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for each
of the years in the five-year period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

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

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

KPMG LLP

Denver, Colorado
September 13, 2005




STATEMENT OF INVESTMENTS  July 31, 2005
--------------------------------------------------------------------------------

    PRINCIPAL                                                                                               VALUE
       AMOUNT                                                              COUPON       MATURITY       SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--103.0%
-----------------------------------------------------------------------------------------------------------------
NEW JERSEY--87.3%
$     275,000    Audubon Devel. Corp. (Audubon Park)                        7.750%    08/01/2024    $     289,597
-----------------------------------------------------------------------------------------------------------------
    2,015,000    Camden County Improvement Authority
                 (Cooper Health System)                                     6.000     02/15/2027        2,087,056
-----------------------------------------------------------------------------------------------------------------
      120,000    Camden County PCFA
                 (Camden County Energy Recovery Associates)                 7.500     12/01/2009          120,630
-----------------------------------------------------------------------------------------------------------------
       15,000    Collingswood GO                                            5.875     07/15/2018           15,256
-----------------------------------------------------------------------------------------------------------------
    1,000,000    Delaware River Port Authority PA/NJ                        5.400     01/01/2016        1,029,980
-----------------------------------------------------------------------------------------------------------------
    5,540,000    Delaware River Port Authority PA/NJ 1                      5.500     01/01/2026        5,710,798
-----------------------------------------------------------------------------------------------------------------
       15,000    Essex County Improvement Authority
                 (County Jail & Youth House)                                5.350     12/01/2024           15,719
-----------------------------------------------------------------------------------------------------------------
    2,000,000    Garden State Preservation Trust
                 (Open Space & Farmland Preservation) 2                     5.800     11/01/2023        2,288,240
-----------------------------------------------------------------------------------------------------------------
       20,000    Gloucester County Improvement Authority
                 (Governmental Leasing Program)                             5.900     04/01/2007           20,053
-----------------------------------------------------------------------------------------------------------------
        5,000    Gloucester County Utilities Authority                      5.125     01/01/2013            5,010
-----------------------------------------------------------------------------------------------------------------
       25,000    Haledon School District                                    5.625     02/01/2009           25,186
-----------------------------------------------------------------------------------------------------------------
      685,000    Higher Education Student Assistance Authority
                 (Student Loan)                                             6.000     06/01/2015          701,502
-----------------------------------------------------------------------------------------------------------------
    3,755,000    Hudson County Improvement Authority (Koppers Site)         6.125     01/01/2029        3,739,492
-----------------------------------------------------------------------------------------------------------------
    1,000,000    Hudson County Solid Waste Improvement Authority            6.000     01/01/2029        1,001,440
-----------------------------------------------------------------------------------------------------------------
       75,000    Mercer County Improvement Authority                        5.000     11/15/2016           78,216
-----------------------------------------------------------------------------------------------------------------
    6,290,000    Mercer County Improvement Authority                        5.000     08/01/2040        6,610,476
-----------------------------------------------------------------------------------------------------------------
      875,000    Middlesex County Improvement Authority
                 (Heldrich Center Hotel) 1                                  5.000     01/01/2015          890,426
-----------------------------------------------------------------------------------------------------------------
      500,000    Middlesex County Improvement Authority
                 (Heldrich Center Hotel) 1                                  5.000     01/01/2020          498,200
-----------------------------------------------------------------------------------------------------------------
    1,535,000    Middlesex County Improvement Authority
                 (Heldrich Center Hotel) 1                                  5.000     01/01/2032        1,537,794
-----------------------------------------------------------------------------------------------------------------
    1,100,000    Middlesex County Improvement Authority
                 (Heldrich Center Hotel) 1                                  5.125     01/01/2037        1,106,083
-----------------------------------------------------------------------------------------------------------------
      975,000    Middlesex County Improvement Authority
                 (Skyline Tower Urban Renewal Associates)                   5.350     07/01/2034        1,025,856
-----------------------------------------------------------------------------------------------------------------
    2,500,000    Middlesex County Pollution Control Authority
                 (Amerada Hess Corp.) 1                                     6.050     09/15/2034        2,694,125
-----------------------------------------------------------------------------------------------------------------
       35,000    New Brunswick Hsg. & Urban Devel. Authority                5.500     08/01/2011           35,082
-----------------------------------------------------------------------------------------------------------------
       65,000    New Brunswick Hsg. & Urban Devel. Authority                5.750     07/01/2024           65,484
-----------------------------------------------------------------------------------------------------------------
      170,000    Newark Hsg. Finance Corp. (Spruce Park Apartments)        10.800     05/01/2025          184,734
-----------------------------------------------------------------------------------------------------------------
      135,000    NJ EDA (American Airlines)                                 7.100     11/01/2031          114,930
-----------------------------------------------------------------------------------------------------------------
      255,000    NJ EDA (Anheuser-Busch Companies) 1                        5.850     12/01/2030          262,245
-----------------------------------------------------------------------------------------------------------------
      100,000    NJ EDA (Cadbury at Cherry Hill)                            5.500     07/01/2018          104,143
-----------------------------------------------------------------------------------------------------------------
       25,000    NJ EDA (Cadbury at Cherry Hill)                            5.500     07/01/2028           25,692


                   20 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

    PRINCIPAL                                                                                               VALUE
       AMOUNT                                                              COUPON       MATURITY       SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------
NEW JERSEY Continued
$      25,000    NJ EDA (Cascade Corp.)                                     8.250%    02/01/2026    $      24,995
-----------------------------------------------------------------------------------------------------------------
    3,000,000    NJ EDA (Cigarette Tax)                                     5.500     06/15/2031        3,149,070
-----------------------------------------------------------------------------------------------------------------
    1,500,000    NJ EDA (Cigarette Tax)                                     5.750     06/15/2029        1,609,215
-----------------------------------------------------------------------------------------------------------------
   10,000,000    NJ EDA (Cigarette Tax)                                     5.750     06/15/2034       10,668,400
-----------------------------------------------------------------------------------------------------------------
      200,000    NJ EDA (Continental Airlines)                              5.500     04/01/2028          150,128
-----------------------------------------------------------------------------------------------------------------
    6,040,000    NJ EDA (Continental Airlines)                              6.250     09/15/2019        5,645,769
-----------------------------------------------------------------------------------------------------------------
       85,000    NJ EDA (Continental Airlines)                              6.250     09/15/2029           77,846
-----------------------------------------------------------------------------------------------------------------
    2,120,000    NJ EDA (Continental Airlines) 1                            6.400     09/15/2023        1,995,450
-----------------------------------------------------------------------------------------------------------------
    2,500,000    NJ EDA (Continental Airlines)                              6.625     09/15/2012        2,434,200
-----------------------------------------------------------------------------------------------------------------
      425,000    NJ EDA (Continental Airlines)                              7.000     11/15/2030          420,125
-----------------------------------------------------------------------------------------------------------------
    3,500,000    NJ EDA (Continental Airlines) 1                            9.000     06/01/2033        3,879,715
-----------------------------------------------------------------------------------------------------------------
      100,000    NJ EDA (Courthouse Convalescent Center)                    8.700     02/01/2014          100,135
-----------------------------------------------------------------------------------------------------------------
    3,100,000    NJ EDA (Cranes Mill) 1                                     5.100     06/01/2027        3,027,956
-----------------------------------------------------------------------------------------------------------------
       60,000    NJ EDA (Dept. of Human Services)                           5.000     07/01/2022           62,581
-----------------------------------------------------------------------------------------------------------------
      135,000    NJ EDA (Dept. of Human Services)                           6.250     07/01/2024          149,993
-----------------------------------------------------------------------------------------------------------------
      100,000    NJ EDA (Devereux Foundation)                               5.450     05/01/2027          104,549
-----------------------------------------------------------------------------------------------------------------
       25,000    NJ EDA (Eastern Shore)                                     8.000     02/01/2011           24,996
-----------------------------------------------------------------------------------------------------------------
      465,000    NJ EDA (Elizabethtown Water Company)                       5.600     12/01/2025          476,490
-----------------------------------------------------------------------------------------------------------------
    4,000,000    NJ EDA (Empowerment Zone-Cumberland)                       7.750     08/01/2021        4,046,160
-----------------------------------------------------------------------------------------------------------------
       20,000    NJ EDA (Fellowship Village)                                5.500     01/01/2018           20,417
-----------------------------------------------------------------------------------------------------------------
      320,000    NJ EDA (Hackensack Water Company)                          5.800     03/01/2024          323,968
-----------------------------------------------------------------------------------------------------------------
       25,000    NJ EDA (Hackensack Water Company)                          5.900     03/01/2024           25,276
-----------------------------------------------------------------------------------------------------------------
    2,000,000    NJ EDA (Jersey Central Power & Light)                      7.100     07/01/2015        2,065,600
-----------------------------------------------------------------------------------------------------------------
    5,500,000    NJ EDA (JVG Properties) 1                                  5.375     03/01/2019        5,608,075
-----------------------------------------------------------------------------------------------------------------
    2,500,000    NJ EDA (Kapkowski Road Landfill)                           6.500     04/01/2031        2,900,125
-----------------------------------------------------------------------------------------------------------------
      125,000    NJ EDA (Kullman Associates)                                6.750     07/01/2019          119,568
-----------------------------------------------------------------------------------------------------------------
    1,020,000    NJ EDA (Liberty Street Park) 2                             5.000     03/01/2020        1,097,591
-----------------------------------------------------------------------------------------------------------------
    2,545,000    NJ EDA (Liberty Street Park) 2                             5.000     03/01/2021        2,730,225
-----------------------------------------------------------------------------------------------------------------
    8,690,000    NJ EDA (Liberty Street Park)                               5.000     03/01/2027        9,258,500
-----------------------------------------------------------------------------------------------------------------
    3,435,000    NJ EDA (Liberty Street Park) 2                             5.000     03/01/2027        3,648,554
-----------------------------------------------------------------------------------------------------------------
      710,000    NJ EDA (Lions Gate)                                        5.750     01/01/2025          722,361
-----------------------------------------------------------------------------------------------------------------
    1,230,000    NJ EDA (Lions Gate)                                        5.875     01/01/2037        1,252,817
-----------------------------------------------------------------------------------------------------------------
    1,000,000    NJ EDA (Marcus L. Ward Home)                               5.750     11/01/2024        1,057,600
-----------------------------------------------------------------------------------------------------------------
    1,000,000    NJ EDA (Marcus L. Ward Home)                               5.800     11/01/2031        1,049,620
-----------------------------------------------------------------------------------------------------------------
    1,000,000    NJ EDA (Masonic Charity Foundation of NJ)                  5.500     06/01/2031        1,075,250
-----------------------------------------------------------------------------------------------------------------
      750,000    NJ EDA (Masonic Charity Foundation of NJ)                  6.000     06/01/2025          838,238
-----------------------------------------------------------------------------------------------------------------
       50,000    NJ EDA (Middlesex Water Company)                           5.200     10/01/2022           50,167
-----------------------------------------------------------------------------------------------------------------
       95,000    NJ EDA (Middlesex Water Company)                           5.250     10/01/2023           95,157
-----------------------------------------------------------------------------------------------------------------
      165,000    NJ EDA (Middlesex Water Company)                           5.350     02/01/2038          171,760
-----------------------------------------------------------------------------------------------------------------
      150,000    NJ EDA (New Jersey American Water Company)                 5.250     07/01/2038          157,373


                   21 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

    PRINCIPAL                                                                                               VALUE
       AMOUNT                                                              COUPON       MATURITY       SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------
NEW JERSEY Continued
$      30,000    NJ EDA (New Jersey Transit)                                5.750%    12/15/2017    $      30,670
-----------------------------------------------------------------------------------------------------------------
       70,000    NJ EDA (NJ American Water Company)                         5.350     06/01/2023           70,132
-----------------------------------------------------------------------------------------------------------------
      240,000    NJ EDA (NJ American Water Company)                         5.350     06/01/2023          240,451
-----------------------------------------------------------------------------------------------------------------
      160,000    NJ EDA (NJ American Water Company)                         5.375     05/01/2032          168,648
-----------------------------------------------------------------------------------------------------------------
      115,000    NJ EDA (NJ American Water Company)                         5.500     06/01/2023          115,128
-----------------------------------------------------------------------------------------------------------------
      655,000    NJ EDA (NJ American Water Company)                         5.950     11/01/2029          672,593
-----------------------------------------------------------------------------------------------------------------
      205,000    NJ EDA (NJ American Water Company)                         6.000     05/01/2036          213,208
-----------------------------------------------------------------------------------------------------------------
    6,520,000    NJ EDA (NJ American Water Company)                         6.875     11/01/2034        6,671,916
-----------------------------------------------------------------------------------------------------------------
       15,000    NJ EDA (NJ Natural Gas Company)                            5.375     08/01/2023           15,015
-----------------------------------------------------------------------------------------------------------------
        5,000    NJ EDA (NJ Natural Gas Company)                            5.375     08/01/2023            5,010
-----------------------------------------------------------------------------------------------------------------
      495,000    NJ EDA (Nui Corp.) 1                                       5.250     11/01/2033          497,846
-----------------------------------------------------------------------------------------------------------------
    1,955,000    NJ EDA (Nui Corp.) 1                                       5.250     11/01/2033        1,982,605
-----------------------------------------------------------------------------------------------------------------
      195,000    NJ EDA (Nui Corp.)                                         5.700     06/01/2032          203,980
-----------------------------------------------------------------------------------------------------------------
    2,000,000    NJ EDA (Public Schools Small Project
                 Loan Program) 3                                           10.916 4   09/01/2024        2,763,200
-----------------------------------------------------------------------------------------------------------------
    4,640,000    NJ EDA (Public Service Electric & Gas)                     6.400     05/01/2032        4,735,862
-----------------------------------------------------------------------------------------------------------------
      130,000    NJ EDA (St. Barnabas Medical Center)                       5.375     07/01/2027          137,497
-----------------------------------------------------------------------------------------------------------------
    2,000,000    NJ EDA (St. Francis Life Care Corp.)                       5.750     10/01/2023        2,025,920
-----------------------------------------------------------------------------------------------------------------
      480,000    NJ EDA (The Gill/St. Bernards School)                      6.000     02/01/2019          494,443
-----------------------------------------------------------------------------------------------------------------
      510,000    NJ EDA (The Gill/St. Bernards School)                      6.000     02/01/2020          525,101
-----------------------------------------------------------------------------------------------------------------
      545,000    NJ EDA (The Gill/St. Bernards School)                      6.000     02/01/2021          561,524
-----------------------------------------------------------------------------------------------------------------
      575,000    NJ EDA (The Gill/St. Bernards School)                      6.000     02/01/2022          591,342
-----------------------------------------------------------------------------------------------------------------
      610,000    NJ EDA (The Gill/St. Bernards School)                      6.000     02/01/2023          626,470
-----------------------------------------------------------------------------------------------------------------
      650,000    NJ EDA (The Gill/St. Bernards School)                      6.000     02/01/2024          667,108
-----------------------------------------------------------------------------------------------------------------
      690,000    NJ EDA (The Gill/St. Bernards School)                      6.000     02/01/2025          708,140
-----------------------------------------------------------------------------------------------------------------
    3,770,000    NJ EDA (Trigen-Trenton District Energy Company)            6.200     12/01/2010        3,774,034
-----------------------------------------------------------------------------------------------------------------
       15,000    NJ EDA (United Methodist Homes of NJ)                      5.125     07/01/2018           14,929
-----------------------------------------------------------------------------------------------------------------
    2,370,000    NJ EDA (United Methodist Homes of NJ)                      5.125     07/01/2025        2,359,643
-----------------------------------------------------------------------------------------------------------------
      240,000    NJ EDA (United Water New Jersey)                           5.000     11/01/2028          247,301
-----------------------------------------------------------------------------------------------------------------
    2,000,000    NJ EDA Retirement Community (Cedar Crest Village)          7.250     11/15/2021        2,195,620
-----------------------------------------------------------------------------------------------------------------
    2,100,000    NJ EDA Retirement Community (Seabrook Village)             8.000     11/15/2015        2,375,793
-----------------------------------------------------------------------------------------------------------------
       90,000    NJ Educational Facilities Authority
                 (Beth Medrash Govoha America)                              6.375     07/01/2030           95,356
-----------------------------------------------------------------------------------------------------------------
    1,420,000    NJ Educational Facilities Authority
                 (Bloomfield College)                                       6.850     07/01/2030        1,449,536
-----------------------------------------------------------------------------------------------------------------
   15,000,000    NJ Educational Facilities Authority
                 (Fairleigh Dickinson University), Series D                 6.000     07/01/2025       16,128,000
-----------------------------------------------------------------------------------------------------------------
    1,265,000    NJ Educational Facilities Authority
                 (Fairleigh Dickinson University), Series G                 5.700     07/01/2028        1,300,142
-----------------------------------------------------------------------------------------------------------------
    3,540,000    NJ Educational Facilities Authority
                 (Georgian Court College) 1                                 6.500     07/01/2033        4,011,068
-----------------------------------------------------------------------------------------------------------------
       60,000    NJ Educational Facilities Authority
                 (Monmouth University)                                      5.625     07/01/2013           60,070


                   22 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

    PRINCIPAL                                                                                               VALUE
       AMOUNT                                                              COUPON       MATURITY       SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------
NEW JERSEY Continued
$   2,000,000    NJ Educational Facilities Authority
                 (Monmouth University)                                      5.800%    07/01/2022    $   2,089,560
-----------------------------------------------------------------------------------------------------------------
       25,000    NJ Educational Facilities Authority
                 (Richard Stockton College)                                 5.400     07/01/2021           25,761
-----------------------------------------------------------------------------------------------------------------
      250,000    NJ Educational Facilities Authority
                 (St. Peter's College)                                      5.500     07/01/2027          246,078
-----------------------------------------------------------------------------------------------------------------
    1,250,000    NJ Educational Facilities Authority
                 (Stevens Institute of Technology) 1                        5.250     07/01/2032        1,304,650
-----------------------------------------------------------------------------------------------------------------
       20,000    NJ Educational Facilities Authority
                 (University of Medicine & Dentistry)                       5.250     12/01/2015           20,349
-----------------------------------------------------------------------------------------------------------------
       75,000    NJ Educational Facilities Authority
                 (University of Medicine & Dentistry)                       5.250     12/01/2021           76,281
-----------------------------------------------------------------------------------------------------------------
      100,000    NJ Educational Facilities Authority
                 (University of Medicine & Dentistry)                       5.250     12/01/2025          101,692
-----------------------------------------------------------------------------------------------------------------
       10,000    NJ Health Care Facilities Financing Authority
                 (Allegany Health System Obligated Group)                   5.200     07/01/2018           10,526
-----------------------------------------------------------------------------------------------------------------
       65,000    NJ Health Care Facilities Financing Authority
                 (Atlantic Health Systems Hospital Corp.)                   5.375     07/01/2019           68,812
-----------------------------------------------------------------------------------------------------------------
      475,000    NJ Health Care Facilities Financing Authority
                 (Avalon at Hillsborough)                                   6.150     07/01/2020          479,513
-----------------------------------------------------------------------------------------------------------------
      750,000    NJ Health Care Facilities Financing Authority
                 (Avalon at Hillsborough)                                   6.375     07/01/2025          754,718
-----------------------------------------------------------------------------------------------------------------
      500,000    NJ Health Care Facilities Financing Authority
                 (Avalon at Hillsborough)                                   6.625     07/01/2035          504,585
-----------------------------------------------------------------------------------------------------------------
       85,000    NJ Health Care Facilities Financing Authority
                 (Bayonne Hospital)                                         6.250     07/01/2012           85,277
-----------------------------------------------------------------------------------------------------------------
       10,000    NJ Health Care Facilities Financing Authority
                 (Burdette Tomlin Memorial Hospital)                        6.500     07/01/2012           10,373
-----------------------------------------------------------------------------------------------------------------
    2,000,000    NJ Health Care Facilities Financing Authority
                 (Englewood Hospital & Medical Center) RITES 3             11.988 4   08/01/2025        2,630,040
-----------------------------------------------------------------------------------------------------------------
       15,000    NJ Health Care Facilities Financing Authority
                 (Holy Name Hospital)                                       6.000     07/01/2025           15,645
-----------------------------------------------------------------------------------------------------------------
       25,000    NJ Health Care Facilities Financing Authority
                 (ONP/MHC Obligated Group)                                  5.375     07/01/2024           26,794
-----------------------------------------------------------------------------------------------------------------
       55,000    NJ Health Care Facilities Financing Authority
                 (Palisades Medical Center)                                 5.250     07/01/2028           55,927
-----------------------------------------------------------------------------------------------------------------
    2,000,000    NJ Health Care Facilities Financing Authority
                 (Raritan Bay Medical Center)                               7.250     07/01/2014        2,112,100
-----------------------------------------------------------------------------------------------------------------
    8,000,000    NJ Health Care Facilities Financing Authority
                 (RWJ University Hospital)                                  5.000     07/01/2035        8,336,560
-----------------------------------------------------------------------------------------------------------------
    1,000,000    NJ Health Care Facilities Financing Authority
                 (RWJ University Hospital)                                  5.750     07/01/2025        1,080,000
-----------------------------------------------------------------------------------------------------------------
       20,000    NJ Health Care Facilities Financing Authority
                 (Society of the Valley Hospital)                           5.500     07/01/2020           21,587


                   23 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

    PRINCIPAL                                                                                               VALUE
       AMOUNT                                                              COUPON       MATURITY       SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------
NEW JERSEY Continued
$      20,000    NJ Health Care Facilities Financing Authority
                 (South Jersey Hospital System)                             6.000%    07/01/2032    $      21,453
-----------------------------------------------------------------------------------------------------------------
      200,000    NJ Health Care Facilities Financing Authority
                 (St. Joseph's Hospital & Medical Center)                   5.750     07/01/2016          208,486
-----------------------------------------------------------------------------------------------------------------
      750,000    NJ Health Care Facilities Financing Authority
                 (St. Joseph's Hospital & Medical Center)                   6.000     07/01/2026          784,890
-----------------------------------------------------------------------------------------------------------------
       95,000    NJ Health Care Facilities Financing Authority
                 (St. Peter's Hospital)                                     5.000     07/01/2021           95,636
-----------------------------------------------------------------------------------------------------------------
       45,000    NJ HFA                                                     5.375     11/01/2008           45,065
-----------------------------------------------------------------------------------------------------------------
       10,000    NJ HFA                                                     5.700     11/01/2005           10,019
-----------------------------------------------------------------------------------------------------------------
       50,000    NJ Higher Education Assistance Authority
                 (Student Loan Program)                                     5.800     06/01/2016           51,508
-----------------------------------------------------------------------------------------------------------------
       10,000    NJ Higher Education Assistance Authority
                 (Student Loan Program)                                     6.125     07/01/2015           10,129
-----------------------------------------------------------------------------------------------------------------
       80,000    NJ Hsg. & Mortgage Finance Agency (Multifamily)            5.400     11/01/2028           83,212
-----------------------------------------------------------------------------------------------------------------
      200,000    NJ Hsg. & Mortgage Finance Agency, Series A                5.550     05/01/2027          211,200
-----------------------------------------------------------------------------------------------------------------
       45,000    NJ Hsg. & Mortgage Finance Agency, Series A                5.650     05/01/2040           47,606
-----------------------------------------------------------------------------------------------------------------
    1,000,000    NJ Hsg. & Mortgage Finance Agency, Series A                6.250     05/01/2028        1,030,180
-----------------------------------------------------------------------------------------------------------------
       30,000    NJ Hsg. & Mortgage Finance Agency, Series B                5.850     11/01/2012           32,074
-----------------------------------------------------------------------------------------------------------------
      100,000    NJ Hsg. & Mortgage Finance Agency, Series E1               5.750     05/01/2025          105,226
-----------------------------------------------------------------------------------------------------------------
    5,230,000    NJ Hsg. & Mortgage Finance Agency, Series M                4.875     10/01/2026        5,375,917
-----------------------------------------------------------------------------------------------------------------
    1,000,000    NJ Hsg. & Mortgage Finance Agency, Series M                5.000     10/01/2036        1,022,260
-----------------------------------------------------------------------------------------------------------------
       35,000    NJ Hsg. & Mortgage Finance Agency, Series N                5.900     10/01/2012           35,672
-----------------------------------------------------------------------------------------------------------------
       10,000    NJ Hsg. & Mortgage Finance Agency, Series S                5.950     10/01/2017           10,332
-----------------------------------------------------------------------------------------------------------------
       75,000    NJ Hsg. & Mortgage Finance Agency, Series T                5.600     04/01/2017           78,261
-----------------------------------------------------------------------------------------------------------------
    1,135,000    NJ Hsg. & Mortgage Finance Agency, Series U                5.750     04/01/2018        1,176,677
-----------------------------------------------------------------------------------------------------------------
       10,000    NJ Hsg. & Mortgage Finance Agency, Series V                5.250     04/01/2026           10,314
-----------------------------------------------------------------------------------------------------------------
      175,000    NJ Sports & Exposition Authority, Series A                 5.200     01/01/2020          175,306
-----------------------------------------------------------------------------------------------------------------
      480,000    NJ Sports & Exposition Authority, Series A                 5.200     01/01/2024          480,840
-----------------------------------------------------------------------------------------------------------------
      300,000    NJ Tobacco Settlement Financing Corp. (TASC)               5.375     06/01/2018          311,085
-----------------------------------------------------------------------------------------------------------------
   12,635,000    NJ Tobacco Settlement Financing Corp. (TASC)               5.750     06/01/2032       13,338,138
-----------------------------------------------------------------------------------------------------------------
    7,965,000    NJ Tobacco Settlement Financing Corp. (TASC)               6.000     06/01/2037        8,586,748
-----------------------------------------------------------------------------------------------------------------
   14,700,000    NJ Tobacco Settlement Financing Corp. (TASC)               6.125     06/01/2042       15,894,081
-----------------------------------------------------------------------------------------------------------------
    3,860,000    NJ Tobacco Settlement Financing Corp. (TASC)               6.250     06/01/2043        4,463,125
-----------------------------------------------------------------------------------------------------------------
    1,005,000    NJ Tobacco Settlement Financing Corp. (TASC)               6.375     06/01/2032        1,170,433
-----------------------------------------------------------------------------------------------------------------
   10,180,000    NJ Tobacco Settlement Financing Corp. (TASC)               6.750     06/01/2039       12,031,335
-----------------------------------------------------------------------------------------------------------------
      295,000    NJ Tobacco Settlement Financing Corp. (TASC)               7.000     06/01/2041          357,012
-----------------------------------------------------------------------------------------------------------------
      800,000    NJ Tobacco Settlement Financing Corp. Fixed Receipts       6.125     06/01/2042          864,984
-----------------------------------------------------------------------------------------------------------------
    9,600,000    NJ Tobacco Settlement Financing Corp. RITES 1,3            8.602 4   06/01/2042       11,159,616
-----------------------------------------------------------------------------------------------------------------
    2,500,000    NJ Transit Corp. ROLs, Series 15 3                         9.800 4   09/15/2014        3,053,325
-----------------------------------------------------------------------------------------------------------------
    4,000,000    NJ University of Medicine & Dentistry 1                    5.000     06/15/2036        4,192,000


                   24 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

    PRINCIPAL                                                                                               VALUE
       AMOUNT                                                              COUPON       MATURITY       SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------
NEW JERSEY Continued
$   4,935,000    North Hudson Sewage Authority 1                            5.125%    08/01/2022    $   5,078,806
-----------------------------------------------------------------------------------------------------------------
    2,500,000    Port Authority NY/NJ (KIAC)                                6.750     10/01/2011        2,640,700
-----------------------------------------------------------------------------------------------------------------
    1,710,000    Port Authority NY/NJ (KIAC)                                6.750     10/01/2019        1,802,733
-----------------------------------------------------------------------------------------------------------------
      370,000    Port Authority NY/NJ, 106th Series                         6.000     07/01/2016          383,834
-----------------------------------------------------------------------------------------------------------------
       25,000    Port Authority NY/NJ, 119th Series                         5.500     09/15/2017           25,861
-----------------------------------------------------------------------------------------------------------------
    1,000,000    Port Authority NY/NJ, 135th Series                         5.000     03/15/2039        1,052,750
-----------------------------------------------------------------------------------------------------------------
    2,635,000    Port Authority NY/NJ, 140th Series 1                       5.000     12/01/2034        2,799,977
-----------------------------------------------------------------------------------------------------------------
    2,305,000    Port Authority NY/NJ, 238th Series ROLs 3                 13.419 4   12/15/2032        2,859,583
-----------------------------------------------------------------------------------------------------------------
       75,000    Readington-Lebanon Sewage Authority                        5.250     01/01/2013           75,533
-----------------------------------------------------------------------------------------------------------------
       20,000    Riverside Township GO                                      5.450     12/01/2010           20,028
-----------------------------------------------------------------------------------------------------------------
      115,000    Salem County Industrial Pollution Control Financing
                 Authority (Atlantic City Electric Company)                 5.600     11/01/2025          115,428
-----------------------------------------------------------------------------------------------------------------
      555,000    Salem County Industrial Pollution Control Financing
                 Authority (E.I. Dupont De Nemours)                         6.125     07/15/2022          561,704
-----------------------------------------------------------------------------------------------------------------
      505,000    Salem County Industrial Pollution Control Financing
                 Authority (E.I. Dupont De Nemours) 1                       6.500     11/15/2021          516,570
-----------------------------------------------------------------------------------------------------------------
      420,000    Salem County Industrial Pollution Control Financing
                 Authority (Public Service Electric & Gas)                  5.200     03/01/2025          420,315
-----------------------------------------------------------------------------------------------------------------
    1,260,000    Salem County Industrial Pollution Control Financing
                 Authority (Public Service Electric & Gas)                  5.450     02/01/2032        1,267,497
-----------------------------------------------------------------------------------------------------------------
    1,120,000    Salem County Industrial Pollution Control Financing
                 Authority (Public Service Electric & Gas)                  5.750     04/01/2031        1,192,632
-----------------------------------------------------------------------------------------------------------------
      120,000    South Jersey Transit Authority
                 (The Raytheon Company)                                     6.150     01/01/2022          123,742
-----------------------------------------------------------------------------------------------------------------
       35,000    Union County Utilities Authority
                 (Ogden Martin Systems of Union)                            5.000     06/01/2023           35,857
-----------------------------------------------------------------------------------------------------------------
       70,000    Union County Utilities Authority
                 (Ogden Martin Systems of Union)                            5.375     06/01/2018           73,498
-----------------------------------------------------------------------------------------------------------------
      100,000    Union County Utilities Authority
                 (Ogden Martin Systems of Union)                            5.375     06/01/2019          104,997
-----------------------------------------------------------------------------------------------------------------
       60,000    Union County Utilities Authority
                 (Ogden Martin Systems of Union)                            5.375     06/01/2020           62,998
-----------------------------------------------------------------------------------------------------------------
       10,000    Washington Township Municipal Utilities Authority          5.625     12/15/2014           10,206
-----------------------------------------------------------------------------------------------------------------
       45,000    Washington Township Municipal Utilities Authority          5.625     12/15/2019           45,912
                                                                                                    -------------
                                                                                                      291,186,895
-----------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--15.7%
    1,420,000    Northern Mariana Islands, Series A                         6.250     03/15/2028        1,481,955
-----------------------------------------------------------------------------------------------------------------
    5,000,000    Northern Mariana Islands, Series A                         6.750     10/01/2033        5,477,100
-----------------------------------------------------------------------------------------------------------------
      350,000    Puerto Rico Commonwealth GO                                5.000     07/01/2025          367,455
-----------------------------------------------------------------------------------------------------------------
       15,000    Puerto Rico Commonwealth GO                                5.000     07/01/2027           15,647
-----------------------------------------------------------------------------------------------------------------
      170,000    Puerto Rico Commonwealth GO                                5.125     07/01/2031          177,077
-----------------------------------------------------------------------------------------------------------------
    2,000,000    Puerto Rico Electric Power Authority, Series NN            5.125     07/01/2029        2,118,120


                   25 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

    PRINCIPAL                                                                                               VALUE
       AMOUNT                                                              COUPON       MATURITY       SEE NOTE 1
------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS Continued
$   9,750,000    Puerto Rico Infrastructure                                 5.000%    07/01/2041    $  10,181,633
------------------------------------------------------------------------------------------------------------------
      100,000    Puerto Rico ITEMECF (Ana G. Mendez University)             5.375     02/01/2019          103,368
------------------------------------------------------------------------------------------------------------------
      500,000    Puerto Rico ITEMECF (Ana G. Mendez University)             5.375     02/01/2029          514,710
------------------------------------------------------------------------------------------------------------------
    1,710,000    Puerto Rico ITEMECF (Cogeneration Facilities)              6.625     06/01/2026        1,855,624
------------------------------------------------------------------------------------------------------------------
      250,000    Puerto Rico ITEMECF
                 (SEAM/Hospital Espanol Auxillio Obligated Group)           6.250     07/01/2024          255,198
------------------------------------------------------------------------------------------------------------------
    1,000,000    Puerto Rico Municipal Finance Agency RITES 3               8.554 4   08/01/2015        1,226,740
------------------------------------------------------------------------------------------------------------------
    6,155,000    Puerto Rico Port Authority (American Airlines),
                 Series A                                                   6.250     06/01/2026        4,874,945
------------------------------------------------------------------------------------------------------------------
    1,790,000    Puerto Rico Port Authority (American Airlines),
                 Series A                                                   6.300     06/01/2023        1,448,880
------------------------------------------------------------------------------------------------------------------
       35,000    Puerto Rico Port Authority, Series D                       6.000     07/01/2021           35,045
------------------------------------------------------------------------------------------------------------------
    6,000,000    Puerto Rico Public Buildings Authority                     5.250     07/01/2029        6,446,100
------------------------------------------------------------------------------------------------------------------
    1,000,000    Puerto Rico Public Buildings Authority, Series D           5.125     07/01/2024        1,050,130
------------------------------------------------------------------------------------------------------------------
      935,000    Puerto Rico Public Buildings Authority, Series D           5.250     07/01/2036          990,707
------------------------------------------------------------------------------------------------------------------
      675,000    University of Puerto Rico, Series O                        5.375     06/01/2030          682,965
------------------------------------------------------------------------------------------------------------------
      150,000    University of V.I. , Series A                              5.250     12/01/2023          156,342
------------------------------------------------------------------------------------------------------------------
      210,000    University of V.I. , Series A                              5.375     06/01/2034          222,245
------------------------------------------------------------------------------------------------------------------
    1,000,000    University of V.I. , Series A                              6.000     12/01/2024        1,081,340
------------------------------------------------------------------------------------------------------------------
       40,000    University of V.I. , Series A                              6.250     12/01/2029           43,728
------------------------------------------------------------------------------------------------------------------
       60,000    V.I. Hsg. Finance Authority, Series A                      6.500     03/01/2025           61,139
------------------------------------------------------------------------------------------------------------------
    5,000,000    V.I. Public Finance Authority (Hovensa Coker) 1            6.500     07/01/2021        5,700,950
------------------------------------------------------------------------------------------------------------------
      525,000    V.I. Public Finance Authority, Series A                    6.125     10/01/2029          586,115
------------------------------------------------------------------------------------------------------------------
    1,515,000    V.I. Public Finance Authority, Series A                    6.375     10/01/2019        1,717,010
------------------------------------------------------------------------------------------------------------------
      300,000    V.I. Public Finance Authority, Series E                    5.875     10/01/2018          315,879
------------------------------------------------------------------------------------------------------------------
    2,500,000    V.I. Public Finance Authority, Series E                    6.000     10/01/2022        2,612,750
------------------------------------------------------------------------------------------------------------------
      290,000    V.I. Water & Power Authority                               5.300     07/01/2018          297,060
------------------------------------------------------------------------------------------------------------------
      175,000    V.I. Water & Power Authority                               5.300     07/01/2021          177,175
                                                                                                    --------------
                                                                                                       52,275,132

------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $321,944,991)--103.0%                                               343,462,027
------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS--(3.0)                                                          (10,103,783)
                                                                                                    --------------
NET ASSETS--100.0%                                                                                  $ 333,358,244
                                                                                                    ==============

FOOTNOTES TO STATEMENT OF INVESTMENTS

1. Security has been segregated for collateral to cover borrowings. See Note 6
of Notes to Financial Statements.

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

3. Illiquid security. The aggregate value of illiquid securities as of July 31,
2005 was $23,692,504, which represents 7.11% of the Fund's net assets. See Note
5 of Notes to Financial Statements.

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


                   26 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

EDA         Economic Development Authority

GO          General Obligation

HFA         Housing Finance Agency/Authority

ITEMECF     Industrial, Tourist, Educational, Medical and
            Environmental Community Facilities

MHC         Meridian Hospitals Corporation

NY/NJ       New York/New Jersey

ONP         Ocean Nursing Pavillion, Inc.

PCFA        Pollution Control Finance Authority

RITES       Residual Interest Tax Exempt Security

ROLs        Residual Option Longs

RWJ         Robert Wood Johnson

SEAM        Sociedad Espanola de Auxilio Mutuo

TASC        Tobacco Settlement Asset-Backed Bonds

V.I.        United States Virgin Islands

--------------------------------------------------------------------------------
INDUSTRY CONCENTRATIONS  July 31, 2005 / Unaudited
--------------------------------------------------------------------------------

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

INDUSTRY                                                       VALUE   PERCENT
-------------------------------------------------------------------------------
Tobacco Settlement Payments                             $ 68,176,557      19.8%
Higher Education                                          29,764,749       8.7
Municipal Leases                                          23,385,201       6.8
Sales Tax Revenue                                         22,946,679       6.7
Airlines                                                  21,041,988       6.1
Adult Living Facilities                                   19,855,115       5.8
Hospital/Health Care                                      18,453,230       5.4
Marine/Aviation Facilities                                15,379,783       4.5
Electric Utilities                                        14,731,046       4.3
Pollution Control                                         13,994,388       4.1
General Obligation                                        13,909,779       4.0
Hotels, Restaurants & Leisure                             13,291,003       3.9
Special Tax                                               13,081,758       3.8
Water Utilities                                            9,755,686       2.8
Single Family Housing                                      7,770,572       2.3
Education                                                  6,962,514       2.0
Manufacturing, Non-Durable Goods                           6,386,890       1.9
Gas Utilities                                              5,398,581       1.6
Sewer Utilities                                            5,159,349       1.5
Resource Recovery                                          5,138,912       1.5
Manufacturing, Durable Goods                               4,314,465       1.2
Multifamily Housing                                        3,165,335       0.9
Student Loans                                                711,631       0.2
Sports Facility Revenue                                      656,146       0.2
Highways/Railways                                             30,670       0.0
                                                        -----------------------
Total                                                   $343,462,027     100.0%
                                                        =======================


                   27 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

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

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

RATINGS                                                                PERCENT
-------------------------------------------------------------------------------
AAA                                                                       22.2%
AA                                                                         7.8
A                                                                          8.4
BBB                                                                       47.4
BB                                                                         2.4
B                                                                          4.2
CCC                                                                        1.9
Not Rated                                                                  5.7
                                                                         ------
Total                                                                    100.0%
                                                                         ======

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                   28 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

-------------------------------------------------------------------------------------------------
ASSETS
-------------------------------------------------------------------------------------------------
Investments, at value (cost $321,944,991)--see accompanying
statement of investments                                                          $  343,462,027
-------------------------------------------------------------------------------------------------
Cash                                                                                     497,650
-------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold                                                     4,815,295
Interest                                                                               4,156,504
Investments sold                                                                       2,573,134
Other                                                                                      7,149
                                                                                  ---------------
Total assets                                                                         355,511,759

-------------------------------------------------------------------------------------------------
LIABILITIES
-------------------------------------------------------------------------------------------------
Payables and other liabilities:
Payable on borrowings (See Note 6)                                                    11,600,000
Investments purchased (including $9,514,815 purchased
on a when-issued basis or forward commitment)                                          9,622,611
Shares of beneficial interest redeemed                                                   537,258
Dividends                                                                                239,155
Distribution and service plan fees                                                        39,877
Trustees' compensation                                                                    23,760
Shareholder communications                                                                21,109
Interest expense                                                                          20,029
Transfer and shareholder servicing agent fees                                             12,709
Other                                                                                     37,007
                                                                                  ---------------
Total liabilities                                                                     22,153,515

-------------------------------------------------------------------------------------------------
NET ASSETS                                                                        $  333,358,244
                                                                                  ===============

-------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
-------------------------------------------------------------------------------------------------
Paid-in capital                                                                   $  315,562,806
-------------------------------------------------------------------------------------------------
Accumulated net investment income                                                        511,303
-------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments                                          (4,232,901)
-------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments                                            21,517,036
                                                                                  ---------------
NET ASSETS                                                                        $  333,358,244
                                                                                  ===============


                   29 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of
$200,831,374 and 16,688,424 shares of beneficial interest outstanding)                  $  12.03
Maximum offering price per share (net asset value plus sales charge of 4.75% of
offering price)                                                                         $  12.63
------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $62,399,331
and 5,178,990 shares of beneficial interest outstanding)                                $  12.05
------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets of $70,127,539
and 5,823,259 shares of beneficial interest outstanding)                                $  12.04

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                   30 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

-------------------------------------------------------------------------------------------------
INVESTMENT INCOME
-------------------------------------------------------------------------------------------------
Interest                                                                          $   14,159,128

-------------------------------------------------------------------------------------------------
EXPENSES
-------------------------------------------------------------------------------------------------
Management fees                                                                        1,363,857
-------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A                                                                                  194,249
Class B                                                                                  509,751
Class C                                                                                  365,028
-------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A                                                                                   63,055
Class B                                                                                   31,670
Class C                                                                                   20,754
-------------------------------------------------------------------------------------------------
Shareholder communications:
Class A                                                                                    5,194
Class B                                                                                    6,271
Class C                                                                                    5,284
-------------------------------------------------------------------------------------------------
Interest expense                                                                         189,885
-------------------------------------------------------------------------------------------------
Custodian fees and expenses                                                               11,612
-------------------------------------------------------------------------------------------------
Trustees' compensation                                                                     8,368
-------------------------------------------------------------------------------------------------
Other                                                                                     72,096
                                                                                  ---------------
Total expenses                                                                         2,847,074
Less reduction to custodian expenses                                                      (4,395)
Less waivers and reimbursements of expenses                                             (460,889)
                                                                                  ---------------
Net expenses                                                                           2,381,790

-------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME                                                                 11,777,338

-------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
-------------------------------------------------------------------------------------------------
Net realized gain on investments                                                         359,429
-------------------------------------------------------------------------------------------------
Net change in unrealized appreciation on investments                                  25,172,214

-------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                              $   37,308,981
                                                                                  ===============

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                   31 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

YEAR ENDED JULY 31,                                                                    2005             2004
-------------------------------------------------------------------------------------------------------------
OPERATIONS
-------------------------------------------------------------------------------------------------------------
Net investment income                                                         $  11,777,338    $   8,903,069
-------------------------------------------------------------------------------------------------------------
Net realized gain (loss)                                                            359,429         (115,750)
-------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)                             25,172,214        1,690,070
                                                                              -------------------------------
Net increase in net assets resulting from operations                             37,308,981       10,477,389

-------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
-------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A                                                                          (7,660,240)      (4,669,052)
Class B                                                                          (2,857,475)      (2,635,363)
Class C                                                                          (1,998,017)      (1,060,217)

-------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
-------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A                                                                          92,338,986       31,512,135
Class B                                                                           4,822,489        3,381,161
Class C                                                                          42,066,514        5,810,614

-------------------------------------------------------------------------------------------------------------
NET ASSETS
-------------------------------------------------------------------------------------------------------------
Total increase                                                                  164,021,238       42,816,667
-------------------------------------------------------------------------------------------------------------
Beginning of period                                                             169,337,006      126,520,339
                                                                              -------------------------------
End of period (including accumulated net investment income
of $511,303 and $1,249,697, respectively)                                     $ 333,358,244    $ 169,337,006
                                                                              ===============================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                   32 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

CLASS A     YEAR ENDED JULY 31,                            2005          2004          2003           2002           2001
----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                 $    10.76     $   10.51     $   10.99    $     10.89     $    10.36
----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                       .62 1         .67           .67            .53            .55
Net realized and unrealized gain (loss)                    1.32           .23          (.52)           .08            .51
                                                     -----------------------------------------------------------------------
Total from investment operations                           1.94           .90           .15            .61           1.06
----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                       (.67)         (.65)         (.63)          (.51)          (.53)
----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                       $    12.03     $   10.76     $   10.51    $     10.99     $    10.89
                                                     =======================================================================

----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                        18.46%         8.63%         1.21%          5.79%         10.42%
----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)             $  200,831     $  94,214     $  61,825    $    47,305     $   39,185
----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                    $  133,634     $  78,828     $  54,811    $    42,809     $   35,710
----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                      5.41%         6.28%         6.24%          4.88%          5.08%
Total expenses                                             0.91%         0.98%         1.02%          0.84%          0.87%
Expenses after payments and waivers and
reduction to custodian expenses                            0.71%         0.78%         0.82%          0.63% 4        0.67% 4
----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                       8%           25%           93%            26%            27%

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

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

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

4. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                   33 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

CLASS B     YEAR ENDED JULY 31,                            2005          2004          2003           2002           2001
----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                 $    10.78     $   10.52     $   11.00    $     10.90     $    10.37
----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                       .54 1         .60           .59            .45            .47
Net realized and unrealized gain (loss)                    1.31           .23          (.53)           .08            .51
                                                     -----------------------------------------------------------------------
Total from investment operations                           1.85           .83           .06            .53            .98
----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                       (.58)         (.57)         (.54)          (.43)          (.45)
----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                       $    12.05     $   10.78     $   10.52    $     11.00     $    10.90
                                                     =======================================================================

----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                        17.53%         7.92%         0.46%          4.99%          9.58%
----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)             $   62,399     $  51,329     $  46,912    $    43,888     $   39,164
----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                    $   56,755     $  50,920     $  45,226    $    41,532     $   36,447
----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                      4.74%         5.54%         5.46%          4.12%          4.34%
Total expenses                                             1.68%         1.73%         1.78%          1.60%          1.62%
Expenses after payments and waivers and
reduction to custodian expenses                            1.48%         1.53%         1.58%          1.39% 4        1.42% 4
----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                       8%           25%           93%            26%            27%

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

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

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

4. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                   34 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

CLASS C     YEAR ENDED JULY 31,                            2005          2004          2003           2002           2001
----------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                 $    10.77     $   10.51     $   10.99    $     10.89     $    10.36
----------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                       .53 1         .59           .59            .44            .47
Net realized and unrealized gain (loss)                    1.32           .24          (.53)           .09            .51
                                                     -----------------------------------------------------------------------
Total from investment operations                           1.85           .83           .06            .53            .98
----------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                       (.58)         (.57)         (.54)          (.43)          (.45)
----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                       $    12.04     $   10.77     $   10.51    $     10.99     $    10.89
                                                     =======================================================================

----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                        17.54%         7.91%         0.45%          4.99%          9.59%
----------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)             $   70,128     $  23,795     $  17,784    $    12,664     $    8,622
----------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                    $   40,717     $  20,470     $  16,770    $     9,831     $    7,301
----------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                      4.57%         5.53%         5.49%          4.10%          4.33%
Total expenses                                             1.67%         1.73%         1.78%          1.60%          1.62%
Expenses after payments and waivers and
reduction to custodian expenses                            1.47%         1.53%         1.58%          1.39% 4        1.42% 4
----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                       8%           25%           93%            26%            27%

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

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

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

4. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                   35 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

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

Oppenheimer New Jersey Municipal Fund (the Fund) is a separate series of
Oppenheimer Multi-State Municipal Trust, a non-diversified, open-end management
investment company registered under the Investment Company Act of 1940, as
amended. The Fund's investment objective is to seek 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. The Fund's investment
advisor is OppenheimerFunds, Inc. (the Manager).

      The Fund offers Class A, Class B and Class C shares. Class A shares are
sold at their offering price, which is normally net asset value plus a front-end
sales charge. Class B and Class C shares are sold without a front-end sales
charge but may be subject to a contingent deferred sales charge (CDSC). All
classes of shares have identical rights and voting privileges with respect to
the Fund in general and exclusive voting rights on matters that affect that
class alone. Earnings, net assets and net asset value per share may differ due
to each class having its own expenses, such as transfer and shareholder
servicing agent fees and shareholder communications, directly attributable to
that class. Class A, B and C have separate distribution and/or service plans.
Class B shares will automatically convert to Class A shares six years after the
date of purchase.

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

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


                   36 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

values have been materially affected by what the Manager identifies as a
significant event occurring before the Fund's assets are valued but after the
close of their respective exchanges will be fair valued. Fair value is
determined in good faith using consistently applied procedures under the
supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).

--------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment can take place up to ten days or more after the trade date.
Normally the settlement date occurs within six months after the trade date;
however, the Fund may, from time to time, purchase securities whose settlement
date extends six months or more beyond trade date. During this period, such
securities do not earn interest, are subject to market fluctuation and may
increase or decrease in value prior to their delivery. The Fund maintains
internally designated assets with a market value equal to or greater than the
amount of its purchase commitments. The purchase of securities on a when-issued
basis or forward commitment may increase the volatility of the Fund's net asset
value to the extent the Fund executes such transactions while remaining
substantially fully invested. The Fund may also sell securities that it
purchased on a when-issued basis or forward commitment prior to settlement of
the original purchase. As of July 31, 2005, the Fund had purchased $9,514,815 of
securities issued on a when-issued basis or forward commitment.

--------------------------------------------------------------------------------
INVERSE FLOATING RATE SECURITIES. The Fund invests in inverse floating rate
securities that pay interest at a rate that varies inversely with short-term
interest rates. Certain of these securities may be leveraged, whereby the
interest rate varies inversely at a multiple of the change in short-term rates.
As interest rates rise, inverse floaters produce less current income. The price
of such securities is more volatile than comparable fixed rate securities. The
Fund will invest no more than 20% of its total assets in inverse floaters.
Inverse floaters amount to $23,692,504 as of July 31, 2005, which represents
6.66% of the Fund's total assets.

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

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

--------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments


                   37 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

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

not offset by capital loss carryforwards, if any, to shareholders, therefore, no
federal income or excise tax provision is required.

The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.

                                                                       NET UNREALIZED
                                                                         APPRECIATION
                                                                     BASED ON COST OF
                                                                       SECURITIES AND
        UNDISTRIBUTED    UNDISTRIBUTED            ACCUMULATED       OTHER INVESTMENTS
        NET INVESTMENT       LONG-TERM                   LOSS      FOR FEDERAL INCOME
        INCOME                    GAIN     CARRYFORWARD 1,2,3            TAX PURPOSES
        -----------------------------------------------------------------------------
        $ 773,927                 $ --          $   4,232,904         $    21,517,036

1. As of July 31, 2005, the Fund had $4,232,904 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of July 31, 2005, details
of the capital loss carryforwards were as follows:

                              EXPIRING
                              ----------------------
                              2009      $  2,565,622
                              2010         1,551,532
                              2012           115,750
                                        ------------
                              Total     $  4,232,904
                                        ============

2. During the fiscal year ended July 31, 2005, the Fund utilized $359,429 of
capital loss carryforward to offset capital gains realized in that fiscal year.

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

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

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

                                       YEAR ENDED      YEAR ENDED
                                    JULY 31, 2005   JULY 31, 2004
        ---------------------------------------------------------
        Distributions paid from:
        Exempt-interest dividends     $12,515,732      $8,364,632

The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of July 31, 2005 are noted below. The primary
difference between book


                   38 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

and tax appreciation or depreciation of securities and other investments, if
applicable, is attributable to the tax deferral of losses or tax realization of
financial statement unrealized gain or loss.

          Federal tax cost of securities         $ 321,944,991
                                                 ==============
          Gross unrealized appreciation          $  21,750,748
          Gross unrealized depreciation               (233,712)
                                                 --------------
          Net unrealized appreciation            $  21,517,036
                                                 ==============

--------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the
Fund's independent trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service. During the year ended July 31,
2005, the Fund's projected benefit obligations were increased by $3,442 and
payments of $1,383 were made to retired trustees, resulting in an accumulated
liability of $18,322 as of July 31, 2005.

      The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of the annual compensation they are entitled to receive from the Fund.
For purposes of determining the amount owed to the Trustee under the plan,
deferred amounts are treated as though equal dollar amounts had been invested in
shares of the Fund or in other Oppenheimer funds selected by the Trustee. The
Fund purchases shares of the funds selected for deferral by the Trustee in
amounts equal to his or her deemed investment, resulting in a Fund asset equal
to the deferred compensation liability. Such assets are included as a component
of "Other" within the asset section of the Statement of Assets and Liabilities.
Deferral of trustees' fees under the plan will not affect the net assets of the
Fund, and will not materially affect the Fund's assets, liabilities or net
investment income per share. Amounts will be deferred until distributed in
accordance to the Plan.

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

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

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


                   39 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

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

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

--------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.

--------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST

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

                                 YEAR ENDED JULY 31, 2005          YEAR ENDED JULY 31, 2004
                                  SHARES           AMOUNT           SHARES           AMOUNT
--------------------------------------------------------------------------------------------
CLASS A
Sold                           9,080,461    $ 105,520,260        4,157,479    $  45,439,740
Dividends and/or
distributions reinvested         376,131        4,339,946          237,670        2,588,895
Redeemed                      (1,520,910)     (17,521,220)      (1,526,995)     (16,516,500)
                              --------------------------------------------------------------
Net increase                   7,935,682    $  92,338,986        2,868,154    $  31,512,135
                              ==============================================================

--------------------------------------------------------------------------------------------
CLASS B
Sold                           1,585,776    $  18,264,106        1,428,513    $  15,622,837
Dividends and/or
distributions reinvested         142,260        1,635,223          142,239        1,552,924
Redeemed                      (1,312,398)     (15,076,840)      (1,267,677)     (13,794,600)
                              --------------------------------------------------------------
Net increase                     415,638    $   4,822,489          303,075    $   3,381,161
                              ==============================================================

--------------------------------------------------------------------------------------------
CLASS C
Sold                           3,958,354    $  46,014,401        1,043,074    $  11,511,732
Dividends and/or
distributions reinvested          90,223        1,044,143           54,414          593,732
Redeemed                        (434,529)      (4,992,030)        (579,840)      (6,294,850)
                              --------------------------------------------------------------
Net increase                   3,614,048    $  42,066,514          517,648    $   5,810,614
                              ==============================================================

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

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

                                   PURCHASES        SALES
      ---------------------------------------------------
      Investment securities     $138,913,934  $15,836,894


                   40 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at annual
rate of 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.

--------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended July 31, 2005, the Fund paid $110,665
to OFS for services to the Fund.

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

--------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
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 services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years. Fees incurred by the Fund under the Plan are detailed in the Statement of
Operations.

--------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B AND CLASS C SHARES. The Fund has
adopted Distribution and Service Plans for Class B and Class C shares to
compensate the Distributor for its services in connection with the distribution
of those shares and servicing accounts. Under the plans, the Fund pays the
Distributor an annual asset-based sales charge of 0.75% per year on Class B and
Class C shares. The Distributor also receives a service fee of up to 0.15% per
year under each plan. If either the Class B or Class C plan is terminated by the
Fund or by the shareholders of a class, the Board of Trustees and its
independent trustees must determine whether the Distributor shall be entitled to
payment from the Fund of all or a portion of the service fee and/or asset-based
sales charge in respect to shares sold prior to the effective date of such
termination. The Distributor's aggregate uncompensated expenses under the plan
at July 31, 2005 for Class B and Class C shares were $2,170,424 and $925,040,
respectively. Fees incurred by the Fund under the plans are detailed in the
Statement of Operations.

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


                   41 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

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

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

the CDSC retained by the Distributor on the redemption of shares is shown in the
table below for the period indicated.

                                       CLASS A         CLASS B          CLASS C
                       CLASS A      CONTINGENT      CONTINGENT       CONTINGENT
                     FRONT-END        DEFERRED        DEFERRED         DEFERRED
                 SALES CHARGES   SALES CHARGES   SALES CHARGES    SALES CHARGES
                   RETAINED BY     RETAINED BY     RETAINED BY      RETAINED BY
YEAR ENDED         DISTRIBUTOR     DISTRIBUTOR     DISTRIBUTOR      DISTRIBUTOR
-------------------------------------------------------------------------------
July 31, 2005         $321,354            $250        $133,731          $40,746

-------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. 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. During the year
ended July 31, 2005, the Manager waived $460,889 of its management fees. This
voluntary undertaking is expected to remain in effect indefinitely, however it
may be amended or withdrawn by the Manager at anytime without notice to
shareholders.

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

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

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

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

The Fund can borrow money from banks in amounts up to one-third of its total
assets (including the amount borrowed) less all liabilities and indebtedness
other than borrowings to purchase portfolio securities, to meet redemption
obligations or for temporary and emergency purposes. The purchase of securities
with borrowed funds creates leverage in the Fund. Until terminated on January
21, 2005, the Fund had entered into an agreement which enabled it to participate
with certain other Oppenheimer funds in a committed, unsecured line of credit
with a bank, which permitted borrowings up to $540 million, collectively.
Interest was charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.75%. The Fund also paid a commitment fee equal to
its pro rata share of the average unutilized amount of the credit facility at a
rate of 0.09% per annum.

      Effective January 21, 2005 the Fund entered into a Revolving Credit and
Security Agreement (the "Agreement") with a conduit lender and a bank which
enables it to


                   42 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND

participate with certain other Oppenheimer funds in a committed, secured
borrowing facility that permits borrowings of up to $800 million, collectively.
To secure the loan, the Fund pledges investment securities in accordance with
the terms of the Agreement. Interest is charged to the Fund, based on its
borrowings, at current commercial paper issuance rates (3.3439% as of July 31,
2005). The Fund pays additional fees of 0.30% per annum on its outstanding
borrowings to manage and administer the facility and is allocated its pro-rata
share of a 0.13% per annum commitment fee for a liquidity backstop facility with
respect to the $800 million facility size.

      For the year ended July 31, 2005, the average daily loan balance was
$6,950,411 at an average daily interest rate of 2.738%. The Fund had borrowings
outstanding of $11,600,000 at July 31, 2005 at an interest rate of 3.3439%. The
Fund had gross borrowings and gross loan repayments of $105,200,000 and
$111,900,000, respectively, during the year ended July 31, 2005. The maximum
amount of borrowings outstanding at any month-end during the year ended July 31,
2005 was $19,400,000. The Fund paid $13,546 in fees and $172,012 in interest
during the year ended July 31, 2005.

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

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

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


                   43 | OPPENHEIMER NEW JERSEY MUNICIPAL FUND










                       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 the Class A 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 Registered Public Accounting Firm's 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






20

------------------------------------------------------------------------------
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 because 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 net assets (plus borrowings for investment
purposes) in Pennsylvania municipal securities.  This includes securities
that generate income subject to the alternative minimum tax. 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" bonds (including "industrial
development" and "private activity" bonds).  They may have fixed, variable or
floating rates of interest or may be "zero coupon bonds" as described below.


      Some bonds may be "callable," allowing the issuer to redeem them before
their maturity date. To protect bondholders, callable bonds may be issued
with provisions that prevent them from being called for a period of time.
Typically, that is five (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, 24.1% 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 past 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. District Court 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 October 17, 2005, the U.S. Supreme Court denied the U.S.
Department of Justice's  petition for certiorari 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 could 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.


      After the Fund buys a municipal security, it 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. 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 commonwealth of Pennsylvania since the date hereof.


      |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.


      The Comprehensive Annual Financial Report ("CAFR") for the fiscal year
ended June 30, 2004 was issued on March 31, 2005.  The CAFR, beginning with
the one issued for the fiscal year ended June 30, 2002, incorporated several
new accounting and reporting standards that affect the comparability of
financial information for that fiscal year and subsequent fiscal years to
GAAP basis financial information reported for fiscal years prior to the
adoption of the new standards.  Also beginning with the fiscal year ended
June 30, 2002, the CAFR provided a new presentation of government-wide
financial statements that were intended to provide an all-encompassing view
of a government's financial condition and activities.

Financial Results for Recent Fiscal Years (GAAP Basis).

      During the five-year period from fiscal year 2000 through fiscal year
2004, total revenues and other sources increased by an average of 4.6 percent
annually. Tax revenues during this same period increased by an annual average
of 2.7 percent.  During the past several fiscal years slow economic growth
and the resulting slow growth for tax revenues have caused fees and license
income and other financing sources such as transfers from other funds to
become a larger portion of income to the General Fund. Expenditures and other
uses during the fiscal years 2000 through 2004 rose at an average annual rate
of 5.4 percent.  Comparison of expenditures by individual category in fiscal
years 2002 through 2004 to prior fiscal years is not reliable due to a change
to the definitions for these expenditure categories in fiscal year 2002.

      The fund balance at June 30, 2004 totaled $3,006.5 million, an increase
of $648.8 million from the balance at June 30, 2003.  The fiscal year 2004
year-end unreserved-undesignated portion of the fund balance was $1,633.3
million, $318.8 million above the amount recorded for fiscal year 2003 at
years end.


Fiscal 2003 Results.

Continued slow growth in the national economy since the recession of 2001
impacted the Commonwealth tax and revenue collections in fiscal year 2003.
Actual fiscal year Commonwealth revenues were below estimate by 2.3 percent
or $497.6 million.  Total fiscal year 2003 Commonwealth revenues net of
reserves for tax refunds and including intergovernmental transfers and
additional resources were $21,808.5 million.  Actual expenditures from fiscal
year 2003 appropriations were 1.4 percent or $295.7 million below the
original enacted amounts for fiscal year 2003.  Total expenditures net of
appropriation lapses and including intergovernmental transfers and
expenditures from additional resources totaled $21,671.9 million.  As result
of financial operations during fiscal year 2003, efforts to reduce
expenditures and the General Assembly's repeal of the transfer of $300
million from the General Fund to the Budget Stabilization Reserve Fund, the
unappropriated surplus balance increased by $136.6 million prior to the
statutorily required 25 percent transfer to the Budget Stabilization Reserve
Fund.  As result, the fiscal year 2003 final unappropriated surplus balance
was $209.3 million as of June 30, 2003.

      Revenues available to the Commonwealth, including intergovernmental
transfers and additional resources, and prior to reserves for refunds
increased 11.0 percent from fiscal year 2002 levels.  Fiscal year 2003
revenues totaled $21,808.5 million, an increase of $2.2 billion over fiscal
year 2002 revenues.  Commonwealth taxes and revenues, prior to reserves for
refunds, increased by $1.3 billion to $21,314.5 million in fiscal year 2003,
a 6.3 percent increase.  This increase in tax revenues was primarily due to
increases for certain Commonwealth taxes enacted with the fiscal 2003
budget.  While Commonwealth revenues increased year over year, revenues were
below the estimate enacted with the fiscal 2003 budget.  Commonwealth taxes
and revenues (prior to reserves for tax refunds) totaled $21,314.5 million,
$497.6 million (2.3 percent) below the estimate made at the time the fiscal
year 2003 budget was enacted.  Most major Commonwealth tax categories
performed below the estimated amount for fiscal year 2003.

      Commonwealth expenditures of appropriations, including supplemental
appropriations, intergovernmental transfers and additional resources, and net
of appropriation lapses, totaled $21,671.9 million, representing an increase
of $797.5 million or 3.8 percent from fiscal year 2002 levels.  A total of
$466.9 million in appropriations were lapsed in fiscal year 2003 as part of a
comprehensive effort by the executive branch to limit expenditures in
response to revenue collections below the estimate enacted with the 2003
budget.  The fiscal year 2003 budget relied on intergovernmental transfers
for a larger portion of medical assistance costs than in fiscal 2002.

      For GAAP purposes, the General Fund reported a fund balance of $2,357.7
million, a decrease of $665 million from the reported $3,022.8 million fund
balance at June 30, 2002.  On a net basis, total assets increased by $388
million to $8,525 million. Liabilities increased by $1,053 million to $6,167
million largely because of a $383 million increase in accounts payable.  A
large part of the $665 million net decrease in General Fund balance was
because the General Fund transferred $903 million to other Funds and provided
$1,037 million to component units.  Without these items, the General Fund
would have increased by $1,275 million.  Total General Fund expenditures
increased by 8.2 percent during the fiscal year ended June 30, 2003, on a
reported basis, largely because of a sharp increase in expenditures for
medical and other assistance (reported as part of health and human services)
and a change in classification for component unit subsidies.  The overall
decrease in fund balance ($665 million) during the fiscal year was an
improvement of $957 million over the prior year fiscal year decrease in fund
balance ($1,622 million).  On an overall basis, during periods of declining
or slow economic growth, it is common for the fund balance of the General
Fund to decline.



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.  Tax rate and tax
base changes 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.


      For GAAP purposes, the General Fund reported a fund balance of $3,006.5
million at June 30, 2004, an increase of $648.8 million from the reported
$2,357.7 million fund balance at June 30, 2003.  On a net basis, total assets
increased by $1,939 million to $10,464 million. Liabilities increased by
$1,290 million to $7,457 million largely because of a $764 million increase
in accounts payable. General Fund tax revenues increased by 8.4 percent due
to economic growth and specific statutory increases in certain tax bases and
rates enacted in December 2003.  Intergovernmental revenues increased by 14.3
percent, due primarily to increases in federally-funded programs,
particularly medical and other assistance, where expenditures increased over
the prior year.  Total General Fund revenues increased by 10.3 percent during
the fiscal year.

      The overall increase in the fund balance, $648.8 million, during the
fiscal year was an improvement of $1,314 million over the prior fiscal year
decrease in fund balance of $665 million.  On an overall basis, during
periods of declining or slow economic growth, it is common for the fund
balance of the General Fund to decline and, conversely, to increase during
periods of economic growth.  During periods of economic growth, General Fund
revenues increase while certain significant expenditures, such as medical
assistance, also increase, but at a slower rate.  Total General Fund
expenditures increased by 6.0 percent during the fiscal year ended June 30,
2004, on a GAAP-reported basis, largely because of the increase in
expenditures for medical and other assistance (reported as part of health and
human services). Expenditures for direction and supportive services increased
due to significantly higher employer costs for both active and retired
employee healthcare benefits.  Year-over-year expenditures for the health and
human services function increased by 6.5 percent; all other expenditures, on
a combined basis, increased by 5.5 percent, largely as a result of higher
amounts appropriated throughout most of the General Fund.


      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, enacted on July 4, 2004, was
based initially 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 were 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, was 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.

      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 anticipated that economic growth
would continue to recover from a period of softness in the second quarter of
2004 and that employment levels would continue to improve moderately.  Trends
in the Pennsylvania economy were expected to maintain their close association
with national economic trends.  Personal income growth in Pennsylvania was
projected to remain slightly below that of the U.S., while the Pennsylvania
unemployment rate was anticipated to be close to the national rate.

      Estimates for fiscal year 2005 General Fund revenues were increased by
$290.9 million in February 2005 as part of the Governor's proposed fiscal
year 2006 budget. Actual fiscal year 2005 collections totaled $24.3 billion,
which was $439.8 million or 1.8 percent above estimate.

      The enacted fiscal year 2005 budget provided $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 budget also included $673.8
million in funding for medical assistance expenditures through
intergovernmental transfer proceeds.

      The fiscal 2005-06 General Fund operating budget for the Commonwealth
that was adopted on July 7, 2005 totals $24.3 billion.  It provided for an
8.7 percent 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 that follows an 8.1 percent increase in
education funding in the prior budget.  It also included $91 million in
funding for the Job Ready Pennsylvania initiative intended to improve
Pennsylvania workforce programs. Most of the tax reform initiatives proposed
by the Governor in February were not adopted.


      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 news release dated
September 30, 2005, the state collected $2.2 billion in General Fund revenues
in September 2005 - $20.3 million, or .9 percent above the official
estimate.  Fiscal year-to-date General Fund collections total $5.5 billion,
which is $30.1 million, or 0.5 percent, above the official estimate.

Commonwealth Debt.

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 included 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 included $625 million in bond funding under the
Growing Greener initiative which would be spread out over six years to allow
the Commonwealth to address some of the Commonwealth's environmental problems
and help the state compete 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
$6,893 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.

            |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.


      |X|  Floating Rate and Variable Rate Obligations.  Variable rate
obligations may 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.


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

      |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.

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| 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| 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(R), the automated quotation system of The
         NASDAQ(R)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.
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.

      |_|  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 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 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|   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| Temporary Defensive and Interim 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.


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


      |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
    Fund 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 Oppenheimer Multi-State
Municipal Trust (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, to
reclassify unissued shares  into additional series or classes of shares and
to divide or combine the shares of a class into a greater or lesser number of
shares without changing the proportionate beneficial interest of a
shareholder in the Fund.  Shares do not have cumulative voting rights,
preemptive rights or subscription rights.  Shares may be voted in person or
by proxy at shareholder meetings.


      The Fund currently has 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 under certain circumstances. However, the risk that a Fund
shareholder will incur financial loss from being held liable as a "partner"
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 who are not "interested persons"
under the Investment Company Act (the "Independent Trustees").  The members
of the Audit Committee are Joel W. Motley (Chairman), Mary F. Miller, Kenneth
A. Randall, 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
Independent Trustees; (v) reviewing the independence of the Fund's
independent Auditors; and (vi) pre-approving the provision of any audit and
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 members of the Regulatory & Oversight Committee are Robert G. Galli
(Chairman),  Matthew P. Fink, Phillip A. Griffiths, Joel W. Motley and Brian
F. Wruble. 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
agency 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. Peter I. Wold and Kenneth A. Randall.  The
Governance Committee held 7 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 Governance 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 Governance 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 Governance Committee has been able to identify from its
own resources an ample number of qualified candidates. Nonetheless, under the
current policy of the Board, if the Board determines that a vacancy exists or
is likely to exist on the Board, the Governance Committee will consider
candidates for Board membership including those recommended by the Fund's
shareholders. The Governance Committee will consider nominees recommended by
Independent Board members or recommended by any other Board members including
Board members affiliated with the Fund's Manager. The Committee may, upon
Board approval, retain an executive search firm to assist in screening
potential candidates. Upon Board approval, the Committee may also use
services of legal, financial, or other external counsel that it deems
necessary or desirable in the screening process. Shareholders wishing to
submit a nominee for election to the Board may do so by mailing their
submission to the office of OppenheimerFunds, Inc., Two World Financial
Center, 225 Liberty Street, 11th Floor, New York, NY 10281-1008, to the
attention of the Board of Trustees of Oppenheimer Pennyslvania Municipal
Fund, c/o the Secretary of the Fund.

      Submissions should, at a minimum, be accompanied by the following: (1)
the name, address, and business, educational, and/or other pertinent
background of the person being recommended; (2) a statement concerning
whether the person is an "interested person" as defined in the Investment
Company Act; (3) any other information that the Fund would be required to
include in a proxy statement concerning the person if he or she was
nominated; (4) the name and address of the person submitting the
recommendation and, if that person is a shareholder, the period for which
that person held Fund shares. Shareholders should not that a person who owns
securities issued by Massachusetts Mutual Life Insurance Company (the parent
company of the Manager) would be deemed an "interested person" under the
Investment Company Act. In addition, certain other relationships with
Massachusetts Mutual Life Insurance Company or its subsidiaries, with
registered broker-dealers, or with the Funds' outside legal counsel may cause
a person to be deemed and "interested person".

      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.

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


Oppenheimer AMT-Free Municipals           Oppenheimer International Growth Fund
                                          Oppenheimer International Large Cap Core
Oppenheimer AMT-Free New York Municipals  Fund
                                          Oppenheimer International Small Company
Oppenheimer Balanced Fund                 Fund
Oppenheimer California Municipal Fund     Oppenheimer International Value Fund
                                          Oppenheimer   Limited   Term   California
Oppenheimer Capital Appreciation Fund     Municipal Fund
Oppenheimer Developing Markets Fund       Oppenheimer Money Market Fund, Inc.
Oppenheimer Discovery Fund                Oppenheimer Multi-State Municipal Trust
Oppenheimer Dividend Growth Fund          Oppenheimer Portfolio Series
Oppenheimer Emerging Growth Fund          Oppenheimer Real Estate Fund
Oppenheimer Emerging Technologies Fund    Oppenheimer Select Value Fund
Oppenheimer Enterprise Fund               Oppenheimer Series Fund, Inc.
Oppenheimer Global Fund                   OFI Tremont Core Strategies Hedge Fund
Oppenheimer Global Opportunities Fund     OFI Tremont Market Neutral Hedge Fund
                                          Oppenheimer  Tremont  Market Neutral Fund
Oppenheimer Gold & Special Minerals Fund  LLC
Oppenheimer Growth Fund                   Oppenheimer Tremont Opportunity Fund LLC
Oppenheimer   International   Diversified
Fund                                      Oppenheimer U.S. Government Trust




      In addition to being a director or trustee of the Board I Funds,
Messrs. Galli and Wruble are directors or trustees of ten other portfolios,
and Messrs. Wikler and Wold are trustees of one other portfolio, 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, Cottier, Loughran, Willis, Gillespie, 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 held of record by an employee benefit plan for employees of the
Manager, other than the shares beneficially owned under that plan by the
officers of the Fund listed above. In addition, none of the Independent
Trustees (nor any of their immediate family members), owns securities of
either the Manager or 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 at least the past five years are listed in the
charts below. The charts also include information about each Trustee's
beneficial share ownership in the Fund and in all of the registered
investment companies that the Trustee oversees in the Oppenheimer family of
funds ("Supervised Funds"). 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. The address of each Trustee in the chart below is 6803 S.
Tucson Way, Centennial, Colorado 80112-3924. Each Trustee serves for an
indefinite term or until his or her resignation, retirement, death or
removal.

-----------------------------------------------------------------------------------
                               Independent Trustees
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Name,              Principal Occupation(s) During Past 5    Dollar     Aggregate
                                                                       Dollar
                                                                       Range Of
                   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 Covanta
2003;              Holding Corp. (waste-to-energy
Trustee since 1991 comp[any) (since 2002); Director of
Age: 74            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: 67            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: 63            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 of Columbia Equity Financial    None       Over
Trustee since 2002 Corp. (privately-held financial                     $100,000
Age: 53            adviser) (since 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); Member of
                   the Finance and Budget Committee of the
                   Council on Foreign Relations, the
                   Investment Committee of the Episcopal
                   Church of America, the Investment
                   Committee of Human Rights Watch and the
                   Investment Committee of Historic Hudson
                   Valley 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 of The Directorship Search      None       Over
Reynolds, Jr.,     Group, Inc. (corporate governance                   $100,000
Trustee since 1989 consulting and executive recruiting)

Age: 73            (since 1993); a Life Trustee of
                   International House (non-profit
                   educational organization); Former
                   Trustee of The Historical Society of
                   the Town of Greenwich. Oversees 38
                   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 39
                   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 39 portfolios in
                   the OppenheimerFunds complex.

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

Brian F. Wruble                                             None       Over
Trustee since 2005 General Partner of Odyssey Partners,                $100,000
Age: 62            L.P. (hedge fund) (since September
o                  1996); Director of Special Value
                   Opportunities Fund, LLC (registered
                   investment company) (since September
                   2004); Director of Zurich Financial
                   Investment Advisory Board (affiliate of
                   the Manager's parent company) (since
                   October 2004); Board of Governing
                   Trustees of The Jackson Laboratory
                   (non-profit) (since August 1990);
                   Trustee of the Institute for Advanced
                   Study (non-profit educational
                   institute) (since May 1992); Special
                   Limited Partner of Odyssey Investment
                   Partners, LLC (private equity
                   investment) (January 1999-September
                   2004); Trustee of Research Foundation
                   of AIMR  (2000-2002) (investment
                   research, non-profit); Governor, Jerome
                   Levy Economics Institute of Bard
                   College (August 1990-September 2001)
                   (economics research); Director of Ray &
                   Berendtson, Inc. (May 2000-April 2002)
                   (executive search firm). Oversees 48
                   portfolios in the OppenheimerFunds
                   complex.

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


      The address of Mr. Murphy is Two World Financial Center, 225 Liberty
Street, 11th Floor, New York, New York 10281-1008. Mr. Murphy serves as a
Trustee and an officer for an indefinite term or until his resignation,
retirement, death or removal. Mr. Murphy is an "Interested Trustee" because
he is affiliated with the Manager by virtue of his positions as an officer
and director of the Manager, and as a shareholder of its parent company.


-------------------------------------------------------------------------------------
                           Interested Trustee and Officer
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Name,               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: 56             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 87 portfolios as a
                    Trustee or Director and officer in the
                    OppenheimerFunds complex.

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


      The addresses of the officers in the chart below are as follows: for
Messrs. Fielding, Loughran, Cottier,Willis, Gillespie and Zack and Ms.
Bloomberg, Two World Financial Center, 225 Liberty Street, New York, New York
10281-1008, for Messrs. Petersen, Vandehey, Vottiero,  and Wixted and Ms.
Ives, 6803 S. Tucson Way, Centennial, Colorado 80112-3924.  Each officer
serves for an indefinite term or until his or her resignation, retirement,
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: 56

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

Daniel G. Loughran,     Vice  President of the Manager  since April 2001; an officer
Vice President since    of 8 portfolios in the OppenheimerFunds complex.
2005
Age: 42

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

Scott Cottier, Vice     Vice President of the Manager since 2002;  portfolio manager
President since 2005    and trader at Victory  Capital  Management  (1999-2002);  an
Age: 34                 officer of 8 portfolios in the OppenheimerFunds complex.

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

Troy Willis, Vice       Assistant  Vice  President  of the Manager  since July 2005;
President since 2005    Associate  Portfolio  Manager  of the  Manager  since  2003;
Age: 33                 corporate  attorney for Southern Resource Group (1999-2003);
                        an officer of 8 portfolios in the OppenheimerFunds complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
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: 46                 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: 40                 October  2003) of the  Distributor;  Assistant  Secretary of

                        Centennial  Asset  Management   Corporation  (since  October
                        2003);   Vice   President   and   Assistant   Secretary   of
                        Shareholder   Services,   Inc.   (since   1999);   Assistant
                        Secretary   of    OppenheimerFunds    Legacy   Program   and
                        Shareholder Financial Services,  Inc. (since December 2001);
                        Assistant  Counsel  of  the  Manager  (August   1994-October
                        2003).  An officer of 87 portfolios in the  OppenheimerFunds
                        complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Lisa I. Bloomberg,      Vice  President and Associate  Counsel of the Manager (since
Assistant Secretary     May 2004);  First Vice President  (April  2001-April  2004),
since 2004              Associate  General  Counsel   (December   2000-April  2004),
Age:  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' compensation from the Fund, shown below, is for
serving as a Trustee and member of a committee (if applicable), with respect
to the Fund's fiscal year ended July 31, 2005.  The total compensation from
the Fund and fund complex represents compensation, including accrued
retirement benefits, for  serving as a Trustee and member of a committee (if
applicable) of the Boards of the Fund and other funds in the OppenheimerFunds
complex during the calendar year ended December 31, 2004.



------------------------------------------------------------------------------------
 Name and Other Fund      Aggregate      Retirement     Estimated        Total
                                          Benefits        Annual      Compensation
                         Compensation    Accrued as      Benefits    From the Fund

Position(s)                From the     Part of Fund       Upon         and Fund
(as applicable)           Fund((1))       Expenses    Retirement((2))   Complex

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

Clayton K. Yeutter       $2,244((3))        $561         $86,171        $173,700

Chairman of the Board
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------

Matthew P. Fink((4))         None           None          $2,641          None
Proxy Committee Member
and Regulatory &
Oversight Committee
Member

------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Robert G. Galli

Regulatory & Oversight      $1,670          None      $100,824((5))  $237,312((6))
Committee Chairman

------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Phillip A. Griffiths
Governance Committee

Chairman and             $1,937((7))       $6,188        $34,972        $142,092
Regulatory & Oversight
Committee Member

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

Mary F. Miller(8)

Audit Committee Member

and Proxy Committee          $880           None          $7,128         $8,532
Member

------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
Joel W. Motley
Audit Committee

Chairman and             $1,947((9))       $2,487        $23,945        $150,760
Regulatory & Oversight
Committee Member

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

Kenneth A. Randall          $1,732       None((10))      $85,944        $134,080

Audit Committee Member
and Governance
Committee Member
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------

Edward V. Regan((11))       $1,423          None         $70,977        $118,788


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

Russell S. Reynolds,        $1,382          None         $66,602        $106,792
Jr.
Proxy Committee
Chairman and
Governance Committee
Member

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

Donald Spiro((12))           $203           None           None         $64,080


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

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

Joseph M. Wikler(13)         None           None            --          $23,000

Audit Committee Member
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------

Peter I. Wold (13)
Governance Committee         None           None            --          $20,500
Member

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

Brian F. Wruble (1(4))
Regulatory & Oversight       None           None      $22,238(1(5))  $111,000(1(6))
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  $597 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   $2,063   deferred  by  Mr.   Griffiths  under  the  "Deferred
   Compensation Plan" described below.
8.    Ms. Miller was appointed as a Board member 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 a Board member of all of the other
   Board I Funds during 2005.
9.    Includes $830  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.

1.    Mr. Wikler and Mr. Wold were elected as Board members of 23 of the
   Board I Funds as of August 17, 2005. They had served as Board members of
   the other 11 Board I Funds prior to that date.
14.         Mr. Wruble was appointed as Trustee of the Board I Funds
   effective October 10, 2005.
15.   Estimated benefits to be paid to Mr. Wruble for serving as a director
   or trustee of 10 other Oppenheimer funds that are not Board I Funds. Mr.
   Wruble's service as a director or trustee of such funds will not be
   counted towards the fulfillment of his eligibility requirements for
   payments under the Board I retirement plan, described below.
16.   For serving as a director or trustee of 10 other Oppenheimer funds (at
   December 31, 2004) that are not Board I Funds.


      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 compensation account.

      |X|  Major Shareholders.  As of October 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/#XXX,
4800 Deer Lake Drive East Floor 3,  Jacksonville,  FL 32246-6484,  which owned
1,172,024.562  Class C shares  (9.73% 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
Portfolio Proxy Voting Policies and Procedures include provisions to address
conflicts of interest that may arise between the Fund and the Manager or the
Manager's affiliates or business relationships.  Such a conflict of interest
may arise, for example, where the Manager or an affiliate of the Manager
manages or administers the assets of a pension plan or other investment
account of the portfolio company soliciting the proxy or seeks to serve in
that capacity.  The Manager and its affiliates generally seek to avoid such
conflicts by maintaining separate investment decision making processes to
prevent the sharing of  business objectives with respect to proposed or
actual actions regarding portfolio proxy voting decisions.  Additionally, the
Manager employs the following two procedures:  (1) if the proposal that gives
rise to the conflict is specifically addressed in the Guidelines, the Manager
will vote the portfolio proxy in accordance with the Guidelines, provided
that they do not provide discretion to the Manager on how to vote on the
matter; and (2) if such proposal is not specifically addressed in the
Guidelines or the Guidelines provide discretion to the Manager on how to
vote, the Manager will vote in accordance with the third-party proxy voting
agent's general recommended guidelines on the proposal provided that the
Manager has reasonably determined that there is no conflict of interest on
the part of the proxy voting agent.  If neither of the previous two
procedures provides an appropriate voting recommendation, the Manager may
retain an independent fiduciary to advise the Manager on how to vote the
proposal or may abstain from voting.  The Guidelines' provisions with respect
to certain routine and non-routine proxy proposals are summarized below:

o     The Fund generally votes with the recommendation of the issuer's
   management on routine matters, including ratification of the independent
   registered public accounting firm, unless circumstances indicate otherwise.
o     The Fund evaluates nominees for director nominated by management on a
   case-by-case basis, examining the following factors, among others:
   Composition of the board and key board committees, attendance at board
   meetings, corporate governance provisions and takeover activity, long-term
   company performance and the nominee's investment in the company.
o     In general, the Fund opposes anti-takeover proposals and supports the
   elimination, or the ability of shareholders to vote on the preservation or
   elimination, of anti-takeover proposals, absent unusual circumstances.
o     The Fund supports shareholder proposals to reduce a super-majority vote
   requirement, and opposes management proposals to add a super-majority vote
   requirement.
o     The Fund opposes proposals to classify the board of directors.
o     The Fund supports proposals to eliminate cumulative voting.
o     The Fund opposes re-pricing of stock options without shareholder
   approval.


o     The Fund generally  considers executive  compensation  questions such as
         stock  option   plans  and  bonus  plans  to  be  ordinary   business
         activity.  The Fund analyzes  stock option plans,  paying  particular
         attention  to  their  dilutive  effect.   While  the  Fund  generally
         supports  management  proposals,  the Fund opposes plans it considers
         to be excessive.

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

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

      The Fund pays expenses not expressly assumed by the Manager under the
advisory agreement. The 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                  the Manager
    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 Ronald H. Fielding, Daniel G.
Loughran, Scott Cottier, Troy Willis, Mark DeMitry and Marcus Franz (each is
referred to as a "Portfolio Manager" and collectively they are referred to as
the "Portfolio Managers") who are responsible for the day-to-day management
of the Fund's investments.

        Other Accounts Managed.  In addition to managing the Fund's
investment portfolio, Messrs. Fielding, Loughran, Cottier, Willis, DeMitry
and Franz 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, Willis DeMitry and Franz 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      None

   Fielding
   -----------------------------------------------------------------------------
   -----------------------------------------------------------------------------

   Daniel G.        10     $19,636.80     None        $0      None      None

   Loughran
   -----------------------------------------------------------------------------
   -----------------------------------------------------------------------------

   Scott Cottier    10     $19,636.80     None        $0      None      None

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

   Troy Willis      10     $19,636.80     None        $0      None      None

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

   Marcus Franz     10     $19,636.80     None        $0      None      None

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

   Mark DeMitry     10     $19,636.80     None        $0      None      None


   *  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, "affiliated" brokers 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, analytical
software and similar products and services. If a research service also
assists the Manager in a non-research capacity (such as bookkeeping or other
administrative functions), then only the percentage or component that
provides assistance to the Manager in the investment decision-making process
may be paid in commission dollars.


The research services provided by brokers broaden the scope and supplement
the research activities of the Manager.  That research provides additional
views and comparisons for consideration and helps the Manager 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 period in which the aggregate net asset value of all Fund shares of
that class held by the recipient for itself and its customers does not exceed
a minimum amount, if any, that may be set from time to time by a majority of
the Independent Trustees.

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

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



      The asset-based sales charge and service fees increase Class B and
Class C expenses by 1.00% of the net assets per year of the respective
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 periodically in lieu of paying
the sales concession and service fee in advance at the time of purchase.


      The asset-based sales charge on Class B and Class C shares allows
investors to buy shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell those shares.  The Fund pays the
asset-based sales charge to the Distributor for its services rendered in
distributing Class B and Class C shares. The payments are made to the
Distributor in recognition that the Distributor:

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


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 may not carry the excess over to subsequent fiscal years. 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 and Service 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       $1,559,825     $1,337,641(1)      $5,240,040         1.07%

 Plan
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------

 Class C        $865,970       $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 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.
o     Yields and total returns for any given past period represent historical
         performance information and are not, and should not be considered, a
         prediction of future yields or returns.

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

      |X| Yields.  The Fund uses a variety of different yields to illustrate
its current returns. Each class of shares calculates its yield separately
because of the different expenses that affect each class.

      |_| Standardized Yield.  The "standardized yield" (sometimes referred
to just as "yield") is shown for a class of shares for a stated thirty day
period.  It is not based on actual distributions paid by the Fund to
shareholders in the thirty 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:

                                6
                      [(a-b    )
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-Years
                                  1-Year           5-Years        (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 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
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 more than $100,000 for
Class B shares or a purchase order of $1 million or more to purchase Class C
shares on behalf of a single investor (not including dealer "street name" or
omnibus accounts).


Class B or Class C shares may not be purchased by 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. Investors should consult their tax
advisers regarding the state and local tax consequences of the conversion or
exchange of classes of shares.


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

      The methodology for calculating the net asset value, dividends and
distributions of the Fund's share classes recognizes two types of expenses.
General expenses that do not pertain specifically to any one class are
allocated pro rata to the shares of all classes. The allocation is based on
the percentage of the Fund's total assets that is represented by the assets
of each class, and then equally to each outstanding share within a given
class. Such general expenses include management fees, legal, bookkeeping and
audit fees, printing and mailing costs of shareholder reports, Prospectuses,
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
in  September.


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

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

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

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

   Limited Term New York Municipal Fund   Oppenheimer Limited Term California
                                          Municipal Fund

   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 Cash Reserves              Oppenheimer Principal Protected Main
                                          Street Fund III
   Oppenheimer Champion Income Fund       Oppenheimer Quest Capital Value Fund,
                                          Inc.
   Oppenheimer Convertible Securities     Oppenheimer Quest International Value
   Fund                                   Fund, Inc.
   Oppenheimer Disciplined Allocation     Oppenheimer Rochester National Municipals
   Fund
   Oppenheimer Dividend Growth Fund       Oppenheimer Senior Floating Rate Fund
   Oppenheimer Gold & Special Minerals    Oppenheimer Total Return Bond Fund
   Fund



     o  Oppenheimer  Money  Market  Fund,  Inc.  only offers Class A and Class Y
shares.

     o Class Y shares of  Oppenheimer  Real Asset Fund may not be exchanged  for
shares of any other fund.

     o Class B and Class C shares of  Oppenheimer  Cash  Reserves are  generally
available  only by exchange  from the same class of shares of other  Oppenheimer
funds or through OppenheimerFunds-sponsored 401(k) plans.

     o  Class  M  shares  of  Oppenheimer  Convertible  Securities  Fund  may be
exchanged  only for Class A shares of other  Oppenheimer  funds  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 (12/16/2011).


     The Fund may amend,  suspend or  terminate  the  exchange  privilege at any
time.  Although the Fund may impose these  changes at any time,  it will provide
you with notice of those changes  whenever it is required to do so by applicable
law. It may be required to provide 60 days' notice prior to materially  amending
or  terminating  the exchange  privilege.  That 60 day notice is not required in
extraordinary circumstances.

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

     o When  Class A  shares  of any  Oppenheimer  fund  (other  than  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 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.


     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.


     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.



     The Fund may either retain or distribute  to  shareholders  its net capital
gain for each taxable year.  The Fund  currently  intends to distribute any such
amounts. If the net capital gain is distributed and designated as a capital gain
distribution, it will be taxable to shareholders as a long-term capital gain and
will be properly  identified in reports sent to  shareholders in January of each
year.  Such treatment will apply no matter how long the shareholder has held his
or her  shares  or  whether  that gain was  recognized  by the Fund  before  the
shareholder acquired his or her shares.

     If the Fund elects to retain its net capital gain, the Fund will be subject
to tax on it at the 35% corporate tax rate. If the Fund elects to retain its net
capital gain, the Fund will provide to shareholders of record on the last day of
its taxable year information  regarding their pro rata share of the gain and tax
paid. As a result,  each  shareholder  will be required to report his or her pro
rata  share of such gain on their tax return as  long-term  capital  gain,  will
receive a  refundable  tax credit for  his/her pro rata share of tax paid by the
Fund on the gain,  and will  increase  the tax basis  for  his/her  shares by an
amount equal to the deemed distribution less the tax credit.

     Distributions  by the Fund will be treated in the  manner  described  above
regardless  of  whether  the  distributions  are paid in cash or  reinvested  in
additional  shares of the Fund (or of another  fund).  Shareholders  receiving a
distribution  in the form of  additional  shares will be treated as  receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date.

     The Fund will be  required  in certain  cases to  withhold  28% of ordinary
income  dividends (not  including  "exempt-interest  dividends"),  capital gains
distributions  and  the  proceeds  of the  redemption  of  shares,  paid  to any
shareholder  (1) who has  failed to  provide a correct  taxpayer  identification
number or to properly  certify that number when required,  (2) who is subject to
backup  withholding  for  failure to report the  receipt of interest or dividend
income  properly,  or (3) who  has  failed  to  certify  to the  Fund  that  the
shareholder  is not subject to backup  withholding  or is an "exempt  recipient"
(such as a corporation). Any tax withheld by the Fund is remitted by the Fund to
the U.S.  Treasury and all income and any tax withheld is  identified in reports
mailed to shareholders in January of each year with a copy sent to the IRS.


     |X| Tax Effects of Redemptions of Shares. If a shareholder redeems all or a
portion of his/her shares,  the shareholder will recognize a gain or loss on the
redeemed shares in an amount equal to the difference between the proceeds of the
redeemed shares and the shareholder's adjusted tax basis in the shares. All or a
portion  of  any  loss  recognized  in  that  manner  may be  disallowed  if the
shareholder  purchases  other  shares of the Fund within 30 days before or after
the redemption. Losses realized by shareholders on the redemption of Fund shares
within six months of purchase will be disallowed for federal income tax purposes
to the extent of exempt-interest dividends received on such shares.


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

     |X| Foreign Shareholders. Under U.S. tax law, taxation of a shareholder who
is a foreign  person  (to  include,  but not  limited  to, a  nonresident  alien
individual,  a foreign  trust, a foreign  estate,  a foreign  corporation,  or a
foreign  partnership)  primarily  depends on whether the foreign person's income
from the Fund is  effectively  connected  with the  conduct  of a U.S.  trade or
business.   Typically,   ordinary   income   dividends   paid   (not   including
exempt-interest  dividends  paid  by  the  Fund)  from a  mutual  fund  are  not
considered "effectively connected" income.

     Ordinary  income  dividends  that are paid by the Fund (and are  deemed not
"effectively connected income") to foreign persons will be subject to a U.S. tax
withheld  by the Fund at a rate of 30%,  provided  the Fund  obtains a  properly
completed and signed  Certificate of Foreign Status. The tax rate may be reduced
if the  foreign  person's  country of  residence  has a tax treaty with the U.S.
allowing for a reduced tax rate on ordinary  income  dividends paid by the Fund.
Any tax  withheld by the Fund is remitted by the Fund to the U.S.  Treasury  and
all income and any tax withheld is identified in reports mailed to  shareholders
in March of each year with a copy sent to the IRS.

     If the ordinary income  dividends from the Fund are  effectively  connected
with the conduct of a U.S. trade or business,  then the foreign person may claim
an  exemption  from the U.S.  tax  described  above  provided the Fund obtains a
properly  completed and signed  Certificate  of Foreign  Status.  If the foreign
person fails to provide a certification of his/her foreign status, the Fund will
be required to withhold U.S. tax at a rate of 28% on ordinary  income  dividends
(not  including  "exempt-interest   dividends"),   capital  gains  distributions
(including  short-term  and  long-term)  and the proceeds of the  redemption  of
shares,  paid to any foreign person. Any tax withheld by the Fund is remitted by
the Fund to the U.S.  Treasury and all income and any tax withheld is identified
in reports  mailed to  shareholders  in January of each year with a copy sent to
the IRS.

     The tax  consequences to foreign persons  entitled to claim the benefits of
an applicable tax treaty may be different from those described  herein.  Foreign
shareholders  are urged to consult  their own tax advisors or the U.S.  Internal
Revenue  Service with respect to the particular tax  consequences  to them of an
investment in the Fund,  including  the  applicability  of the U.S.  withholding
taxes described above.

     Dividend  Reinvestment in Another Fund.  Shareholders of the Fund may elect
to reinvest all dividends  and/or capital gains  distributions  in shares of the
same class of any of the other Oppenheimer funds 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.



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

--------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
OPPENHEIMER MULTI-STATE MUNICIPAL TRUST:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Pennsylvania Municipal Fund (one of the portfolios constituting the
Oppenheimer Multi-State Municipal Trust), including the statement of
investments, as of July 31, 2005, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for each
of the years in the five-year period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

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

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


KPMG LLP

Denver, Colorado
September 13, 2005






STATEMENT OF INVESTMENTS  JULY 31, 2005
--------------------------------------------------------------------------------

   PRINCIPAL                                                                                                  VALUE
      AMOUNT                                                                 COUPON       MATURITY       SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--102.5%
-------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA--71.1%
$     20,000    Allegheny County Airport
                (Pittsburgh International Airport)                            5.250%    01/01/2016    $      20,836
-------------------------------------------------------------------------------------------------------------------
     130,000    Allegheny County HDA (Catholic Health East)                   5.375     11/15/2022          135,478
-------------------------------------------------------------------------------------------------------------------
   5,000,000    Allegheny County HDA (Jefferson Health Services)              5.875     05/01/2026        5,208,750
-------------------------------------------------------------------------------------------------------------------
   3,150,000    Allegheny County HDA (Ohio Valley General Hospital)           5.125     04/01/2035        3,209,220
-------------------------------------------------------------------------------------------------------------------
      35,000    Allegheny County HDA
                (Pittsburgh Mercy Health System)                              5.625     08/15/2026           36,382
-------------------------------------------------------------------------------------------------------------------
     165,000    Allegheny County HDA
                (Presbyterian University Health System)                       5.375     12/01/2025          169,302
-------------------------------------------------------------------------------------------------------------------
      30,000    Allegheny County HDA (Presbyterian University Hospital)       5.625     04/01/2027           31,637
-------------------------------------------------------------------------------------------------------------------
   1,500,000    Allegheny County HDA (The Covenant at South Hills)            8.625     02/01/2021          984,465
-------------------------------------------------------------------------------------------------------------------
     180,000    Allegheny County HDA (The Covenant at South Hills)            8.750     02/01/2031          117,652
-------------------------------------------------------------------------------------------------------------------
     100,000    Allegheny County HDA
                (University of Pittsburgh Medical Center)                     5.350     12/01/2017          102,711
-------------------------------------------------------------------------------------------------------------------
     420,000    Allegheny County HDA
                (West Penn Allegheny Health System)                           9.250     11/15/2015          507,478
-------------------------------------------------------------------------------------------------------------------
   1,625,000    Allegheny County HDA
                (West Penn Allegheny Health System)                           9.250     11/15/2022        1,960,660
-------------------------------------------------------------------------------------------------------------------
  12,640,000    Allegheny County HDA
                (West Penn Allegheny Health System)                           9.250     11/15/2030       15,192,648
-------------------------------------------------------------------------------------------------------------------
     350,000    Allegheny County HDA RITES 1                                 17.024 2   11/15/2030          561,708
-------------------------------------------------------------------------------------------------------------------
   1,900,000    Allegheny County HDA RITES 1                                 17.024 2   11/15/2030        3,049,272
-------------------------------------------------------------------------------------------------------------------
     300,000    Allegheny County HEBA (Carnegie Mellon University)            5.450     03/01/2027          300,558
-------------------------------------------------------------------------------------------------------------------
   2,020,000    Allegheny County HEBA (Chatham College) 3                     5.750     11/15/2028        2,140,594
-------------------------------------------------------------------------------------------------------------------
   7,965,000    Allegheny County HEBA (Chatham College)                       5.750     11/15/2035        8,415,421
-------------------------------------------------------------------------------------------------------------------
   1,000,000    Allegheny County HEBA (Chatham College) 3                     5.850     03/01/2022        1,049,740
-------------------------------------------------------------------------------------------------------------------
   1,000,000    Allegheny County HEBA (Chatham College) 3                     5.950     03/01/2032        1,040,490
-------------------------------------------------------------------------------------------------------------------
      20,000    Allegheny County HEBA (Robert Morris College)                 6.200     02/15/2010           20,623
-------------------------------------------------------------------------------------------------------------------
   2,310,000    Allegheny County HEBA (Robert Morris College)                 6.250     02/15/2026        2,387,270
-------------------------------------------------------------------------------------------------------------------
      60,000    Allegheny County HEBA (Thiel College)                         5.375     11/15/2029           61,479
-------------------------------------------------------------------------------------------------------------------
   1,775,000    Allegheny County IDA
                (Airport Special Facilities/U S Airways) 1,3,4,5              8.875     03/01/2021           35,323
-------------------------------------------------------------------------------------------------------------------
      10,000    Allegheny County IDA (Coltec Industries)                      7.250     06/01/2008            9,889
-------------------------------------------------------------------------------------------------------------------
   1,145,000    Allegheny County IDA (Residential Resources)                  5.700     09/01/2012        1,181,422
-------------------------------------------------------------------------------------------------------------------
   4,845,000    Allegheny County IDA (Residential Resources)                  6.600     09/01/2031        5,147,134
-------------------------------------------------------------------------------------------------------------------
      40,000    Allegheny County IDA (The Bradley Center)                     6.400     05/01/2010           40,061
-------------------------------------------------------------------------------------------------------------------
      10,000    Allegheny County IDA (USX Corp.)                              5.500     12/01/2029           10,390
-------------------------------------------------------------------------------------------------------------------
     235,000    Allegheny County IDA (USX Corp.)                              5.600     09/01/2030          245,599
-------------------------------------------------------------------------------------------------------------------
     105,000    Allegheny County IDA (USX Corp.)                              6.100     01/15/2018          110,603
-------------------------------------------------------------------------------------------------------------------
      10,000    Allegheny County IDA (USX Corp.)                              6.100     07/15/2020           10,534


                  20 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

   PRINCIPAL                                                                                                  VALUE
      AMOUNT                                                                 COUPON       MATURITY       SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA Continued
$  3,520,000    Allegheny County IDA (USX Corp.) 3                            6.700%    12/01/2020    $   3,580,720
-------------------------------------------------------------------------------------------------------------------
   1,000,000    Allegheny County Redevel. Authority (Pittsburgh Mills)        5.100     07/01/2014        1,037,250
-------------------------------------------------------------------------------------------------------------------
   4,000,000    Allegheny County Redevel. Authority (Pittsburgh Mills)        5.600     07/01/2023        4,173,560
-------------------------------------------------------------------------------------------------------------------
      65,000    Allegheny County Redevel. Authority (Robinson Mall) 3         6.875     11/01/2017           68,772
-------------------------------------------------------------------------------------------------------------------
       5,000    Allegheny County Residential Finance Authority                5.625     11/01/2023            5,012
-------------------------------------------------------------------------------------------------------------------
      35,000    Allegheny County Residential Finance Authority                5.950     11/01/2024           36,994
-------------------------------------------------------------------------------------------------------------------
      10,000    Allegheny County Residential Finance Authority                6.250     11/01/2016           10,344
-------------------------------------------------------------------------------------------------------------------
   8,000,000    Allegheny County Residential Finance Authority                7.000     11/01/2017        8,588,960
-------------------------------------------------------------------------------------------------------------------
      65,000    Allegheny County Residential Finance Authority                7.100     05/01/2024           65,098
-------------------------------------------------------------------------------------------------------------------
     485,000    Allegheny County Residential Finance Authority
                (Single Family)                                               5.150     11/01/2016          502,441
-------------------------------------------------------------------------------------------------------------------
   1,000,000    Allegheny County Sanitation Authority                         5.000     12/01/2030        1,061,740
-------------------------------------------------------------------------------------------------------------------
   2,775,000    Allentown Area Hospital Authority
                (Sacred Heart Healthcare System)                              6.750     11/15/2014        2,883,780
-------------------------------------------------------------------------------------------------------------------
   3,290,000    Allentown Area Hospital Authority
                (Sacred Heart Healthcare System)                              6.750     11/15/2015        3,418,968
-------------------------------------------------------------------------------------------------------------------
     740,000    Beaver County IDA
                (Cleveland Electric Illuminating Company)                     7.750     07/15/2025          755,029
-------------------------------------------------------------------------------------------------------------------
     380,000    Beaver County IDA (J. Ray McDermott & Company)                6.800     02/01/2009          379,958
-------------------------------------------------------------------------------------------------------------------
     100,000    Beaver County IDA (Ohio Edison Company)                       5.450     09/15/2033          100,244
-------------------------------------------------------------------------------------------------------------------
     125,000    Beaver County IDA
                (Pennsylvania Power & Light Company) 3                        5.375     06/01/2028          131,069
-------------------------------------------------------------------------------------------------------------------
      65,000    Beaver County IDA
                (Pennsylvania Power & Light Company)                          5.450     09/15/2028           65,159
-------------------------------------------------------------------------------------------------------------------
      50,000    Beaver County IDA
                (Pennsylvania Power & Light Company)                          6.000     09/01/2028           51,124
-------------------------------------------------------------------------------------------------------------------
      85,000    Beaver County IDA (St. Joe Minerals Corp.)                    6.000     05/01/2007           87,542
-------------------------------------------------------------------------------------------------------------------
   2,180,000    Beaver County IDA (Toledo Edison Company)                     7.750     05/01/2020        2,253,728
-------------------------------------------------------------------------------------------------------------------
      35,000    Beaver County IDA (Toledo Edison Company)                     7.750     05/01/2020           36,184
-------------------------------------------------------------------------------------------------------------------
      50,000    Bedford County IDA (Brown Group)                              7.125     02/01/2009           50,003
-------------------------------------------------------------------------------------------------------------------
     375,000    Blair County IDA
                (The Village at Penn State Retirement Community)              6.050     01/01/2034          376,039
-------------------------------------------------------------------------------------------------------------------
   3,785,000    Blair County IDA
                (The Village at Penn State Retirement Community)              6.900     01/01/2022        4,025,310
-------------------------------------------------------------------------------------------------------------------
   6,835,000    Blair County IDA
                (The Village at Penn State Retirement Community)              7.000     01/01/2034        7,241,136
-------------------------------------------------------------------------------------------------------------------
      50,000    Blair County IDA
                (The Village at Penn State Retirement Community) 4,5         10.000     01/01/2012           25,100
-------------------------------------------------------------------------------------------------------------------
     140,000    Bradford County IDA (International Paper Company) 3           5.900     12/01/2019          143,125
-------------------------------------------------------------------------------------------------------------------
     500,000    Brighton Township Municipal Authority                         5.100     07/15/2022          501,050
-------------------------------------------------------------------------------------------------------------------
     800,000    Bucks County IDA (Chandler Hall Health Care Facility)         6.300     05/01/2029          820,232
-------------------------------------------------------------------------------------------------------------------
     240,000    Bucks County IDA (PA Suburban Water Company)                  5.550     09/01/2032          256,178


                  21 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

   PRINCIPAL                                                                                                  VALUE
      AMOUNT                                                                 COUPON       MATURITY       SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA Continued
$     15,000    Bucks County IDA (Pennswood Village)                          5.800%    10/01/2020    $      15,936
-------------------------------------------------------------------------------------------------------------------
   1,000,000    Bucks County IDA (Pennswood Village) 3                        6.000     10/01/2027        1,071,270
-------------------------------------------------------------------------------------------------------------------
   2,000,000    Bucks County IDA RITES 1                                     13.109 2   09/01/2032        2,539,320
-------------------------------------------------------------------------------------------------------------------
      20,000    Butler County Hospital Authority
                (Butler Memorial Hospital)                                    5.250     07/01/2016           20,035
-------------------------------------------------------------------------------------------------------------------
     480,000    Butler County IDA (Greenview Gardens Apartments)              6.000     07/01/2023          488,405
-------------------------------------------------------------------------------------------------------------------
     880,000    Butler County IDA (Greenview Gardens Apartments)              6.250     07/01/2033          903,162
-------------------------------------------------------------------------------------------------------------------
      10,000    Cambria County IDA (PA Electric Company)                      6.050     11/01/2025           10,271
-------------------------------------------------------------------------------------------------------------------
      25,000    Central Greene School District                                5.250     02/15/2024           25,289
-------------------------------------------------------------------------------------------------------------------
   7,870,000    Chester County H&EFA (Chester County Hospital)                5.875     07/01/2016        8,142,932
-------------------------------------------------------------------------------------------------------------------
      95,000    Chester County H&EFA (Devereaux Foundation)                   6.000     11/01/2019          101,230
-------------------------------------------------------------------------------------------------------------------
      25,000    Chester County H&EFA (Immaculata College)                     5.300     10/15/2011           25,007
-------------------------------------------------------------------------------------------------------------------
   7,500,000    Chester County H&EFA (Jenners Pond) 3                         7.625     07/01/2034        8,330,400
-------------------------------------------------------------------------------------------------------------------
   2,000,000    Chester County IDA (Collegium Charter School) 3               5.500     04/15/2031        2,127,220
-------------------------------------------------------------------------------------------------------------------
   3,730,000    Columbia County Hospital Authority
                (Bloomsburg Hospital Obligated Group)                         5.800     06/01/2019        3,505,976
-------------------------------------------------------------------------------------------------------------------
      35,000    Conrad Weiser Area School District                            5.200     12/15/2010           35,712
-------------------------------------------------------------------------------------------------------------------
   1,000,000    Conrad Weiser Area School District, Series AA                 5.250     12/15/2011        1,020,770
-------------------------------------------------------------------------------------------------------------------
     750,000    Crawford County Hospital Authority
                (Wesbury United Methodist Community)                          6.125     08/15/2019          779,723
-------------------------------------------------------------------------------------------------------------------
     145,000    Cumberland County Municipal Authority
                (Presbyterian Homes)                                          6.000     12/01/2017          147,456
-------------------------------------------------------------------------------------------------------------------
     370,000    Cumberland County Municipal Authority
                (Presbyterian Homes)                                          6.000     12/01/2026          376,986
-------------------------------------------------------------------------------------------------------------------
     215,000    Cumberland County Municipal Authority
                (Presbyterian Homes)                                          6.000     12/01/2026          220,764
-------------------------------------------------------------------------------------------------------------------
   6,000,000    Cumberland County Municipal Authority
                (Wesley Affiliated Services)                                  7.250     01/01/2035        6,587,220
-------------------------------------------------------------------------------------------------------------------
     175,000    Delaware County Authority
                (Crozer-Chester Medical Center)                               5.300     12/15/2020          176,304
-------------------------------------------------------------------------------------------------------------------
     120,000    Delaware County Authority
                (MHSSPA/MAS/MHH/MHP/MCMCSPA Obligated Group)                  5.375     11/15/2023          127,655
-------------------------------------------------------------------------------------------------------------------
   2,500,000    Delaware County Authority (Neumann College) 3                 6.000     10/01/2031        2,629,275
-------------------------------------------------------------------------------------------------------------------
      20,000    Delaware County Authority (Riddle Village)                    7.000     06/01/2021           20,637
-------------------------------------------------------------------------------------------------------------------
     750,000    Delaware County Authority (White Horse Village)               7.625     07/01/2030          811,493
-------------------------------------------------------------------------------------------------------------------
      15,000    Delaware County Hospital Authority
                (CCMC/CKHS/DCMH Obligated Group)                              5.375     12/01/2018           15,537
-------------------------------------------------------------------------------------------------------------------
      10,000    Delaware County IDA (American Ref-Fuel Company)               6.100     07/01/2013           10,551
-------------------------------------------------------------------------------------------------------------------
      20,000    Delaware County IDA (American Ref-Fuel Company)               6.200     07/01/2019           20,839
-------------------------------------------------------------------------------------------------------------------
     100,000    Delaware County IDA
                (Philadelphia Suburban Water Company)                         6.350     08/15/2025          102,158


                  22 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

   PRINCIPAL                                                                                                  VALUE
      AMOUNT                                                                 COUPON       MATURITY       SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA Continued
$ 10,000,000    Delaware County IDA Water Facilities
                (Aqua Pennsylvania)                                           5.000%    11/01/2037    $  10,369,800
-------------------------------------------------------------------------------------------------------------------
   9,900,000    Delaware County IDA Water Facilities
                (Aqua Pennsylvania)                                           5.000     11/01/2038       10,265,310
-------------------------------------------------------------------------------------------------------------------
   2,250,000    Delaware County IDA Water Facilities
                (Aqua Pennsylvania) RITES 1                                  11.048 2   11/01/2038        2,582,100
-------------------------------------------------------------------------------------------------------------------
     175,000    Delaware River Port Authority PA/NJ                           5.400     01/01/2015          180,247
-------------------------------------------------------------------------------------------------------------------
   2,000,000    Delaware River Port Authority PA/NJ 3                         5.400     01/01/2016        2,059,960
-------------------------------------------------------------------------------------------------------------------
   6,095,000    Delaware River Port Authority PA/NJ 3                         5.500     01/01/2026        6,282,909
-------------------------------------------------------------------------------------------------------------------
     245,000    Eastern York County Sewer Authority                           6.000     09/15/2016          249,131
-------------------------------------------------------------------------------------------------------------------
     270,000    Eastern York County Sewer Authority                           6.000     09/15/2019          273,839
-------------------------------------------------------------------------------------------------------------------
   1,000,000    Erie County Convention Center Authority 3                     5.000     01/15/2036        1,051,860
-------------------------------------------------------------------------------------------------------------------
     170,000    Erie County Hospital Authority (St. Mary's Home of Erie)      6.000     08/15/2029          184,659
-------------------------------------------------------------------------------------------------------------------
      50,000    Erie-Western PA Port Authority                                6.875     06/15/2016           52,198
-------------------------------------------------------------------------------------------------------------------
       5,000    Exeter Township Sewer Authority                               6.500     04/01/2008            5,023
-------------------------------------------------------------------------------------------------------------------
      80,000    Falls Township Hospital Authority
                (Delaware Valley Medical Center)                              7.000     08/01/2022           81,862
-------------------------------------------------------------------------------------------------------------------
      45,000    Ferndale Area School District GO                              6.750     07/15/2009           45,147
-------------------------------------------------------------------------------------------------------------------
      50,000    Horizon Hospital System Authority
                (Horizon Hospital Systems)                                    6.350     05/15/2026           51,772
-------------------------------------------------------------------------------------------------------------------
   1,000,000    Horsham Industrial & Commercial Devel. Authority
                (GF/Pennsylvania Property)                                    8.375     09/01/2024          957,970
-------------------------------------------------------------------------------------------------------------------
      30,000    Indiana County IDA Pollution Control
                (PSEG Power LLC)                                              5.850     06/01/2027           31,627
-------------------------------------------------------------------------------------------------------------------
     250,000    Jeannette Health Services Authority
                (Jeannette District Memorial Hospital)                        6.000     11/01/2018          247,723
-------------------------------------------------------------------------------------------------------------------
      25,000    Lancaster County Hospital Authority
                (Saint Anne's Home for the Aged)                              6.500     04/01/2015           25,002
-------------------------------------------------------------------------------------------------------------------
      15,000    Lancaster County IDA (Garden Spot Village)                    7.600     05/01/2022           16,575
-------------------------------------------------------------------------------------------------------------------
   2,300,000    Lancaster County IDA (Garden Spot Village)                    7.625     05/01/2031        2,525,538
-------------------------------------------------------------------------------------------------------------------
   1,000,000    Langhorne Manor Boro Higher Education Authority
                (Lower Bucks Hospital)                                        7.350     07/01/2022        1,000,120
-------------------------------------------------------------------------------------------------------------------
   1,000,000    Langhorne Manor Boro Higher Education Authority
                (Philadelphia Biblical University)                            5.200     04/01/2020          992,930
-------------------------------------------------------------------------------------------------------------------
     575,000    Langhorne Manor Boro Higher Education Authority
                (Philadelphia Biblical University)                            5.500     04/01/2025          576,018
-------------------------------------------------------------------------------------------------------------------
      35,000    Lawrence County IDA (Pennsylvania Power & Light)              5.400     09/15/2017           35,315
-------------------------------------------------------------------------------------------------------------------
     105,000    Lawrence County IDA (Shenango Presbyterian Center)            7.000     11/15/2016          105,569
-------------------------------------------------------------------------------------------------------------------
   5,085,000    Lawrence County IDA (Shenango Presbyterian Center)            7.500     11/15/2031        5,230,889
-------------------------------------------------------------------------------------------------------------------
     450,000    Lebanon County Health Facilities Authority
                (Pleasant View Retirement Community)                          6.625     12/15/2029          467,843
-------------------------------------------------------------------------------------------------------------------
   1,000,000    Lehigh County GPA (Bible Fellowship Church Home)              6.000     12/15/2023        1,005,260


                  23 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

   PRINCIPAL                                                                                                  VALUE
      AMOUNT                                                                 COUPON       MATURITY       SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA Continued
$  1,060,000    Lehigh County GPA (Bible Fellowship Church Home)              7.625%    11/01/2021    $   1,176,685
-------------------------------------------------------------------------------------------------------------------
     750,000    Lehigh County GPA (Bible Fellowship Church Home)              7.750     11/01/2033          825,893
-------------------------------------------------------------------------------------------------------------------
     115,000    Lehigh County GPA (Cedar Crest College)                       6.600     04/01/2010          117,072
-------------------------------------------------------------------------------------------------------------------
     100,000    Lehigh County GPA (Cedar Crest College)                       6.650     04/01/2017          103,209
-------------------------------------------------------------------------------------------------------------------
      60,000    Lehigh County GPA (Cedar Crest College)                       6.700     04/01/2026           62,147
-------------------------------------------------------------------------------------------------------------------
   1,485,000    Lehigh County GPA (Kidspeace Obligated Group)                 5.800     11/01/2012        1,454,780
-------------------------------------------------------------------------------------------------------------------
   1,265,000    Lehigh County GPA (Kidspeace Obligated Group) 3               5.800     11/01/2012        1,360,773
-------------------------------------------------------------------------------------------------------------------
   8,155,000    Lehigh County GPA (Kidspeace Obligated Group)                 6.000     11/01/2018        7,972,165
-------------------------------------------------------------------------------------------------------------------
   1,100,000    Lehigh County GPA (Kidspeace Obligated Group)                 6.000     11/01/2023        1,058,607
-------------------------------------------------------------------------------------------------------------------
     145,000    Lehigh County GPA (Kidspeace Obligated Group)                 6.000     11/01/2023          154,084
-------------------------------------------------------------------------------------------------------------------
     200,000    Lehigh County IDA (Lifepath)                                  5.850     06/01/2008          198,394
-------------------------------------------------------------------------------------------------------------------
   1,000,000    Lehigh County IDA
                (PA Power & Light Company) RITES 1,3                         13.702 2   02/15/2027        1,136,260
-------------------------------------------------------------------------------------------------------------------
   4,335,000    Lehigh County IDA Pollution Control RITES 1,3                10.117 2   02/15/2027        4,728,791
-------------------------------------------------------------------------------------------------------------------
     650,000    Lehigh Northampton Airport Authority
                (Lehigh Valley International Airport)                         5.000     01/01/2021          678,009
-------------------------------------------------------------------------------------------------------------------
     750,000    Lehigh Northampton Airport Authority
                (Lehigh Valley International Airport)                         5.000     01/01/2023          779,393
-------------------------------------------------------------------------------------------------------------------
   3,160,000    Luzerne County IDA ROLs 1                                    12.335 2   09/01/2034        3,684,370
-------------------------------------------------------------------------------------------------------------------
      10,000    Lycoming County Authority (Muncy Valley Hospital)             5.500     11/15/2022           10,266
-------------------------------------------------------------------------------------------------------------------
      20,000    Lycoming County Hospital Authority
                (WH/NCPHS Obligated Group)                                    5.250     11/15/2015           20,501
-------------------------------------------------------------------------------------------------------------------
     975,000    Lycoming County Recreation Authority 3                        5.000     12/15/2027          996,226
-------------------------------------------------------------------------------------------------------------------
      55,000    McKean County Hospital Authority (Bradford Hospital)          6.100     10/01/2020           55,900
-------------------------------------------------------------------------------------------------------------------
     100,000    Mifflin County Hospital Authority (Lewiston Hospital)         6.200     07/01/2030          111,045
-------------------------------------------------------------------------------------------------------------------
      25,000    Montgomery County HEHA (Foulkeways at Gwynedd)                6.100     11/15/2008           25,121
-------------------------------------------------------------------------------------------------------------------
     700,000    Montgomery County HEHA
                (Philadelphia Geriatric Center)                               7.375     12/01/2030          747,628
-------------------------------------------------------------------------------------------------------------------
      20,000    Montgomery County HEHA (Waverly Heights)                      6.000     01/01/2008           20,031
-------------------------------------------------------------------------------------------------------------------
   1,345,000    Montgomery County IDA
                (ACTS/BPE Obligated Group) 3                                  5.875     11/15/2022        1,393,030
-------------------------------------------------------------------------------------------------------------------
   1,750,000    Montgomery County IDA (Meadowood Corp.)                       6.250     12/01/2017        1,821,663
-------------------------------------------------------------------------------------------------------------------
      20,000    Montgomery County IDA (Meadowood Corp.)                       7.400     12/01/2020           20,685
-------------------------------------------------------------------------------------------------------------------
   2,500,000    Montgomery County IDA
                (Whitemarsh Continued Care)                                   6.250     02/01/2035        2,681,350
-------------------------------------------------------------------------------------------------------------------
   3,840,000    Montgomery County IDA (Wordsworth Academy)                    8.000     09/01/2024        3,845,875
-------------------------------------------------------------------------------------------------------------------
     145,000    Montgomery County Redevel. Authority                          5.600     01/15/2024          148,321
-------------------------------------------------------------------------------------------------------------------
      15,000    Montgomery County Redevel. Authority (Pheasant Run)           5.600     01/15/2024           15,344
-------------------------------------------------------------------------------------------------------------------
      50,000    Moon IDA (Ellis School)                                       5.650     03/01/2020           52,808
-------------------------------------------------------------------------------------------------------------------
      65,000    Moon Township Municipal Authority                             5.500     12/01/2019           65,554
-------------------------------------------------------------------------------------------------------------------
     220,000    Muncy Boro Municipal Utility Authority                        5.000     07/01/2020          223,766


                  24 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

   PRINCIPAL                                                                                                  VALUE
      AMOUNT                                                                 COUPON       MATURITY       SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA Continued
$    600,000    Myerstown Water Authority                                     5.000%    11/15/2018    $     600,966
-------------------------------------------------------------------------------------------------------------------
      65,000    New Castle GO, Series B                                       5.000     11/01/2018           65,308
-------------------------------------------------------------------------------------------------------------------
   2,860,000    New Morgan IDA (Browning-Ferris Industries)                   6.500     04/01/2019        2,860,715
-------------------------------------------------------------------------------------------------------------------
      40,000    New Wilmington Municipal Authority
                (Westminster College)                                         5.300     03/01/2018           40,760
-------------------------------------------------------------------------------------------------------------------
     810,000    North Penn HHEA (Maple Village)                               7.800     10/01/2024          826,621
-------------------------------------------------------------------------------------------------------------------
   1,205,000    North Penn HHEA (Maple Village)                               8.000     10/01/2032        1,211,278
-------------------------------------------------------------------------------------------------------------------
     155,000    North Wales Water Authority                                   5.250     11/01/2009          155,972
-------------------------------------------------------------------------------------------------------------------
     190,000    Northampton County IDA
                (Metropolitan Edison Company)                                 6.100     07/15/2021          194,273
-------------------------------------------------------------------------------------------------------------------
     170,000    Northampton County IDA (Moravian Hall Square)                 5.350     07/01/2010          172,562
-------------------------------------------------------------------------------------------------------------------
      40,000    Northampton County IDA (Moravian Hall Square)                 5.700     07/01/2020           40,847
-------------------------------------------------------------------------------------------------------------------
     465,000    Northeastern PA Hospital &
                Education Authority (Wilkes University)                       5.625     10/01/2018          475,132
-------------------------------------------------------------------------------------------------------------------
      20,000    Northern Lebanon School District                              5.450     04/01/2018           20,088
-------------------------------------------------------------------------------------------------------------------
     830,000    Northumberland County IDA (Aqua Pennsylvania)                 5.050     10/01/2039          861,606
-------------------------------------------------------------------------------------------------------------------
     445,000    Northumberland County IDA (NHS Youth Services)                5.500     02/15/2033          466,534
-------------------------------------------------------------------------------------------------------------------
   1,620,000    Northumberland County IDA (NHS Youth Services)                7.500     02/15/2029        1,677,559
-------------------------------------------------------------------------------------------------------------------
   3,955,000    Northumberland County IDA (NHS Youth Services)                7.750     02/15/2029        4,150,377
-------------------------------------------------------------------------------------------------------------------
      35,000    PA Convention Center Authority, Series A                      6.750     09/01/2019           35,791
-------------------------------------------------------------------------------------------------------------------
   1,400,000    PA Convention Center Authority, Series A 3                    6.750     09/01/2019        1,453,508
-------------------------------------------------------------------------------------------------------------------
   2,450,000    PA Convention Center Authority, Series A 3                    6.750     09/01/2019        2,543,639
-------------------------------------------------------------------------------------------------------------------
   9,000,000    PA EDFA (30th St. Garage)                                     5.875     06/01/2033        9,642,690
-------------------------------------------------------------------------------------------------------------------
     315,000    PA EDFA (Amtrak)                                              6.000     11/01/2005          316,065
-------------------------------------------------------------------------------------------------------------------
     250,000    PA EDFA (Amtrak)                                              6.125     11/01/2021          268,108
-------------------------------------------------------------------------------------------------------------------
   5,005,000    PA EDFA (Amtrak) 3                                            6.250     11/01/2031        5,411,706
-------------------------------------------------------------------------------------------------------------------
     880,000    PA EDFA (Amtrak)                                              6.375     11/01/2041          954,448
-------------------------------------------------------------------------------------------------------------------
   5,000,000    PA EDFA (Colver)                                              5.000     12/01/2014        5,380,950
-------------------------------------------------------------------------------------------------------------------
   3,700,000    PA EDFA (Colver)                                              5.000     12/01/2015        3,977,167
-------------------------------------------------------------------------------------------------------------------
   2,000,000    PA EDFA (Colver)                                              7.050     12/01/2010        2,043,040
-------------------------------------------------------------------------------------------------------------------
   1,500,000    PA EDFA (Colver)                                              7.125     12/01/2015        1,532,325
-------------------------------------------------------------------------------------------------------------------
   9,900,000    PA EDFA (Colver)                                              7.150     12/01/2018       10,113,444
-------------------------------------------------------------------------------------------------------------------
  14,700,000    PA EDFA (National Gypsum Company) 3                           6.125     11/02/2027       15,675,639
-------------------------------------------------------------------------------------------------------------------
   5,000,000    PA EDFA (National Gypsum Company) 3                           6.250     11/01/2027        5,380,350
-------------------------------------------------------------------------------------------------------------------
   7,000,000    PA EDFA (Northampton Generating)                              6.400     01/01/2009        7,058,100
-------------------------------------------------------------------------------------------------------------------
   4,950,000    PA EDFA (Northampton Generating)                              6.500     01/01/2013        5,025,240
-------------------------------------------------------------------------------------------------------------------
   6,000,000    PA EDFA (Northampton Generating) 3                            6.600     01/01/2019        6,088,140
-------------------------------------------------------------------------------------------------------------------
   4,310,000    PA EDFA (Northwestern Human Services)                         5.250     06/01/2014        4,249,832
-------------------------------------------------------------------------------------------------------------------
   3,000,000    PA EDFA (Northwestern Human Services)                         5.250     06/01/2028        2,582,130
-------------------------------------------------------------------------------------------------------------------
   6,500,000    PA EDFA (Reliant Energy)                                      6.750     12/01/2036        6,995,300


                  25 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

   PRINCIPAL                                                                                                  VALUE
      AMOUNT                                                                 COUPON       MATURITY       SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA Continued
$  3,000,000    PA EDFA (Reliant Energy)                                      6.750%    12/01/2036    $   3,228,840
-------------------------------------------------------------------------------------------------------------------
   5,000,000    PA EDFA (Reliant Energy) RITES 1,3                           10.163 2   12/01/2036        5,762,050
-------------------------------------------------------------------------------------------------------------------
   2,500,000    PA EDFA ROLs 1                                               10.897 2   12/01/2018        2,696,450
-------------------------------------------------------------------------------------------------------------------
      65,000    PA HEFA (Allegheny Delaware Valley Obligated Group)           5.875     11/15/2021           68,533
-------------------------------------------------------------------------------------------------------------------
     155,000    PA HEFA (Allegheny General Hospital) 1                        7.125     09/01/2007          155,243
-------------------------------------------------------------------------------------------------------------------
      40,000    PA HEFA (Allegheny General Hospital) 1                        7.250     09/01/2017           40,068
-------------------------------------------------------------------------------------------------------------------
   1,500,000    PA HEFA (CA University of PA Student Association)             6.750     09/01/2020        1,610,100
-------------------------------------------------------------------------------------------------------------------
     110,000    PA HEFA (CA University of PA Student Association)             6.750     09/01/2032          115,702
-------------------------------------------------------------------------------------------------------------------
      30,000    PA HEFA (CA University of PA Student Association)             6.800     09/01/2025           31,784
-------------------------------------------------------------------------------------------------------------------
   1,450,000    PA HEFA (College of Science & Agriculture)                    5.350     04/15/2028        1,453,611
-------------------------------------------------------------------------------------------------------------------
   1,460,000    PA HEFA (Delaware Valley College of Science & Agriculture)    5.650     04/15/2025        1,504,092
-------------------------------------------------------------------------------------------------------------------
     815,000    PA HEFA (Delaware Valley College of Science & Agriculture)    5.750     04/15/2029          839,287
-------------------------------------------------------------------------------------------------------------------
     170,000    PA HEFA (Delaware Valley College of Science & Agriculture)    5.750     04/15/2034          174,692
-------------------------------------------------------------------------------------------------------------------
   3,210,000    PA HEFA (Delaware Valley College of Science & Agriculture)    5.800     04/15/2030        3,317,150
-------------------------------------------------------------------------------------------------------------------
   3,385,000    PA HEFA (Delaware Valley College of Science & Agriculture)    5.800     04/15/2033        3,486,076
-------------------------------------------------------------------------------------------------------------------
   1,820,000    PA HEFA (Geneva College) 3                                    5.375     04/01/2023        1,890,197
-------------------------------------------------------------------------------------------------------------------
     860,000    PA HEFA (Geneva College)                                      5.450     04/01/2018          901,994
-------------------------------------------------------------------------------------------------------------------
   1,000,000    PA HEFA (Geneva College) 3                                    6.125     04/01/2022        1,069,800
-------------------------------------------------------------------------------------------------------------------
     735,000    PA HEFA (Lycoming College)                                    5.250     11/01/2027          780,879
-------------------------------------------------------------------------------------------------------------------
   3,000,000    PA HEFA (MCP/HUHS/AUS Obligated Group)                        5.875     11/15/2021        3,166,980
-------------------------------------------------------------------------------------------------------------------
       5,000    PA HEFA (Medical College of
                Pennsylvania/Allegheny United Hospitals)                      5.875     11/15/2016            5,272
-------------------------------------------------------------------------------------------------------------------
   2,200,000    PA HEFA (Philadelphia University) 3                           5.250     06/01/2032        2,216,082
-------------------------------------------------------------------------------------------------------------------
     250,000    PA HEFA (Philadelphia University)                             6.000     06/01/2029          273,453
-------------------------------------------------------------------------------------------------------------------
      50,000    PA HEFA (Philadelphia University)                             6.100     06/01/2030           54,909
-------------------------------------------------------------------------------------------------------------------
     100,000    PA HEFA (Saint Francis University)                            5.750     11/01/2023          104,224
-------------------------------------------------------------------------------------------------------------------
   2,300,000    PA HEFA (Slippery Rock University Foundation)                 5.000     07/01/2023        2,441,266
-------------------------------------------------------------------------------------------------------------------
   3,000,000    PA HEFA (Slippery Rock University Foundation)                 5.000     07/01/2037        3,142,140
-------------------------------------------------------------------------------------------------------------------
   3,925,000    PA HEFA (St. Francis University) 3                            6.250     11/01/2018        4,268,398
-------------------------------------------------------------------------------------------------------------------
      40,000    PA HEFA (St. Joseph University)                               5.875     07/15/2025           40,894
-------------------------------------------------------------------------------------------------------------------
      35,000    PA HEFA (St. Joseph University)                               5.875     07/15/2025           35,782
-------------------------------------------------------------------------------------------------------------------
       5,000    PA HEFA (Temple University)                                   7.400     10/01/2010            5,019
-------------------------------------------------------------------------------------------------------------------
      10,000    PA HEFA (University of PA Presbyterian Medical Center)        5.875     01/01/2015           10,215
-------------------------------------------------------------------------------------------------------------------
      25,000    PA HEFA (University of the Arts)                              5.750     03/15/2030           26,912
-------------------------------------------------------------------------------------------------------------------
     750,000    PA HEFA (Widener University)                                  5.000     07/15/2026          775,260
-------------------------------------------------------------------------------------------------------------------
      65,000    PA HFA (Multifamily FHA Mtg.)                                 8.200     07/01/2024           66,136


                  26 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

   PRINCIPAL                                                                                                  VALUE
      AMOUNT                                                                 COUPON       MATURITY       SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA Continued
$  2,500,000    PA HFA (Single Family Mtg.) RITES 1                          11.319% 2  10/01/2020    $   2,861,850
-------------------------------------------------------------------------------------------------------------------
   2,500,000    PA HFA (Single Family Mtg.) RITES 1                          11.519 2   10/01/2022        2,846,550
-------------------------------------------------------------------------------------------------------------------
   2,000,000    PA HFA (Single Family Mtg.) RITES 1                          12.013 2   04/01/2021        2,260,560
-------------------------------------------------------------------------------------------------------------------
   2,850,000    PA HFA (Single Family Mtg.) RITES 1                          12.319 2   10/01/2022        3,335,868
-------------------------------------------------------------------------------------------------------------------
      35,000    PA HFA (Single Family Mtg.), Series 47                        5.700     10/01/2016           35,756
-------------------------------------------------------------------------------------------------------------------
   1,230,000    PA HFA (Single Family Mtg.), Series 47 3                      5.700     10/01/2026        1,260,258
-------------------------------------------------------------------------------------------------------------------
   2,640,000    PA HFA (Single Family Mtg.), Series 59A 3                     5.750     10/01/2023        2,731,925
-------------------------------------------------------------------------------------------------------------------
   2,450,000    PA HFA (Single Family Mtg.), Series 59A                       5.800     10/01/2029        2,531,953
-------------------------------------------------------------------------------------------------------------------
      55,000    PA HFA (Single Family Mtg.), Series 60A                       5.850     10/01/2027           56,637
-------------------------------------------------------------------------------------------------------------------
   9,180,000    PA HFA (Single Family Mtg.), Series 61A                       5.450     10/01/2021        9,518,375
-------------------------------------------------------------------------------------------------------------------
      85,000    PA HFA (Single Family Mtg.), Series 61A                       5.500     04/01/2029           87,951
-------------------------------------------------------------------------------------------------------------------
     195,000    PA HFA (Single Family Mtg.), Series 63A                       0.000 6   04/01/2030           51,400
-------------------------------------------------------------------------------------------------------------------
      50,000    PA HFA (Single Family Mtg.), Series 66A                       5.650     04/01/2029           52,043
-------------------------------------------------------------------------------------------------------------------
      85,000    PA HFA (Single Family Mtg.), Series 67A                       5.900     10/01/2030           88,618
-------------------------------------------------------------------------------------------------------------------
   4,740,000    PA HFA (Single Family Mtg.), Series 70A                       5.800     04/01/2027        4,959,083
-------------------------------------------------------------------------------------------------------------------
      75,000    PA HFA (Single Family Mtg.)                                   5.450     10/01/2032           77,844
-------------------------------------------------------------------------------------------------------------------
   2,365,000    PA Infrastructure Investment Authority                        5.625     09/01/2014        2,480,814
-------------------------------------------------------------------------------------------------------------------
      35,000    Patterson Township Municipal Authority                        5.250     04/15/2007           35,051
-------------------------------------------------------------------------------------------------------------------
      10,000    Patterson Township Municipal Authority                        5.500     04/15/2011           10,013
-------------------------------------------------------------------------------------------------------------------
   2,000,000    Philadelphia Airport Authority for Industrial
                Devel. RITES 1                                               12.312 2   07/01/2022        2,595,320
-------------------------------------------------------------------------------------------------------------------
      20,000    Philadelphia Airport System, Series B                         5.400     06/15/2027           20,724
-------------------------------------------------------------------------------------------------------------------
   1,470,000    Philadelphia Authority for Industrial Devel.
                (Aero Philadelphia)                                           5.500     01/01/2024        1,465,208
-------------------------------------------------------------------------------------------------------------------
     135,000    Philadelphia Authority for Industrial Devel.
                (Philadelphia Airport)                                        5.125     07/01/2028          138,706
-------------------------------------------------------------------------------------------------------------------
      40,000    Philadelphia Authority for Industrial Devel.
                (Philadelphia Airport)                                        5.300     07/01/2017           41,928
-------------------------------------------------------------------------------------------------------------------
   3,000,000    Philadelphia Authority for Industrial Devel.
                (Presbyterian Homes Germantown)                               5.625     07/01/2035        2,989,500
-------------------------------------------------------------------------------------------------------------------
   1,400,000    Philadelphia Authority for Industrial Devel.
                Senior Living (Arbor House)                                   6.100     07/01/2033        1,425,354
-------------------------------------------------------------------------------------------------------------------
   1,240,000    Philadelphia Authority for Industrial Devel.
                Senior Living (Miriam and Robert M. Rieder House)             6.100     07/01/2033        1,262,456
-------------------------------------------------------------------------------------------------------------------
   1,160,000    Philadelphia Authority for Industrial Devel.
                Senior Living (Robert Saligman House)                         6.100     07/01/2033        1,181,008
-------------------------------------------------------------------------------------------------------------------
   1,000,000    Philadelphia Gas Works                                        5.250     08/01/2021        1,083,910
-------------------------------------------------------------------------------------------------------------------
      15,000    Philadelphia Gas Works                                        5.250     08/01/2024           15,177
-------------------------------------------------------------------------------------------------------------------
   1,780,000    Philadelphia Gas Works RITES 1                               11.478 2   08/01/2031        2,087,976
-------------------------------------------------------------------------------------------------------------------
   2,000,000    Philadelphia Gas Works RITES 1                               11.840 2   08/01/2021        2,622,120
-------------------------------------------------------------------------------------------------------------------
     205,000    Philadelphia GO                                               5.000     03/15/2028          211,693


                  27 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

   PRINCIPAL                                                                                                  VALUE
      AMOUNT                                                                 COUPON       MATURITY       SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA Continued
$  1,210,000    Philadelphia H&HEFA
                (Centralized Comprehensive Human Services)                    7.250%    01/01/2021    $   1,299,383
-------------------------------------------------------------------------------------------------------------------
   1,785,000    Philadelphia H&HEFA (Jeanes Health System) 3                  6.600     07/01/2010        1,961,251
-------------------------------------------------------------------------------------------------------------------
   2,380,000    Philadelphia H&HEFA (Philadelphia Protestant Home)            6.500     07/01/2027        2,406,727
-------------------------------------------------------------------------------------------------------------------
      10,000    Philadelphia H&HEFA (Temple University Hospital)              5.500     11/15/2027           10,531
-------------------------------------------------------------------------------------------------------------------
      25,000    Philadelphia H&HEFA (Temple University Hospital)              5.500     11/15/2027           25,136
-------------------------------------------------------------------------------------------------------------------
      35,000    Philadelphia H&HEFA (Temple University Hospital)              5.875     11/15/2023           35,519
-------------------------------------------------------------------------------------------------------------------
      10,000    Philadelphia H&HEFA (Temple University Hospital)              6.500     11/15/2008           10,554
-------------------------------------------------------------------------------------------------------------------
   3,675,000    Philadelphia H&HEFA (Temple University Hospital)              6.625     11/15/2023        3,726,818
-------------------------------------------------------------------------------------------------------------------
   3,870,000    Philadelphia IDA (Air Cargo)                                  7.500     01/01/2025        4,045,698
-------------------------------------------------------------------------------------------------------------------
      90,000    Philadelphia IDA (Baker's Bay Nursing Home Associates)        5.750     08/01/2023           90,639
-------------------------------------------------------------------------------------------------------------------
   1,150,000    Philadelphia IDA (Baptist Home of Philadelphia)               5.500     11/15/2018        1,152,300
-------------------------------------------------------------------------------------------------------------------
     326,000    Philadelphia IDA (Baptist Home of Philadelphia)               5.600     11/15/2028          321,586
-------------------------------------------------------------------------------------------------------------------
     450,000    Philadelphia IDA (Cathedral Village)                          6.750     04/01/2023          491,882
-------------------------------------------------------------------------------------------------------------------
   1,000,000    Philadelphia IDA (Cathedral Village)                          6.875     04/01/2034        1,084,430
-------------------------------------------------------------------------------------------------------------------
   2,750,000    Philadelphia IDA (First Mtg.-CPAP)                            6.125     04/01/2019        2,155,038
-------------------------------------------------------------------------------------------------------------------
   1,330,000    Philadelphia IDA
                (International Educational & Community Project) 3             5.875     06/01/2022        1,441,853
-------------------------------------------------------------------------------------------------------------------
      25,000    Philadelphia IDA (The Franklin Institute)                     5.200     06/15/2018           25,305
-------------------------------------------------------------------------------------------------------------------
   3,425,000    Philadelphia IDA RITES 1                                     11.488 2   10/01/2026        4,310,431
-------------------------------------------------------------------------------------------------------------------
     195,000    Philadelphia Redevel. Authority (Multifamily Hsg.)            5.450     02/01/2023          199,844
-------------------------------------------------------------------------------------------------------------------
   2,580,000    Philadelphia Redevel. Authority (Pavilion Apartments) 3       6.000     10/01/2023        2,593,803
-------------------------------------------------------------------------------------------------------------------
   4,100,000    Philadelphia Redevel. Authority (Pavilion Apartments) 3       6.250     10/01/2032        4,140,016
-------------------------------------------------------------------------------------------------------------------
   2,250,000    Philadelphia Redevel. Authority ROLs 1                       12.538 2   04/15/2028        2,748,960
-------------------------------------------------------------------------------------------------------------------
   2,000,000    Philadelphia School District GO RITES 1                      13.492 2   08/01/2022        3,033,240
-------------------------------------------------------------------------------------------------------------------
   3,000,000    Philadelphia Water & Wastewater                               5.000     07/01/2035        3,166,830
-------------------------------------------------------------------------------------------------------------------
      60,000    Pittsburgh Urban Redevel. Authority                           5.600     04/01/2020           61,763
-------------------------------------------------------------------------------------------------------------------
      30,000    Pittsburgh Urban Redevel. Authority
                (Home Improvement Loans), Series A                            5.650     08/01/2015           30,092
-------------------------------------------------------------------------------------------------------------------
      20,000    Pittsburgh Urban Redevel. Authority (Oliver Garage)           5.450     06/01/2028           21,332
-------------------------------------------------------------------------------------------------------------------
      25,000    Pittsburgh Urban Redevel. Authority Mtg., Series A            5.650     10/01/2024           25,414
-------------------------------------------------------------------------------------------------------------------
      25,000    Pittsburgh Urban Redevel. Authority Mtg., Series A            5.650     10/01/2024           25,519
-------------------------------------------------------------------------------------------------------------------
     140,000    Pittsburgh Urban Redevel. Authority Mtg., Series A            6.050     10/01/2026          143,861
-------------------------------------------------------------------------------------------------------------------
      40,000    Pittsburgh Urban Redevel. Authority Mtg., Series A            7.250     02/01/2024           40,054
-------------------------------------------------------------------------------------------------------------------
      10,000    Pittsburgh Urban Redevel. Authority Mtg., Series C            5.700     04/01/2030           10,268
-------------------------------------------------------------------------------------------------------------------
     535,000    Pittsburgh Urban Redevel. Authority Mtg., Series C            5.950     10/01/2029          556,106
-------------------------------------------------------------------------------------------------------------------
      25,000    Pittsburgh Urban Redevel. Authority Mtg., Series C            7.125     08/01/2013           25,032
-------------------------------------------------------------------------------------------------------------------
   4,250,000    Pittsburgh Water & Sewer Authority                            5.000     09/01/2029        4,493,058
-------------------------------------------------------------------------------------------------------------------
   2,250,000    Pittsburgh Water & Sewer Authority                            5.000     09/01/2033        2,371,140


                  28 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

   PRINCIPAL                                                                                                  VALUE
      AMOUNT                                                                 COUPON       MATURITY       SEE NOTE 1
-------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA Continued
$    100,000    Potter County Hospital Authority
                (Charles Cole Memorial Hospital)                              6.050%    08/01/2024    $     104,677
-------------------------------------------------------------------------------------------------------------------
   1,000,000    Pottsville Hospital Authority
                (Pottsville Hospital & Warne Clinic)                          5.500     07/01/2018          999,950
-------------------------------------------------------------------------------------------------------------------
   4,170,000    Pottsville Hospital Authority
                (Pottsville Hospital & Warne Clinic)                          5.625     07/01/2024        4,119,626
-------------------------------------------------------------------------------------------------------------------
   2,000,000    Sayre Health Care Facilities (Guthrie Healthcare System)      7.125     12/01/2031        2,378,740
-------------------------------------------------------------------------------------------------------------------
      10,000    Scranton Parking Authority                                    7.000     09/15/2009           10,034
-------------------------------------------------------------------------------------------------------------------
      35,000    Snyder County Higher Education Authority
                (Susquehanna University)                                      5.000     01/01/2028           35,049
-------------------------------------------------------------------------------------------------------------------
      30,000    Somerset County Hospital Authority
                (Somerset Community Hospital)                                 5.375     03/01/2017           31,059
-------------------------------------------------------------------------------------------------------------------
   3,250,000    St. Mary Hospital Authority (Catholic Health East)            5.375     11/15/2034        3,412,923
-------------------------------------------------------------------------------------------------------------------
      95,000    St. Mary Hospital Authority (Catholic Health Initiatives)     5.000     12/01/2028           99,971
-------------------------------------------------------------------------------------------------------------------
      50,000    St. Mary Hospital Authority (Franciscan Health)               7.000     06/15/2015           51,608
-------------------------------------------------------------------------------------------------------------------
   1,000,000    Susquehanna Area Regional Airport Authority
                (Aero Harrisburg)                                             5.500     01/01/2024          925,670
-------------------------------------------------------------------------------------------------------------------
     145,000    Warren County Hospital Authority
                (Warren General Hospital)                                     6.900     04/01/2011          146,781
-------------------------------------------------------------------------------------------------------------------
   2,200,000    Warren County Hospital Authority
                (Warren General Hospital) 3                                   7.000     04/01/2019        2,227,148
-------------------------------------------------------------------------------------------------------------------
   5,200,000    Washington County Authority
                (Capital Projects & Equipment Program) 3                      6.150     12/01/2029        5,574,920
-------------------------------------------------------------------------------------------------------------------
     750,000    Washington Township Municipal Authority                       5.875     12/15/2023          778,965
-------------------------------------------------------------------------------------------------------------------
   2,500,000    Washington Township Municipal Authority                       6.000     12/15/2033        2,590,075
-------------------------------------------------------------------------------------------------------------------
   1,000,000    West Cornwall Township Municipal Authority
                (Elizabethtown College) 3                                     6.000     12/15/2022        1,073,420
-------------------------------------------------------------------------------------------------------------------
      25,000    West Cornwall Township Municipal Authority
                (Elizabethtown College)                                       6.000     12/15/2027           26,623
-------------------------------------------------------------------------------------------------------------------
     300,000    West Shore Area Hospital Authority (Holy Spirit Hospital)     6.250     01/01/2032          325,593
-------------------------------------------------------------------------------------------------------------------
      25,000    Westmoreland County IDA (Redstone Health Care Facilities)     5.850     11/15/2029           24,997
-------------------------------------------------------------------------------------------------------------------
      10,000    Westmoreland County IDA (Redstone Health Care Facilities)     5.900     11/15/2021           10,000
-------------------------------------------------------------------------------------------------------------------
     500,000    Westmoreland County IDA (Redstone Health Care Facilities)     8.000     11/15/2023          551,960
-------------------------------------------------------------------------------------------------------------------
       5,000    Westmoreland County IDA (Redstone Health Care Facilities)     8.125     11/15/2030            5,524
-------------------------------------------------------------------------------------------------------------------
      25,000    York County Hospital Authority (York Hospital)                5.500     07/01/2008           25,055
-------------------------------------------------------------------------------------------------------------------
      10,000    York County IDA (PSEG Power)                                  5.500     09/01/2020           10,598
-------------------------------------------------------------------------------------------------------------------
      30,000    York Hsg. Corp. Mtg., Series A                                6.875     11/01/2009           30,046
                                                                                                      -------------
                                                                                                        503,900,407


                  29 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

   PRINCIPAL                                                                                                  VALUE
      AMOUNT                                                                 COUPON       MATURITY       SEE NOTE 1
--------------------------------------------------------------------------------------------------------------------
U.S. POSSESSIONS--31.4%
$  1,485,000    Guam EDA (TASC) 3                                             5.400%    05/15/2031    $   1,527,605
--------------------------------------------------------------------------------------------------------------------
   3,350,000    Guam EDA (TASC) 3                                             5.500     05/15/2041        3,452,611
--------------------------------------------------------------------------------------------------------------------
     710,000    Guam Power Authority, Series A 3                              5.250     10/01/2023          711,470
--------------------------------------------------------------------------------------------------------------------
      60,000    Northern Mariana Islands, Series A                            6.000     06/01/2014           64,158
--------------------------------------------------------------------------------------------------------------------
   1,410,000    Northern Mariana Islands, Series A                            6.600     03/15/2028        1,569,133
--------------------------------------------------------------------------------------------------------------------
  10,100,000    Northern Mariana Islands, Series A                            6.750     10/01/2033       11,063,742
--------------------------------------------------------------------------------------------------------------------
 199,000,000    Puerto Rico Children's Trust Fund (TASC) 7                    0.000 6   05/15/2050       12,624,560
--------------------------------------------------------------------------------------------------------------------
  39,865,000    Puerto Rico Children's Trust Fund (TASC)                      5.375     05/15/2033       41,212,437
--------------------------------------------------------------------------------------------------------------------
  67,005,000    Puerto Rico Children's Trust Fund (TASC)                      5.500     05/15/2039       69,888,895
--------------------------------------------------------------------------------------------------------------------
  39,440,000    Puerto Rico Children's Trust Fund (TASC)                      5.625     05/15/2043       41,456,173
--------------------------------------------------------------------------------------------------------------------
   2,250,000    Puerto Rico Infrastructure                                    5.000     07/01/2041        2,349,608
--------------------------------------------------------------------------------------------------------------------
      25,000    Puerto Rico ITEMECF (Ana G. Mendez University)                5.375     02/01/2019           25,842
-------------------------------------------------------------------------------------------------------------------
     500,000    Puerto Rico ITEMECF (Ana G. Mendez University)                5.375     02/01/2029          514,710
--------------------------------------------------------------------------------------------------------------------
  14,480,000    Puerto Rico Port Authority (American Airlines), Series A 3    6.250     06/01/2026       11,468,594
--------------------------------------------------------------------------------------------------------------------
     115,000    Puerto Rico Port Authority, Series D                          7.000     07/01/2014          116,804
--------------------------------------------------------------------------------------------------------------------
     100,000    University of Puerto Rico                                     5.400     06/01/2009          101,727
--------------------------------------------------------------------------------------------------------------------
   6,645,000    V.I. Government Refinery Facilities (Hovensa Coker)           6.500     07/01/2021        7,576,545
--------------------------------------------------------------------------------------------------------------------
   4,000,000    V.I. Public Finance Authority (Hovensa Coker)                 6.500     07/01/2021        4,560,760
--------------------------------------------------------------------------------------------------------------------
   5,000,000    V.I. Public Finance Authority (Hovensa Refinery) 3            6.125     07/01/2022        5,518,050
--------------------------------------------------------------------------------------------------------------------
   3,250,000    V.I. Public Finance Authority ROLs 1,3                       12.403 2   10/01/2024        4,003,740
--------------------------------------------------------------------------------------------------------------------
      45,000    V.I. Tobacco Settlement Financing Corp. (TASC) 3              5.000     05/15/2021           45,595
--------------------------------------------------------------------------------------------------------------------
   2,235,000    V.I. Tobacco Settlement Financing Corp. (TASC) 3              5.000     05/15/2031        2,254,400
                                                                                                      --------------
                                                                                                        222,107,159

--------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $670,751,709)--102.5%                                                 726,007,566
--------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS--(2.5)                                                            (17,932,218)
                                                                                                      --------------
NET ASSETS--100.0%                                                                                    $ 708,075,348
                                                                                                      ==============

FOOTNOTES TO STATEMENT OF INVESTMENTS

1. Illiquid security. The aggregate value of illiquid securities as of July 31,
2005 was $59,677,570, which represents 8.43% of the Fund's net assets. See Note
5 of Notes to Financial Statements.

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

3. Security has been segregated for collateral to cover borrowings. See Note 6
of Notes to Financial Statements.

4. Issue is in default. See Note 1 of Notes to Financial Statements.

5. Non-income producing security.

6. Represents a zero coupon bond.

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


                  30 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

ACTS        Adult Communities Total Services

AUS         Allegheny United Hospitals

BPE         Brittany Pointe Estates

CCMC        Crozer-Chester Medical Center

CKHS        Crozer-Keystone Health System

CPAP        Crime Prevention Association of Philadelphia

DCMH        Delaware County Memorial Hospital

EDA         Economic Development Authority

EDFA        Economic Development Finance Authority

FHA         Federal Housing Agency

GO          General Obligation

GPA         General Purpose Authority

H&EFA       Health and Educational Facilities Authority

H&HEFA      Hospitals and Higher Education Facilities Authority

HDA         Hospital Development Authority

HEBA        Higher Education Building Authority

HEFA        Higher Education Facilities Authority

HEHA        Higher Education and Health Authority

HFA         Housing Finance Agency/Authority

HHEA        Health, Hospital and Education Authority

HUHS        Hahnemann University Hospital System

IDA         Industrial Development Agency

ITEMECF     Industrial, Tourist, Educational, Medical and
            Environmental Community Facilities

MAS         Mercy Adult Services

MCMCSPA     Mercy Catholic Medical Center of Southeastern Pennsylvania

MCP         Medical College of Pennsylvania

MHH         Mercy Haverford Hospital

MHP         Mercy Health Plan

MHSSPA      Mercy Health System of Southeastern PA

NCPHS       North Central Pennsylvania Health System

PSEG        Public Service Enterprise Group

RITES       Residual Interest Tax Exempt Security

ROLs        Residual Option Longs

TASC        Tobacco Settlement Asset-Backed Bonds

V.I.        United States Virgin Islands

WH          Williamsport Hospital


                  31 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

--------------------------------------------------------------------------------
INDUSTRY CONCENTRATIONS July 31, 2005 / Unaudited
--------------------------------------------------------------------------------

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

INDUSTRY                                         VALUE        PERCENTAGE
-------------------------------------------------------------------------
Tobacco Settlement Payments             $  172,462,276              23.8%
Hospital/Health Care                        74,958,468              10.3
Adult Living Facilities                     61,927,868               8.5
Higher Education                            52,814,867               7.3
Resource Recovery                           46,806,961               6.5
Water Utilities                             41,553,162               5.7
Not-for-Profit Organization                 39,080,622               5.4
Single Family Housing                       34,088,782               4.7
Electric Utilities                          26,000,834               3.6
Manufacturing, Durable Goods                24,177,189               3.3
Pollution Control                           21,937,241               3.0
General Obligation                          21,119,039               2.9
Marine/Aviation Facilities                  20,792,496               2.9
Special Tax                                 13,687,528               1.9
Airlines                                    11,503,917               1.6
Parking Fee Revenue                          9,674,056               1.3
Multifamily Housing                          8,790,964               1.2
Sewer Utilities                              8,170,667               1.1
Sales Tax Revenue                            8,036,678               1.1
Highways/Railways                            7,130,574               1.0
Gas Utilities                                5,809,183               0.8
Special Assessment                           5,210,810               0.7
Municipal Leases                             4,310,431               0.6
Education                                    3,702,970               0.5
Hotels, Restaurants & Leisure                1,120,632               0.2
Sports Facility Revenue                        996,226               0.1
Paper, Containers & Packaging                  143,125               0.0
                                        ---------------------------------
Total                                   $  726,007,566             100.0%
                                        =================================


                  32 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

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

RATINGS                                                                 PERCENT
--------------------------------------------------------------------------------
AAA                                                                        18.9%
AA                                                                          5.5
A                                                                           4.2
BBB                                                                        49.1
BB                                                                          5.5
B                                                                           4.1
CCC                                                                         1.6
Not Rated                                                                  11.1
                                                                          ------
Total                                                                     100.0%
                                                                          ======

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                  33 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

------------------------------------------------------------------------------------------------------------------
ASSETS
------------------------------------------------------------------------------------------------------------------
Investments, at value (cost $670,751,709)--see accompanying statement of investments              $   726,007,566
------------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Investments sold                                                                                       13,870,895
Interest                                                                                               10,052,031
Shares of beneficial interest sold                                                                      4,895,651
Other                                                                                                      14,812
                                                                                                  ----------------
Total assets                                                                                          754,840,955

------------------------------------------------------------------------------------------------------------------
LIABILITIES
------------------------------------------------------------------------------------------------------------------
Bank overdraft                                                                                          2,162,884
------------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Payable on borrowings (See Note 6)                                                                     31,500,000
Investments purchased (including $11,981,790 purchased on a when-issued basis
or forward commitment)                                                                                 12,058,639
Dividends                                                                                                 473,923
Shares of beneficial interest redeemed                                                                    242,328
Distribution and service plan fees                                                                         85,946
Interest expense                                                                                           70,754
Trustees' compensation                                                                                     52,623
Shareholder communications                                                                                 34,695
Transfer and shareholder servicing agent fees                                                              28,058
Other                                                                                                      55,757
                                                                                                  ----------------
Total liabilities                                                                                      46,765,607

------------------------------------------------------------------------------------------------------------------
NET ASSETS                                                                                        $   708,075,348
                                                                                                  ================

------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
------------------------------------------------------------------------------------------------------------------
Paid-in capital                                                                                   $   655,959,326
------------------------------------------------------------------------------------------------------------------
Accumulated net investment income                                                                         108,639
------------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments                                                           (3,248,474)
------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments                                                             55,255,857
                                                                                                  ----------------
NET ASSETS                                                                                        $   708,075,348
                                                                                                  ================


                  34 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

-----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
-----------------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $384,863,080 and
29,952,829 shares of beneficial interest outstanding)                                             $         12.85
Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price)   $         13.49
-----------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $189,643,273 and 14,763,720 shares
of beneficial interest outstanding)                                                               $         12.85
-----------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $133,568,995 and 10,407,808 shares
of beneficial interest outstanding)                                                               $         12.83

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                  35 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
------------------------------------------------------------------------------------------------------------------
Interest                                                                                          $    34,881,979

------------------------------------------------------------------------------------------------------------------
EXPENSES
------------------------------------------------------------------------------------------------------------------
Management fees                                                                                         3,034,961
------------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A                                                                                                   418,901
Class B                                                                                                 1,559,825
Class C                                                                                                   865,970
------------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A                                                                                                   127,852
Class B                                                                                                    96,734
Class C                                                                                                    55,613
------------------------------------------------------------------------------------------------------------------
Shareholder communications:
Class A                                                                                                    16,041
Class B                                                                                                    16,739
Class C                                                                                                    10,370
------------------------------------------------------------------------------------------------------------------
Interest expense                                                                                          323,131
------------------------------------------------------------------------------------------------------------------
Custodian fees and expenses                                                                                27,645
------------------------------------------------------------------------------------------------------------------
Trustees' compensation                                                                                     23,230
------------------------------------------------------------------------------------------------------------------
Other                                                                                                     113,671
                                                                                                  ----------------
Total expenses                                                                                          6,690,683
Less reduction to custodian expenses                                                                       (6,144)
                                                                                                  ----------------
Net expenses                                                                                            6,684,539

------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME                                                                                  28,197,440

------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
------------------------------------------------------------------------------------------------------------------
Net realized loss on investments                                                                         (396,855)
------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation on investments                                                   49,249,528

------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                                              $    77,050,113
                                                                                                  ================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                  36 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

YEAR ENDED JULY 31,                                                                       2005               2004
------------------------------------------------------------------------------------------------------------------
OPERATIONS
------------------------------------------------------------------------------------------------------------------
Net investment income                                                           $   28,197,440    $    24,870,361
------------------------------------------------------------------------------------------------------------------
Net realized loss                                                                     (396,855)          (530,650)
------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation                                               49,249,528          7,584,109
                                                                                ----------------------------------
Net increase in net assets resulting from operations                                77,050,113         31,923,820

------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
------------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A                                                                            (16,117,132)       (12,179,580)
Class B                                                                             (8,235,507)        (7,846,660)
Class C                                                                             (4,521,666)        (3,754,519)

------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A                                                                            130,474,143         41,101,968
Class B                                                                             17,198,067          7,719,115
Class C                                                                             48,949,671          5,391,284

------------------------------------------------------------------------------------------------------------------
NET ASSETS
------------------------------------------------------------------------------------------------------------------
Total increase                                                                     244,797,689         62,355,428
------------------------------------------------------------------------------------------------------------------
Beginning of period                                                                463,277,659        400,922,231
                                                                                ----------------------------------
End of period (including accumulated net investment income
of $108,639 and $785,504, respectively)                                         $  708,075,348    $   463,277,659
                                                                                ==================================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                  37 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

CLASS A      YEAR ENDED JULY 31,                       2005           2004            2003          2002           2001
--------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period             $    11.76     $    11.48      $    11.57    $    11.46     $    11.28
--------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                   .67 1          .73             .75           .70            .67
Net realized and unrealized gain (loss)                1.10            .25            (.11)          .11            .21
                                                 -------------------------------------------------------------------------
Total from investment operations                       1.77            .98             .64           .81            .88
--------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                   (.68)          (.70)           (.73)         (.70)          (.70)
--------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                   $    12.85     $    11.76      $    11.48    $    11.57     $    11.46
                                                 =========================================================================

--------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                    15.43%          8.53%           5.36%         7.36%          8.10%
--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)         $  384,863     $  229,450      $  184,638    $  144,592     $  100,222
--------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                $  295,002     $  211,061      $  172,228    $  120,251     $   77,048
--------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                  5.35%          6.01%           6.11%         6.03%          5.84%
Total expenses                                         0.81%          0.86%           0.86%         0.85%          0.94%
Expenses after payments and waivers and
reduction to custodian expenses                         N/A 4          N/A 4,5         N/A 4        0.82% 6        0.87% 6
--------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  30%            37%             33%           39%            58%

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

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

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

4. Reduction to custodian expenses less than 0.01%.

5. Voluntary waiver of transfer agent fees less than 0.01%.

6. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                  38 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

CLASS B      YEAR ENDED JULY 31,                       2005           2004            2003          2002           2001
--------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period             $    11.76     $    11.48      $    11.57    $    11.46     $    11.27
--------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                   .57 1          .63             .65           .62            .59
Net realized and unrealized gain (loss)                1.11            .25            (.11)          .11            .22
                                                 -------------------------------------------------------------------------
Total from investment operations                       1.68            .88             .54           .73            .81
--------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                   (.59)          (.60)           (.63)         (.62)          (.62)
--------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                   $    12.85     $    11.76      $    11.48    $    11.57     $    11.46
                                                 =========================================================================

--------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                    14.56%          7.71%           4.56%         6.55%          7.40%
--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)         $  189,643     $  157,338      $  146,369    $  101,126     $   52,926
--------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                $  173,663     $  156,689      $  127,280    $   75,772     $   32,037
--------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                  4.62%          5.26%           5.34%         5.26%          5.03%
Total expenses                                         1.59%          1.62%           1.63%         1.61%          1.68%
Expenses after payments and waivers and
reduction to custodian expenses                         N/A 4          N/A 4,5         N/A 4        1.58% 6        1.62% 6
--------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  30%            37%             33%           39%            58%

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

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

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

4. Reduction to custodian expenses less than 0.01%.

5. Voluntary waiver of transfer agent fees less than 0.01%.

6. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                  39 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

CLASS C      YEAR ENDED JULY 31,                       2005           2004            2003          2002           2001
--------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period             $    11.75     $    11.47      $    11.56    $    11.45     $    11.27
--------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                   .57 1          .63             .65           .61            .57
Net realized and unrealized gain (loss)                1.10            .25            (.11)          .12            .23
                                                 -------------------------------------------------------------------------
Total from investment operations                       1.67            .88             .54           .73            .80
--------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                   (.59)          (.60)           (.63)         (.62)          (.62)
--------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                   $    12.83     $    11.75      $    11.47    $    11.56     $    11.45
                                                 =========================================================================

--------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                    14.48%          7.71%           4.57%         6.55%          7.30%
--------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)         $  133,569     $   76,489      $   69,916    $   47,163     $   19,494
--------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                $   96,508     $   74,956      $   60,202    $   33,327     $   10,913
--------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                  4.56%          5.25%           5.34%         5.26%          5.01%
Total expenses                                         1.59%          1.63%           1.63%         1.61%          1.68%
Expenses after payments and waivers and
reduction to custodian expenses                         N/A 4          N/A 4,5         N/A 4        1.58% 6        1.62% 6
--------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                  30%            37%             33%           39%            58%

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

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

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

4. Reduction to custodian expenses less than 0.01%.

5. Voluntary waiver of transfer agent fees less than 0.01%.

6. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                  40 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

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

Oppenheimer Pennsylvania Municipal Fund (the Fund) is a separate series of
Oppenheimer Multi-State Municipal Trust, a non-diversified, open-end management
investment company registered under the Investment Company Act of 1940, as
amended. The Fund's investment objective is to seek 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.
The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager).

      The Fund offers Class A, Class B and Class C shares. Class A shares are
sold at their offering price, which is normally net asset value plus a front-end
sales charge. Class B and Class C shares are sold without a front-end sales
charge but may be subject to a contingent deferred sales charge (CDSC). All
classes of shares have identical rights and voting privileges with respect to
the Fund in general and exclusive voting rights on matters that affect that
class alone. Earnings, net assets and net asset value per share may differ due
to each class having its own expenses, such as transfer and shareholder
servicing agent fees and shareholder communications, directly attributable to
that class. Class A, B and C have separate distribution and/or service plans.
Class B shares will automatically convert to Class A shares six years after the
date of purchase.

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

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


                  41 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

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

readily available are valued at their fair value. Foreign and domestic
securities whose values have been materially affected by what the Manager
identifies as a significant event occurring before the Fund's assets are valued
but after the close of their respective exchanges will be fair valued. Fair
value is determined in good faith using consistently applied procedures under
the supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).

--------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment can take place up to ten days or more after the trade date.
Normally the settlement date occurs within six months after the trade date;
however, the Fund may, from time to time, purchase securities whose settlement
date extends six months or more beyond trade date. During this period, such
securities do not earn interest, are subject to market fluctuation and may
increase or decrease in value prior to their delivery. The Fund maintains
internally designated assets with a market value equal to or greater than the
amount of its purchase commitments. The purchase of securities on a when-issued
basis or forward commitment may increase the volatility of the Fund's net asset
value to the extent the Fund executes such transactions while remaining
substantially fully invested. The Fund may also sell securities that it
purchased on a when-issued basis or forward commitment prior to settlement of
the original purchase. As of July 31, 2005, the Fund had purchased $11,981,790
of securities issued on a when-issued basis or forward commitment.

--------------------------------------------------------------------------------
INVERSE FLOATING RATE SECURITIES. The Fund invests in inverse floating rate
securities that pay interest at a rate that varies inversely with short-term
interest rates. Certain of these securities may be leveraged, whereby the
interest rate varies inversely at a multiple of the change in short-term rates.
As interest rates rise, inverse floaters produce less current income. The price
of such securities is more volatile than comparable fixed rate securities. The
Fund will invest no more than 20% of its total assets in inverse floaters.
Inverse floaters amount to $59,446,936 as of July 31, 2005, which represents
7.88% of the Fund's total assets.

--------------------------------------------------------------------------------
SECURITY CREDIT RISK. The Fund invests in high-yield securities, which may be
subject to a greater degree of credit risk, market fluctuations and loss of
income and principal, and may be more sensitive to economic conditions than
lower-yielding, higher-rated fixed-income securities. The Fund may acquire
securities in default, and is not obligated to dispose of securities whose
issuers subsequently default. As of July 31, 2005, securities with an aggregate
market value of $60,423, representing 0.01% of the Fund's net assets, were in
default.

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


                  42 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

--------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.

The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.

                                                                       NET UNREALIZED
                                                                         APPRECIATION
                                                                     BASED ON COST OF
                                                                       SECURITIES AND
         UNDISTRIBUTED      UNDISTRIBUTED           ACCUMULATED     OTHER INVESTMENTS
         NET INVESTMENT         LONG-TERM                  LOSS    FOR FEDERAL INCOME
         INCOME                      GAIN    CARRYFORWARD 1,2,3          TAX PURPOSES
         ----------------------------------------------------------------------------
         $634,602                     $--            $3,220,867           $55,228,247

1. As of July 31, 2005, the Fund had $3,220,867 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of July 31, 2005, details
of the capital loss carryforwards were as follows:

                           EXPIRING
                           ----------------------------
                           2009            $    195,858
                           2010               1,365,649
                           2013               1,659,360
                                           ------------
                           Total           $  3,220,867
                                           ============

2. During the fiscal year ended July 31, 2005, the Fund did not utilize any
capital loss carryforward.

3. During the fiscal year ended July 31, 2004, the Fund utilized $759,465 of
capital loss carryforward to offset capital gains realized in that fiscal year.

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


                  43 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

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

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

                                             YEAR ENDED       YEAR ENDED
                                          JULY 31, 2005    JULY 31, 2004
         ---------------------------------------------------------------
         Distributions paid from:
         Exempt-interest dividends          $28,874,305      $23,780,759

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

         Federal tax cost of securities   $ 670,779,319
                                          ==============
         Gross unrealized appreciation    $  58,460,272
         Gross unrealized depreciation       (3,232,025)
                                          --------------
         Net unrealized appreciation      $  55,228,247
                                          ==============

--------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the
Fund's independent trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service. During the year ended July 31,
2005, the Fund's projected benefit obligations were increased by $10,276 and
payments of $2,510 were made to retired trustees, resulting in an accumulated
liability of $39,829 as of July 31, 2005.

      The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of the annual compensation they are entitled to receive from the Fund.
For purposes of determining the amount owed to the Trustee under the plan,
deferred amounts are treated as though equal dollar amounts had been invested in
shares of the Fund or in other Oppenheimer funds selected by the Trustee. The
Fund purchases shares of the funds selected for deferral by the Trustee in
amounts equal to his or her deemed investment, resulting in a Fund asset equal
to the deferred compensation liability. Such assets are included as a component
of "Other" within the asset section of the Statement of Assets and Liabilities.
Deferral of trustees' fees under the plan will not affect the net assets of the
Fund, and will not materially affect the Fund's assets, liabilities or net
investment income per share. Amounts will be deferred until distributed in
accordance to the Plan.

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


                  44 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

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

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

--------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.

--------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST

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

                                 YEAR ENDED JULY 31, 2005          YEAR ENDED JULY 31, 2004
                                 SHARES            AMOUNT           SHARES           AMOUNT
--------------------------------------------------------------------------------------------
CLASS A
Sold                         12,116,018    $  151,196,257        6,348,845    $  75,835,815
Dividends and/or
distributions reinvested        695,852         8,652,502          552,950        6,600,738
Redeemed                     (2,365,369)      (29,374,616)      (3,477,589)     (41,334,585)
                             ---------------------------------------------------------------
Net increase                 10,446,501    $  130,474,143        3,424,206      $41,101,968
                             ===============================================================

--------------------------------------------------------------------------------------------
CLASS B
Sold                          2,375,112    $   29,515,607        2,430,805    $  29,026,035
Dividends and/or
distributions reinvested        314,290         3,897,091          315,813        3,768,477
Redeemed                     (1,305,293)      (16,214,631)      (2,119,775)     (25,075,397)
                             ---------------------------------------------------------------
Net increase                  1,384,109    $   17,198,067          626,843    $   7,719,115
                             ===============================================================


                  45 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

--------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST Continued

                                 YEAR ENDED JULY 31, 2005          YEAR ENDED JULY 31, 2004
                                 SHARES            AMOUNT           SHARES           AMOUNT
--------------------------------------------------------------------------------------------
CLASS C
Sold                          4,460,811    $   55,895,068        2,039,798    $  24,542,492
Dividends and/or
distributions reinvested        221,073         2,744,414          199,041        2,373,352
Redeemed                       (784,051)       (9,689,811)      (1,825,116)     (21,524,560)
                             ---------------------------------------------------------------
Net increase                  3,897,833    $   48,949,671          413,723    $   5,391,284
                             ===============================================================

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

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

                                         PURCHASES             SALES
         -----------------------------------------------------------
         Investment securities        $300,902,353      $145,841,963

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

MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of 0.60% 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.

--------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended July 31, 2005, the Fund paid $273,166
to OFS for services to the Fund.

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

--------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
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 services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years. Fees incurred by the Fund under the Plan are detailed in the Statement of
Operations.

--------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B AND CLASS C SHARES. The Fund has
adopted Distribution and Service Plans for Class B and Class C shares to
compensate the


                  46 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

Distributor for its services in connection with the distribution of those shares
and servicing accounts. Under the plans, the Fund pays the Distributor an annual
asset-based sales charge of 0.75% per year on Class B and Class C shares. The
Distributor also receives a service fee of up to 0.15% per year under each plan.
If either the Class B or Class C plan is terminated by the Fund or by the
shareholders of a class, the Board of Trustees and its independent trustees must
determine whether the Distributor shall be entitled to payment from the Fund of
all or a portion of the service fee and/or asset-based sales charge in respect
to shares sold prior to the effective date of such termination. The
Distributor's aggregate uncompensated expenses under the plan at July 31, 2005
for Class B and Class C shares were $5,240,040 and $1,639,689, respectively.
Fees incurred by the Fund under the plans are detailed in the Statement of
Operations.

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

                                                 CLASS A           CLASS B            CLASS C
                              CLASS A         CONTINGENT        CONTINGENT         CONTINGENT
                            FRONT-END           DEFERRED          DEFERRED           DEFERRED
                        SALES CHARGES      SALES CHARGES     SALES CHARGES      SALES CHARGES
                          RETAINED BY        RETAINED BY       RETAINED BY        RETAINED BY
YEAR ENDED                DISTRIBUTOR        DISTRIBUTOR       DISTRIBUTOR        DISTRIBUTOR
---------------------------------------------------------------------------------------------
July 31, 2005                $538,933             $4,305          $276,297            $16,742
---------------------------------------------------------------------------------------------

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

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

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

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

The Fund can borrow money from banks in amounts up to one-third of its total
assets (including the amount borrowed) less all liabilities and indebtedness
other than borrowings to purchase portfolio securities, to meet redemption
obligations or for temporary and emergency purposes. The purchase of securities
with borrowed funds creates leverage in the Fund. Until terminated on January
21, 2005, the Fund had entered into an


                  47 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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

--------------------------------------------------------------------------------
6. BORROWINGS Continued

agreement which enabled it to participate with certain other Oppenheimer funds
in a committed, unsecured line of credit with a bank, which permitted borrowings
up to $540 million, collectively. Interest was charged to each fund, based on
its borrowings, at a rate equal to the Federal Funds Rate plus 0.75%. The Fund
also paid a commitment fee equal to its pro rata share of the average unutilized
amount of the credit facility at a rate of 0.09% per annum.

      Effective January 21, 2005 the Fund entered into a Revolving Credit and
Security Agreement (the "Agreement") with a conduit lender and a bank which
enables it to participate with certain other Oppenheimer funds in a committed,
secured borrowing facility that permits borrowings of up to $800 million,
collectively. To secure the loan, the Fund pledges investment securities in
accordance with the terms of the Agreement. Interest is charged to the Fund,
based on its borrowings, at current commercial paper issuance rates (3.3439% as
of July 31, 2005). The Fund pays additional fees of 0.30% per annum on its
outstanding borrowings to manage and administer the facility and is allocated
its pro-rata share of a 0.13% per annum commitment fee for a liquidity backstop
facility with respect to the $800 million facility size.

      For the year ended July 31, 2005, the average daily loan balance was
$11,147,397 at an average daily interest rate of 2.752%. The Fund had borrowings
outstanding of $31,500,000 at July 31, 2005 at an interest rate of 3.3439%. The
Fund had gross borrowings and gross loan repayments of $241,100,000 and
$224,200,000, respectively, during the year ended July 31, 2005. The maximum
amount of borrowings outstanding at any month-end during the year ended July 31,
2005 was $31,500,000. The Fund paid $32,649 in fees and $254,097 in interest
during the year ended July 31, 2005.

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

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


                  48 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND

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


                  49 | OPPENHEIMER PENNSYLVANIA MUNICIPAL FUND





                    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-15
                                  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 the Class A 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...........................................
     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 because 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" bonds (including "industrial
development"and "private activity" bonds).  They may have fixed, variable or
floating rates of interest or may be "zero-coupon" bonds, as described below.


      Some bonds may be "callable," allowing the issuer to redeem them before
their maturity date.  To protect bondholders, callable bonds may be issued
with provisions that prevent them from being called for a period of time.
Typically, that is five (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. Interest on certain
Qualified Private Activity Municipal Securities is excludable from gross
income for federal income tax purposes if certain tests are met. They are
issued by or on behalf of public authorities to raise money to finance
various privately operated facilities for business and manufacturing,
housing, sports, and pollution control. These securities may also be used to
finance public facilities such as airports, mass transit systems, ports, and
parking. The payment of the principal and interest on such municipal
securities is dependent solely on the ability of the facility's user to meet
its financial obligations and the pledge, if any, of real and personal
property financed by the security as security for those payments.


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

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

      Interest on certain private activity bonds issued after August 7, 1986,
which continues to be tax-exempt, will be treated as a tax preference item
subject to the 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 past 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. District Court 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 October 17, 2005, the U.S. Supreme Court denied the U.S.
Department of Justice's petition for certiorari 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 could 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.


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


      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. Although under
normal market conditions the Fund intends to invest approximately 50% to 70%
of its total assets in these 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 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.

      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| Floating Rate and Variable Rate Obligations.  Variable rate
obligations may 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.

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


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

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

       |X| 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.


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| 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.
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.


            |_|  Purchasing Calls and Puts.  The Fund may buy calls only on
securities that relate to securities the Fund owns, broadly-based municipal
bond indices, municipal bond index futures and interest rate futures.  It can
also buy calls to close out a call it has written, as discussed above.  Calls
the Fund buys must be listed on a securities or commodities exchange, or
quoted on NASDAQ, 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") has eliminated limitations on futures trading
by certain regulated entities including registered investment companies and
consequently registered investment companies may engage in unlimited futures
transactions and options thereon provided that the Fund claims an exclusion
from regulation as a commodity pool operator. The Fund has claimed such an
exclusion from registration as a commodity pool operator under the Commodity
Exchange Act ("CEA"). The Fund may use futures and options for hedging and
non-hedging purposes to the extent consistent with its investment objective,
internal risk management guidelines adopted by the Fund's investment advisor
(as they may be amended from time to time), and as otherwise set forth in the
Fund's prospectus or this statement of additional information.


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

      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| 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| Temporary Defensive and Interim 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 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 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
    Fund 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 is a series Oppenheimer Multi-State
Municipal Trust (referred to as the "Trust), and is an open-end, 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, the Trust was reorganized as a multi-series business
trust (now called Oppenheimer Multi-State Municipal Trust). The Fund
(formerly known as Oppenheimer Florida Municipal Fund) was added as a
separated series of the Trust in 1993. In September 2001, the Fund was
renamed "Oppenheimer Rochester National Municipals".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, to reclassify unissued
shares into additional series or classes and to divide or combine the shares
of a class into a greater or lesser number of shares without changing the
proportionate beneficial interest of a shareholder in the Fund.  Shares do
not have cumulative voting rights 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 who are not "interested persons"
under the Investment company Act (the "Independent Trustees").  The members
of the Audit Committee are Joel W. Motley (Chairman), Mary F. Miller, Kenneth
A. Randall, 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 Independent Trustees; (v) reviewing the independence of the
Fund's independent Auditors; and(vi) pre-approving the provision of any audit
and 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 members of the Regulatory & Oversight Committee are Robert G. Galli
(Chairman), Matthew P. Fink, Phillip A. Griffiths, Joel W. Motley and Brian
F. Wruble.  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
agency 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), Kenneth A. Randall, Russell S. Reynolds, Jr. and Peter I. Wold.
The Governance Committee held 7 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 Governance 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 Governance 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 Governance Committee has been able to identify from its
own resources an ample number of qualified candidates. Nonetheless, under the
current policy of the Board, if the Board determines that a vacancy exists or
is likely to exist on the Board, the Governance Committee will consider
candidates for Board membership including those recommended by the Fund's
shareholders. The Governance Committee will consider nominees recommended by
Independent Board members or recommended by any other Board members including
Board members affiliated with the Fund's Manager. The Committee may, upon
Board approval, retain an executive search firm to assist in screening
potential candidates. Upon Board approval, the Committee may also use
services of legal, financial, or other external counsel that it deems
necessary or desirable in the screening process. Shareholders wishing to
submit a nominee for election to the Board may do so by mailing their
submission to the office of OppenheimerFunds, Inc., Two World Financial
Center, 225 Liberty Street, 11th Floor, New York, NY 10281-1008, to the
attention of the Board of Trustees of Oppenheimer Rochester National
Municipal Fund, c/o the Secretary of the Fund.

      Submissions should, at a minimum, be accompanied by the following: (1)
the name, address, and business, educational, and/or other pertinent
background of the person being recommended; (2) a statement concerning
whether the person is an "interested person" as defined in the Investment
Company Act; (3) any other information that the Fund would be required to
include in a proxy statement concerning the person if he or she was
nominated; (4) the name and address of the person submitting the
recommendation and, if that person is a shareholder, the period for which
that person held Fund shares. Shareholders should not that a person who owns
securities issued by Massachusetts Mutual Life Insurance Company (the parent
company of the Manager) would be deemed an "interested person" under the
Investment Company Act. In addition, certain other relationships with
Massachusetts Mutual Life Insurance Company or its subsidiaries, with
registered broker-dealers, or with the Funds' outside legal counsel may cause
a person to be deemed and "interested person".


      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.  Except for Mr. Murphy, each of the
Trustees is an Independent Trustee. All of the Trustees are also directors or
trustees of the following Oppenheimer funds (referred to as "Board I
Funds"):

Oppenheimer AMT-Free Municipals            Oppenheimer International Growth Fund
                                           Oppenheimer International Large Cap Core
Oppenheimer AMT-Free New York Municipals   Fund
                                           Oppenheimer International Small Company
Oppenheimer Balanced Fund                  Fund
Oppenheimer California Municipal Fund      Oppenheimer International Value Fund
                                           Oppenheimer Limited Term California
Oppenheimer Capital Appreciation Fund      Municipal Fund
Oppenheimer Developing Markets Fund        Oppenheimer Money Market Fund, Inc.
Oppenheimer Discovery Fund                 Oppenheimer Multi-State Municipal Trust
Oppenheimer Dividend Growth Fund           Oppenheimer Portfolio Series
Oppenheimer Emerging Growth Fund           Oppenheimer Real Estate Fund
Oppenheimer Emerging Technologies Fund     Oppenheimer Select Value Fund
Oppenheimer Enterprise Fund                Oppenheimer Series Fund, Inc.
Oppenheimer Global Fund                    OFI Tremont Core Strategies Hedge Fund
Oppenheimer Global Opportunities Fund      OFI Tremont Market Neutral Hedge Fund
                                           Oppenheimer Tremont Market Neutral Fund
Oppenheimer Gold & Special Minerals Fund   LLC
Oppenheimer Growth Fund                    Oppenheimer Tremont Opportunity Fund LLC
Oppenheimer International Diversified Fund Oppenheimer U.S. Government Trust




      In addition to being a director or trustee of the Board I Funds,
Messrs. Galli and Wruble are directors or trustees of ten other portfolios,
and Messrs. Wikler and Wold are trustees of one other portfolio, 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, Cottier, Loughran, Willis, Gillespie, Murphy,
Petersen, Vandehey, Vottiero, Wixted, and Zack, and Mss. Bloomberg and Ives,
who are officers of the Fund respectively hold the same offices with one or
more of the other Board I Funds.  As of October 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.  The foregoing statement does not reflect
ownership of shares held of record by an employee benefit plan for employees
of the Manager, other than the shares beneficially owned under that plan by
the officers of the Fund listed above. In addition, none of the Independent
Trustees (nor any of their immediate family members) 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 the 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 at least the past five years are listed in the
charts below. The charts also include information about each Trustee's
beneficial share ownership in the Fund and in all of the registered
investment companies that the Trustee oversees in the Oppenheimer family of
funds ("Supervised Funds"). 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.The address of each Trustee in the chart below is 6803 S.
Tucson Way, Centennial, Colorado 80112-3924. Each Trustee serves for an
indefinite term or until his or her resignation, retirement, death or
removal.

-----------------------------------------------------------------------------------
                               Independent Trustees
-----------------------------------------------------------------------------------
-----------------------------------------------------------------------------------
Name,              Principal Occupation(s) During Past 5    Dollar     Aggregate
                                                                       Dollar
                                                                       Range Of
                   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 Covanta
2003;              Holding Corp. (waste-to-energy company)
Trustee since 1991 (since 2002); Director of Weyerhaeuser
Age: 74            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: 67            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: 63            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 of Columbia Equity Financial    None       Over
Trustee since 2002 Corp. (privately-held financial                     $100,000
Age: 53            adviser) (since 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); Member of
                   the Finance and Budget Committee of the
                   Council on Foreign Relations, the
                   Investment Committee of the Episcopal
                   Church of America, the Investment
                   Committee of Human Rights Watch and the
                   Investment Committee of Historic Hudson
                   Valley. 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 of The Directorship Search      None       Over
Reynolds, Jr.,     Group, Inc. (corporate governance                   $100,000
Trustee since 1989 consulting and executive recruiting)

Age: 73            (since 1993); a Life Trustee of
                   International House (non-profit
                   educational organization); Former
                   Trustee of The Historical Society of
                   the Town of Greenwich. Oversees 38
                   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 39
                   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 39 portfolios in
                   the OppenheimerFunds complex.

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

Brian F. Wruble    General Partner of Odyssey Partners,     None       Over
Trustee since 2005 L.P. (hedge fund) (since September                  $100,000
Age: 62            1996); Director of Special Value
                   Opportunities Fund, LLC (registered
                   investment company) (since September
                   2004); Director of Zurich Financial
                   Investment Advisory Board (affiliate of
                   the Manager's parent company) (since
                   October 2004); Board of Governing
                   Trustees of The Jackson Laboratory
                   (non-profit) (since August 1990);
                   Trustee of the Institute for Advanced
                   Study (non-profit educational
                   institute) (since May 1992); Special
                   Limited Partner of Odyssey Investment
                   Partners, LLC (private equity
                   investment) (January 1999-September
                   2004); Trustee of Research Foundation
                   of AIMR  (2000-2002) (investment
                   research, non-profit); Governor, Jerome
                   Levy Economics Institute of Bard
                   College (August 1990-September 2001)
                   (economics research); Director of Ray &
                   Berendtson, Inc. (May 2000-April 2002)
                   (executive search firm). Oversees 48
                   portfolios in the OppenheimerFunds
                   complex.

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



      The address of Mr. Murphy is Two World Financial Center, 225 Liberty
Street, 11th Floor, New York, New York 10281-1008.  Mr. Murphy serves as a
Trustee for an indefinite term and as an officer for an annual term, or until
his resignation, retirement, death or removal. Mr. Murphy is an "Interested
Trustee" because he is affiliated with the Manager by virtue of his positions
as an officer and director of the Manager, and as a shareholder of its parent
company.


-------------------------------------------------------------------------------------
                           Interested Trustee and Officer
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Name,               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: 56             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 87 portfolios as a
                    Trustee or Director and officer in the
                    OppenheimerFunds complex.

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


The addresses of the officers in the chart below are as follows: for Messrs.
Fielding, Cottier, Loughran, Willis,Gillespie and Zack and Ms. Bloomberg, Two
World Financial Center, 225 Liberty Street, 11th Floor, New York, New York
10281-1008, for Messrs. Petersen, Vandehey, Vottiero, and Wixted and Ms.
Ives, 6803 S. Tucson Way, Centennial, Colorado 80112-3924.  Each officer
serves for an indefinite term or until his or her resignation, retirement,
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: 56

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

Scott Cottier, Vice     Vice President of the Manager since 2002;  portfolio manager
President since 2005    and trader at Victory  Capital  Management  (1999-2002);  an
Age: 34                 officer of 8 portfolios in the OppenheimerFunds complex.

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

Daniel G. Loughran,     Vice  President of the Manager  since April 2001; an officer
Vice President since    of 8 portfolios in the OppenheimerFunds complex.
2005
Age: 42

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

Troy Willis, Vice       Assistant  Vice  President  of the Manager  since July 2005;
President since 2005    Associate  Portfolio  Manager  of the  Manager  since  2003;
Age: 33                 corporate  attorney for Southern Resource Group (1999-2003);
                        an officer of 8 portfolios in the OppenheimerFunds complex.

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
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: 46                 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: 40                 October  2003) of the  Distributor;  Assistant  Secretary of

                        Centennial  Asset  Management   Corporation  (since  October
                        2003);   Vice   President   and   Assistant   Secretary   of
                        Shareholder   Services,   Inc.   (since   1999);   Assistant
                        Secretary   of    OppenheimerFunds    Legacy   Program   and
                        Shareholder Financial Services,  Inc. (since December 2001);
                        Assistant  Counsel  of  the  Manager  (August   1994-October
                        2003).  An officer of 87 portfolios in the  OppenheimerFunds
                        complex.
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Lisa I. Bloomberg,      Vice  President and Associate  Counsel of the Manager (since
Assistant Secretary     May 2004);  First Vice President  (April  2001-April  2004),
since 2004              Associate  General  Counsel   (December   2000-April  2004),
Age:  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' compensation from the Fund, shown below, is for
serving as a Trustee and member of a committee (if applicable), with respect
to the Fund's fiscal year ended July 31, 2005. The total compensation from
the Fund and fund complex represents compensation, including accrued
retirement benefits, for serving as a Trustee and member of a committee (if
applicable) of the Boards of the Fund and other funds in the OppenheimerFunds
complex during the calendar year ended December 31, 2004.


-------------------------------------------------------------------------------------
Name and Other Fund        Aggregate      Retirement     Estimated        Total
                                           Benefits        Annual      Compensation
                          Compensation    Accrued as      Benefits    From the Fund

Position(s)                 From the     Part of Fund       Upon         and Fund
(as applicable)             Fund(1)        Expenses    Retirement(2)     Complex

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

Clayton K. Yeutter        $7,164((3))       $1,791        $86,171        $173,700

Chairman of the Board
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Matthew P. Fink((4))          None           None          $2,641          None
Proxy Committee Member
and Regulatory &
Oversight Committee
Member

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Robert G. Galli
Regulatory & Oversight

Committee Chairman           $5,333          None      $100,824((5))  $237,312((6))

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Phillip A. Griffiths
Governance Committee
Chairman and Regulatory

& Oversight Committee     $6,188((7))       $6,188        $34,972        $142,092
Member

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

Mary F. Miller(8)

Audit Committee Member
and Proxy Committee

Member                       $2,964          None          $7,128         $8,532

-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Joel W. Motley
Audit Committee
Chairman and Regulatory

& Oversight Committee     $6,218((9))       $2,487        $23,945        $150,760
Member

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

Kenneth A. Randall           $5,530       None((10))      $85,944        $134,080

Audit Committee Member
and Governance
Committee Member
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Edward V. Regan((11))        $4,542          None         $70,977        $118,788


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

Russell S. Reynolds, Jr.     $4,414          None         $66,602        $106,792

Proxy Committee
Chairman and Governance
Committee Member
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Donald Spiro ((12))           $594           None           None         $64,080


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

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

Joseph M. Wikler(13)          None           None            --          $23,000

Audit Committee Member
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------

Peter I. Wold (13)
Governance Committee
Member                        None           None            --          $20,500

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

Brian F. Wruble(1(4))
Regulatory & Oversight
Committee Member              None           None      $22,238(1(5))  $111,000(1(6))

-------------------------------------------------------------------------------------
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  $597 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 $2,063 deferred by Mr. Griffiths under the "Deferred
   Compensation Plan" described below.
8.    Ms. Miller was appointed as a Board member 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 a Board member of all of the other
   Board I Funds during 2005.
9.    Includes $830 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.

1.    Mr. Wikler and Mr. Wold were elected as Board members of 23 of the
   Board I Funds as of August 17, 2005. They had served as Board members of
   the other 11 Board I Funds prior to that date.
14.   Mr. Wruble was appointed as Trustee of the Board I Funds effective
   October 10, 2005.
15.   Estimated benefits to be paid to Mr. Wruble for serving as a director
   or trustee of 10 other Oppenheimer funds that are not Board I Funds. Mr.
   Wruble's service as a director or trustee of such funds will not be
   counted towards the fulfillment of his eligibility requirements for
   payments under the Board I retirement plan, described below.
16.   For serving as a director or trustee of 10 other Oppenheimer funds (at
   December 31, 2004) that are not Board I Funds.

|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 the length of his
or her service on the Board.

|X|   Deferred Compensation Plan. The Board of the 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 October 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
11,480,837.656 Class A shares (5.81% of the Class A shares then outstanding)
for the benefit of its customers.

      Charles Schwab & Co Inc. Special Custody acct for the exclusive benefit
of customers, Attn. Mutual Funds, 101 Montgomery St. San Francisco CA
94104-4122, which owned 16,276,263.428 Class A shares (8.24% of the Class A
shares then outstanding) for the benefit of its customers.

      MLPF&S for the sole benefit of its customers, Attn. Fund ADMN/#XXXX,
4800 Deer Lake Drive East Floor 3, Jacksonville, FL 32246-6484, which owned
10,543,885.786 Class A shares (5.34% 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
4,259,118.274 Class B shares (10.00% 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
3,515,205.312 Class B shares (8.25% 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
17,072,316.592 Class C shares (22.07% 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
8,307,975.118 Class C shares (10.74% 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 Portfolio Proxy Voting Policies and Procedures include provisions to
address conflicts of interest that may arise between the Fund and the Manager
or the Manager's affiliates or business relationships.  Such a conflict of
interest may arise, for example, where the Manager or an affiliate of the
Manager manages or administers the assets of a pension plan or other
investment account of the portfolio company soliciting the proxy or seeks to
serve in that capacity.  The Manager and its affiliates generally seek to
avoid such conflicts by maintaining separate investment decision making
processes to prevent the sharing of  business objectives with respect to
proposed or actual actions regarding portfolio proxy voting decisions.
Additionally, the Manager employs the following two procedures:  (1) if the
proposal that gives rise to the conflict is specifically addressed in the
Guidelines, the Manager will vote the portfolio proxy in accordance with the
Guidelines, provided that they do not provide discretion to the Manager on
how to vote on the matter; and (2) if such proposal is not specifically
addressed in the Guidelines or the Guidelines provide discretion to the
Manager on how to vote, the Manager will vote in accordance with the
third-party proxy voting agent's general recommended guidelines on the
proposal provided that the Manager has reasonably determined that there is no
conflict of interest on the part of the proxy voting agent.  If neither of
the previous two procedures provides an appropriate voting recommendation,
the Manager may retain an independent fiduciary to advise the Manager on how
to vote the proposal or may abstain from voting.  The Guidelines' provisions
with respect to certain routine and non-routine proxy proposals are
summarized below:

o     The Fund generally votes with the recommendation of the issuer's
      management on routine matters, including ratification of the
      independent registered public accounting firm, unless circumstances
      indicate otherwise.
o     The Fund evaluates nominees for director nominated by management on a
      case-by-case basis, examining the following factors, among others:
      Composition of the board and key board committees, attendance at board
      meetings, corporate governance provisions and takeover activity,
      long-term company performance and the nominee's investment in the
      company.
o     In general, the Fund opposes anti-takeover proposals and supports the
      elimination, or the ability of shareholders to vote on the preservation
      or elimination, of anti-takeover proposals, absent unusual
      circumstances.
o     The Fund supports shareholder proposals to reduce a super-majority vote
      requirement, and opposes management proposals to add a super-majority
      vote requirement.
o     The Fund opposes proposals to classify the board of directors.
o     The Fund supports proposals to eliminate cumulative voting.
o     The Fund opposes re-pricing of stock options without shareholder
      approval.


o     The Fund generally considers executive compensation questions such as
      stock option plans and bonus plans to be ordinary business activity.
      The Fund analyzes stock option plans, paying particular attention to
      their dilutive effect. While the Fund generally supports management
      proposals, the Fund opposes plans it considers to be excessive.

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

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

      The Fund pays expenses not expressly assumed by the Manager under the
advisory agreement.  The 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.

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


        Fiscal Year               Management Fee        Management Fee Paid to
        Ended 7/31          (Without Voluntary Waiver)        the Manager

                                                            (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 a team of
      investment professionals including Ronald H. Fielding, Scott Cottier,
      Daniel G. Loughran, Troy Willis, Mark DeMitry and Marcus Franz  (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, Cottier, Loughran,
      Willis, DeMitry and Franz 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, Cottier, Loughran, Willis,
      DeMitry and Franz as of July 31, 2005.  No account has a
      performance-based advisory fee:


   Portfolio       RegisteredTotal     Other        Total    Other   Total
                              Assets              Assets in
                              in                    Other
                              RegisterePooled      Pooled              Assets
                   Investment InvestmenInvestmentInvestment          in Other
                   Companies  CompaniesVehicles   Vehicles   AccountsAccounts
   Manager          Managed   Managed* tManaged   Managed*   Managed  Managed*
   -----------------------------------------------------------------------------
   -----------------------------------------------------------------------------

   Ronald H.          10     $19,636.8   None        $0       None      None
   Fielding

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

   Daniel G.          10     $19,636.8   None        $0       None   $10,001-50,000
   Loughran

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

   Scott Cottier      10     $19,636.8   None        $0       None      None

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

   Troy Willis        10     $19,636.8   None        $0       None   $10,001-50,000

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

   Marcus Franz       10     $19,636.80  None        $0       None      None

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

   Mark DeMitry       10     $19,636.80  None        $0       None      None


   *  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 September 30, 2005, the
      Portfolio Manager beneficially owned shares of the Fund as follows:


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

                                                Range of Shares
            ------------------------------        Beneficially
                  Portfolio Manager            Owned in the Fund

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

            Daniel G. Loughran                     1,092.720

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

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


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 "affiliated" brokers, 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, analytical
software and similar products and services.  If a research service also
assists the Manager in a non-research capacity (such as bookkeeping or other
administrative functions), then only the percentage or component that
provides assistance to the Manager in the investment decision-making process
may be paid in commission dollars.


      The research services provided by brokers broaden the scope and
supplement the research activities of the Manager.  That research provides
additional views and comparisons for consideration and helps the Manager 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 period in which the aggregate net asset value of all Fund shares of
that class held by the recipient for itself and its customers does not exceed
a minimum amount, if any, that may be set from time to time by a majority of
the Independent Trustees.

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


      The asset-based sales charge and service fees increase Class B and
Class C expenses by 1.00% of the net assets per year of the respective
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 periodically in
lieu of paying the sales concession and service fee in advance at the time of
purchase.


      The asset-based sales charge on Class B and Class C shares allows
investors to buy shares without a front-end sales charge while allowing the
Distributor to compensate dealers that sell those shares.  The Fund pays the
asset-based sales charge to the Distributor for its services rendered in
distributing Class B and Class C shares.  The payments are made to the
Distributor in recognition that the Distributor:

      |_|         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 may not carry the excess over to subsequent fiscal years. 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 and Service 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 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 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 30-day period.
      b =  expenses accrued for the period (net of any expense assumptions).
      c =  the average daily number of shares of that class outstanding
           during the 30-day period that were entitled to receive dividends.
      d =  the maximum offering price per share of that class on the last day

           of the period, adjusted for undistributed net investment income.


      The standardized yield for a particular 30-day 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 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 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-Years
                                 1-Year            5-Years        (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 (After Taxes)
                          For the Periods Ended 7/31/05
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------

                                 1-Year           5-Years            10-Years


----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
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%
----------------------------------------------------------------------------------

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


      Class B or Class C shares may not be purchased by 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. Investors should consult their tax
advisers regarding the state and local tax consequences of the conversion or
exchange of classes of shares.


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

      The methodology for calculating the net asset value, dividends and
distributions of the Fund's share classes recognizes two types of expenses.
General expenses that do not pertain specifically to any one class are
allocated pro rata to the shares of all classes. The allocation is based on
the percentage of the Fund's total assets that is represented by the assets
of each class, and then equally to each outstanding share within a given
class. Such general expenses include management fees, legal, bookkeeping and
audit fees, printing and mailing costs of shareholder reports, Prospectuses,
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
in September.


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

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

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


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

   Limited Term New York Municipal Fund    Oppenheimer Limited Term California
                                           Municipal Fund
   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 Cash Reserves               Oppenheimer Principal Protected Main
                                           Street Fund III
   Oppenheimer Champion Income Fund        Oppenheimer Quest Capital Value Fund,
                                           Inc.
   Oppenheimer Convertible Securities Fund Oppenheimer Quest International Value
                                           Fund, Inc.
   Oppenheimer Disciplined Allocation Fund Oppenheimer Rochester National
                                           Municipals
   Oppenheimer Dividend Growth Fund        Oppenheimer Senior Floating Rate Fund
   Oppenheimer Gold & Special Minerals     Oppenheimer Total Return Bond Fund
   Fund

     o  Oppenheimer  Money  Market  Fund,  Inc.  only offers Class A and Class Y
shares.

     o Class Y shares of  Oppenheimer  Real Asset Fund may not be exchanged  for
shares of any other fund.

     o Class B and Class C shares of  Oppenheimer  Cash  Reserves are  generally
available  only by exchange  from the same class of shares of other  Oppenheimer
funds or through OppenheimerFunds-sponsored 401(k) plans.

     o  Class  M  shares  of  Oppenheimer  Convertible  Securities  Fund  may be
exchanged only for Class A shares of other  Oppenheimer  funds.  They may not be
acquired  by  exchange  of shares of any  class of any other  Oppenheimer  funds
except  Class A shares of  Oppenheimer  Money  Market Fund 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 (12/16/2011).


     The Fund may amend,  suspend or  terminate  the  exchange  privilege at any
time.  Although the Fund may impose these  changes at any time,  it will provide
you with notice of those changes  whenever it is required to do so by applicable
law. It may be required to provide 60 days' notice prior to materially  amending
or  terminating  the exchange  privilege.  That 60 day notice is not required in
extraordinary circumstances.

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

     o When  Class A  shares  of any  Oppenheimer  fund  (other  than  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
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.

     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.


     Tax Effects of  Redemptions  of Shares.  If a shareholder  redeems all or a
portion of his/her shares,  the shareholder will recognize a gain or loss on the
redeemed shares in an amount equal to the difference between the proceeds of the
redeemed shares and the shareholder's adjusted tax basis in the shares. All or a
portion  of  any  loss  recognized  in  that  manner  may be  disallowed  if the
shareholder  purchases  other  shares of the Fund within 30 days before or after
the redemption. Losses realized by shareholders on the redemption of Fund shares
within six months of purchase will be disallowed for federal income tax purposes
to the extent of exempt-interest dividends received on such shares.



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

     |X| Foreign Shareholders. Under U.S. tax law, taxation of a shareholder who
is a foreign  person  (to  include,  but not  limited  to, a  nonresident  alien
individual,  a foreign  trust, a foreign  estate,  a foreign  corporation,  or a
foreign  partnership)  primarily  depends on whether the foreign person's income
from the Fund is  effectively  connected  with the  conduct  of a U.S.  trade or
business.   Typically,   ordinary   income   dividends   paid   (not   including
exempt-interest  dividends  paid  by  the  Fund)  from a  mutual  fund  are  not
considered "effectively connected" income.

     Ordinary  income  dividends  that are paid by the Fund (and are  deemed not
"effectively connected income") to foreign persons will be subject to a U.S. tax
withheld  by the Fund at a rate of 30%,  provided  the Fund  obtains a  properly
completed and signed  Certificate of Foreign Status. The tax rate may be reduced
if the  foreign  person's  country of  residence  has a tax treaty with the U.S.
allowing for a reduced tax rate on ordinary  income  dividends paid by the Fund.
Any tax  withheld by the Fund is remitted by the Fund to the U.S.  Treasury  and
all income and any tax withheld is identified in reports mailed to  shareholders
in March of each year with a copy sent to the IRS.

     If the ordinary income  dividends from the Fund are  effectively  connected
with the conduct of a U.S. trade or business,  then the foreign person may claim
an  exemption  from the U.S.  tax  described  above  provided the Fund obtains a
properly  completed and signed  Certificate  of Foreign  Status.  If the foreign
person fails to provide a certification of his/her foreign status, the Fund will
be required to withhold U.S. tax at a rate of 28% on ordinary  income  dividends
(not  including  "exempt-interest   dividends"),   capital  gains  distributions
(including  short-term  and  long-term)  and the proceeds of the  redemption  of
shares,  paid to any foreign person. Any tax withheld by the Fund is remitted by
the Fund to the U.S.  Treasury and all income and any tax withheld is identified
in reports  mailed to  shareholders  in January of each year with a copy sent to
the IRS.

     The tax  consequences to foreign persons  entitled to claim the benefits of
an applicable tax treaty may be different from those described  herein.  Foreign
shareholders  are urged to consult  their own tax advisors or the U.S.  Internal
Revenue  Service with respect to the particular tax  consequences  to them of an
investment in the Fund,  including  the  applicability  of the U.S.  withholding
taxes described above.

     Dividend  Reinvestment in Another Fund.  Shareholders of the Fund may elect
to reinvest all dividends  and/or capital gains  distributions  in shares of the
same class of any of the other Oppenheimer funds 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.





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

--------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
OPPENHEIMER MULTI-STATE MUNICIPAL TRUST:

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

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

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


KPMG LLP

Denver, Colorado
September 13, 2005



STATEMENT OF INVESTMENTS  July 31, 2005
--------------------------------------------------------------------------------

   PRINCIPAL                                                                                                      VALUE
      AMOUNT                                                                 COUPON            MATURITY      SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS AND NOTES--103.7%
-----------------------------------------------------------------------------------------------------------------------
ALABAMA--1.3%
$ 30,000,000     AL Hsg. Finance Authority (Single Family)                    5.450%         10/01/2032   $  30,838,200
-----------------------------------------------------------------------------------------------------------------------
     190,000     AL IDA Solid Waste Disposal (Pine City Fiber Company)        6.450          12/01/2023         198,712
-----------------------------------------------------------------------------------------------------------------------
      55,000     AL IDA Solid Waste Disposal (Pine City Fiber Company)        6.450          12/01/2023          57,999
-----------------------------------------------------------------------------------------------------------------------
  11,000,000     AL Space Science Exhibit Finance Authority                   6.000          10/01/2025      10,930,260
-----------------------------------------------------------------------------------------------------------------------
   5,845,000     Courtland, AL Industrial Devel. Board
                 (Champion International Corp.), Series A                     6.375          03/01/2029       5,894,683
-----------------------------------------------------------------------------------------------------------------------
   2,200,000     Rainbow City, AL Special Health Care Facilities
                 Financing Authority (Regency Pointe)                         8.250          01/01/2031         887,524
-----------------------------------------------------------------------------------------------------------------------
      10,000     Selma, AL Industrial Devel. Board
                 (International Paper Company)                                6.000          05/01/2025          10,558
-----------------------------------------------------------------------------------------------------------------------
      30,000     South Marengo County, AL Water
                 & Fire Protection Authority                                  7.700          05/01/2008          30,299
                                                                                                          -------------
                                                                                                             48,848,235
-----------------------------------------------------------------------------------------------------------------------
 ALASKA--0.2%
     260,000     AK Northern Tobacco Securitization Corp. (TASC)              5.375          06/01/2021         267,717
-----------------------------------------------------------------------------------------------------------------------
     330,000     AK Northern Tobacco Securitization Corp. (TASC)              5.500          06/01/2029         341,025
-----------------------------------------------------------------------------------------------------------------------
   5,170,000     AK Northern Tobacco Securitization Corp. (TASC)              6.500          06/01/2031       5,502,638
                                                                                                          -------------
                                                                                                              6,111,380
-----------------------------------------------------------------------------------------------------------------------
 ARIZONA--0.6%
     200,000     Apache County, AZ IDA
                 (Tucson Electric Power Company)                              5.875          03/01/2033         200,058
-----------------------------------------------------------------------------------------------------------------------
   7,000,000     AZ Health Facilities Authority (American Baptist
                 Estates)                                                     7.750          11/15/2033       7,311,640
-----------------------------------------------------------------------------------------------------------------------
     520,000     Coconino County, AZ Pollution Control
                 (Nevada Power Company)                                       6.375          10/01/2036         534,279
-----------------------------------------------------------------------------------------------------------------------
   3,360,000     Gila County, AZ IDA (Asarco, Inc.) 1,2                       5.550          01/01/2027       2,966,309
-----------------------------------------------------------------------------------------------------------------------
     310,000     Maricopa County, AZ IDA (Sun King Apartments)                6.750          11/01/2018         280,863
-----------------------------------------------------------------------------------------------------------------------
     490,000     Maricopa County, AZ IDA (Sun King Apartments)                6.750          05/01/2031         418,583
-----------------------------------------------------------------------------------------------------------------------
   4,375,000     Maricopa County, AZ Pollution Control ROLs 3,4              12.447 5        08/01/2033       4,460,925
-----------------------------------------------------------------------------------------------------------------------
      50,000     Navajo County, AZ IDA (Stone Container Corp.)                7.400          04/01/2026          51,645
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     Phoenix, AZ IDA (America West Airlines)                      6.250          06/01/2019       1,640,420
-----------------------------------------------------------------------------------------------------------------------
   1,750,000     Phoenix, AZ IDA (Royal Paper Converting)                     7.000          03/01/2014       1,702,365
-----------------------------------------------------------------------------------------------------------------------
     170,000     Pima County, AZ Devel. Authority
                 (Tucson Electric Power Company)                              6.100          09/01/2025         170,019
-----------------------------------------------------------------------------------------------------------------------
   1,385,000     Pima County, AZ IDA (Basis School)                           7.375          07/01/2034       1,413,863
-----------------------------------------------------------------------------------------------------------------------
   1,000,000     Pima County, AZ IDA (Desert Tech Schools)                    7.000          02/01/2024       1,005,710
-----------------------------------------------------------------------------------------------------------------------
     210,000     Tucson & Pima Counties, AZ IDA (Single Family Mtg.)          6.200          01/01/2034         212,516
                                                                                                          -------------
                                                                                                             22,369,195


                 21 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

    PRINCIPAL                                                                                                      VALUE
       AMOUNT                                                                COUPON            MATURITY       SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------
ARKANSAS--0.1%
$     520,000     Little River County, AR (Georgia-Pacific Corp.) 4           5.600%         10/01/2026   $      525,845
------------------------------------------------------------------------------------------------------------------------
    2,160,000     North Little Rock, AR Residential Hsg. Facilities
                  Board RITES 3                                              13.355 5        02/20/2017         2,531,34
                                                                                                          --------------
                                                                                                               3,057,192
------------------------------------------------------------------------------------------------------------------------
CALIFORNIA--14.4%
    2,500,000     CA County Tobacco Securitization Agency (TASC)              5.500          06/01/2033        2,595,650
------------------------------------------------------------------------------------------------------------------------
      680,000     CA County Tobacco Securitization Agency (TASC)              5.750          06/01/2029          715,816
------------------------------------------------------------------------------------------------------------------------
    2,610,000     CA County Tobacco Securitization Agency (TASC)              5.875          06/01/2035        2,742,249
------------------------------------------------------------------------------------------------------------------------
    7,285,000     CA County Tobacco Securitization Agency (TASC)              5.875          06/01/2043        7,716,855
------------------------------------------------------------------------------------------------------------------------
    2,375,000     CA County Tobacco Securitization Agency (TASC)              5.875          06/01/2043        2,496,054
------------------------------------------------------------------------------------------------------------------------
    5,105,000     CA County Tobacco Securitization Agency (TASC)              5.875          06/01/2043        5,365,202
------------------------------------------------------------------------------------------------------------------------
    1,605,000     CA County Tobacco Securitization Agency (TASC)              6.000          06/01/2038        1,697,833
------------------------------------------------------------------------------------------------------------------------
    2,930,000     CA County Tobacco Securitization Agency (TASC)              6.000          06/01/2042        3,099,471
------------------------------------------------------------------------------------------------------------------------
      155,000     CA County Tobacco Securitization Agency (TASC)              6.000          06/01/2043          163,965
------------------------------------------------------------------------------------------------------------------------
    5,000,000     CA County Tobacco Securitization Agency (TASC)              6.125          06/01/2038        5,325,000
------------------------------------------------------------------------------------------------------------------------
    2,720,000     CA Golden State Tobacco Securitization Corp.                5.500          06/01/2043        3,054,723
------------------------------------------------------------------------------------------------------------------------
    3,655,000     CA Golden State Tobacco Securitization Corp.                6.250          06/01/2033        4,077,153
------------------------------------------------------------------------------------------------------------------------
   13,180,000     CA Golden State Tobacco Securitization Corp.                6.625          06/01/2040       15,070,803
------------------------------------------------------------------------------------------------------------------------
   23,855,000     CA Golden State Tobacco Securitization Corp.                6.750          06/01/2039       27,476,189
------------------------------------------------------------------------------------------------------------------------
  160,000,000     CA Golden State Tobacco Securitization Corp.
                  (TASC) 4                                                    5.000          06/01/2045      164,422,400
------------------------------------------------------------------------------------------------------------------------
    1,510,000     CA Golden State Tobacco Securitization Corp. (TASC)         7.875          06/01/2042        1,883,559
------------------------------------------------------------------------------------------------------------------------
    7,320,000     CA Golden State Tobacco Securitization Corp. RITES 3       11.954 5        06/01/2043       10,923,050
------------------------------------------------------------------------------------------------------------------------
    6,800,000     CA Golden State Tobacco Securitization Corp. RITES 3       12.988 5        06/01/2043       10,147,096
------------------------------------------------------------------------------------------------------------------------
    3,790,000     CA Pollution Control Financing Authority
                  (Browning-Ferris Industries)                                6.875          11/01/2027        3,847,608
------------------------------------------------------------------------------------------------------------------------
    4,880,000     CA Statewide CDA (Aspire Public Schools)                    7.250          08/01/2031        4,970,329
------------------------------------------------------------------------------------------------------------------------
    5,000,000     CA Statewide CDA (Daughters of Charity)                     5.250          07/01/2035        5,252,750
------------------------------------------------------------------------------------------------------------------------
    9,000,000     CA Statewide CDA (East Valley Tourist)                      9.250          10/01/2020        9,934,110
------------------------------------------------------------------------------------------------------------------------
   19,000,000     CA Statewide CDA (East Valley Tourist)                     11.000          10/01/2020       19,561,070
------------------------------------------------------------------------------------------------------------------------
    3,000,000     CA Statewide CDA (Elder Care Alliance)                      8.250          11/15/2032        3,111,570
------------------------------------------------------------------------------------------------------------------------
   14,400,000     CA Statewide CDA (Fairfield Apartments)                     7.250          01/01/2035       14,686,992
------------------------------------------------------------------------------------------------------------------------
   47,039,000     CA Statewide CDA (United Airlines) 1,2                      5.700          10/01/2033       30,659,079
------------------------------------------------------------------------------------------------------------------------
    4,500,000     CA Statewide Financing Authority Tobacco
                  Settlement (TASC)                                           6.000          05/01/2037        4,757,535
------------------------------------------------------------------------------------------------------------------------
    1,405,000     CA Statewide Financing Authority Tobacco
                  Settlement (TASC)                                           6.000          05/01/2043        1,485,408
------------------------------------------------------------------------------------------------------------------------
      100,000     CA Statewide Financing Authority Tobacco
                  Settlement (TASC)                                           6.000          05/01/2043          105,723
------------------------------------------------------------------------------------------------------------------------
    3,995,000     CA Valley Health System COP                                 6.875          05/15/2023        4,000,953
------------------------------------------------------------------------------------------------------------------------
    9,010,000     CA Veterans GO                                              4.750          12/01/2018        9,169,027


                 22 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


   PRINCIPAL                                                                                                      VALUE
      AMOUNT                                                                COUPON            MATURITY       SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
CALIFORNIA Continued
$ 21,000,000     CA Veterans GO                                              4.900%         12/01/2025   $   21,290,220
-----------------------------------------------------------------------------------------------------------------------
  57,500,000     CA Veterans GO 6                                            5.050          12/01/2036       59,190,500
-----------------------------------------------------------------------------------------------------------------------
   1,535,000     Lathrop, CA Special Tax Community Facilities
                 District No. 03-2                                           7.000          09/01/2033        1,607,790
-----------------------------------------------------------------------------------------------------------------------
   3,250,000     Long Beach, CA Harbor DRIVERS 3                            12.918 5        05/15/2027        4,041,765
-----------------------------------------------------------------------------------------------------------------------
   5,700,000     Los Angeles, CA Regional Airports Improvement
                 Corp. (Air Canada)                                          8.750          10/01/2014        5,639,637
-----------------------------------------------------------------------------------------------------------------------
  10,000,000     Los Angeles, CA Regional Airports Improvement
                 Corp. (American Airlines)                                   7.500          12/01/2024       10,705,100
-----------------------------------------------------------------------------------------------------------------------
   1,135,000     Los Angeles, CA Regional Airports Improvement
                 Corp. (Delta Airlines)                                      6.350          11/01/2025          934,241
-----------------------------------------------------------------------------------------------------------------------
   8,485,000     Los Angeles, CA Regional Airports Improvement
                 Corp. (Delta-Continental Airlines)                          9.250          08/01/2024        8,591,911
-----------------------------------------------------------------------------------------------------------------------
   9,800,000     Northern CA Tobacco Securitization Authority (TASC)         5.375          06/01/2041       10,039,708
-----------------------------------------------------------------------------------------------------------------------
   1,565,000     Northern CA Tobacco Securitization Authority (TASC),
                 Series A                                                    5.250          06/01/2031        1,588,444
-----------------------------------------------------------------------------------------------------------------------
   2,200,000     San Diego County, CA COP                                    5.700          02/01/2028        2,143,702
-----------------------------------------------------------------------------------------------------------------------
   5,025,000     Southern CA Tobacco Securitization Authority (TASC)         5.500          06/01/2036        5,183,338
-----------------------------------------------------------------------------------------------------------------------
   8,550,000     Southern CA Tobacco Securitization Authority (TASC)         5.625          06/01/2043        8,888,324
-----------------------------------------------------------------------------------------------------------------------
   8,335,000     Southern CA Tobacco Securitization Authority (TASC)         6.000          06/01/2043        8,814,596
-----------------------------------------------------------------------------------------------------------------------
   2,680,000     Val Verde, CA Unified School District Special Tax           5.450          09/01/2036        2,707,068
                                                                                                         --------------
                                                                                                            531,881,566
-----------------------------------------------------------------------------------------------------------------------
COLORADO--2.0%
   1,620,000     Beacon Point, CO Metropolitan District                      6.125          12/01/2025        1,612,386
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     Beacon Point, CO Metropolitan District                      6.250          12/01/2035        1,983,660
-----------------------------------------------------------------------------------------------------------------------
   6,000,000     Central Marksheffel, CO Metropolitan District               7.250          12/01/2029        6,338,520
-----------------------------------------------------------------------------------------------------------------------
  24,295,000     CO Educational & Cultural Facilities Authority              6.000          07/01/2042       24,268,518
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     CO Educational & Cultural Facilities Authority
                 (Colorado Lutheran High School Assoc.)                      7.625          06/01/2034        2,124,380
-----------------------------------------------------------------------------------------------------------------------
     830,000     CO Hsg. & Finance Authority                                 6.400          11/01/2024          854,278
-----------------------------------------------------------------------------------------------------------------------
   1,170,000     CO Hsg. & Finance Authority                                 6.450          04/01/2030        1,235,485
-----------------------------------------------------------------------------------------------------------------------
     240,000     CO Hsg. & Finance Authority                                 7.050          04/01/2031          248,114
-----------------------------------------------------------------------------------------------------------------------
     695,000     CO Hsg. & Finance Authority                                 8.400          10/01/2021          756,042
-----------------------------------------------------------------------------------------------------------------------
     600,000     CO Hsg. & Finance Authority (Single Family), Series C-2     6.600          08/01/2032          627,048
-----------------------------------------------------------------------------------------------------------------------
   4,535,000     Colorado Springs, CO Utilities ROLs 3,4                    13.258 5        11/15/2043        5,238,651
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     Denver, CO City & County Airport Special Facilities
                 (United Air Lines) 1,2                                      6.875          10/01/2032        1,825,340
-----------------------------------------------------------------------------------------------------------------------
   3,625,000     High Plains, CO Metropolitan District                       6.125          12/01/2025        3,674,518
-----------------------------------------------------------------------------------------------------------------------
   5,625,000     High Plains, CO Metropolitan District                       6.250          12/01/2035        5,704,819
-----------------------------------------------------------------------------------------------------------------------
   3,725,000     Highline Business Improvement District (Littleton, CO)      5.250          12/15/2019        2,523,688


                 23 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

   PRINCIPAL                                                                                                      VALUE
      AMOUNT                                                                 COUPON            MATURITY      SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
COLORADO Continued
$ 11,000,000     Lincoln Park, CO Metropolitan District                       7.750%         12/01/2026   $  11,767,360
-----------------------------------------------------------------------------------------------------------------------
   1,000,000     Southlands, CO Medical District                              7.000          12/01/2024       1,099,490
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     Southlands, CO Medical District                              7.125          12/01/2034       2,195,760
                                                                                                          -------------
                                                                                                             74,078,057
-----------------------------------------------------------------------------------------------------------------------
CONNECTICUT--0.1%
   1,500,000     CT Devel. Authority Airport Facility (Learjet)               7.950          04/01/2026       1,808,925
-----------------------------------------------------------------------------------------------------------------------
   1,500,000     CT Resource Recovery Authority
                 (Browning-Ferris Industries)                                 6.450          11/15/2022       1,528,650
                                                                                                          -------------
                                                                                                              3,337,575
-----------------------------------------------------------------------------------------------------------------------
DELAWARE--0.0%
     200,000     DE Hsg. (Multifamily)                                        7.000          05/01/2025         200,952
-----------------------------------------------------------------------------------------------------------------------
DISTRICT OF COLUMBIA--1.4%
      85,000     District of Columbia HFA (Benning Road Apartments)           6.300          01/01/2012          85,638
-----------------------------------------------------------------------------------------------------------------------
     100,000     District of Columbia Tobacco Settlement Financing Corp.      6.250          05/15/2024         107,826
-----------------------------------------------------------------------------------------------------------------------
   3,295,000     District of Columbia Tobacco Settlement Financing Corp.      6.500          05/15/2033       3,916,832
-----------------------------------------------------------------------------------------------------------------------
  26,885,000     District of Columbia Tobacco Settlement Financing Corp.      6.750          05/15/2040      30,007,424
-----------------------------------------------------------------------------------------------------------------------
   2,055,000     Metropolitan Washington, D.C. Airport Authority
                 DRIVERS 3,4                                                 12.997 5        10/01/2011       2,422,023
-----------------------------------------------------------------------------------------------------------------------
   5,575,000     Metropolitan Washington, D.C. Airport Authority ROLs 3      13.402 5        10/01/2032       6,630,905
-----------------------------------------------------------------------------------------------------------------------
   6,580,000     Metropolitan Washington, D.C. Airport Authority,
                 Series A ROLs 3                                             13.402 5        10/01/2020       7,256,161
                                                                                                          -------------
                                                                                                             50,426,809
-----------------------------------------------------------------------------------------------------------------------
FLORIDA--7.1%
   2,200,000     Beacon, FL Tradeport Community Devel. District               7.250          05/01/2033       2,382,930
-----------------------------------------------------------------------------------------------------------------------
   2,750,000     Beacon, FL Tradeport Community Devel. District RITES 3      13.419 5        05/01/2032       3,718,220
-----------------------------------------------------------------------------------------------------------------------
   7,625,000     Bonnet Creek, FL Resort Community Devel.
                 District Special Assessment                                  7.500          05/01/2034       8,225,698
-----------------------------------------------------------------------------------------------------------------------
   1,900,000     Dade County, FL IDA (Miami Cerebral Palsy Residence)         8.000          06/01/2022       1,941,629
-----------------------------------------------------------------------------------------------------------------------
      50,000     FL Capital Projects Finance Authority CCRC
                 (Glenridge on Palmer Ranch)                                  7.625          06/01/2032          52,465
-----------------------------------------------------------------------------------------------------------------------
   8,485,000     FL Capital Projects Finance Authority CCRC
                 (Glenridge on Palmer Ranch)                                  8.000          06/01/2032       9,436,508
-----------------------------------------------------------------------------------------------------------------------
     710,000     FL Capital Trust Agency (American Opportunity)               8.250          12/01/2038         660,627
-----------------------------------------------------------------------------------------------------------------------
  24,400,000     FL Capital Trust Agency (Seminole Tribe                      8.950          10/01/2033      26,674,080
                 Convention) 6
-----------------------------------------------------------------------------------------------------------------------
  72,110,000     FL Capital Trust Agency (Seminole Tribe Convention)         10.000          10/01/2033      79,367,872
-----------------------------------------------------------------------------------------------------------------------
  28,230,000     FL Capital Trust Agency Multifamily Affordable Hsg.,
                 Series C                                                     8.125          10/01/2038      28,096,190
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     FL City Center Community Devel. District                     6.125          05/01/2036       2,007,580
-----------------------------------------------------------------------------------------------------------------------
     260,000     FL HFA (Multifamily Hsg.), Series I                          6.625          07/01/2028         249,072
-----------------------------------------------------------------------------------------------------------------------
     570,000     FL HFA (Multifamily Hsg.), Series I-1                        6.100          01/01/2009         571,248


                 24 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


   PRINCIPAL                                                                                                      VALUE
      AMOUNT                                                                 COUPON            MATURITY      SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
FLORIDA Continued
$  1,660,000     FL HFC (Tallahassee Augustine Club Apartments)               8.250%         10/01/2030   $   1,541,825
-----------------------------------------------------------------------------------------------------------------------
   5,220,000     FL HFC (Westchase Apartments)                                6.610          07/01/2038       4,540,147
-----------------------------------------------------------------------------------------------------------------------
     665,000     Grand Haven, FL Community Devel. District
                 Special Assessment, Series B                                 6.900          05/01/2019         670,227
-----------------------------------------------------------------------------------------------------------------------
   2,255,000     Hillsborough County, FL Hsg. & Finance Authority
                 (Gardens at South Bay Apartments) ROLs 3                    11.374 5        07/01/2022       2,240,207
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     Hillsborough County, FL IDA
                 (National Gypsum Company)                                    7.125          04/01/2030       2,245,420
-----------------------------------------------------------------------------------------------------------------------
   9,250,000     Hillsborough County, FL IDA (Senior Care Group)              6.700          07/01/2021       9,476,163
-----------------------------------------------------------------------------------------------------------------------
   3,500,000     Hillsborough County, FL IDA (Senior Care Group)              6.750          07/01/2029       3,566,255
-----------------------------------------------------------------------------------------------------------------------
   1,500,000     Jacksonville, FL Economic Devel. Corp.
                 (Met Packaging Solutions)                                    5.500          10/01/2030       1,581,765
-----------------------------------------------------------------------------------------------------------------------
   4,500,000     Jacksonville, FL Health Facilities Authority ROLs 3         13.522 5        11/15/2032       5,426,010
-----------------------------------------------------------------------------------------------------------------------
   1,225,000     Keys Cove, FL Community Devel. District                      5.875          05/01/2035       1,275,433
-----------------------------------------------------------------------------------------------------------------------
   1,800,000     Madison County, FL Mtg. (Twin Oaks)                          6.000          07/01/2025       1,788,732
-----------------------------------------------------------------------------------------------------------------------
  14,090,000     Martin County, FL IDA (Indiantown Cogeneration)              7.875          12/15/2025      14,325,303
-----------------------------------------------------------------------------------------------------------------------
     670,000     Martin County, FL IDA (Indiantown Cogeneration)              8.050          12/15/2025         681,196
-----------------------------------------------------------------------------------------------------------------------
   1,000,000     Miami Beach, FL Health Facilities Authority
                 (Mt. Sinai Medical Center)                                   6.700          11/15/2019       1,092,520
-----------------------------------------------------------------------------------------------------------------------
     500,000     Miami Beach, FL Health Facilities Authority
                 (Mt. Sinai Medical Center)                                   6.800          11/15/2031         547,400
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     Miami, FL Health Facilities Authority
                 (Mercy Hospital) IRS                                         7.770 5        08/15/2015       2,045,920
-----------------------------------------------------------------------------------------------------------------------
   1,500,000     Orange County, FL Health Facilities Authority
                 (Orlando Lutheran Towers)                                    8.750          07/01/2026       1,619,130
-----------------------------------------------------------------------------------------------------------------------
     685,000     Palm Beach County, FL Multifamily
                 (Boynton Apartments) 1,2                                     8.000          01/01/2014         377,483
-----------------------------------------------------------------------------------------------------------------------
      15,000     Pinellas County, FL Educational Facilities Authority
                 (Eckerd College)                                             7.750          07/01/2014          15,025
-----------------------------------------------------------------------------------------------------------------------
   1,750,000     Reunion East, FL Community Devel. District                   5.800          05/01/2036       1,804,810
-----------------------------------------------------------------------------------------------------------------------
  10,000,000     Reunion East, FL Community Devel. District, Series A         7.375          05/01/2033      11,213,300
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     Reunion West, FL Community Devel. District
                 Special Assessment                                           6.250          05/01/2036       2,113,480
-----------------------------------------------------------------------------------------------------------------------
   3,965,000     Sanford, FL Airport Facilities Authority
                 (Central Florida Terminals)                                  7.500          05/01/2010       3,950,924
-----------------------------------------------------------------------------------------------------------------------
   5,880,000     Sanford, FL Airport Facilities Authority
                 (Central Florida Terminals)                                  7.500          05/01/2015       5,823,493
-----------------------------------------------------------------------------------------------------------------------
   1,145,000     Sanford, FL Airport Facilities Authority
                 (Central Florida Terminals)                                  7.500          05/01/2021       1,125,844
-----------------------------------------------------------------------------------------------------------------------
  10,395,000     Sanford, FL Airport Facilities Authority
                 (Central Florida Terminals)                                  7.750          05/01/2021      10,416,518
-----------------------------------------------------------------------------------------------------------------------
   4,475,000     Seminole County, FL IDA (Progressive Health)                 7.500          03/01/2035       4,522,838


                 25 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

    PRINCIPAL                                                                                                     VALUE
       AMOUNT                                                               COUPON            MATURITY       SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
FLORIDA Continued
$   3,000,000     Town Center, FL at Palm Coast Community
                  Devel. District                                            6.000%         05/01/2036   $    3,055,260
                                                                                                         --------------
                                                                                                            262,466,747
-----------------------------------------------------------------------------------------------------------------------
GEORGIA--1.3%
    3,000,000     Atlanta, GA Devel. Authority Student Hsg.
                  (ADA/CAU Partners)                                         6.250          07/01/2036        3,333,780
-----------------------------------------------------------------------------------------------------------------------
      140,000     Atlanta, GA Urban Residential Finance Authority
                  (Spring Branch Apartments)                                 8.500          04/01/2026          138,296
-----------------------------------------------------------------------------------------------------------------------
      580,000     Brunswick & Glynn County, GA Devel. Authority
                  (Coastal Community Retirement Corp.)                       7.125          01/01/2025          617,132
-----------------------------------------------------------------------------------------------------------------------
    7,695,000     Brunswick & Glynn County, GA Devel. Authority
                  (Coastal Community Retirement Corp.)                       7.250          01/01/2035        8,269,124
-----------------------------------------------------------------------------------------------------------------------
    6,700,000     Burke County, GA Devel. Authority RITES 3                  9.582 5        05/01/2034        6,766,330
-----------------------------------------------------------------------------------------------------------------------
       75,000     Charlton County, GA Solid Waste Management
                  Authority (Chesser Island Road Landfill)                   7.375          04/01/2018           75,446
-----------------------------------------------------------------------------------------------------------------------
       35,000     Effingham County, GA Devel. Authority
                  (Fort James Corp.)                                         5.625          07/01/2018           34,992
-----------------------------------------------------------------------------------------------------------------------
    8,270,000     GA Hsg. & Finance Authority 4                              4.850          12/01/2037        8,315,816
-----------------------------------------------------------------------------------------------------------------------
      100,000     McDuffie County, GA County Devel. Authority
                  (Temple-Inland)                                            6.950          12/01/2023          113,737
-----------------------------------------------------------------------------------------------------------------------
    3,475,000     Rockdale County, GA Devel. Authority (Visy Paper)          7.400          01/01/2016        3,527,855
-----------------------------------------------------------------------------------------------------------------------
   14,500,000     Rockdale County, GA Devel. Authority (Visy Paper) 6        7.500          01/01/2026       14,720,545
-----------------------------------------------------------------------------------------------------------------------
      425,000     Savannah, GA EDA (Skidway Health & Living Services)        7.400          01/01/2024          446,050
-----------------------------------------------------------------------------------------------------------------------
    2,450,000     Savannah, GA EDA (Skidway Health & Living Services)        7.400          01/01/2034        2,569,291
                                                                                                         --------------
                                                                                                             48,928,394
-----------------------------------------------------------------------------------------------------------------------
HAWAII--0.7%
    2,500,000     HI Department of Budget & Finance RITES 3                 10.820 5        12/01/2022        2,876,600
-----------------------------------------------------------------------------------------------------------------------
    2,125,000     HI Department of Budget & Finance RITES 3                 11.216 5        09/01/2032        2,449,573
-----------------------------------------------------------------------------------------------------------------------
   10,600,000     HI Department of Budget & Finance Special Purpose
                  (Kahala Nui)                                               8.000          11/15/2033       12,195,724
-----------------------------------------------------------------------------------------------------------------------
    2,600,000     HI Department of Budget & Finance Special Purpose
                  (Kahala Senior Living Community)                           7.875          11/15/2023        2,999,308
-----------------------------------------------------------------------------------------------------------------------
    3,920,000     HI Department of Transportation (Continental
                  Airlines)                                                  7.000          06/01/2020        3,803,615
                                                                                                         --------------
                                                                                                             24,324,820
-----------------------------------------------------------------------------------------------------------------------
IDAHO--0.1%
    3,000,000     ID Health Facilities Authority (Valley Vista Care Corp.)   7.875          11/15/2022        3,021,720
-----------------------------------------------------------------------------------------------------------------------
ILLINOIS--2.8%
    4,262,500     Bolingbrook, IL Will & Du Page Counties Wastewater
                  Facilities (Crossroads Treatment)                          6.600          01/01/2035        4,311,945
-----------------------------------------------------------------------------------------------------------------------
    8,000,000     Caseyville, IL Tax (Forest Lakes)                          7.000          12/30/2022        8,037,600
-----------------------------------------------------------------------------------------------------------------------
    8,000,000     Centerpoint, IL Intermodal Center Program                  8.000          06/15/2023        7,834,000


                 26 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


    PRINCIPAL                                                                                                     VALUE
       AMOUNT                                                               COUPON            MATURITY       SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
ILLINOIS Continued
$  13,645,000     Chicago, IL O'Hare International Airport
                  (American Airlines)                                        8.200%         12/01/2024   $   13,472,254
-----------------------------------------------------------------------------------------------------------------------
    8,050,000     Chicago, IL O'Hare International Airport RITES 3          14.806 5        01/01/2029       12,161,296
-----------------------------------------------------------------------------------------------------------------------
    2,000,000     Chicago, IL O'Hare International Airport ROLs 3           12.388 5        01/01/2034        2,235,160
-----------------------------------------------------------------------------------------------------------------------
    1,375,000     Godfrey, IL (United Methodist Village)                     5.875          11/15/2029          966,158
-----------------------------------------------------------------------------------------------------------------------
      170,000     IL Devel. Finance Authority                                8.250          08/01/2012          172,655
-----------------------------------------------------------------------------------------------------------------------
   23,540,000     IL Devel. Finance Authority (Citgo Petroleum Corp.) 6      8.000          06/01/2032       26,998,497
-----------------------------------------------------------------------------------------------------------------------
    2,000,000     IL Finance Authority (Friendship Village Schaumburg)       5.375          02/15/2025        2,020,020
-----------------------------------------------------------------------------------------------------------------------
    2,000,000     IL Finance Authority (Friendship Village Schaumburg)       5.625          02/15/2037        2,027,200
-----------------------------------------------------------------------------------------------------------------------
    1,500,000     IL Health Facilities Authority                             6.900          11/15/2033        1,586,280
-----------------------------------------------------------------------------------------------------------------------
    2,125,000     IL Health Facilities Authority RITES 3                    11.478 5        02/15/2025        2,516,255
-----------------------------------------------------------------------------------------------------------------------
       10,000     IL Hsg. Devel. Authority (Multifamily Hsg.),
                  Series A                                                   7.100          07/01/2026           10,015
-----------------------------------------------------------------------------------------------------------------------
      500,000     Peoria, IL Hsg. (Peoria Oak Woods Apartments)              7.750          10/15/2033          494,545
-----------------------------------------------------------------------------------------------------------------------
   19,026,158     Robbins, IL Res Rec (Robbins Res Rec Partners)             7.250          10/15/2024       19,442,641
                                                                                                         --------------
                                                                                                            104,286,521
-----------------------------------------------------------------------------------------------------------------------
INDIANA--1.3%
    2,175,000     East Chicago, IN Pollution Control
                  (Ispat Inland Steel Company)                               6.800          06/01/2013        2,174,696
-----------------------------------------------------------------------------------------------------------------------
   13,925,000     IN Devel. Finance Authority (Inland Steel)                 7.250          11/01/2011       14,662,607
-----------------------------------------------------------------------------------------------------------------------
    1,690,000     IN Health Facility Financing Authority RITES 3            12.939 5        11/01/2031        2,067,614
-----------------------------------------------------------------------------------------------------------------------
    2,500,000     IN Health Facility Financing Authority RITES 3            12.954 5        11/01/2031        3,058,600
-----------------------------------------------------------------------------------------------------------------------
   17,500,000     North Manchester, IN
                  (Estelle Peabody Memorial Home)                            7.250          07/01/2033       18,255,300
-----------------------------------------------------------------------------------------------------------------------
    7,120,000     Vincennes, IN Economic Devel.
                  (Southwest Indiana Regional Youth Village)                 6.250          01/01/2024        7,161,438
-----------------------------------------------------------------------------------------------------------------------
       30,000     Wabash, IN Solid Waste Disposal
                  (Jefferson Smurfit Corp.)                                  7.500          06/01/2026           31,270
                                                                                                         --------------
                                                                                                             47,411,525
-----------------------------------------------------------------------------------------------------------------------
IOWA--2.4%
      900,000     IA Finance Authority Retirement Community
                  (Friendship Haven)                                         6.125          11/15/2032          917,550
-----------------------------------------------------------------------------------------------------------------------
   22,245,000     IA Tobacco Settlement Authority (TASC)                     5.300          06/01/2025       22,813,805
-----------------------------------------------------------------------------------------------------------------------
   62,965,000     IA Tobacco Settlement Authority (TASC)                     5.600          06/01/2035       64,971,695
                                                                                                         --------------
                                                                                                             88,703,050
-----------------------------------------------------------------------------------------------------------------------
KANSAS--0.1%
    1,300,000     Lenexa, KS Multifamily Hsg. (Meadows Apartments)           7.750          10/15/2035        1,248,936
-----------------------------------------------------------------------------------------------------------------------
    1,745,000     Sedgwick & Shawnee Counties, KS Hsg. (Single Family)       6.875          12/01/2026        1,822,827
-----------------------------------------------------------------------------------------------------------------------
      445,000     Sedgwick & Shawnee Counties, KS Hsg. (Single Family)       7.600          12/01/2031          470,579
-----------------------------------------------------------------------------------------------------------------------
    1,110,000     Sedgwick & Shawnee Counties, KS Hsg. (Single Family)       7.600          12/01/2031        1,173,803
                                                                                                         --------------
                                                                                                              4,716,145


                 27 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

   PRINCIPAL                                                                                                      VALUE
      AMOUNT                                                                COUPON            MATURITY       SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
KENTUCKY--3.5%
$  3,360,000      Boone County, KY Pollution Control
                  (Dayton Power & Light Company)                             6.500%         11/15/2022   $    3,427,570
-----------------------------------------------------------------------------------------------------------------------
      25,000      Boone County, KY Pollution Control
                  (Dayton Power & Light Company)                             6.500          11/15/2022           25,078
-----------------------------------------------------------------------------------------------------------------------
  20,760,000      Kenton County, KY Airport Special Facilities
                  (Delta Airlines)                                           6.125          02/01/2022       16,709,309
-----------------------------------------------------------------------------------------------------------------------
  42,760,000      Kenton County, KY Airport Special Facilities
                  (Delta Airlines)                                           7.125          02/01/2021       38,353,154
-----------------------------------------------------------------------------------------------------------------------
     100,000      Kenton County, KY Airport Special Facilities
                  (Delta Airlines)                                           7.250          02/01/2022           90,488
-----------------------------------------------------------------------------------------------------------------------
  27,795,000      Kenton County, KY Airport Special Facilities
                  (Delta Airlines)                                           7.500          02/01/2012       26,600,371
-----------------------------------------------------------------------------------------------------------------------
  29,185,000      Kenton County, KY Airport Special Facilities
                  (Delta Airlines)                                           7.500          02/01/2020       27,189,913
-----------------------------------------------------------------------------------------------------------------------
   2,165,000      Kenton County, KY Airport Special Facilities
                  (Mesaba Aviation)                                          6.625          07/01/2019        1,889,504
-----------------------------------------------------------------------------------------------------------------------
   3,000,000      Kenton County, KY Airport Special Facilities
                  (Mesaba Aviation)                                          6.700          07/01/2029        2,492,010
-----------------------------------------------------------------------------------------------------------------------
   2,735,000      Kuttawa, KY (1st Mortgage-GF/Kentucky)                     6.750          03/01/2029        2,636,540
-----------------------------------------------------------------------------------------------------------------------
   2,900,000      Morgantown, KY Solid Waste Disposal (Imco Recycling)       6.000          05/01/2023        2,817,727
-----------------------------------------------------------------------------------------------------------------------
   1,200,000      Morgantown, KY Solid Waste Disposal (Imco Recycling)       7.450          05/01/2022        1,198,092
-----------------------------------------------------------------------------------------------------------------------
   5,740,000      Morgantown, KY Solid Waste Disposal (Imco Recycling)       7.650          05/01/2016        5,765,026
-----------------------------------------------------------------------------------------------------------------------
   2,000,000      Perry County, KY Solid Waste Disposal
                  (Weyerhaeuser Company)                                     6.550          04/15/2027        2,113,340
                                                                                                         --------------
                                                                                                            131,308,122
-----------------------------------------------------------------------------------------------------------------------
LOUISIANA--5.3%
   5,555,000      Calcasieu Parish, LA Industrial Devel. Board Pollution
                  Control (Gulf States Utilities Company)                    6.750          10/01/2012        5,610,272
-----------------------------------------------------------------------------------------------------------------------
   1,375,000      Epps, LA COP 3                                             8.000          06/01/2018        1,418,643
-----------------------------------------------------------------------------------------------------------------------
   3,800,000      LA CDA (Eunice Student Hsg. Foundation)                    7.375          09/01/2033        2,659,620
-----------------------------------------------------------------------------------------------------------------------
     695,000      LA Local Government EF&CD (Oakleigh Apartments)            8.500          06/01/2038          702,930
-----------------------------------------------------------------------------------------------------------------------
   1,170,000      LA Local Government EF&CD Authority
                  (Cypress Apartments)                                       8.000          04/20/2028        1,148,776
-----------------------------------------------------------------------------------------------------------------------
     525,000      LA Local Government EF&CD Authority
                  (Sharlo Apartments)                                        8.000          06/20/2028          506,048
-----------------------------------------------------------------------------------------------------------------------
   8,000,000      LA Local Government EF&CD Authority (St. James Place)      7.000          11/01/2029        8,030,880
-----------------------------------------------------------------------------------------------------------------------
   6,000,000      LA Public Facilities Authority
                  (Lake Charles Memorial Hospital)                           8.625          12/01/2030        6,409,080
-----------------------------------------------------------------------------------------------------------------------
   5,350,000      LA Public Facilities Authority (Progressive Healthcare)    6.375          10/01/2028        5,009,259
-----------------------------------------------------------------------------------------------------------------------
   1,875,000      LA Public Facilities Authority ROLs 3                     12.508 5        05/15/2022        2,236,838
-----------------------------------------------------------------------------------------------------------------------
 118,530,000      LA Tobacco Settlement Financing Corp. (TASC)               5.875          05/15/2039      125,565,941
-----------------------------------------------------------------------------------------------------------------------
   9,580,000      LA Tobacco Settlement Financing Corp. (TASC), Series B     5.500          05/15/2030       10,000,849


                 28 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS



   PRINCIPAL                                                                                                      VALUE
      AMOUNT                                                                COUPON            MATURITY       SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
LOUISIANA Continued
$     50,000     Lake Charles, LA Non-Profit HDC Section 8 (Chateau)         7.875%         02/15/2025   $       52,125
-----------------------------------------------------------------------------------------------------------------------
   1,000,000     Port New Orleans, LA Industrial Devel.
                 (Continental Grain Company)                                 7.500          07/01/2013        1,033,600
-----------------------------------------------------------------------------------------------------------------------
  19,650,000     St. Charles Parish, LA
                 (Louisiana Power & Light Company)                           7.500          06/01/2021       19,753,556
-----------------------------------------------------------------------------------------------------------------------
   4,250,000     St. Charles Parish, LA
                 (Louisiana Power & Light Company)                           7.500          06/01/2021        4,361,988
                                                                                                         --------------
                                                                                                            194,500,405
-----------------------------------------------------------------------------------------------------------------------
MAINE--0.3%
   7,595,000     ME Finance Authority Solid Waste Recycling Facilities
                 (Great Northern Paper)                                      7.750          10/01/2022        7,635,937
-----------------------------------------------------------------------------------------------------------------------
   1,495,000     ME State Hsg. Authority Mtg. ROLs 3                        12.996 5        11/15/2022        1,682,114
                                                                                                         --------------
                                                                                                              9,318,051
-----------------------------------------------------------------------------------------------------------------------
 MARYLAND--0.0%
     320,000     MD Industrial Devel. Financing Authority
                 (Our Lady of Good Counsel)                                  5.500          05/01/2020          323,946
-----------------------------------------------------------------------------------------------------------------------
     850,000     MD Industrial Devel. Financing Authority
                 (Our Lady of Good Counsel)                                  6.000          05/01/2035          874,429
-----------------------------------------------------------------------------------------------------------------------
      15,000     Montgomery County, MD Hsg. Opportunities
                 Commission (Multifamily Mtg.), Series C                     7.150          07/01/2023           15,020
                                                                                                         --------------
                                                                                                              1,213,395
-----------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS--2.2%
     800,000     MA Devel. Finance Agency (Eastern Nazarene College)         5.625          04/01/2019          810,576
-----------------------------------------------------------------------------------------------------------------------
   1,000,000     MA Devel. Finance Agency (Eastern Nazarene College)         5.625          04/01/2029        1,000,390
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     MA GO ROLs 3                                               12.538 5        08/01/2027        2,720,120
-----------------------------------------------------------------------------------------------------------------------
  22,575,000     MA HFA                                                      5.000          07/01/2022       22,990,380
-----------------------------------------------------------------------------------------------------------------------
  52,085,000     MA HFA 6                                                    5.250          07/01/2025       53,907,454
                                                                                                         --------------
                                                                                                             81,428,920
-----------------------------------------------------------------------------------------------------------------------
MICHIGAN--2.3%
     310,000     Detroit, MI Hsg. Finance Corp.
                 (Across The Park Section 8 Elderly Hsg.)                    7.875          06/01/2010          313,457
-----------------------------------------------------------------------------------------------------------------------
      95,000     Detroit, MI Local Devel. Finance Authority                  5.500          05/01/2021           89,272
-----------------------------------------------------------------------------------------------------------------------
   2,625,000     Kent, MI Hospital Finance Authority                         6.250          07/01/2040        2,903,119
-----------------------------------------------------------------------------------------------------------------------
   2,475,000     MI Higher Education Student Loan Authority RITES 3         12.616 5        09/01/2026        2,940,894
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     MI Strategic Fund Limited Obligation
                 (Detroit Edison) ROLs 3                                    14.416 5        06/01/2030        2,628,480
-----------------------------------------------------------------------------------------------------------------------
     485,000     MI Strategic Fund Limited Obligation
                 (Ford Motor Company), Series A                              6.550          10/01/2022          485,058
-----------------------------------------------------------------------------------------------------------------------
   3,710,000     MI Strategic Fund Pollution Control
                 (General Motors Corporation)                                6.200          09/01/2020        3,732,705


                 29 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

   PRINCIPAL                                                                                                      VALUE
      AMOUNT                                                                 COUPON            MATURITY      SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
MICHIGAN Continued
$  2,640,000     Wayne Charter County, MI Airport Facilities
                 (Northwest Airlines)                                         6.000%         12/01/2029   $   2,101,546
-----------------------------------------------------------------------------------------------------------------------
   5,375,000     Wayne Charter County, MI Airport Facilities
                 (Northwest Airlines)                                         6.750          12/01/2015       4,220,396
-----------------------------------------------------------------------------------------------------------------------
  15,190,000     Wayne County, MI Airport Authority                           4.750          12/01/2018      15,633,396
-----------------------------------------------------------------------------------------------------------------------
  15,925,000     Wayne County, MI Airport Authority                           4.750          12/01/2019      16,309,907
-----------------------------------------------------------------------------------------------------------------------
  31,195,000     Wayne County, MI Airport Authority 6                         5.000          12/01/2029      32,537,009
-----------------------------------------------------------------------------------------------------------------------
   2,900,000     Wenonah Park Properties, MI (Bay City Hotel)                 7.500          04/01/2033       2,779,302
                                                                                                          -------------
                                                                                                             86,674,541
-----------------------------------------------------------------------------------------------------------------------
MINNESOTA--1.7%
   1,430,000     Burnsville, MN Commercial Devel. (Holiday Inn)               5.900          04/01/2008       1,423,150
-----------------------------------------------------------------------------------------------------------------------
   1,235,000     Mahtomedi, MN Multifamily (Briarcliff)                       7.350          06/01/2036       1,270,926
-----------------------------------------------------------------------------------------------------------------------
  27,300,000     Minneapolis & St. Paul, MN Metropolitan Airports
                 Commission (Northwest Airlines)                              7.000          04/01/2025      25,053,483
-----------------------------------------------------------------------------------------------------------------------
  12,400,000     Minneapolis & St. Paul, MN Metropolitan Airports
                 Commission (Northwest Airlines)                              7.375          04/01/2025      11,842,496
-----------------------------------------------------------------------------------------------------------------------
   8,150,000     Rochester, MN Hsg. (Wedum Shorewood Campus)                  6.600          06/01/2036       8,473,555
-----------------------------------------------------------------------------------------------------------------------
     690,000     Rochester, MN Multifamily Hsg. (Eastridge Estates)           7.750          12/15/2034         689,903
-----------------------------------------------------------------------------------------------------------------------
   1,700,000     St. Paul, MN Hsg. & Redevel. Authority
                 (Brigecreek Senior Place)                                    7.000          09/15/2037       1,700,153
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     St. Paul, MN Hsg. & Redevel. Authority
                 (Community of Peace Building Company)                        7.875          12/01/2030       2,090,080
-----------------------------------------------------------------------------------------------------------------------
   3,000,000     St. Paul, MN Hsg. & Redevel. Authority
                 (Great Northern Lofts)                                       6.250          03/01/2029       3,025,080
-----------------------------------------------------------------------------------------------------------------------
   2,130,000     St. Paul, MN Hsg. & Redevel. Authority (Upper Landing)       7.000          03/01/2029       2,135,112
-----------------------------------------------------------------------------------------------------------------------
   3,400,000     St. Paul, MN Port Authority (Healtheast Midway Campus)       6.000          05/01/2030       3,454,808
                                                                                                          -------------
                                                                                                             61,158,746
-----------------------------------------------------------------------------------------------------------------------
MISSISSIPPI--0.1%
     100,000     Claiborne County, MS Pollution Control
                 (System Energy Resources)                                    6.200          02/01/2026         100,037
-----------------------------------------------------------------------------------------------------------------------
     320,000     Hinds County, MS Urban Renewal
                 (The Lodge Associates, Ltd.) 1,2                             8.000          10/15/2022         179,504
-----------------------------------------------------------------------------------------------------------------------
   4,375,000     MS Hospital Equipment & Facilities Authority RITES 3        11.062 5        09/01/2024       4,922,313
                                                                                                          -------------
                                                                                                              5,201,854
-----------------------------------------------------------------------------------------------------------------------
MISSOURI--1.1%
  13,000,000     Branson, MO IDA (Branson Hills)                              7.050          05/01/2027      13,103,740
-----------------------------------------------------------------------------------------------------------------------
   1,000,000     Kansas City, MO IDA (Plaza Library)                          5.900          03/01/2024       1,000,340
-----------------------------------------------------------------------------------------------------------------------
   1,400,000     Kansas City, MO IDA (West Paseo)                             6.750          07/01/2036       1,410,416
-----------------------------------------------------------------------------------------------------------------------
   2,500,000     St. Joseph, MO IDA (Living Community of St. Joseph)          7.000          08/15/2032       2,676,050
-----------------------------------------------------------------------------------------------------------------------
     750,000     St. Joseph, MO IDA (Shoppes at North Village)                5.375          11/01/2024         745,043
-----------------------------------------------------------------------------------------------------------------------
   2,500,000     St. Joseph, MO IDA (Shoppes at North Village)                5.500          11/01/2027       2,498,175


                 30 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


   PRINCIPAL                                                                                                      VALUE
      AMOUNT                                                                 COUPON             MATURITY     SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
MISSOURI Continued
$  2,335,000     St. Louis, MO IDA (Kiel Center Multipurpose Arena)           7.750%          12/01/2013  $   2,377,731
-----------------------------------------------------------------------------------------------------------------------
  15,400,000     St. Louis, MO IDA (Kiel Center Multipurpose Arena) 6         7.875           12/01/2024     15,697,220
                                                                                                          -------------
                                                                                                             39,508,715
-----------------------------------------------------------------------------------------------------------------------
MONTANA--1.2%
  18,245,000     Lewis & Clark County, MT Environmental (Asarco) 1,2          5.600           01/01/2027     16,066,912
-----------------------------------------------------------------------------------------------------------------------
  23,195,000     Lewis & Clark County, MT Environmental (Asarco) 1,2          5.850           10/01/2033     20,857,408
-----------------------------------------------------------------------------------------------------------------------
   6,800,000     MT Board of Investment Exempt Facilities
                 (Stillwater Mining Company)                                  8.000           07/01/2020      7,126,944
-----------------------------------------------------------------------------------------------------------------------
   1,905,000     MT Health Facilities Authority
                 (Community Medical Center)                                   6.375           06/01/2018      1,962,664
                                                                                                          -------------
                                                                                                             46,013,928
-----------------------------------------------------------------------------------------------------------------------
MULTI STATES--0.5%
   7,000,000     GMAC Municipal Mortgage Trust                                5.500           10/31/2040      7,050,120
-----------------------------------------------------------------------------------------------------------------------
  13,000,000     GMAC Municipal Mortgage Trust                                5.700           10/31/2040     13,121,550
                                                                                                          -------------
                                                                                                             20,171,670
-----------------------------------------------------------------------------------------------------------------------
NEVADA--1.7%
  27,210,000     Clark County, NV Industrial Devel.
                 (Nevada Power Company)                                       5.900           10/01/2030     27,212,993
-----------------------------------------------------------------------------------------------------------------------
   6,990,000     Clark County, NV Industrial Devel.
                 (Nevada Power Company), Series A                             5.900           11/01/2032      6,990,769
-----------------------------------------------------------------------------------------------------------------------
  16,150,000     Clark County, NV Industrial Devel.
                 (Southwest Gas Corp.), Series B 6                            5.000           12/01/2033     16,665,993
-----------------------------------------------------------------------------------------------------------------------
   2,065,000     Clark County, NV Industrial Devel. RITES 3                  13.016 5         12/01/2038      2,643,365
-----------------------------------------------------------------------------------------------------------------------
  10,000,000     Director of the State of NV Dept. of Business
                 & Industry (Las Ventanas Retirement)                         7.000           11/15/2034     10,579,200
-----------------------------------------------------------------------------------------------------------------------
     150,000     NV Hsg. Division (Single Family Mtg.), Series A              8.625           04/01/2016        157,418
                                                                                                          -------------
                                                                                                             64,249,738
-----------------------------------------------------------------------------------------------------------------------
NEW HAMPSHIRE--0.3%
   2,265,000     NH Business Finance Authority (Air Cargo at Pease)           6.750           04/01/2024      2,214,264
-----------------------------------------------------------------------------------------------------------------------
   4,000,000     NH H&EFA (Franklin Pierce College)                           6.050           10/01/2034      4,355,400
-----------------------------------------------------------------------------------------------------------------------
   1,500,000     NH H&EFA (Southern New Hampshire University)                 5.000           01/01/2030      1,536,750
-----------------------------------------------------------------------------------------------------------------------
   3,000,000     NH H&EFA (Southern New Hampshire University)                 5.000           01/01/2036      3,063,180
-----------------------------------------------------------------------------------------------------------------------
   1,000,000     NH HE&H Facilities Authority (New England College)           5.750           03/01/2009        973,930
                                                                                                          -------------
                                                                                                             12,143,524
-----------------------------------------------------------------------------------------------------------------------
NEW JERSEY--11.2%
     435,000     NJ EDA (American Airlines)                                   7.100           11/01/2031        370,329
-----------------------------------------------------------------------------------------------------------------------
     100,000     NJ EDA (Cascade Corp.)                                       8.250           02/01/2026        100,071
-----------------------------------------------------------------------------------------------------------------------
  24,000,000     NJ EDA (Cigarette Tax) 6                                     5.500           06/15/2024     25,397,520
-----------------------------------------------------------------------------------------------------------------------
   5,205,000     NJ EDA (Cigarette Tax)                                       5.500           06/15/2031      5,463,636
-----------------------------------------------------------------------------------------------------------------------
  19,205,000     NJ EDA (Cigarette Tax)                                       5.750           06/15/2029     20,603,316


                 31 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

   PRINCIPAL                                                                                                      VALUE
      AMOUNT                                                                COUPON            MATURITY       SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
NEW JERSEY Continued
$  3,000,000     NJ EDA (Cigarette Tax)                                      5.750%         06/15/2034   $    3,200,520
-----------------------------------------------------------------------------------------------------------------------
     965,000     NJ EDA (Continental Airlines)                               5.500          04/01/2028          724,368
-----------------------------------------------------------------------------------------------------------------------
  12,030,000     NJ EDA (Continental Airlines)                               6.250          09/15/2019       11,244,802
-----------------------------------------------------------------------------------------------------------------------
  27,800,000     NJ EDA (Continental Airlines)                               6.250          09/15/2029       25,460,074
-----------------------------------------------------------------------------------------------------------------------
  10,755,000     NJ EDA (Continental Airlines)                               6.400          09/15/2023       10,123,144
-----------------------------------------------------------------------------------------------------------------------
     760,000     NJ EDA (Continental Airlines)                               6.625          09/15/2012          739,997
-----------------------------------------------------------------------------------------------------------------------
  12,820,000     NJ EDA (Continental Airlines)                               7.000          11/15/2030       12,672,955
-----------------------------------------------------------------------------------------------------------------------
  16,910,000     NJ EDA (Continental Airlines)                               7.200          11/15/2030       16,970,876
-----------------------------------------------------------------------------------------------------------------------
     100,000     NJ EDA (Continental Airlines)                               9.000          06/01/2033          110,849
-----------------------------------------------------------------------------------------------------------------------
   1,600,000     NJ EDA (Empowerment Zone-Cumberland)                        7.750          08/01/2021        1,618,464
-----------------------------------------------------------------------------------------------------------------------
   3,250,000     NJ EDA Retirement Community (Cedar Crest Village)           7.250          11/15/2031        3,537,170
-----------------------------------------------------------------------------------------------------------------------
   7,395,000     NJ EDA ROLs 3                                              13.546 5        12/15/2015       10,954,805
-----------------------------------------------------------------------------------------------------------------------
   5,000,000     NJ Health Care Facilities Financing Authority
                 (Raritan Bay Medical Center)                                7.250          07/01/2027        5,212,500
-----------------------------------------------------------------------------------------------------------------------
   1,125,000     NJ Tobacco Settlement Financing Corp. (TASC)                5.750          06/01/2032        1,187,606
-----------------------------------------------------------------------------------------------------------------------
  64,620,000     NJ Tobacco Settlement Financing Corp. (TASC)                6.000          06/01/2037       69,664,237
-----------------------------------------------------------------------------------------------------------------------
  88,750,000     NJ Tobacco Settlement Financing Corp. (TASC)                6.125          06/01/2042       95,959,163
-----------------------------------------------------------------------------------------------------------------------
  46,215,000     NJ Tobacco Settlement Financing Corp. (TASC)                6.250          06/01/2043       53,436,094
-----------------------------------------------------------------------------------------------------------------------
  16,165,000     NJ Tobacco Settlement Financing Corp. (TASC)                6.375          06/01/2032       18,825,921
-----------------------------------------------------------------------------------------------------------------------
  12,590,000     NJ Tobacco Settlement Financing Corp. (TASC)                6.750          06/01/2039       14,879,617
-----------------------------------------------------------------------------------------------------------------------
   4,055,000     NJ Tobacco Settlement Financing Corp. (TASC)                7.000          06/01/2041        4,907,402
                                                                                                         --------------
                                                                                                            413,365,436
-----------------------------------------------------------------------------------------------------------------------
NEW MEXICO--0.5%
   5,800,000     El Dorado, NM Area Water & Sanitation District              6.000          02/01/2025        5,770,304
-----------------------------------------------------------------------------------------------------------------------
  10,800,000     Sandoval County, NM (Santa Ana Pueblo)                      7.750          07/01/2015       11,275,848
-----------------------------------------------------------------------------------------------------------------------
   1,000,000     Ventana West, NM Public Improvement District
                 Special Levy                                                6.875          08/01/2033        1,022,520
                                                                                                         --------------
                                                                                                             18,068,672
-----------------------------------------------------------------------------------------------------------------------
 NEW YORK--0.7%
   3,000,000     Albany, NY IDA (New Covenant Charter School)                7.000          05/01/2035        2,880,330
-----------------------------------------------------------------------------------------------------------------------
   2,825,000     NYC IDA (American Airlines)                                 5.400          07/01/2019        2,122,536
-----------------------------------------------------------------------------------------------------------------------
   3,815,000     NYC IDA (American Airlines)                                 5.400          07/01/2020        2,831,646
-----------------------------------------------------------------------------------------------------------------------
   6,905,000     NYC IDA (American Airlines)                                 6.900          08/01/2024        5,886,651
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     NYC IDA (Liberty-7 World Trade Center) 3                    6.500          03/01/2035        2,127,120
-----------------------------------------------------------------------------------------------------------------------
     500,000     NYC IDA Special Facilities (JFK International Airport)      8.000          08/01/2012          491,500
-----------------------------------------------------------------------------------------------------------------------
   5,000,000     NYS DA
                 (MSH/NYU Hospital Center/HJDOI Obligated Group)             6.625          07/01/2019        5,349,000
-----------------------------------------------------------------------------------------------------------------------
   1,350,000     Otsego County, NY IDA (Hartwick College)                    6.000          07/01/2013        1,365,525
-----------------------------------------------------------------------------------------------------------------------
   1,435,000     Otsego County, NY IDA (Hartwick College)                    6.000          07/01/2014        1,443,380
-----------------------------------------------------------------------------------------------------------------------
   1,520,000     Otsego County, NY IDA (Hartwick College)                    6.000          07/01/2015        1,520,334


                 32 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


    PRINCIPAL                                                                                                     VALUE
       AMOUNT                                                                COUPON            MATURITY      SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
NEW YORK Continued
$   1,610,000     Otsego County, NY IDA (Hartwick College)                    6.000%         07/01/2016   $   1,597,828
                                                                                                          -------------
                                                                                                             27,615,850
-----------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA--0.2%
      600,000     Charlotte, NC Douglas International Airport
                  Special Facilities (US Airways)(1,2,3)                      7.750          02/01/2028         432,612
-----------------------------------------------------------------------------------------------------------------------
   10,420,000     Charlotte, NC Special Facilities
                  (Charlotte/Douglas International Airport)(1,2,3)            5.600          07/01/2027       6,816,243
                                                                                                          -------------
                                                                                                              7,248,855
-----------------------------------------------------------------------------------------------------------------------
NORTH DAKOTA--0.1%
    2,635,000     Richland County, ND Hsg. (Birchwood Properties)             6.750          05/01/2029       2,582,748
-----------------------------------------------------------------------------------------------------------------------
OHIO--2.0%
    1,520,000     Butler County, OH Hsg. (Anthony Wayne Apartments)           6.500          09/01/2030       1,368,836
-----------------------------------------------------------------------------------------------------------------------
   11,685,000     Cleveland, OH Airport (Continental Airlines)                5.375          09/15/2027       9,254,637
-----------------------------------------------------------------------------------------------------------------------
   12,710,000     Cleveland, OH Airport (Continental Airlines)                5.700          12/01/2019      10,990,337
-----------------------------------------------------------------------------------------------------------------------
    3,680,000     Dublin, OH Industrial Devel. (Dublin Health Care Corp.)     7.500          12/01/2016       3,785,726
-----------------------------------------------------------------------------------------------------------------------
   18,480,000     Hamilton, OH Electric                                       4.600          10/15/2020      19,010,191
-----------------------------------------------------------------------------------------------------------------------
    1,500,000     Moraine, OH Solid Waste Disposal
                  (General Motors Corp.)                                      5.650          07/01/2024       1,409,550
-----------------------------------------------------------------------------------------------------------------------
   12,190,000     OH Solid Waste (General Motors Corp.)                       6.300          12/01/2032      12,488,533
-----------------------------------------------------------------------------------------------------------------------
   16,320,000     Port Authority of Columbiana, OH Solid Waste
                  (Apex Environmental)                                        7.250          08/01/2034      16,603,152
                                                                                                          -------------
                                                                                                             74,910,962
-----------------------------------------------------------------------------------------------------------------------
OKLAHOMA--1.0%
    2,635,000     Cleveland County, OK IDA (Vaughn Foods)                     6.750          12/01/2012       2,672,048
-----------------------------------------------------------------------------------------------------------------------
    2,365,000     Cleveland County, OK IDA (Vaughn Foods)                     7.100          12/01/2024       2,429,328
-----------------------------------------------------------------------------------------------------------------------
    2,015,000     Ellis County, OK Industrial Authority
                  (W.B. Johnston Grain of Shattuck)                           7.100          08/01/2023       2,129,089
-----------------------------------------------------------------------------------------------------------------------
    2,760,000     Ellis County, OK Industrial Authority
                  (W.B. Johnston Grain of Shattuck)                           7.500          08/01/2023       2,965,454
-----------------------------------------------------------------------------------------------------------------------
    3,825,000     Jackson County, OK Memorial Hospital Authority
                  (Jackson County Memorial)                                   7.300          08/01/2015       3,887,233
-----------------------------------------------------------------------------------------------------------------------
    9,000,000     OK Devel. Finance Authority (Doane Products Company)        6.250          07/15/2023       8,439,390
-----------------------------------------------------------------------------------------------------------------------
    1,500,000     Oklahoma City, OK Industrial & Cultural Facilities
                  (Aero Obligated Group)                                      6.750          01/01/2023       1,506,420
-----------------------------------------------------------------------------------------------------------------------
    3,000,000     Ottawa, OK Finance Authority
                  (Doane Products Company)                                    7.250          06/01/2017       2,868,390
-----------------------------------------------------------------------------------------------------------------------
       50,000     Tulsa, OK Municipal Airport Trust (American Airlines)       7.350          12/01/2011          50,003
-----------------------------------------------------------------------------------------------------------------------
   10,500,000     Tulsa, OK Municipal Airport Trust (American Airlines)       7.750          06/01/2035      11,053,875
                                                                                                          -------------
                                                                                                             38,001,230


                 33 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

   PRINCIPAL                                                                                                      VALUE
      AMOUNT                                                                COUPON            MATURITY       SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
OREGON--0.0%
$     90,000     OR Economic Devel. (Georgia-Pacific Corp.)                  6.350%         08/01/2025   $       90,221
-----------------------------------------------------------------------------------------------------------------------
   3,000,000     Port of Portland, OR Special Obligation (Delta Air Lines)   6.200          09/01/2022        1,021,770
                                                                                                         --------------
                                                                                                              1,111,991
-----------------------------------------------------------------------------------------------------------------------
PENNSYLVANIA--5.4%
   1,250,000     Allegheny County, PA HDA
                 (The Covenant at South Hills)                               8.750          02/01/2031          817,025
-----------------------------------------------------------------------------------------------------------------------
   4,370,000     Allegheny County, PA HDA
                 (West Penn Allegheny Health System)                         9.250          11/15/2015        5,280,184
-----------------------------------------------------------------------------------------------------------------------
   6,000,000     Allegheny County, PA HDA
                 (West Penn Allegheny Health System)                         9.250          11/15/2022        7,239,360
-----------------------------------------------------------------------------------------------------------------------
  36,010,000     Allegheny County, PA HDA
                 (West Penn Allegheny Health System) 6                       9.250          11/15/2030       43,282,220
-----------------------------------------------------------------------------------------------------------------------
   1,000,000     Chester County, PA H&EFA (Jenners Pond)                     7.750          07/01/2034        1,042,060
-----------------------------------------------------------------------------------------------------------------------
     440,000     Horsham, PA Industrial & Commercial Devel. Authority
                 (GF/Pennsylvania Property)                                  7.375          09/01/2008          434,720
-----------------------------------------------------------------------------------------------------------------------
   5,040,000     Horsham, PA Industrial & Commercial Devel. Authority
                 (GF/Pennsylvania Property)                                  8.375          09/01/2024        4,828,169
-----------------------------------------------------------------------------------------------------------------------
   1,000,000     Lawrence County, PA IDA
                 (Shenango Presbyterian Center)                              7.500          11/15/2031        1,028,690
-----------------------------------------------------------------------------------------------------------------------
     475,000     New Morgan, PA IDA (Browning-Ferris Industries)             6.500          04/01/2019          475,119
-----------------------------------------------------------------------------------------------------------------------
   3,000,000     PA EDFA (Colver)                                            7.150          12/01/2018        3,064,680
-----------------------------------------------------------------------------------------------------------------------
   5,000,000     PA EDFA (National Gypsum Company)                           6.250          11/01/2027        5,380,350
-----------------------------------------------------------------------------------------------------------------------
  70,875,000     PA EDFA (Reliant Energy)                                    6.750          12/01/2036       76,275,675
-----------------------------------------------------------------------------------------------------------------------
  10,500,000     PA EDFA (Reliant Energy)                                    6.750          12/01/2036       11,300,100
-----------------------------------------------------------------------------------------------------------------------
  23,275,000     PA EDFA (Reliant Energy)                                    6.750          12/01/2036       25,050,417
-----------------------------------------------------------------------------------------------------------------------
   8,000,000     PA EDFA (Reliant Energy)                                    6.750          12/01/2036        8,609,600
-----------------------------------------------------------------------------------------------------------------------
   1,310,000     Philadelphia, PA Airport, Series A 4                        5.000          06/15/2023        1,371,819
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     Philadelphia, PA Airport, Series A 4                        5.000          06/15/2024        2,091,120
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     Philadelphia, PA Airport, Series A 4                        5.000          06/15/2025        2,089,500
                                                                                                         --------------
                                                                                                            199,660,808
-----------------------------------------------------------------------------------------------------------------------
RHODE ISLAND--3.0%
  45,000,000     Central Falls, RI Detention Facility                        7.250          07/15/2035       46,283,400
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     RI Hsg. & Mtg. Finance Corp. RITES 3                       11.485 5        10/01/2022        2,208,360
-----------------------------------------------------------------------------------------------------------------------
  41,515,000     RI Tobacco Settlement Financing Corp. (TASC)                6.250          06/01/2042       44,860,279
-----------------------------------------------------------------------------------------------------------------------
  17,925,000     RI Tobacco Settlement Financing Corp. (TASC), Series A      6.125          06/01/2032       19,148,919
                                                                                                         --------------
                                                                                                            112,500,958
-----------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA--1.6%
   1,510,000     Florence County, SC Industrial Devel.
                 (Stone Container Corp.)                                     7.375          02/01/2007        1,516,025
-----------------------------------------------------------------------------------------------------------------------
   7,810,000     Greenville County, SC School District ROLs 3               10.957 5        12/01/2020        9,011,334


                 34 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


   PRINCIPAL                                                                                                      VALUE
      AMOUNT                                                                  COUPON           MATURITY      SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
SOUTH CAROLINA Continued
$  6,250,000     SC Connector 2000 Association Toll Road, Series B             0.000%7       01/01/2020   $   2,837,313
-----------------------------------------------------------------------------------------------------------------------
   8,500,000     SC Connector 2000 Association Toll Road, Series B             0.000 7       01/01/2024       3,050,735
-----------------------------------------------------------------------------------------------------------------------
   7,315,000     SC GO ROLs 3                                                  9.988 5       08/01/2019       8,450,434
-----------------------------------------------------------------------------------------------------------------------
   1,785,000     SC Hsg. Finance & Devel. Authority RITES 3                   10.231 5       01/01/2023       1,908,843
-----------------------------------------------------------------------------------------------------------------------
   2,800,000     SC Hsg. Finance & Devel. Authority ROLs 3                    13.199 5       07/01/2034       3,143,784
-----------------------------------------------------------------------------------------------------------------------
       5,000     SC Resource Authority Local Government Program                7.250         06/01/2020           5,019
-----------------------------------------------------------------------------------------------------------------------
  18,840,000     SC Tobacco Settlement Management Authority, Series B 6        6.375         05/15/2028      20,264,116
-----------------------------------------------------------------------------------------------------------------------
   6,485,000     SC Tobacco Settlement Management Authority, Series B          6.375         05/15/2030       7,601,847
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     Spartanburg County, SC Solid Waste Disposal Facilities
                 (BMW US Capital Corp.)                                        7.550         11/01/2024       2,079,540
-----------------------------------------------------------------------------------------------------------------------
     110,000     York County, SC (Hoechst Celanese Corp.)                      5.700         01/01/2024         108,514
-----------------------------------------------------------------------------------------------------------------------
     255,000     York County, SC Pollution Control (Bowater)                   7.400         01/01/2010         255,474
                                                                                                          -------------
                                                                                                             60,232,978
-----------------------------------------------------------------------------------------------------------------------
SOUTH DAKOTA--1.3%
   1,000,000     Lower Brule, SD Sioux Tribe, Series B                         5.500         05/01/2019         996,090
-----------------------------------------------------------------------------------------------------------------------
   1,000,000     Lower Brule, SD Sioux Tribe, Series B                         5.600         05/01/2020         999,110
-----------------------------------------------------------------------------------------------------------------------
  36,920,000     SD Educational Enhancement Funding Corp.
                 Tobacco Settlement                                            6.500         06/01/2032      40,388,265
-----------------------------------------------------------------------------------------------------------------------
   6,444,756     Sioux Falls, SD Economic Devel. (City Centre Hotel)           7.000 8       11/01/2016       6,404,992
                                                                                                          -------------
                                                                                                             48,788,457
-----------------------------------------------------------------------------------------------------------------------
TENNESSEE--0.9%
   1,000,000     Chattanooga, TN Health Educational & Hsg. Board
                 (Campus Devel. Foundation Phase I)                            5.500         10/01/2020         996,350
-----------------------------------------------------------------------------------------------------------------------
   1,800,000     Chattanooga, TN Health Educational & Hsg. Board
                 (Campus Devel. Foundation Phase I)                            6.000         10/01/2035       1,825,542
-----------------------------------------------------------------------------------------------------------------------
     400,000     Hamilton County, TN Industrial Devel. Board (Park at 58)      6.700         03/01/2021         346,464
-----------------------------------------------------------------------------------------------------------------------
  14,745,000     Maury County, TN Industrial Devel. Board
                 (General Motors Company) 6                                    6.500         09/01/2024      14,790,562
-----------------------------------------------------------------------------------------------------------------------
   4,335,000     McMinn County, TN Industrial Devel. Board Pollution
                 Control (Calhoun Newsprint)                                   7.625         03/01/2016       4,343,757
-----------------------------------------------------------------------------------------------------------------------
   1,500,000     McMinn County, TN Industrial Devel. Board Solid Waste
                 (Calhoun Newsprint)                                           7.400         12/01/2022       1,508,130
-----------------------------------------------------------------------------------------------------------------------
   7,500,000     Metropolitan Knoxville, TN Airport Authority
                 (Northwest Airlines)                                          8.000         04/01/2032       7,661,475
-----------------------------------------------------------------------------------------------------------------------
     800,000     Shelby County, TN HE&HF
                 (Cornerstone-Cameron & Stonegate)                             5.900         07/01/2018         618,568
-----------------------------------------------------------------------------------------------------------------------
     655,000     Shelby County, TN HE&HF
                 (Cornerstone-Cameron & Stonegate)                             6.000         07/01/2028         466,360
                                                                                                          -------------
                                                                                                             32,557,208


                 35 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

   PRINCIPAL                                                                                                      VALUE
      AMOUNT                                                                 COUPON             MATURITY     SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
TEXAS--10.2%
$ 28,615,000     Alliance Airport Authority, TX (American Airlines)           7.500%          12/01/2029  $  25,727,747
-----------------------------------------------------------------------------------------------------------------------
   5,015,000     Alliance Airport Authority, TX (Federal Express Corp.)       6.375           04/01/2021      5,227,435
-----------------------------------------------------------------------------------------------------------------------
     520,000     Austin, TX Convention Enterprises (Convention Center)        6.700           01/01/2028        561,226
-----------------------------------------------------------------------------------------------------------------------
     540,000     Bexar County, TX HFC (American Opportunity Hsg.)             7.500           01/01/2013        549,299
-----------------------------------------------------------------------------------------------------------------------
     800,000     Bexar County, TX HFC (American Opportunity Hsg.)             8.000           01/01/2031        803,680
-----------------------------------------------------------------------------------------------------------------------
   1,195,000     Bexar County, TX HFC (American Opportunity Hsg.)             8.250           12/01/2037      1,062,032
-----------------------------------------------------------------------------------------------------------------------
     975,000     Bexar County, TX HFC (American Opportunity Hsg.)             9.250           12/01/2037        855,368
-----------------------------------------------------------------------------------------------------------------------
     220,000     Bexar County, TX HFC (Honey Creek LLC)                       8.000           04/01/2030        220,579
-----------------------------------------------------------------------------------------------------------------------
   1,460,000     Bexar County, TX HFC (Perrin Square)                         9.750           11/20/2031      1,451,109
-----------------------------------------------------------------------------------------------------------------------
  18,720,000     Brazos River Authority, TX (Centerpoint Energy)              4.250           03/01/2017     18,903,269
-----------------------------------------------------------------------------------------------------------------------
   3,150,000     Brazos River Authority, TX (TXU Energy Company)              6.750           10/01/2038      3,521,133
-----------------------------------------------------------------------------------------------------------------------
   8,000,000     Brazos River Authority, TX (TXU Energy Company)              7.700           04/01/2033      9,499,120
-----------------------------------------------------------------------------------------------------------------------
  17,500,000     Cambridge, TX Student Hsg.
                 (Cambridge Student Hsg. Devel.)                              7.000           11/01/2039     17,705,450
-----------------------------------------------------------------------------------------------------------------------
     885,000     Dallas-Fort Worth, TX International Airport
                 (American Airlines)                                          6.150           05/01/2029        853,273
-----------------------------------------------------------------------------------------------------------------------
   3,630,000     Dallas-Fort Worth, TX International Airport
                 (American Airlines)                                          6.375           05/01/2035      2,803,195
-----------------------------------------------------------------------------------------------------------------------
  19,065,000     Dallas-Fort Worth, TX International Airport
                 (American Airlines)                                          7.250           11/01/2030     16,573,776
-----------------------------------------------------------------------------------------------------------------------
      40,000     Dallas-Fort Worth, TX International Airport
                 (American Airlines)                                          8.250           11/01/2036         38,924
-----------------------------------------------------------------------------------------------------------------------
     235,000     Dallas-Fort Worth, TX International Airport
                 (Delta Air Lines)                                            7.625           11/01/2021         63,521
-----------------------------------------------------------------------------------------------------------------------
  22,000,000     Dallas-Fort Worth, TX International Airport Facility
                 Improvement Corp.                                            9.000           05/01/2029     22,869,660
-----------------------------------------------------------------------------------------------------------------------
  45,945,000     Dallas-Fort Worth, TX International Airport Facility
                 Improvement Corp. 6                                          9.125           05/01/2029     47,978,526
-----------------------------------------------------------------------------------------------------------------------
   6,000,000     Dallas-Fort Worth, TX International Airport RITES 3         10.944 5         11/01/2027      6,425,880
-----------------------------------------------------------------------------------------------------------------------
   8,125,000     Dallas-Fort Worth, TX International Airport ROLs 3          14.416 5         11/01/2033     10,540,075
-----------------------------------------------------------------------------------------------------------------------
   7,240,000     El Paso, TX Health Facilities Devel. Corp.
                 (Bienvivir Senior Health Services)                           7.750           08/15/2031      7,937,574
-----------------------------------------------------------------------------------------------------------------------
      25,000     Galveston County, TX HFC                                     6.200           10/01/2021         25,060
-----------------------------------------------------------------------------------------------------------------------
      10,000     Galveston, TX Special Contract
                 (Farmers Export Company)                                     6.750           05/01/2007         10,039
-----------------------------------------------------------------------------------------------------------------------
   1,000,000     Grapevine, TX IDC (Air Cargo)                                6.500           01/01/2024      1,048,430
-----------------------------------------------------------------------------------------------------------------------
   4,660,000     Gulf Coast, TX IDA (Citgo Petroleum Corp.)                   7.500           05/01/2025      5,355,458
-----------------------------------------------------------------------------------------------------------------------
      80,000     Gulf Coast, TX Waste Disposal Authority (FMC Corp.)          7.050           10/01/2009         81,688
-----------------------------------------------------------------------------------------------------------------------
   5,950,000     Harris County, TX Industrial Devel. Corp.
                 (Continental Airlines)                                       5.375           07/01/2019      4,879,774
-----------------------------------------------------------------------------------------------------------------------
   2,000,000     HFDC of Central TX
                 (Lutheran Social Services of the South)                      6.875           02/15/2032      2,100,600


                 36 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


   PRINCIPAL                                                                                                      VALUE
      AMOUNT                                                                 COUPON            MATURITY      SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
TEXAS Continued
$  4,000,000     HFDC of Central TX (Villa De San Antonio)                    6.250%         05/15/2036   $   4,057,240
-----------------------------------------------------------------------------------------------------------------------
   6,070,000     Houston, TX Airport Special Facilities
                 (Continental Airlines)                                       5.700          07/15/2029       4,876,759
-----------------------------------------------------------------------------------------------------------------------
   2,385,000     Houston, TX Airport Special Facilities
                 (Continental Airlines)                                       5.700          07/15/2029       1,916,157
-----------------------------------------------------------------------------------------------------------------------
   8,285,000     Houston, TX Airport Special Facilities
                 (Continental Airlines)                                       6.125          07/15/2017       7,467,933
-----------------------------------------------------------------------------------------------------------------------
   6,405,000     Houston, TX Airport Special Facilities
                 (Continental Airlines)                                       6.125          07/15/2027       5,540,453
-----------------------------------------------------------------------------------------------------------------------
   4,520,000     Houston, TX Airport Special Facilities
                 (Continental Airlines)                                       6.125          07/15/2027       3,909,890
-----------------------------------------------------------------------------------------------------------------------
  17,750,000     Houston, TX Airport Special Facilities
                 (Continental Airlines)                                       6.750          07/01/2021      17,301,813
-----------------------------------------------------------------------------------------------------------------------
  22,015,000     Houston, TX Airport Special Facilities
                 (Continental Airlines)                                       6.750          07/01/2029      21,316,684
-----------------------------------------------------------------------------------------------------------------------
     100,000     Houston, TX Airport Special Facilities
                 (Continental Airlines)                                       7.000          07/01/2029          99,819
-----------------------------------------------------------------------------------------------------------------------
   1,230,000     Houston, TX Airport Special Facilities
                 (Continental Airlines)                                       7.375          07/01/2022       1,253,850
-----------------------------------------------------------------------------------------------------------------------
   1,500,000     Houston, TX HFDC
                 (Buckinham Senior Living Community)                          7.000          02/15/2026       1,653,600
-----------------------------------------------------------------------------------------------------------------------
   5,000,000     Houston, TX HFDC
                 (Buckinham Senior Living Community)                          7.125          02/15/2034       5,501,700
-----------------------------------------------------------------------------------------------------------------------
     135,000     Houston, TX IDC (Air Cargo)                                  6.375          01/01/2023         140,528
-----------------------------------------------------------------------------------------------------------------------
   2,200,000     IAH TX Public Facility Corp.                                 7.750          05/01/2026       2,150,852
-----------------------------------------------------------------------------------------------------------------------
   2,500,000     Lancaster, TX Independent School District GO RITES 3        13.955 5        02/15/2034       3,759,650
-----------------------------------------------------------------------------------------------------------------------
   9,000,000     Lewisville, TX GO                                            6.125          09/01/2029       9,848,790
-----------------------------------------------------------------------------------------------------------------------
   1,790,000     Lubbock, TX HFC (Las Colinas Quail Creek Apartments)         6.000          07/01/2032       1,818,837
-----------------------------------------------------------------------------------------------------------------------
     140,000     Matagorda County, TX Navigation District
                 (Reliant Energy)                                             5.950          05/01/2030         142,471
-----------------------------------------------------------------------------------------------------------------------
   1,350,000     Newton County, TX Public Facility Corp. 3                    8.000          03/01/2019       1,385,343
-----------------------------------------------------------------------------------------------------------------------
   2,250,000     North Central, TX HFDC (Northwest Senior Hsg. Corp.)         7.500          11/15/2029       2,433,848
-----------------------------------------------------------------------------------------------------------------------
   1,860,000     Nueces County, TX HFC (Dolphins Landing Apartments)          6.875          07/01/2030       1,878,265
-----------------------------------------------------------------------------------------------------------------------
   1,310,000     Nueces, TX River Authority (Asarco) 1,2                      5.600          04/01/2018       1,193,829
-----------------------------------------------------------------------------------------------------------------------
   3,570,000     Nueces, TX River Authority (Asarco) 1,2                      5.600          01/01/2027       3,139,422
-----------------------------------------------------------------------------------------------------------------------
      75,000     Port Corpus Christi, TX Industrial Devel. Corp.
                 (Citgo Petroleum Corp.)                                      8.250          11/01/2031          80,215
-----------------------------------------------------------------------------------------------------------------------
   5,905,000     Port of Bay City, TX (Hoechst Celanese Corp.)                6.500          05/01/2026       6,064,376
-----------------------------------------------------------------------------------------------------------------------
  15,000,000     Port of Corpus Christi, TX Authority (CNA Holdings) 6        6.700          11/01/2030      16,152,300
-----------------------------------------------------------------------------------------------------------------------
      15,000     San Antonio, TX Convention Center Hotel Finance
                 Corp. (Empowerment Zone) 4                                   5.000          07/15/2039          15,477
-----------------------------------------------------------------------------------------------------------------------
   8,065,000     San Antonio, TX Convention Center Hotel Finance Corp.
                 ROLs 3,4                                                    12.388 5        07/15/2039       9,091,513


                 37 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

    PRINCIPAL                                                                                                     VALUE
       AMOUNT                                                               COUPON            MATURITY       SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------
TEXAS Continued
$      45,000     Southeast TX HFC (Forest View Apartments)                  8.750%         11/01/2023   $       30,883
-----------------------------------------------------------------------------------------------------------------------
    2,125,000     Tomball, TX Hospital Authority
                  (Tomball Regional Hospital)                                6.125          07/01/2023        2,155,388
-----------------------------------------------------------------------------------------------------------------------
    2,965,000     TX Affordable Hsg. Corp.
                  (Ashton Place & Woodstock Apartments)                      6.300          08/01/2033        2,108,767
-----------------------------------------------------------------------------------------------------------------------
   10,000,000     TX Department of Hsg. & Community Affairs RITES 3         10.944 5        07/01/2034       10,780,800
-----------------------------------------------------------------------------------------------------------------------
    2,500,000     TX GO RITES 3                                             15.416 5        12/01/2028        3,036,800
-----------------------------------------------------------------------------------------------------------------------
    3,000,000     TX Research Division RITES 3                              13.816 5        06/01/2029        3,508,560
-----------------------------------------------------------------------------------------------------------------------
    2,320,000     TX State Affordable Hsg. Corp.
                  (American Hsg. Foundation)                                 8.000          03/01/2032          696,719
-----------------------------------------------------------------------------------------------------------------------
       50,000     TX Student Hsg. Corp. (University of North Texas)          6.000          07/01/2011           48,321
-----------------------------------------------------------------------------------------------------------------------
       40,000     TX Student Hsg. Corp. (University of North Texas)          6.750          07/01/2021           37,641
-----------------------------------------------------------------------------------------------------------------------
      200,000     TX Student Hsg. Corp. (University of North Texas)          6.850          07/01/2031          184,686
-----------------------------------------------------------------------------------------------------------------------
    4,000,000     TX Turnpike Authority ROLs 3                              12.508 5        08/15/2042        4,482,960
                                                                                                         --------------
                                                                                                            376,936,039
-----------------------------------------------------------------------------------------------------------------------
 U.S. POSSESSIONS--2.2%
    1,155,000     Guam EDA (Royal Socio Apartments) 1,2                      9.500          11/01/2018          579,394
-----------------------------------------------------------------------------------------------------------------------
    9,500,000     Northern Mariana Islands, Series A                         6.750          10/01/2033       10,406,490
-----------------------------------------------------------------------------------------------------------------------
  405,000,000     Puerto Rico Children's Trust Fund (TASC) 4                 0.000 7        05/15/1955       13,693,050
-----------------------------------------------------------------------------------------------------------------------
  548,500,000     Puerto Rico Children's Trust Fund (TASC) 4                 0.000 7        05/15/2050       34,796,840
-----------------------------------------------------------------------------------------------------------------------
      850,000     Puerto Rico IMEPCF (American Airlines)                     6.450          12/01/2025          685,712
-----------------------------------------------------------------------------------------------------------------------
       75,000     Puerto Rico ITEMECF (Mennonite General Hospital)           6.500          07/01/2012           75,588
-----------------------------------------------------------------------------------------------------------------------
   22,430,000     Puerto Rico Port Authority (American Airlines), Series A   6.250          06/01/2026       17,765,233
-----------------------------------------------------------------------------------------------------------------------
    4,950,000     Puerto Rico Port Authority (American Airlines), Series A   6.300          06/01/2023        4,006,679
                                                                                                         --------------
                                                                                                             82,008,986
-----------------------------------------------------------------------------------------------------------------------
UTAH--0.1%
      650,000     Carbon County, UT Solid Waste Disposal
                  (Allied Waste Industries)                                  7.450          07/01/2017          678,373
-----------------------------------------------------------------------------------------------------------------------
    1,385,000     Carbon County, UT Solid Waste Disposal
                  (Allied Waste Industries)                                  7.500          02/01/2010        1,419,764
-----------------------------------------------------------------------------------------------------------------------
    1,975,000     UT HFA (RHA Community Service of Utah)                     6.875          07/01/2027        1,998,029
                                                                                                         --------------
                                                                                                              4,096,166
-----------------------------------------------------------------------------------------------------------------------
VIRGINIA--2.8%
    2,275,000     Bedford County, VA IDA (Georgia-Pacific Corp.)             6.550          12/01/2025        2,386,543
-----------------------------------------------------------------------------------------------------------------------
       90,000     Giles County, VA IDA (Hoechst Celanese Corp.)              5.950          12/01/2025           90,831
-----------------------------------------------------------------------------------------------------------------------
   10,000,000     Giles County, VA IDA (Hoechst Celanese Corp.)              6.450          05/01/2026       10,271,000
-----------------------------------------------------------------------------------------------------------------------
    7,915,000     Giles County, VA IDA (Hoechst Celanese Corp.)              6.625          12/01/2022        7,946,660
-----------------------------------------------------------------------------------------------------------------------
    1,750,000     Halifax County, VA IDA RITES 3                            13.350 5        06/01/2028        2,463,965
-----------------------------------------------------------------------------------------------------------------------
    1,100,000     Norfolk, VA Redevel. & Hsg. Authority
                  (First Mtg.-Retirement Community)                          6.125          01/01/2035        1,127,170

                 38 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


   PRINCIPAL                                                                                                       VALUE
      AMOUNT                                                                COUPON            MATURITY        SEE NOTE 1
------------------------------------------------------------------------------------------------------------------------
VIRGINIA Continued
$ 10,500,000      Pittsylvania County, VA IDA (Multitrade of Pittsylvania)    7.500%         01/01/2014   $   10,926,195
------------------------------------------------------------------------------------------------------------------------
   7,350,000      Pittsylvania County, VA IDA (Multitrade of Pittsylvania)    7.550          01/01/2019        7,652,012
------------------------------------------------------------------------------------------------------------------------
   2,250,000      Pocahontas Parkway Association, VA
                  (Route 895 Connector Toll Road)                             0.000 7        08/15/2007        1,980,450
------------------------------------------------------------------------------------------------------------------------
   4,050,000      Pocahontas Parkway Association, VA
                  (Route 895 Connector Toll Road)                             0.000 7        08/15/2012        2,811,429
------------------------------------------------------------------------------------------------------------------------
     100,000      Pocahontas Parkway Association, VA
                  (Route 895 Connector Toll Road)                             0.000 7        08/15/2015           58,276
------------------------------------------------------------------------------------------------------------------------
     865,000      Pocahontas Parkway Association, VA
                  (Route 895 Connector Toll Road)                             0.000 7        08/15/2016          475,153
------------------------------------------------------------------------------------------------------------------------
   1,125,000      Pocahontas Parkway Association, VA
                  (Route 895 Connector Toll Road)                             0.000 7        08/15/2018          450,518
------------------------------------------------------------------------------------------------------------------------
   1,845,000      Pocahontas Parkway Association, VA
                  (Route 895 Connector Toll Road)                             0.000 7        08/15/2019          679,514
------------------------------------------------------------------------------------------------------------------------
     125,000      Pocahontas Parkway Association, VA
                  (Route 895 Connector Toll Road)                             0.000 7        08/15/2019           57,276
------------------------------------------------------------------------------------------------------------------------
   1,000,000      Pocahontas Parkway Association, VA
                  (Route 895 Connector Toll Road)                             0.000 7        08/15/2023          362,250
------------------------------------------------------------------------------------------------------------------------
  26,500,000      Pocahontas Parkway Association, VA
                  (Route 895 Connector Toll Road)                             0.000 7        08/15/2024        9,030,670
------------------------------------------------------------------------------------------------------------------------
  10,000,000      Pocahontas Parkway Association, VA
                  (Route 895 Connector Toll Road)                             0.000 7        08/15/2025        3,216,100
------------------------------------------------------------------------------------------------------------------------
     825,000      Pocahontas Parkway Association, VA
                  (Route 895 Connector Toll Road)                             0.000 7        08/15/2030          197,670
------------------------------------------------------------------------------------------------------------------------
  48,400,000      Pocahontas Parkway Association, VA
                  (Route 895 Connector Toll Road)                             0.000 7        08/15/2034        9,083,712
------------------------------------------------------------------------------------------------------------------------
   3,000,000      Pocahontas Parkway Association, VA
                  (Route 895 Connector Toll Road)                             5.250          08/15/2008        3,107,310
------------------------------------------------------------------------------------------------------------------------
   5,510,000      Pocahontas Parkway Association, VA
                  (Route 895 Connector Toll Road)                             5.500          08/15/2028        5,741,916
------------------------------------------------------------------------------------------------------------------------
  20,000,000      VA Tobacco Settlement Authority (TASC)                      5.625          06/01/2037       21,115,000
------------------------------------------------------------------------------------------------------------------------
   2,500,000      West Point, VA IDA (Chesapeake Corp.)                       6.375          03/01/2019        2,545,575
                                                                                                          --------------
                                                                                                             103,777,195
------------------------------------------------------------------------------------------------------------------------
WASHINGTON--1.7%
   3,000,000      Chelan County, WA Public Utility District RITES 3          13.219 5        01/01/2036        4,020,600
------------------------------------------------------------------------------------------------------------------------
   3,500,000      Grant County, WA Public Utility District RITES 3           10.988 5        01/01/2022        3,827,600
------------------------------------------------------------------------------------------------------------------------
     100,000      Port Camas, WA Public Industrial Corp.
                  (James River Corp. of VA)                                   6.700          04/01/2023          100,099
------------------------------------------------------------------------------------------------------------------------
   1,600,000      Port Seattle, WA Special Facility (Northwest Airlines)      7.125          04/01/2020        1,517,424
------------------------------------------------------------------------------------------------------------------------
  24,900,000      Port Seattle, WA Special Facility (Northwest Airlines)      7.250          04/01/2030       23,470,740
------------------------------------------------------------------------------------------------------------------------
   1,500,000      WA Health Care Facilities Authority
                  (Overlake Hospital Medical Center)                          5.000          07/01/2030        1,538,295


                 39 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

   PRINCIPAL                                                                                                   VALUE
      AMOUNT                                                            COUPON          MATURITY          SEE NOTE 1
---------------------------------------------------------------------------------------------------------------------
WASHINGTON Continued
$  8,000,000     WA Health Care Facilities Authority
                 (Overlake Hospital Medical Center)                      5.000%       07/01/2038      $    8,166,000
---------------------------------------------------------------------------------------------------------------------
   4,710,000     WA Tobacco Settlement Authority (TASC)                  6.500        06/01/2026           5,216,231
---------------------------------------------------------------------------------------------------------------------
  13,955,000     WA Tobacco Settlement Authority (TASC)                  6.625        06/01/2032          15,519,495
                                                                                                      ---------------
                                                                                                          63,376,484
---------------------------------------------------------------------------------------------------------------------
WEST VIRGINIA--0.2%
   6,365,000     WV Hsg. Devel. Fund RITES 3                            12.332 5      11/01/2032           6,992,971
---------------------------------------------------------------------------------------------------------------------
WISCONSIN--2.5%
      15,000     Badger, WI Tobacco Asset Securitization Corp.           6.125        06/01/2027              16,159
---------------------------------------------------------------------------------------------------------------------
  34,870,000     Badger, WI Tobacco Asset Securitization Corp.           6.375        06/01/2032          38,174,979
---------------------------------------------------------------------------------------------------------------------
     600,000     Milwaukee, WI (Aero Milwaukee)                          6.500        01/01/2025             635,568
---------------------------------------------------------------------------------------------------------------------
   1,420,000     Milwaukee, WI (Air Cargo)                               7.500        01/01/2025           1,463,338
---------------------------------------------------------------------------------------------------------------------
     165,000     New Berlin, WI Hsg. Authority (Pinewood Creek)          6.800        11/01/2012             170,899
---------------------------------------------------------------------------------------------------------------------
     160,000     New Berlin, WI Hsg. Authority (Pinewood Creek)          6.850        05/01/2013             165,720
---------------------------------------------------------------------------------------------------------------------
   1,595,000     New Berlin, WI Hsg. Authority (Pinewood Creek)          7.125        05/01/2024           1,648,034
---------------------------------------------------------------------------------------------------------------------
   1,000,000     WI H&EFA (Eastcastle Place)                             6.125        12/01/2034           1,011,130
---------------------------------------------------------------------------------------------------------------------
   4,400,000     WI H&EFA (Hess Memorial Hospital Association)           7.750        11/01/2015           4,541,372
---------------------------------------------------------------------------------------------------------------------
   2,600,000     WI H&EFA (National Regency of New Berlin)               7.750        08/15/2015           2,716,948
---------------------------------------------------------------------------------------------------------------------
   6,200,000     WI H&EFA (National Regency of New Berlin)               8.000        08/15/2025           6,485,076
---------------------------------------------------------------------------------------------------------------------
   2,000,000     WI H&EFA RITES 3                                       11.954 5      02/15/2032           2,474,000
---------------------------------------------------------------------------------------------------------------------
   5,000,000     WI Hsg. & Economic Devel. Authority                     4.950        03/01/2025           5,131,200
---------------------------------------------------------------------------------------------------------------------
   2,500,000     WI Hsg. & Economic Devel. Authority ROLs 3             11.881 5      03/01/2036           2,621,950
---------------------------------------------------------------------------------------------------------------------
   5,600,000     WI Hsg. & Economic Devel. Authority ROLs 3             12.185 5      03/01/2024           5,859,360
---------------------------------------------------------------------------------------------------------------------
  19,500,000     WI Hsg. & Economic Devel. Authority, Series C           4.875        03/01/2036          19,737,737
---------------------------------------------------------------------------------------------------------------------
     250,000     WI Lac Courte Oreilles Band of Lake Superior
                 Chippewa Indians                                        8.000        12/01/2018             251,111
                                                                                                       --------------
                                                                                                          93,104,581
---------------------------------------------------------------------------------------------------------------------
WYOMING--0.0%
      25,000     Sweetwater County, WY Solid Waste Disposal
                 (FMC Corp.)                                             6.900        09/01/2024              25,349
---------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $3,570,287,846)--103.7%                                              3,844,025,416
---------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS--(3.7)                                                            (137,869,435)
                                                                                                      ---------------
NET ASSETS--100.0%                                                                                    $3,706,155,981
                                                                                                      ===============


                 40 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


FOOTNOTES TO STATEMENT OF INVESTMENTS

1. Issue is in default. See Note 1 of Notes to Financial Statements.

2. Non-income producing security.

3. Illiquid security. The aggregate value of illiquid securities as of July 31,
2005 was $246,686,115, which represents 6.66% of the Fund's net assets. See Note
5 of Notes to Financial Statements.

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

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

6. Security has been segregated for collateral to cover borrowings. See Note 6
of Notes to Financial Statements.

7. Represents a zero coupon bond.

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

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

ADA      Atlanta Development Authority
CAU      Clark Atlanta University
CCRC     Continuing Care Retirement Community
CDA      Communities Development Authority
COP      Certificates of Participation
DA       Dormitory Authority
DRIVERS  Derivative Inverse Tax Exempt Receipts
EDA      Economic Development Authority
EDFA     Economic Development Finance
         Authority
EF&CD    Environmental Facilities and Community
         Development
GO       General Obligation
H&EFA    Health and Educational Facilities
         Authority
HDA      Hospital Development Authority
HDC      Housing Development Corp.
HE&H     Higher Educational and Health
HE&HF    Higher Educational and Housing Facilities
HFA      Housing Finance Agency/Authority
HFC      Housing Finance Corp.
HFDC     Health Facilities Development Corp.
HJDOI    Hospital for Joint Diseases Orthopedic
         Institute
IDA      Industrial Development Agency
IDC      Industrial Development Corporation
IMEPCF   Industrial, Medical and Environmental
         Pollution Control Facilities
IRS      Inverse Rate Security
ITEMECF  Industrial, Tourist, Educational, Medical
         and Environmental Community Facilities
JFK      John Fitzgerald Kennedy
MSH/NYU  Mount Sinai Hospital/New York
         University
NYC      New York City
NYS      New York State
Res Rec  Resource Recovery Facility
RITES    Residual Interest Tax Exempt Security
ROLs     Residual Option Longs
TASC     Tobacco Settlement Asset-Backed Bonds


                 41 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

--------------------------------------------------------------------------------
INDUSTRY CONCENTRATIONS July 31, 2005 / Unaudited
--------------------------------------------------------------------------------

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

INDUSTRY                                         VALUE         PERCENT
-----------------------------------------------------------------------
Tobacco Settlement Payments             $  904,439,847            23.5%
Airlines                                   603,762,488            15.7
Electric Utilities                         297,841,929             7.8
Special Assessment                         255,648,569             6.7
Multifamily Housing                        215,199,471             5.6
Hospital/Health Care                       191,589,126             5.0
Hotels, Restaurants & Leisure              180,265,211             4.7
Marine/Aviation Facilities                 155,308,817             4.0
General Obligation                         127,072,069             3.3
Adult Living Facilities                    118,850,071             3.1
Single Family Housing                      109,020,541             2.8
Resource Recovery                           64,470,289             1.7
Manufacturing, Non-Durable Goods            63,170,980             1.6
Manufacturing, Durable Goods                60,796,870             1.6
Not-for-Profit Organization                 59,565,647             1.6
Pollution Control                           57,234,942             1.5
Sales Tax Revenue                           54,670,011             1.4
Higher Education                            53,929,349             1.4
Gas Utilities                               51,743,528             1.4
Special Tax                                 50,071,579             1.3
Highways/Railways                           47,623,252             1.2
Paper, Containers & Packaging               44,049,200             1.1
Education                                   35,649,206             0.9
Sports Facility Revenue                     18,074,951             0.5
Water Utilities                             11,008,955             0.3
Municipal Leases                             7,074,808             0.2
Sewer Utilities                              4,311,945             0.1
Parking Fee Revenue                          1,581,765             0.0
                                        -------------------------------
Total                                   $3,844,025,416           100.0%
                                        ===============================


                 42 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

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

RATING                                                                PERCENT
-------------------------------------------------------------------------------
AAA                                                                      11.0%
AA                                                                        4.5
A                                                                         6.5
BBB                                                                      31.0
BB                                                                        6.7
B                                                                         9.0
CCC                                                                       5.5
CC                                                                        2.9
Not Rated                                                                22.9
                                                                        ------
Total                                                                   100.0%
                                                                        ======

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                 43 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

---------------------------------------------------------------------------------------------------------
ASSETS
---------------------------------------------------------------------------------------------------------
Investments, at value (cost $3,570,287,846)--see accompanying statement of investments   $ 3,844,025,416
---------------------------------------------------------------------------------------------------------
Cash                                                                                           2,438,783
---------------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold                                                            60,429,764
Interest                                                                                      55,590,581
Investments sold                                                                              44,642,356
Other                                                                                             31,291
                                                                                         ----------------
Total assets                                                                               4,007,158,191

---------------------------------------------------------------------------------------------------------
LIABILITIES
---------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $263,401,362 purchased on a when-issued basis
or forward commitment)                                                                       272,901,085
Payable on borrowings (See Note 6)                                                            17,100,000
Shares of beneficial interest redeemed                                                         6,841,244
Dividends                                                                                      2,931,791
Distribution and service plan fees                                                               448,352
Interest expense                                                                                 155,358
Transfer and shareholder servicing agent fees                                                    127,201
Trustees' compensation                                                                            91,449
Shareholder communications                                                                        89,190
Other                                                                                            316,540
                                                                                         ----------------
Total liabilities                                                                            301,002,210

---------------------------------------------------------------------------------------------------------
NET ASSETS                                                                               $ 3,706,155,981
                                                                                         ================

---------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
---------------------------------------------------------------------------------------------------------
Paid-in capital                                                                          $ 3,436,055,576
---------------------------------------------------------------------------------------------------------
Accumulated net investment income                                                                133,374
---------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments                                                  (3,770,539)
---------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments                                                   273,737,570
                                                                                         ----------------
NET ASSETS                                                                               $ 3,706,155,981
                                                                                         ================


           44 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


---------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
---------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $2,309,856,096 and
182,000,546 shares of beneficial interest outstanding)                                             $12.69
Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price)    $13.32
----------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $528,192,261 and 41,521,913 shares
of beneficial interest outstanding)                                                                $12.72
----------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $868,107,624 and 68,507,949 shares
of beneficial interest outstanding)                                                                $12.67

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                 45 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS

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

--------------------------------------------------------------------------------
INVESTMENT INCOME
--------------------------------------------------------------------------------
Interest                                                          $ 162,287,477

--------------------------------------------------------------------------------
EXPENSES
--------------------------------------------------------------------------------
Management fees                                                       9,270,643
--------------------------------------------------------------------------------
Distribution and service plan fees:
Class A                                                               2,023,635
Class B                                                               3,680,913
Class C                                                               4,378,928
--------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A                                                                 515,730
Class B                                                                 251,937
Class C                                                                 256,036
--------------------------------------------------------------------------------
Shareholder communications:
Class A                                                                  62,760
Class B                                                                  30,868
Class C                                                                  35,803
--------------------------------------------------------------------------------
Interest expense                                                      1,320,120
--------------------------------------------------------------------------------
Custodian fees and expenses                                             170,237
--------------------------------------------------------------------------------
Trustees' compensation                                                   83,551
--------------------------------------------------------------------------------
Other                                                                   526,213
                                                                  --------------
Total expenses                                                       22,607,374
Less reduction to custodian expenses                                   (120,585)
                                                                  --------------
Net expenses                                                         22,486,789

--------------------------------------------------------------------------------
NET INVESTMENT INCOME                                               139,800,688

--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
--------------------------------------------------------------------------------
Net realized gain on investments                                     16,330,226
--------------------------------------------------------------------------------
Net change in unrealized appreciation on investments                270,282,535

--------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS              $ 426,413,449
                                                                  ==============

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                 46 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

YEAR ENDED JULY 31,                                                                      2005               2004
-----------------------------------------------------------------------------------------------------------------
OPERATIONS
-----------------------------------------------------------------------------------------------------------------
Net investment income                                                         $   139,800,688    $    68,719,462
-----------------------------------------------------------------------------------------------------------------
Net realized gain                                                                  16,330,226          8,187,916
-----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation                                             270,282,535            191,836
                                                                              -----------------------------------
Net increase in net assets resulting from operations                              426,413,449         77,099,214

-----------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
-----------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A                                                                           (89,316,259)       (37,786,294)
Class B                                                                           (24,198,317)       (17,197,773)
Class C                                                                           (28,160,685)       (12,989,258)

-----------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
-----------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A                                                                         1,407,359,926        421,943,144
Class B                                                                           166,634,889        114,357,949
Class C                                                                           541,739,166        153,043,901

-----------------------------------------------------------------------------------------------------------------
NET ASSETS
-----------------------------------------------------------------------------------------------------------------
Total increase                                                                  2,400,472,169        698,470,883
-----------------------------------------------------------------------------------------------------------------
Beginning of period                                                             1,305,683,812        607,212,929
                                                                              -----------------------------------
End of period (including accumulated net investment income
of $133,374 and $2,007,947, respectively)
                                                                              $ 3,706,155,981    $ 1,305,683,812
                                                                              ===================================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                 47 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

CLASS A     YEAR ENDED JULY 31,                         2005           2004          2003         2002            2001
-------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
-------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period              $    11.13       $  10.64      $  11.28     $  11.25        $  10.76
-------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                    .78 1          .85           .92          .71             .58
Net realized and unrealized gain (loss)                 1.59            .50          (.67)         .03             .48
                                                  -----------------------------------------------------------------------
Total from investment operations                        2.37           1.35           .25          .74            1.06
-------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                    (.81)          (.86)         (.89)        (.71)           (.57)
-------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                    $    12.69       $  11.13      $  10.64     $  11.28        $  11.25
                                                  =======================================================================

-------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                     21.97%         12.78%         2.36%        6.89%          10.03%
-------------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)          $2,309,856       $731,565      $306,857     $193,452        $ 38,827
-------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                 $1,366,113       $506,440      $252,496     $ 73,877        $ 36,900
-------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                   6.46%          7.54%         8.44%        6.61%           5.21%
Total expenses                                          0.69%          0.80%         1.04%        1.06%           0.87%
Expenses after payments and waivers and
reduction to custodian expenses                          N/A 4          N/A 4,5       N/A 4       0.89% 6         0.78% 6
-------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                   22%            44%           57%         127%             37%

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

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

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

4. Reduction to custodian expenses less than 0.01%.

5. Voluntary waiver of transfer agent fees less than 0.01%.

6. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                 48 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


CLASS B          YEAR ENDED JULY 31,                  2005           2004         2003         2002            2001
----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period              $  11.15        $ 10.66      $ 11.30      $ 11.27         $ 10.78
----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                  .70 1          .77          .83          .63             .49
Net realized and unrealized gain (loss)               1.59            .49         (.66)         .02             .48
                                                  --------------------------------------------------------------------
Total from investment operations                      2.29           1.26          .17          .65             .97
----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                  (.72)          (.77)        (.81)        (.62)           (.48)
----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                    $  12.72        $ 11.15      $ 10.66      $ 11.30         $ 11.27
                                                  ====================================================================

----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                   21.09%         11.89%        1.57%        6.07%           9.19%
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)          $528,192       $308,778     $188,645      $90,547         $20,279
----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                 $410,031       $256,425     $141,819      $36,100         $18,445
----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                 5.80%          6.80%        7.67%        5.85%           4.45%
Total expenses                                        1.48%          1.56%        1.81%        1.80%           1.62%
Expenses after payments and waivers and
reduction to custodian expenses                        N/A 4          N/A 4,5      N/A 4       1.63% 6         1.53% 6
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                 22%            44%          57%         127%             37%

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

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

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

4. Reduction to custodian expenses less than 0.01%.

5. Voluntary waiver of transfer agent fees less than 0.01%.

6. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                 49 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

CLASS C     YEAR ENDED JULY 31,                       2005           2004         2003         2002            2001
----------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period              $  11.11        $ 10.63      $ 11.27      $ 11.24         $ 10.75
----------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                  .68 1          .76          .83          .61             .50
Net realized and unrealized gain (loss)               1.60            .49         (.66)         .04             .48
                                                   -------------------------------------------------------------------
Total from investment operations                      2.28           1.25          .17          .65             .98
----------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                  (.72)          (.77)        (.81)        (.62)           (.49)
----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                    $  12.67        $ 11.11      $ 10.63      $ 11.27         $ 11.24
                                                  ====================================================================

----------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                   21.08%         11.83%        1.59%        6.09%           9.22%
----------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)          $868,108       $265,340     $111,710      $49,248         $ 3,410
----------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                 $488,562       $193,845     $ 85,483      $13,453         $ 2,552
----------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                 5.68%          6.76%        7.68%        5.88%           4.45%
Total expenses                                        1.46%          1.56%        1.80%        1.80%           1.62%
Expenses after payments and waivers and
reduction to custodian expenses                        N/A 4          N/A 4,5      N/A 4       1.63% 6         1.53% 6
----------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                 22%            44%          57%         127%             37%

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

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

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

4. Reduction to custodian expenses less than 0.01%.

5. Voluntary waiver of transfer agent fees less than 0.01%.

6. Excludes interest expense.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                 50 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

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

Oppenheimer Rochester National Municipals (the Fund) is a separate series of
Oppenheimer Multi-State Municipal Trust, an open-end management investment
company registered under the Investment Company Act of 1940, as amended. The
Fund's investment objective is to seek 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. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager).

      The Fund offers Class A, Class B and Class C shares. Class A shares are
sold at their offering price, which is normally net asset value plus a front-end
sales charge. Class B and Class C shares are sold without a front-end sales
charge but may be subject to a contingent deferred sales charge (CDSC). All
classes of shares have identical rights and voting privileges with respect to
the Fund in general and exclusive voting rights on matters that affect that
class alone. Earnings, net assets and net asset value per share may differ due
to each class having its own expenses, such as transfer and shareholder
servicing agent fees and shareholder communications, directly attributable to
that class. Class A, B and C have separate distribution and/or service plans.
Class B shares will automatically convert to Class A shares six years after the
date of purchase.

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

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


                 51 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS



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

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

readily available are valued at their fair value. Foreign and domestic
securities whose values have been materially affected by what the Manager
identifies as a significant event occurring before the Fund's assets are valued
but after the close of their respective exchanges will be fair valued. Fair
value is determined in good faith using consistently applied procedures under
the supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).

--------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment can take place up to ten days or more after the trade date.
Normally the settlement date occurs within six months after the trade date;
however, the Fund may, from time to time, purchase securities whose settlement
date extends six months or more beyond trade date. During this period, such
securities do not earn interest, are subject to market fluctuation and may
increase or decrease in value prior to their delivery. The Fund maintains
internally designated assets with a market value equal to or greater than the
amount of its purchase commitments. The purchase of securities on a when-issued
basis or forward commitment may increase the volatility of the Fund's net asset
value to the extent the Fund executes such transactions while remaining
substantially fully invested. The Fund may also sell securities that it
purchased on a when-issued basis or forward commitment prior to settlement of
the original purchase. As of July 31, 2005, the Fund had purchased $263,401,362
of securities issued on a when-issued basis or forward commitment.

--------------------------------------------------------------------------------
INVERSE FLOATING RATE SECURITIES. The Fund invests in inverse floating rate
securities that pay interest at a rate that varies inversely with short-term
interest rates. Certain of these securities may be leveraged, whereby the
interest rate varies inversely at a multiple of the change in short-term rates.
As interest rates rise, inverse floaters produce less current income. The price
of such securities is more volatile than comparable fixed rate securities. The
Fund will invest no more than 35% of its total assets in inverse floaters.
Inverse floaters amount to $236,552,076 as of July 31, 2005, which represents
5.90% of the Fund's total assets.

--------------------------------------------------------------------------------
SECURITY CREDIT RISK. The Fund invests in high-yield securities, which may be
subject to a greater degree of credit risk, market fluctuations and loss of
income and principal, and may be more sensitive to economic conditions than
lower-yielding, higher-rated fixed-income securities. The Fund may acquire
securities in default, and is not obligated to dispose of securities whose
issuers subsequently default. As of July 31, 2005, securities with an aggregate
market value of $85,093,535, representing 2.30% of the Fund's net assets, were
in default.

--------------------------------------------------------------------------------
ALLOCATION OF INCOME, EXPENSES, GAINS AND LOSSES. Income, expenses (other than
those attributable to a specific class), gains and losses are allocated on a
daily basis to


                 52 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


each class of shares based upon the relative proportion of net assets
represented by such class. Operating expenses directly attributable to a
specific class are charged against the operations of that class.

--------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders, therefore, no federal income or excise tax provision is
required.

The tax components of capital shown in the table below represent distribution
requirements the Fund must satisfy under the income tax regulations, losses the
Fund may be able to offset against income and gains realized in future years and
unrealized appreciation or depreciation of securities and other investments for
federal income tax purposes.

                                                                             NET UNREALIZED
                                                                               APPRECIATION
                                                                           BASED ON COST OF
                                                                             SECURITIES AND
       UNDISTRIBUTED     UNDISTRIBUTED                 ACCUMULATED        OTHER INVESTMENTS
       NET INVESTMENT        LONG-TERM                        LOSS       FOR FEDERAL INCOME
       INCOME                     GAIN          CARRYFORWARD 1,2,3             TAX PURPOSES
       ------------------------------------------------------------------------------------
       $3,269,849                  $--                  $3,586,519             $273,553,548

1. As of July 31, 2005, the Fund had $3,586,519 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of July 31, 2005, details
of the capital loss carryforward were as follows:

                EXPIRING
                ---------------------------------
                2012                   $3,586,519

2. During the fiscal year ended July 31, 2005, the Fund utilized $16,514,248 of
capital loss carryforward to offset capital gains realized in that fiscal year.

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

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

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

                                             YEAR ENDED               YEAR ENDED
                                          JULY 31, 2005            JULY 31, 2004
--------------------------------------------------------------------------------
Distributions paid from:
Exempt-interest dividends                  $141,675,261              $67,973,325


                 53 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

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

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

               Federal tax cost of securities    $ 3,570,471,869
                                                 ===============
               Gross unrealized appreciation     $   288,790,208
               Gross unrealized depreciation         (15,236,660)
                                                 ---------------
               Net unrealized appreciation       $   273,553,548
                                                 ===============

--------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the
Fund's independent trustees. Benefits are based on years of service and fees
paid to each trustee during the years of service. During the year ended July 31,
2005, the Fund's projected benefit obligations were increased by $43,130 and
payments of $704 were made to retired trustees, resulting in an accumulated
liability of $67,605 as of July 31, 2005.

      The Board of Trustees has adopted a deferred compensation plan for
independent trustees that enables trustees to elect to defer receipt of all or a
portion of the annual compensation they are entitled to receive from the Fund.
For purposes of determining the amount owed to the Trustee under the plan,
deferred amounts are treated as though equal dollar amounts had been invested in
shares of the Fund or in other Oppenheimer funds selected by the Trustee. The
Fund purchases shares of the funds selected for deferral by the Trustee in
amounts equal to his or her deemed investment, resulting in a Fund asset equal
to the deferred compensation liability. Such assets are included as a component
of "Other" within the asset section of the Statement of Assets and Liabilities.
Deferral of trustees' fees under the plan will not affect the net assets of the
Fund, and will not materially affect the Fund's assets, liabilities or net
investment income per share. Amounts will be deferred until distributed in
accordance to the Plan.

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

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

--------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash


                 54 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


overdrafts at a rate equal to the Federal Funds Rate plus 0.50%. The Reduction
to Custodian Expenses line item, if applicable, represents earnings on cash
balances maintained by the Fund during the period. Such interest expense and
other custodian fees may be paid with these earnings.

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

--------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with U.S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.

--------------------------------------------------------------------------------
2. SHARES OF BENEFICIAL INTEREST

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

                                    YEAR ENDED JULY 31, 2005          YEAR ENDED JULY 31, 2004
                                  SHARES              AMOUNT          SHARES            AMOUNT
-----------------------------------------------------------------------------------------------
CLASS A
Sold                         133,239,665     $ 1,612,797,528      45,587,726     $ 519,590,084
Dividends and/or
distributions reinvested       3,545,591          42,823,965       1,579,654        17,826,296
Redeemed                     (20,526,179)       (248,261,567)    (10,258,031)     (115,473,236)
                            -------------------------------------------------------------------
Net increase                 116,259,077     $ 1,407,359,926      36,909,349     $ 421,943,144
                            ===================================================================

-----------------------------------------------------------------------------------------------
CLASS B
Sold                          17,084,575     $   205,710,784      12,764,933     $ 145,432,112
Dividends and/or
distributions reinvested         820,743           9,875,104         620,409         7,015,793
Redeemed                      (4,071,776)        (48,950,999)     (3,387,398)      (38,089,956)
                            -------------------------------------------------------------------
Net increase                  13,833,542     $   166,634,889       9,997,944     $ 114,357,949
                            ===================================================================

-----------------------------------------------------------------------------------------------
CLASS C
Sold                          47,841,160     $   580,425,334      17,536,942     $ 199,701,778
Dividends and/or
distributions reinvested       1,061,481          12,801,896         568,003         6,410,221
Redeemed                      (4,272,766)        (51,488,064)     (4,736,781)      (53,068,098)
                            -------------------------------------------------------------------
Net increase                  44,629,875     $   541,739,166      13,368,164     $ 153,043,901
                            ===================================================================

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

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

                                            PURCHASES              SALES
            ------------------------------------------------------------
            Investment securities      $2,298,924,374       $410,767,698


                 55 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

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

MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of 0.60% 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.

--------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended July 31, 2005, the Fund paid $953,268
to OFS for services to the Fund.

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

--------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
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 services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years. Fees incurred by the Fund under the Plan are detailed in the Statement of
Operations.

--------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B AND CLASS C SHARES. The Fund has
adopted Distribution and Service Plans for Class B and Class C shares to
compensate the Distributor for its services in connection with the distribution
of those shares and servicing accounts. Under the plans, the Fund pays the
Distributor an annual asset-based sales charge of 0.75% per year on Class B and
Class C shares. The Distributor also receives a service fee of up to 0.15% per
year under each plan. If either the Class B or Class C plan is terminated by the
Fund or by the shareholders of a class, the Board of Trustees and its
independent trustees must determine whether the Distributor shall be entitled to
payment from the Fund of all or a portion of the service fee and/or asset-based
sales charge in respect to shares sold prior to the effective date of such
termination. The Distributor's aggregate uncompensated expenses under the plan
at July 31, 2005 for Class B and Class C shares were $17,018,319 and
$10,097,129, respectively. Fees incurred by the Fund under the plans are
detailed in the Statement of Operations.

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


                 56 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


the CDSC retained by the Distributor on the redemption of shares is shown in the
table below for the period indicated.

                                                  CLASS A                 CLASS B            CLASS C
                           CLASS A             CONTINGENT              CONTINGENT         CONTINGENT
                         FRONT-END               DEFERRED                DEFERRED           DEFERRED
                     SALES CHARGES          SALES CHARGES           SALES CHARGES      SALES CHARGES
                       RETAINED BY            RETAINED BY             RETAINED BY        RETAINED BY
   YEAR ENDED          DISTRIBUTOR            DISTRIBUTOR             DISTRIBUTOR        DISTRIBUTOR
-----------------------------------------------------------------------------------------------------
July 31, 2005           $4,232,112                $76,961              $1,058,377           $176,463

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

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

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

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

The Fund can borrow money from banks in amounts up to one-third of its total
assets (including the amount borrowed) less all liabilities and indebtedness
other than borrowings to purchase portfolio securities, to meet redemption
obligations or for temporary and emergency purposes. The purchase of securities
with borrowed funds creates leverage in the Fund. Until terminated on January
21, 2005, the Fund had entered into an agreement which enabled it to participate
with certain other Oppenheimer funds in a committed, unsecured line of credit
with a bank, which permitted borrowings up to $540 million, collectively.
Interest was charged to each fund, based on its borrowings, at a rate equal to
the Federal Funds Rate plus 0.75%. The Fund also paid a commitment fee equal to
its pro rata share of the average unutilized amount of the credit facility at a
rate of 0.09% per annum.

      Effective January 21, 2005 the Fund entered into a Revolving Credit and
Security Agreement (the "Agreement") with a conduit lender and a bank which
enables it to participate with certain other Oppenheimer funds in a committed,
secured borrowing facility that permits borrowings of up to $800 million,
collectively. To secure the loan, the Fund pledges investment securities in
accordance with the terms of the Agreement. Interest is charged to the Fund,
based on its borrowings, at current commercial paper issuance rates (3.344% as
of July 31, 2005). The Fund pays additional fees of 0.30% per annum on its
outstanding borrowings to manage and administer the facility and is allocated
its pro-rata share of a 0.13% per annum commitment fee for a liquidity backstop
facility with respect to the $800 million facility size.


                 57 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS


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

--------------------------------------------------------------------------------
6. BORROWINGS Continued

      For the year ended July 31, 2005, the average daily loan balance was
$45,398,904 at an average daily interest rate of 2.811%. The Fund had borrowings
outstanding of $17,100,000 at July 31, 2005 at an interest rate of 3.344%. The
Fund had gross borrowings and gross loan repayments of $910,100,000 and
$968,400,000, respectively, during the year ended July 31, 2005. The maximum
amount of borrowings outstanding at any month-end during the year ended July 31,
2005 was $165,800,000. The Fund paid $140,390 in fees and $1,173,643 in interest
during the year ended July 31, 2005.

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

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

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


                 58 | OPPENHEIMER ROCHESTER NATIONAL MUNICIPALS





                     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-2
                                  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 the Class A 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: Previously filed with Registrant's
Post-Effective Amendment No. 31 (September 27, 2005), and incorporated herein by
reference.

      (ii) Amended and Restated Investment Advisory Agreement for Oppenheimer
Rochester National Municipals, dated January 1, 2005: Previously filed with Registrant's
Post-Effective Amendment No. 31 (September 27, 2005), and incorporated herein by
reference.

      (iii)   Investment   Advisory   Agreement  for  Oppenheimer  New  Jersey
Municipal Fund dated January 1, 2005: Previously filed with Registrant's
Post-Effective Amendment No. 31 (September 27, 2005), and incorporated herein by
reference.


(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: Filed herewith.


(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 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

---------------------------------------------------------------------------------
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Eric C. Fallon                  Vice President            None
10 Worth Circle
Newton, MA 02458
---------------------------------------------------------------------------------
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Deanna Farrugia(1)              Vice President            None

---------------------------------------------------------------------------------
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Joseph Fernandez                Vice President            None
1717 Richbourg Park Drive
Brentwood, TN 37027
---------------------------------------------------------------------------------
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Mark J. Ferro(2)                Senior Vice President     None
---------------------------------------------------------------------------------
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Ronald H. Fielding(3)           Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Eric P. Fishel                  Vice President            None
725 Boston Post Rd., #12
Sudbury, MA 01776

---------------------------------------------------------------------------------
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Patrick W. Flynn (1)            Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John E. Forrest(2)              Senior Vice President     None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

John ("J") Fortuna(2)           Vice President            None

---------------------------------------------------------------------------------
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Lucio Giliberti                 Vice President            None
6 Cyndi Court
Flemington, NJ 08822
---------------------------------------------------------------------------------
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Raquel Granahan(2)              Vice President            None
---------------------------------------------------------------------------------
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Ralph Grant                     Senior Vice President     None
10 Boathouse Close
Mt. Pleasant, SC 29464
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Kahle Greenfield(2)             Vice President            None

---------------------------------------------------------------------------------
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Michael D. Guman                Vice President            None
3913 Pleasant Avenue
Allentown, PA 18103
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

James E. Gunther                Vice President            None
178 Canterbury Turn
Lancaster, PA 17601

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

---------------------------------------------------------------------------------
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Suzanne Heske                   Vice President            None
4146 22nd Street
San Francisco, CA 94114

---------------------------------------------------------------------------------
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Wendy G. Hetson(2)              Vice President            None

---------------------------------------------------------------------------------
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William E. Hortz(2)             Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Edward Hrybenko(2)              Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian F. Husch(2)               Vice President            None
---------------------------------------------------------------------------------
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Stephen Ilnitzki(2)             Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kathleen T. Ives(1)             Vice President &          Assistant Secretary
                                Assistant Secretary
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Shonda Rae Jaquez(2)            Assistant Vice President  None

---------------------------------------------------------------------------------
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Nivan Jaleeli                   Vice President            None
13622 E. Geronimo Rd.
Scottsdale, AZ 85259

---------------------------------------------------------------------------------
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Eric K. Johnson(1)              Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mark D. Johnson                 Vice President            None
15792 Scenic Green Court
Chesterfield, MO 63017
---------------------------------------------------------------------------------
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Christina J. Keller(2)          Vice President            None
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Michael Keogh(2)                Vice President            None
---------------------------------------------------------------------------------
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Lisa Klassen(1)                 Assistant Vice President  None
---------------------------------------------------------------------------------
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Richard Klein                   Senior Vice President     None
4820 Fremont Avenue South
Minneapolis, MN 55419

---------------------------------------------------------------------------------
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Richard Knott(1)                Senior Vice President     None
---------------------------------------------------------------------------------
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Brent A. Krantz                 Senior Vice President     None
61500 Tam McArthur Loop
Bend, OR 97702

---------------------------------------------------------------------------------
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David T. Kuzia                  Vice President            None
19102 Miranda Circle
Omaha, NE 68130
---------------------------------------------------------------------------------
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Tracey Lange(2)                 Vice President            None
---------------------------------------------------------------------------------
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Paul R. LeMire                  Vice President            None
7 Cormorant Drive
Middletown, NJ 07748

---------------------------------------------------------------------------------
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Eric J. Liberman(2)             Vice President            None
---------------------------------------------------------------------------------
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Malissa Lischin(2)              Assistant Vice President  None
---------------------------------------------------------------------------------
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James V. Loehle(2)              Vice President            None

---------------------------------------------------------------------------------
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Thomas Loncar(1)                Vice President            None
---------------------------------------------------------------------------------
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Montana W. Low                  Vice President            None
1636 N. Wells Street, Apt. 3411

Chicago, IL 60614
---------------------------------------------------------------------------------
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Craig Lyman                     Vice President            None
3930 Swenson St. #502
Las Vegas, NV 89119

---------------------------------------------------------------------------------
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John J. Lynch                   Vice President            None
6325 Bryan Parkway
Dallas, TX 75214
---------------------------------------------------------------------------------
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Michael Malik                   Vice President            None
546 Idylberry Road
San Rafael, CA 94903

---------------------------------------------------------------------------------
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Steven C. Manns                 Vice President            None
1627 N. Hermitage Avenue
Chicago, IL 60622
---------------------------------------------------------------------------------
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Todd A. Marion(2)               Vice President            None

---------------------------------------------------------------------------------
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LuAnn Mascia(2)                 Vice President            None
---------------------------------------------------------------------------------
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Theresa-Marie Maynier           Vice President            None
2421 Charlotte Drive
Charlotte, NC 28203
---------------------------------------------------------------------------------
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John C. McDonough               Vice President            None
2 Leland Ct.
Chevy Chase, MD 20815

---------------------------------------------------------------------------------
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Kent C. McGowan                 Vice President            None
9510 190th Place SW
Edmonds, WA 98020

---------------------------------------------------------------------------------
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Brian F. Medina(1)              Vice President            None

---------------------------------------------------------------------------------
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Daniel Melehan                  Vice President            None
906 Bridgeport Court
San Marcos, CA 92069
---------------------------------------------------------------------------------
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Mark Mezzanotte                 Vice President            None
16 Cullen Way
Exeter, NH 03833
---------------------------------------------------------------------------------
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Clint Modler(1)                 Vice President            None
---------------------------------------------------------------------------------
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Robert Moser(1)                 Vice President            None
---------------------------------------------------------------------------------
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David W. Mountford              Vice President            None
7820 Banyan Terrace
Tamarac, FL 33321
---------------------------------------------------------------------------------
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Gzim Muja                       Vice President            None
269 S. Beverly Dr. #807
Beverly Hills, CA 90212

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John V. Murphy(2)               Director                  President & Trustee

---------------------------------------------------------------------------------
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Wendy Jean Murray               Vice President            None
32 Carolin Road
Upper Montclair, NJ 07043
---------------------------------------------------------------------------------
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John S. Napier                  Vice President            None
17 Hillcrest Ave.
Darien, CT 06820

---------------------------------------------------------------------------------
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Christina Nasta(2)              Vice President            None
---------------------------------------------------------------------------------
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Kevin P. Neznek(2)              Vice President            None
---------------------------------------------------------------------------------
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Bradford Norford                Vice President            None
3914 Easton Sq. Pl.
Columbus, OH 43219

---------------------------------------------------------------------------------
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Alan Panzer                     Vice President            None
6755 Ridge Mill Lane
Atlanta, GA 30328
---------------------------------------------------------------------------------
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Michael Park(2)                 Vice President            None

---------------------------------------------------------------------------------
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Brian C. Perkes                 Vice President            None
6 Lawton Ct.
Frisco, TX 75034

---------------------------------------------------------------------------------
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Charles K. Pettit(2)            Vice President            None

---------------------------------------------------------------------------------
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Andrew Pizza(2)                 Vice President            None

---------------------------------------------------------------------------------
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Elaine M. Puleo-Carter(2)       Senior Vice President     None

---------------------------------------------------------------------------------
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Minnie Ra                       Vice President            None
100 Dolores Street, #203
Carmel, CA 93923
---------------------------------------------------------------------------------
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Dusting Raring                  Vice President            None
27 Blakemore Drive

Ladera Ranch, CA 92797
---------------------------------------------------------------------------------
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Michael A. Raso(2)              Vice President            None

---------------------------------------------------------------------------------
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Richard Rath                    Vice President            None
46 Mt. Vernon Ave.

Alexandria, VA 22301
---------------------------------------------------------------------------------
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Ruxandra Risko(2)               Vice President            None
---------------------------------------------------------------------------------
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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

---------------------------------------------------------------------------------
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Kenneth A. Rosenson             Vice President            None
24753 Vantage Pt. Terrace
Malibu, CA 90265
---------------------------------------------------------------------------------
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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
---------------------------------------------------------------------------------
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John Saunders                   Vice President            None
911 North Orange Avenue #401
Orlando, FL 32801
---------------------------------------------------------------------------------
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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

---------------------------------------------------------------------------------
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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 of 1933 and/or the
Investment Company Act of 1940, the Registrant certifies that it meets all
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on
the 23rd 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 23 2005
Clayton K. Yeutter

/s/Joseph Wikler             Vice Chairman of the        November 23 2005
-------------------------    Board and Trustee
Joseph Wikler


/s/ John V. Murphy*          President, Principal

--------------------------   Executive Officer           November 23, 2005
John V. Murphy               & Trustee

/s/ Brian W. Wixted*         Treasurer, Principal        November 23, 2005
-------------------------    Financial and
Brian W. Wixted              Accounting Officer

/s/ Robert G. Galli*         Trustee                     November 23, 2005

-----------------------
Robert G. Galli


/s/ Phillip A. Griffiths*    Trustee                     November 23, 2005

---------------------------
Phillip A. Griffiths


/s/ Joel W. Motley*          Trustee                     November 23, 2005

------------------------
Joel W. Motley


/s/ Kenneth A. Randall*      Trustee                     November 23, 2005

----------------------------
Kenneth A. Randall


/s/ Peter I. Wold*           Trustee                     November 23, 2005

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

Peter I. Wold

/s/ Russell S. Reynolds, Jr.*                            Trustee  November
23, 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 (j)            Independent Registered Public Accounting Firm's Consent