Oppenheimer Developing Markets Fund
6803 South Tucson Way, Centennial, Colorado 80112
1.800.CALL OPP (225.5677)

Statement of Additional Information dated November 24, 2006

      This Statement of Additional Information is not a Prospectus.
This document contains additional information about Oppenheimer
Developing Markets Fund (the "Fund") and supplements information in the
Prospectus dated November 24, 2006. 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..   2
    The Fund's Investment Policies.....................................   2
    Other Investment Techniques and Strategies.........................   8
    Other Investment Restrictions......................................  24
    Disclosure of Portfolio Holdings...................................  26
How the Fund is Managed ...............................................  31
    Organization and History...........................................  31
    Board of Trustees and Oversight Committees.........................  32
    Trustees and Officers of the Fund..................................  34
    The Manager........................................................  44
Brokerage Policies of the Fund.........................................  48
Distribution and Service Plans.........................................  50
Payments to Fund Intermediaries........................................  55
Performance of the Fund................................................  59

About Your Account
How To Buy Shares......................................................  65
How To Sell Shares.....................................................  75
How To Exchange Shares.................................................  79
Dividends, Capital Gains and Taxes.....................................  83
Additional Information About the Fund..................................  88

Financial Information About the Fund
Report of Independent Registered Public Accounting Firm................  89
Financial Statements...................................................  90

Appendix A: Industry Classifications................................... A-1
Appendix B:  OppenheimerFunds  Special  Sales  Charge  Arrangements  and
Waivers................................................................ B-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 ("SAI") contains supplemental
information about those policies and risks and the types of securities
that the Fund's investment manager, OppenheimerFunds, Inc. (the
"Manager") can select for the Fund. Additional information is also
provided about the strategies that 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 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.

      In selecting securities for the Fund's portfolio, the Manager
evaluates the merits of securities primarily through the exercise of
its own investment analysis. That analysis includes a number of
factors, some of which are discussed in the Prospectus. Additionally,
the Manager may evaluate
o     the strength of an issuer's management and the history of its
      operations,
o     the soundness of its financial and accounting policies and its
      financial condition,
o     the issuer's products and those of competitors,
o     the effect of general market conditions on the issuer's business
         and the prospects for the industry of which the issuer is a
         part, and
o     governmental proposals that might affect the issuer.

      In addition, the Manager ordinarily looks for one of the
following characteristics: an above-average earnings growth per share;
high return on invested capital; effective research and product
development; pricing flexibility; and general operating characteristics
that might enable the issuer to compete successfully in its intended
markets.

      The Fund intends to spread its investments among at least three
developing markets under normal market conditions. In determining an
appropriate distribution of investments among the various countries and
geographic regions in which the Fund may invest, the Manager generally
considers the following factors:
o     prospects for relative economic growth, the balance of payments,
o     anticipated levels of inflation,
o     governmental policies influencing business conditions,
o     the outlook for currency relationships and
o     the range of individual investment opportunities available to
         international investors among the various counties and
         geographic regions.

      The percentage of the Fund's assets invested in particular
developing markets will vary from time to time based on the Manager's
assessment of these factors, the appreciation possibilities of particular
issuers and macroeconomic and political factors that may affect specific
markets.

      The portion of the Fund's assets allocated to securities selected
for capital appreciation and the investment techniques used will depend
upon the judgment of the Fund's Manager as to the future movement of
the equity securities markets. If the Manager believes that economic
conditions favor a rising market, the Fund will emphasize securities
and investment methods selected for high capital growth. If the Manager
believes that a market decline is likely, defensive securities and
investment methods may be emphasized.

      Current income is not a consideration in the selection of
portfolio securities for the Fund in normal circumstances. The fact
that a security has a low yield or does not pay current income will not
be an adverse factor in considering it for the Fund's portfolio unless
the Manager believes that the lack of yield might adversely affect
appreciation possibilities.

      o     Growth Companies. Growth companies are those
companies that the Manager believes are entering into a growth cycle in
their business, with the expectation that their stock will increase in
value. They may be established companies as well as newer companies in
the development stage.

      Growth companies may have a variety of characteristics that in
the Manager's view define them as "growth" issuers. They may be
generating or applying new technologies, new or improved distribution
techniques or new services. They may own or develop natural resources.
They may be companies that can benefit from changing consumer demands
or lifestyles, or companies that have projected earnings in excess of
the average for their sector or industry. The Manager seeks to identify
companies that offer growth at a reasonable price and/or
underperforming businesses that the Manager believes are set for an
improvement in fundamentals over the near term.  In each case, they
have prospects that the Manager believes are favorable for the long
term. The Manager looks for growth companies with strong, capable
management sound financial and accounting policies, successful product
development and marketing and other factors.

      o   Investments in Equity Securities. The Fund focuses its
investments in equity securities of foreign companies whose principal
activities are in developing markets. Equity securities include common
stocks, preferred stocks, rights and warrants, and securities
convertible into common stock. The Fund's investment primarily include
stocks of what the Manager believes are growth companies. They may have
a market capitalization of any range, small, medium or large.

      The Manager selects securities primarily on the basis of its view
of a security's potential for capital appreciation.

      Small-cap growth companies may offer greater opportunities for
capital appreciation than securities of large, more established
companies. However, these securities also involve greater risks than
securities of larger companies. Securities of small capitalization
issuers may be subject to greater price volatility in general than
securities of large-cap and mid-cap companies. Therefore, to the degree
that the Fund has investments in smaller capitalization companies at
times of market volatility, the Fund's share price may fluctuate more.
As noted below, the Fund may invest without limit in unseasoned small
cap issuers.

         o  Convertible Securities. While some convertible securities
are a form of debt security, in many cases their conversion feature
(allowing conversion into equity securities) causes them to be regarded
by the Manager more as "equity equivalents." As a result, the credit
rating assigned to the security has less impact on the Manager's
investment decision than in the case of non-convertible fixed income
securities.

      The value of a convertible security is a function of its
"investment value" and its "conversion value." If the investment value
exceeds the conversion value, the security will behave more like a debt
security and the security's price will likely increase when interest
rates fall and decrease when interest rates rise. If the conversion
value exceeds the investment value, the security will behave more like
an equity security. In that case it will likely sell at a premium over
its conversion value and its price will tend to fluctuate directly with
the price of the underlying security.

      To determine whether convertible securities should be regarded as
"equity equivalents," the Manager examines the following factors:
(1)   whether, at the option of the investor, the convertible security
      can be exchanged for a fixed number of shares of common stock of
      the issuer,
(2)   whether the issuer of the convertible securities has restated its
      earnings per share of common stock on a fully diluted basis
      (considering the effect of conversion of the convertible
      securities), and
(3)   the extent to which the convertible security may be a defensive
      "equity substitute," providing the ability to participate in any
      appreciation in the price of the issuer's common stock.

            o  Rights and Warrants. The Fund may invest in warrants or
rights. Warrants basically are options to purchase equity securities at
specific prices valid for a specific period of time. Their prices do
not necessarily move parallel to the prices of the underlying
securities. Rights are similar to warrants, but normally have a short
duration and are distributed directly by the issuer to its
shareholders. Rights and warrants have no voting rights, receive no
dividends and have no rights with respect to the assets of the issuer.

      o   Foreign Securities. The Fund emphasizes investments in
equity securities issued or guaranteed by foreign companies. "Foreign
securities" include equity and debt securities of companies organized
under the laws of countries other than the United States, and debt
securities of governments other than the U.S. government. They also
include securities of companies (including those that are located in
the U.S. or organized under U.S. law) that derive a significant portion
of their revenue or profits from foreign businesses, investments or
sales, or that have a significant portion of their assets abroad. They
may be traded on foreign securities exchanges or in the foreign
over-the-counter markets.

      Securities of foreign issuers that are represented by American
Depository Receipts or that are listed on a U.S. securities exchange or
traded in the U.S. over-the-counter markets are considered "foreign
securities" for the purpose of the Fund's investment allocations. They
are subject to some of the special considerations and risks, discussed
below, that apply to foreign securities traded and held abroad.

      Because the Fund may purchase securities denominated in foreign
currencies, a change in the value of such foreign currency against the
U.S. dollar will result in a change in the amount of income the Fund
has available for distribution.  Because a portion of the Fund's
investment income may be received in foreign currencies, the Fund will
be required to compute its income in U.S. dollars for distribution to
shareholders, and therefore the Fund will absorb the cost of currency
fluctuations.  After the Fund has distributed income, subsequent
foreign currency losses may result in the Fund's having distributed
more income, subsequent foreign currency losses may result in the
Fund's having distributed more income in a particular fiscal period
than was available from investment income, which could result in a
return of capital to shareholders.

      Investing in foreign securities offers potential benefits not
available from investing solely in securities of domestic issuers. They
include the opportunity to invest in foreign issuers that appear to
offer growth potential, or in foreign countries with economic policies
or business cycles different from those of the U.S., or to reduce
fluctuations in portfolio value by taking advantage of foreign stock
markets that do not move in a manner parallel to U.S. markets. The Fund
will hold foreign currency only in connection with the purchase or sale
of foreign securities.

         o  Risks of Foreign Investing. Investments in foreign
securities may offer special opportunities for investing but also
present special additional risks and considerations not typically
associated with investments in domestic securities. Some of these
additional risks are:
o     reduction of income by foreign taxes;
o     fluctuation in value of foreign investments due to changes in
         currency rates, currency devaluations or currency control
         regulations (for example, currency blockage);
o     transaction charges for currency exchange;
o     lack of public information about foreign issuers;
o     lack of uniform accounting, auditing and financial reporting
         standards in foreign countries comparable to those applicable
         to domestic issuers;
o     less volume on foreign exchanges than on U.S. exchanges;
o     greater volatility and less liquidity on foreign markets than in
         the U.S.;
o     less governmental regulation of foreign issuers, stock exchanges
         and brokers than in the U.S.;
o     greater difficulties in commencing lawsuits;
o     higher brokerage commission rates than in the U.S.;
o     increased risks of delays in settlement of portfolio transactions
         or loss of certificates for portfolio securities;
o     foreign withholding taxes on interest and dividends;
o     possibilities in some countries of expropriation, confiscatory
         taxation, political, financial or social instability or
         adverse diplomatic developments; and
o     unfavorable differences between the U.S. economy and foreign
         economies.

      In the past, U.S. government policies have discouraged certain
investments abroad by U.S. investors, through taxation or other
restrictions, and it is possible that such restrictions could be
re-imposed.

o   Passive Foreign Investment Companies. Some securities of
corporations domiciled outside the U.S. which the Fund may purchase,
may be considered passive foreign investment companies ("PFICs") under
U.S. tax laws. PFICs are those foreign corporations which generate
primarily passive income. They tend to be growth companies or
"start-up" companies. For federal tax purposes, a corporation is deemed
a PFIC if 75% or more of the foreign corporation's gross income for the
income year is passive income or if 50% or more of its assets are
assets that produce or are held to produce passive income. Passive
income is further defined as any income to be considered foreign
personal holding company income within the subpart F provisions defined
by IRCss.954.

      Investing in PFICs involves the risks associated with investing
in foreign securities, as described above. There are also the risks
that the Fund may not realize that a foreign corporation it invests in
is a PFIC for federal tax purposes. Federal tax laws impose severe tax
penalties for failure to properly report investment income from PFICs.
Following industry standards, the Fund makes every effort to ensure
compliance with federal tax reporting of these investments. PFICs are
considered foreign securities for the purposes of the Fund's minimum
percentage requirements or limitations on investing in foreign
securities.

      Subject to the limits under the Investment Company Act of 1940
(the "Investment Company Act"), the Fund may also invest in foreign
mutual funds which are also deemed PFICs (since nearly all of the
income of a mutual fund is generally passive income). Investing in
these types of PFICs may allow exposure to various countries because
some foreign countries limit, or prohibit, all direct foreign
investment in the securities of companies domiciled therein.

      In addition to bearing their proportionate share of a fund's
expenses (management fees and operating expenses), shareholders will
also indirectly bear similar expenses of such entities. Additional
risks of investing in other investment companies are described below
under "Investment in Other Investment Companies."

         o  Developing Markets and Their Special Risks. Emerging and
developing markets abroad may also offer special opportunities for
growth investing but have greater risks than markets in the United
States or more developed foreign markets, such as those in Western
Europe, Canada, Australia, New Zealand and Japan. Some of those special
risks are described below.

         o  Settlement of Transactions. Settlement procedures in
developing markets may differ from those of more established securities
markets. Settlements may also be delayed by operational problems.
Securities issued by developing countries and by issuers located in
those countries may be subject to extended settlement periods. Delays
in settlement could result in temporary periods during which a portion
of the Fund's assets is uninvested and no return is earned on those
assets. The inability of the Fund to make intended purchases of
securities due to settlement problems could cause the Fund to miss
investment opportunities. The Fund could suffer losses from the
inability to dispose of portfolio securities due to settlement
problems. As a result there could be subsequent declines in the value
of the portfolio security, a decrease in the level of liquidity of the
Fund's portfolio or, if the Fund has entered into a contract to sell
the security, a possible liability to the purchaser.

         o  Price Volatility. Securities prices in developing markets
may be significantly more volatile than is the case in more developed
nations of the world. In particular, countries with emerging markets
may have relatively unstable governments. That presents the risk of
nationalization of businesses, restrictions on foreign ownership or
prohibitions of repatriation of assets. These countries may have less
protection of property rights than more developed countries. The
economies of developing countries may be predominantly based on only a
few industries and, as such, may be highly vulnerable to changes in
local or global trade conditions.

         o  Less Developed Securities Markets. Developing market
countries may have less well-developed securities markets and
exchanges. Consequently they have lower trading volume than the
securities markets of more developed countries. These markets may be
unable to respond effectively to increases in trading volume.
Therefore, prompt liquidation of substantial portfolio holdings may be
difficult at times. As a result, these markets may be substantially
less liquid than those of more developed countries, and the securities
of issuers located in these markets may have limited marketability.

         o  Government Restrictions. In certain developing countries,
government approval may be required for the repatriation of investment
income, capital or the proceeds of sales of securities by foreign
investors, such as the Fund. Also, a government might impose temporary
restrictions on remitting capital abroad if the country's balance of
payments deteriorates, or it might do so for other reasons. If
government approval were delayed or refused, the Fund could be
adversely affected. Additionally, the Fund could be adversely affected
by the imposition of restrictions on investments by foreign entities.

      Among the countries that the Manager has identified as developing
or emerging markets in which the Fund will consider investing are the
following countries. The Fund might not invest in all of these
countries and the list may change.

 Algeria          Czech Republic Ivory Coast   Nigeria           Sri Lanka
 Argentina        Ecuador        Jamaica       Pakistan          Swaziland
 Bangladesh       Egypt          Jordan        Paraguay          Taiwan
 Bolivia          Estonia        Kenya         Peru              Tanzania
 Botswana         Ghana          Latvia        Philippines       Thailand
 Brazil           Greece         Lebanon       Poland            Tunisia
 Bulgaria         Guyana         Lithuania     Portugal          Turkey
 Chile            Hong Kong      Malaysia      Russia            Ukraine
 China            Hungary        Mauritius     Singapore         Uruguay
 Colombia         India          Mexico        Slovakia Republic Venezuela
 Costa Rica       Indonesia      Morocco       Slovenia          Vietnam
 Croatia          Iran           Myanmar       South Africa      Zambia
 Cyprus           Israel         Namibia       South Korea       Zimbabwe

      o     Portfolio Turnover. "Portfolio turnover" describes
the rate at which the Fund traded its portfolio securities during its
last fiscal year. For example, if a fund sold all of its securities
during the year, its portfolio turnover rate would have been 100%. The
Fund's portfolio turnover rate will fluctuate from year to year,
although the Fund does not expect to have a portfolio turnover rate of
more than 100% annually.

      Increased portfolio turnover creates higher brokerage and
transaction costs for the Fund, which may reduce its overall
performance. Additionally, the realization of capital gains from
selling portfolio securities may result in distributions of taxable
long-term capital gains to shareholders, since the Fund will normally
distribute all of its capital gains realized each year, to avoid excise
taxes under the Internal Revenue Code.

Other Investment Techniques and Strategies. In seeking its objective,
the Fund may from time to time use 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.

o   Investing in Small, Unseasoned Companies. The Fund may invest in
securities of small, unseasoned companies. These are companies that
have been in operation for less than three years, including the
operations of any predecessors. Securities of these companies may be
particularly subject to volatility in their prices. They may have a
limited trading market, which may adversely affect the Fund's ability
to dispose of them and can reduce the price the Fund might be able to
obtain for them. Other investors that own a security issued by a small,
unseasoned issuer for which there is limited liquidity might trade the
security when the Fund is attempting to dispose of its holdings of that
security. In that case the Fund might receive a lower price for its
holdings than might otherwise be obtained. The Fund has no limit on the
amount of its net assets that may be invested in those securities.

      o   Debt Securities. While the Fund does not invest for the
purpose of seeking current income, at times certain debt securities
(other than convertible debt securities described above under the
description of equity investments) may be selected for investment by
the Fund for investment or defensive purposes, as described below.
Certain debt securities may be selected for the Fund's portfolio for
defensive purposes (including debt securities that the Manager believes
may offer some opportunities for capital appreciation when stocks are
disfavored). In normal circumstances, up to 35% of the Fund's assets
may be invested in any combination of debt securities of government or
corporate issuers in developing countries.  At times, the Fund may also
invest in equity and debt securities of issuers in developed countries
(including the United States) and cash and money market instruments.
For example, when the stock market is volatile, or when the Manager
believes that growth opportunities in stocks are not attractive,
certain debt securities might provide not only defensive opportunities
but also some opportunities for capital appreciation. These investments
could include corporate bonds and notes of foreign or U.S. companies,
as well as U.S. and foreign government securities. It is not expected
that this will be a significant portfolio strategy of the Fund under
normal market circumstances.

         o  Credit Risk. Debt securities are subject to credit risk.
Credit risk relates to the ability of the issuer of a debt security to
make interest or 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 bond and
of the Fund's shares may be reduced. The Manager may rely 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 may also use 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. The Fund may
invest in higher-yielding lower-grade debt securities (that is "junk
bonds"), which have special risks. Those are securities rated below the
four highest rating categories of Standard & Poor's Rating Service or
Moody's Investors Service, Inc., or equivalent ratings of other rating
agencies or ratings assigned to a security by the Manager.

         o  Special Risks of Lower-Grade Securities. "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
Standard & Poor's or Fitch, Inc., or similar ratings by other rating
organizations, or if they are unrated, are determined by the Manager to
be of comparable quality to debt securities rated below investment
grade. The Fund will not invest in securities rated "C" or "D" by
Moody's, Standard & Poor's or Fitch, Inc. or which are in default.

      Among the special credit risks of lower-grade securities is the
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. In the case of foreign high
yield bonds, these risks are in addition to the special risk of foreign
investing discussed in the Prospectus and in this Statement of
Additional Information. To the extent they can be converted into stock,
convertible securities may be less subject to some of these risks than
non-convertible high yield bonds, since stock may be more liquid and
less affected by some of these risk factors.

      While securities rated "Baa" by Moody's or "BBB" by Standard &
Poor's or Fitch, Inc. are investment grade and are not regarded as junk
bonds, those securities may be subject to special risks, and have some
speculative characteristics.

         o  Interest Rate Risks. In addition to credit risks, debt
securities are subject to changes in value when prevailing interest
rates change. When prevailing interest rates fall, the values of
outstanding debt securities generally rise, and the bonds may sell for
more than their face amount. When prevailing interest rates rise, the
values of outstanding debt securities generally decline, and the bonds
may sell at a discount from their face amount. The magnitude of these
price changes is generally greater for bonds with longer maturities.
Therefore, when the average maturity of the Fund's debt securities is
longer, its share price may fluctuate more when interest rates change.

         o  Privatization Programs. The governments in some developing
countries have been engaged in programs to sell all or part of their
interests in government-owned or controlled enterprises. Privatization
programs may offer opportunities for significant capital appreciation,
and the Manager may invest Fund assets in privatization programs in what
it considers to be appropriate circumstances. In certain developing
countries, the ability of foreign entities such as the Fund to
participate in privatization programs may be limited by local law.
Additionally, the terms on which the Fund might be permitted to
participate may be less advantageous than those afforded local
investors. There can be no assurance that privatization programs will be
successful.

         o  "When-Issued" and Delayed-Delivery Transactions. The Fund
can purchase securities on a "when-issued" basis and may purchase or
sell securities on a "delayed-delivery" or "forward commitment basis.
These terms refer to securities that have been created and for which a
market exists, but which are not available for immediate delivery.
There may be a risk of loss to the Fund if the value of the security
declines prior to the settlement date.

      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 (generally within 45 days of the date the offer is accepted). The
securities are subject to change in value from market fluctuations
during the period until settlement. 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 a loss to the
Fund. During the period between purchase and settlement, no payment is
made by the Fund to the issuer and no interest accrues to the Fund from
the investment.

      The Fund will engage in when-issued transactions to secure what
the Manager considers to be an advantageous price and yield at the time
of entering into the obligation. When the Fund enters into a
when-issued or delayed-delivery transaction, it relies on the other
party to complete the transaction. Its failure to do so may cause the
Fund to lose the opportunity to obtain the security at a price and
yield the Manager considers to be 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 purpose of investment leverage. Although
the Fund will enter into delayed-delivery or when-issued purchase
transactions to acquire securities, it 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 delivery or receive against a forward commitment, it
may incur a gain or loss.

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

      When-issued and delayed-delivery transactions 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
delayed-delivery basis to obtain the benefit of currently higher cash
yields.

         o  Repurchase Agreements. The Fund can acquire securities
subject to repurchase agreements. It may do so:
o     for liquidity purposes to meet anticipated redemptions of Fund
            shares, or pending the investment of the proceeds from
            sales of Fund shares, or
o     pending the settlement of portfolio securities transactions, or
o     for temporary defensive purposes, as described below.

      In a repurchase transaction, the Fund buys 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
Fund's Manager from time to time.

      The majority of these transactions run from day to day, and
delivery pursuant to the resale typically occurs within one to five
days of the purchase. Repurchase agreements having a maturity beyond
seven days are subject to the Fund's limits on holding illiquid
investments. The Fund will not enter into a repurchase agreement that
causes more than 10% of its net assets to be subject to repurchase
agreements having a maturity beyond seven days. There is no limit on
the amount of the Fund's net assets that may be subject to repurchase
agreements having maturities of seven days or less.

      Repurchase agreements, considered "loans" under the Investment
Company Act, are collateralized by the underlying security. The Fund's
repurchase agreements require that at all times while the repurchase
agreement is in effect, the value of the collateral must equal or
exceed the repurchase price to fully collateralize the repayment
obligation. 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. The Manager will monitor the vendor's creditworthiness to confirm
that the vendor is financially sound and will continuously monitor the
collateral's value.

      Pursuant to an Exemptive Order issued by the Securities and
Exchange Commission (the "SEC"), the 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 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 of
the collateral may be subject to legal proceedings.

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

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

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

      Illiquid securities include repurchase agreements maturing in
more than seven days and participation interests that do not have puts
exercisable within seven days.

o   Loans of Portfolio Securities.  The Fund may lend its portfolio
securities pursuant to policies approved by the Fund's Board. It may do
so to try to provide income or to raise cash for liquidity purposes.
These loans are limited to not more than 25% of the value of the Fund's
net assets.

      The Fund has entered into a Securities Lending Agreement (the
"Securities Lending Agreement") with JPMorgan Chase Bank, N.A.
("JPMorgan Chase"). Under the Securities Lending Agreement and
applicable regulatory requirements (which are subject to change), the
collateral for such loans must, on each business day, be at least equal
to the value of the loaned securities and must consist of cash, bank
letters of credit or 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, a bank letter of
credit must obligate the bank to pay to JPMorgan Chase, as agent,
amounts demanded by the Fund if the demand meets the terms of the
letter. Both the issuing bank and the terms of the letter of credit
must be satisfactory to JPMorgan Chase and the Fund. The terms of the
loans must also meet applicable tests under the Internal Revenue Code
and permit the Fund to reacquire loaned securities on five business
days' notice or in time to vote on any material matters. The Securities
Lending Agreement may be terminated by either JPMorgan Chase or the
Fund on 30 days' written notice.

      Pursuant to the Securities Lending Agreement, the Fund will
receive a percentage of all annual net income (i.e., net of rebates to
the borrower and certain other approved expenses) from securities
lending transactions. Such net income includes earnings from the
investment of any cash collateral received from a borrower and loan
fees paid or payable by a borrower in connection with loans secured by
collateral other than cash.

      There are some risks in connection with securities lending,
including possible delays in receiving additional collateral from the
borrower to secure a loan or delays in recovering the loaned securities
if the borrower defaults. JPMorgan Chase has agreed, in general, to
guarantee the obligations of borrowers to return loaned securities to
the Fund and to be responsible for expenses relating to securities
lending. The Fund, however, will be responsible for risks associated
with the investment of cash collateral, including the risk of a default
by the issuer of a security in which cash collateral has been invested.
If that occurs, the Fund may incur additional costs in seeking to
obtain the collateral or may lose the amount of the collateral
investment. The Fund may also lose money if the value of the
investments purchased with cash collateral decreases.

      o   Borrowing and Leverage.  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. Borrowing may entail
"leverage," and may be a speculative investment strategy. Any borrowing
will be made only from banks and, pursuant to the requirements of the
Investment Company Act, will be made only to the extent that the value
of the Fund's assets, less its liabilities other than borrowings, is
equal to at least 300% of all borrowings including the proposed
borrowing. If the value of the Fund's assets, when computed in that
manner, should fail 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 that coverage requirement. To do so, the Fund
may have to sell a portion of its investments at a time when it would
otherwise not want to sell the securities. Interest on money the Fund
borrows is an expense the Fund would not otherwise incur, so that
during periods of substantial borrowings, its expenses may increase
more than the expenses of funds that do not borrow. The use of leverage
also may make the Fund's share prices more sensitive to interest rate
changes.

      o   Derivatives. The Fund can invest in a variety of derivative
investments to seek income for liquidity needs or for hedging purposes.
Some derivative investments the Fund can use are the hedging
instruments described below in this Statement of Additional
Information. However, the Fund does not use, and does not currently
contemplate using, derivatives or hedging instruments to a significant
degree in the coming year.

      Some of the derivative investments the Fund can use include debt
exchangeable for common stock of an issuer or "equity-linked debt
securities" of an issuer. At maturity, the debt security is exchanged
for common stock of the issuer or it is payable in an amount based on
the price of the issuer's common stock at the time of maturity. Both
alternatives present a risk that the amount payable at maturity will be
less than the principal amount of the debt because the price of the
issuer's common stock might not be as high as the Manager expected.

      o   Hedging. Although the Fund does not anticipate the
extensive use of hedging instruments, the Fund can use hedging
instruments. To attempt to protect against declines in the market value
of the Fund's portfolio, to permit the Fund to retain unrealized gains
in the value of portfolio securities which have appreciated, or to
facilitate selling securities for investment reasons, the Fund could:
o     sell futures contracts,
o     buy puts on such futures or on securities, or
o     write covered calls on securities or futures. Covered calls can
         also be used to increase the Fund's income, but the Manager
         does not expect to engage extensively in that practice.

      The Fund can use hedging to establish a position in the
securities market as a temporary substitute for purchasing particular
securities. In that case the Fund would normally seek to purchase the
securities and then terminate that hedging position. The Fund might
also use this type of hedge to attempt to protect against the
possibility that its portfolio securities would not be fully included
in a rise in value of the market. To do so the Fund could:
o     buy futures, or
o     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 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.

      o  Futures. The Fund can buy and sell futures contracts that
relate to (1) broadly-based stock indices (these are referred to as
"stock index futures"), (2) an individual stock ("single stock
futures"), (3) other broadly based securities indices (these are
referred to as "financial futures"), (4) debt securities (these are
referred to as "interest rate futures"), (5) foreign currencies (these
are referred to as "forward contracts") and (6) commodities (these are
referred to as "commodity futures").

      A broadly-based stock index is used as the basis for trading
stock index futures. They may in some cases be based on stocks of
issuers in a particular industry or group of industries. A stock index
assigns relative values to the common stocks included in the index and
its value fluctuates in response to the changes in value of the
underlying stocks. A stock index cannot be purchased or sold directly.
Financial futures are similar contracts based on the future value of
the basket of securities that comprise the index. These contracts
obligate the seller to deliver, and the purchaser to take, cash to
settle the futures transaction. There is no delivery made of the
underlying securities to settle the futures obligation. Either party
may also settle the transaction by entering into an offsetting contract.

      An interest rate future obligates the seller to deliver (and the
purchaser to take) cash or a specified type of debt security to settle
the futures transaction. Either party could also enter into an
offsetting contract to close out the position. Similarly, a single
stock future obligates the seller to deliver (and the purchaser to
take) cash or a specified equity security to settle the futures
transaction. Either party could also enter into an offsetting contract
to close out the position. Single stock futures trade on a very limited
number of exchanges, with contracts typically not fungible among the
exchanges.

      The Fund can invest a portion of its assets in commodity futures
contracts. Commodity futures may be based upon commodities within five
main commodity groups: (1) energy, which includes crude oil, natural
gas, gasoline and heating oil; (2) livestock, which includes cattle and
hogs; (3) agriculture, which includes wheat, corn, soybeans, cotton,
coffee, sugar and cocoa; (4) industrial metals, which includes
aluminum, copper, lead, nickel, tin and zinc; and (5) precious metals,
which includes gold, platinum and silver. The Fund may purchase and
sell commodity futures contracts, options on futures contracts and
options and futures on commodity indices with respect to these five
main commodity groups and the individual commodities within each group,
as well as other types of commodities.

      No money is paid or received by the Fund on the purchase or sale
of a future. Upon entering into a futures transaction, the Fund will be
required to deposit an initial margin payment 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 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 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 any additional
cash must be paid by or released to the Fund. Any loss or gain on the
future is then realized by the Fund for tax purposes. All futures
transactions (except forward contracts) are effected through a
clearinghouse associated with the exchange on which the contracts are
traded.

         o  Put and Call Options. The Fund may buy and sell certain
kinds of put options ("puts") and call options ("calls"). The Fund may
buy and sell exchange-traded and over-the-counter put and call options,
including index options, securities options, currency options,
commodities options, and options on the other types of futures
described above.

         o  Writing Covered Call Options. The Fund can write (that is,
sell) covered calls. If the Fund sells a call option, it must be
covered. That means the Fund must own the security subject to the call
while the call is outstanding, or, for certain types of calls, the call
may be covered by liquid assets identified on the Fund's books to
enable the Fund to satisfy its obligations if the call is exercised. Up
to 25% of the Fund's total assets may be subject to calls the Fund
writes.

      When the Fund writes a call on a security, it receives cash (a
premium). The Fund agrees to sell the underlying security 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 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 a specified multiple that
determines the total value of the call for each point 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 bank, or a securities depository acting for
the custodian bank, 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 option or when the Fund enters into a closing
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 will
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 holding illiquid securities) the
mark-to-market value of any OTC option it holds, unless the option is
subject to a buy-back agreement by the executing broker.

      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 is more or less than the price of
the call the Fund purchases to close out the transaction. The Fund may
realize a profit if the call expires unexercised, because the Fund will
retain the underlying security and the premium it received when it
wrote the call. Any such profits are considered short-term capital
gains for federal income tax purposes, as are the premiums on lapsed
calls. When distributed by the Fund they are taxable as ordinary
income. If the Fund cannot effect a closing purchase transaction due to
the lack of a market, it will have to hold the callable securities
until the call expires or is exercised.

      The Fund may also write calls on a futures contract 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 identifying an equivalent dollar amount of liquid
assets on the Fund's books. The Fund will identify additional liquid
assets on the Fund's books if the value of the identified assets drops
below 100% of the current value of the future. Because of this
identification requirement, in no circumstances would the Fund's
receipt of an exercise notice as to that future require the Fund to
deliver a futures contract. It would simply put the Fund in a short
futures position, which is permitted by the Fund's hedging policies.

         o  Writing Put Options. The Fund can sell put options. A put
option on securities gives the purchaser the right to sell, and the
writer the obligation to buy, the underlying investment at the exercise
price during the option period. The Fund will not write puts if, as a
result, more than 50% of the Fund's net assets would be required to be
identified on the Fund's books to cover such put options.

      If the Fund writes a put, the put must be covered by liquid
assets identified on the Fund's books. The premium the Fund receives
from writing a put represents a profit, as long as the price of the
underlying investment remains equal to or above the exercise price of
the put. However, the Fund also assumes the obligation during the
option period to buy the underlying investment from the buyer of the
put at the exercise price, even if the value of the investment falls
below the exercise price. If a put the Fund has written expires
unexercised, the Fund realizes a gain in the amount of the premium less
the transaction costs incurred. If the put is exercised, the Fund must
fulfill its obligation to purchase the underlying investment at the
exercise price. That price will usually exceed the market value of the
investment at that time. In that case, the Fund may incur a loss if it
sells the underlying investment. That loss will be equal to the sum of
the sale price of the underlying investment and the premium received
minus the sum of the exercise price and any transaction costs the Fund
incurred.

      When writing a put option on a security, to secure its obligation
to pay for the underlying security the Fund will identify liquid assets
with a value equal to or greater than the exercise price of the
underlying securities. The Fund therefore forgoes the opportunity of
investing the identified assets or writing calls against those assets.

      As long as the Fund's obligation as the put writer continues, it
may be assigned an exercise notice by the broker-dealer through which
the put was sold. That notice will require the Fund to take delivery of
the underlying security and pay the exercise price. The Fund has no
control over when it may be required to purchase the underlying
security, since it may be assigned an exercise notice at any time prior
to the termination of its obligation as the writer of the put. That
obligation terminates upon expiration of the put. It may also terminate
if, before it receives an exercise notice, the Fund effects a closing
purchase transaction by purchasing a put of the same series as it sold.
Once the Fund has been assigned an exercise notice, it cannot effect a
closing purchase transaction.

      The Fund may decide to effect a closing purchase transaction to
realize a profit on an outstanding put option it has written or to
prevent the underlying security from being put. Effecting a closing
purchase transaction will also permit the Fund to write another put
option on the security, or to sell the security and use the proceeds
from the sale for other investments. The Fund will realize a profit or
loss from a closing purchase transaction depending on whether the cost
of the transaction is less or more than the premium received from
writing the put option. Any profits from writing puts are considered
short-term capital gains for federal tax purposes, and when distributed
by the Fund, are taxable as ordinary income.

         o  Purchasing Puts and Calls. The Fund can purchase calls to
protect against the possibility that the Fund's portfolio will not
participate in an anticipated rise in the securities market. When the
Fund buys a call (other than in a closing purchase transaction), it
pays a premium. The Fund then 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 it sells the call at a profit or if, during the call period,
the market price of the underlying investment is above the sum of the
call price plus the transaction costs and the premium paid for the call
and the Fund exercises the call. If the Fund does not exercise the call
or sell it (whether or not at a profit), the call will become worthless
at its expiration date. In that case the Fund will have paid the
premium but lost the right to purchase the underlying investment.

      The Fund can buy puts whether or not it holds the underlying
investment in its portfolio. When the Fund purchases a put, it pays a
premium and, except as to puts on indices, has the right to sell the
underlying investment to a seller of a put on a corresponding
investment during the put period at a fixed exercise price. Buying a
put on securities or futures the Fund owns enables the Fund to attempt
to protect itself during the put period against a decline in the value
of the underlying investment below the exercise price by selling the
underlying investment at the exercise price to a seller of a
corresponding put. 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 have paid the premium but lost the
right to sell the underlying investment. However, the Fund may sell the
put prior to its expiration. That sale may or may not be at a profit.

      Buying a put on an investment the Fund does not own (such as an
index or future) permits the Fund to resell the put or to buy the
underlying investment and sell it at the exercise price. The resale
price will vary inversely to the price of the underlying investment. If
the market price of the underlying investment is above the exercise
price and, as a result, the put is not exercised, the put will become
worthless on its expiration date.

      When the Fund purchases a call or put on an index or future, it
pays a premium, but settlement is in cash rather than by delivery of
the underlying investment to the Fund. Gain or loss depends on changes
in the index in question (and thus on price movements in the securities
market generally) rather than on price movements in individual
securities or futures contracts.

      The Fund may buy a call or put only if, after the purchase, the
value of all call and put options held by the Fund will not exceed 5%
of the Fund's total assets.

         o  Buying and Selling Options on Foreign Currencies. The Fund
can buy and sell calls and puts on foreign currencies. They include
puts and calls that trade on a securities or commodities exchange or in
the over-the-counter markets or are quoted by major recognized dealers
in such options. The Fund could use these calls and puts to try to
protect against declines in the dollar value of foreign securities and
increases in the dollar cost of foreign securities the Fund wants to
acquire.

      If the Manager anticipates a rise in the dollar value of a
foreign currency in which securities to be acquired are denominated,
the increased cost of those securities may be partially offset by
purchasing calls or writing puts on that foreign currency. If the
Manager anticipates a decline in the dollar value of a foreign
currency, the decline in the dollar value of portfolio securities
denominated in that currency might be partially offset by writing calls
or purchasing puts on that foreign currency. However, the currency
rates could fluctuate in a direction adverse to the Fund's position.
The Fund will then have incurred option premium payments and
transaction costs without a corresponding benefit.

      A call the Fund writes on a foreign currency is "covered" if the
Fund owns the underlying foreign currency covered by the call or has an
absolute and immediate right to acquire that foreign currency without
additional cash consideration (or it can do so for additional cash
consideration identified on its books) upon conversion or exchange of
other foreign currency held in its portfolio.

      The Fund could write a call on a foreign currency to provide a
hedge against a decline in the U.S. dollar value of a security which the
Fund owns or has the right to acquire and which is denominated in the
currency underlying the option. That decline might be one that occurs
due to an expected adverse change in the exchange rate. This is known as
a "cross-hedging" strategy. In those circumstances, the Fund covers the
option by identifying on its books cash, U.S. government securities or
other liquid securities in an amount equal to the exercise price of the
option.

         o  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 return. 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 could affect its portfolio turnover
rate and brokerage commissions. The exercise of calls written by the
Fund might cause the Fund to sell related portfolio securities, thus
increasing its turnover rate. The exercise by the Fund of puts on
securities will cause the sale of underlying investments, increasing
portfolio turnover. Although the decision whether to exercise a put it
holds is 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. Those
commissions could 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.

      An option position may be closed out only on a market that
provides secondary trading for options of the same series, and there is
no assurance that a liquid secondary market will exist for any
particular option. The Fund might experience losses if it could not
close out a position because of an illiquid market for the future or
option.

      There is a risk in using short hedging by selling futures or
purchasing puts on broadly-based indices or futures to attempt to
protect against declines in the value of the Fund's portfolio
securities. The risk is that the prices of the futures or the
applicable index will correlate imperfectly with the behavior of the
cash prices of the Fund's securities. For example, it is possible that
while the Fund has used hedging instruments in a short hedge, the
market might advance and the value of the 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 the value of
its portfolio securities. However, while this could occur for a very
brief period or to a very small degree, over time the value of a
diversified portfolio of 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 the portfolio securities being hedged and
movements in the price of the hedging instruments, the Fund might use
hedging instruments in a greater dollar amount than the dollar amount
of portfolio securities being hedged. It might do so if the historical
volatility of the prices of the portfolio securities being hedged is
more 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 nature of
those markets. First, all participants in the futures market are
subject to margin deposit and maintenance requirements. Rather than
meeting additional margin deposit requirements, investors may close
futures contracts through offsetting transactions which could distort
the normal relationship between the cash and futures markets. Second,
the liquidity of the futures market depends on participants entering
into offsetting transactions rather than making or taking delivery. To
the extent participants decide to make or take delivery, liquidity in
the futures market could be reduced, thus producing distortion. Third,
from the point of view of speculators, the deposit requirements in the
futures market are less onerous than margin requirements in the
securities markets. Therefore, increased participation by speculators
in the futures market may cause temporary price distortions.

      The Fund can use hedging instruments to establish a position in
the securities markets as a temporary substitute for the purchase of
individual securities (long hedging) by buying futures and/or calls on
such futures, broadly-based indices or on securities. It is possible
that when the Fund does so the market might decline. If the Fund then
concludes not to invest in securities because of concerns that the
market might decline further or for other reasons, the Fund will
realize a loss on the hedging instruments that is not offset by a
reduction in the price of the securities purchased.

         o  Forward Contracts. Forward contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency for
future delivery at a fixed price. The Fund uses them to "lock in" the
U.S. dollar price of a security denominated in a foreign currency that
the Fund has bought or sold, or to protect against possible losses from
changes in the relative values of the U.S. dollar and a foreign
currency. The Fund limits its exposure in foreign currency exchange
contracts in a particular foreign currency to the amount of its assets
denominated in that currency or a closely-correlated currency. The Fund
may also use "cross-hedging" where the Fund hedges against changes in
currencies other than the currency in which a security it holds is
denominated.

      Under a forward contract, one party agrees to purchase, and
another party agrees to sell, a specific currency at a future date.
That date may be any fixed number of days from the date of the contract
agreed upon by the parties. The transaction price is set at the time
the contract is entered into. These contracts are traded in the
inter-bank market conducted directly among currency traders (usually
large commercial banks) and their customers.

      The Fund may use forward contracts to protect against uncertainty
in the level of future exchange rates. The use of forward contracts
does not eliminate the risk of fluctuations in the prices of the
underlying securities the Fund owns or intends to acquire, but it does
fix a rate of exchange in advance. Although forward contracts may
reduce the risk of loss from a decline in the value of the hedged
currency, at the same time they limit any potential gain if the value
of the hedged currency increases.

      When the Fund enters into a contract for the purchase or sale of
a security denominated in a foreign currency, or when it anticipates
receiving dividend payments in a foreign currency, the Fund might
desire to "lock-in" the U.S. dollar price of the security or the U.S.
dollar equivalent of the dividend payments. To do so, the Fund could
enter into a forward contract for the purchase or sale of the amount of
foreign currency involved in the underlying transaction, in a fixed
amount of U.S. dollars per unit of the foreign currency. This is called
a "transaction hedge." The transaction hedge will protect the Fund
against a loss from an adverse change in the currency exchange rates
during the period between the date on which the security is purchased
or sold or on which the payment is declared, and the date on which the
payments are made or received.

      The Fund could also use forward contracts to lock in the U.S.
dollar value of portfolio positions. This is called a "position hedge."
When the Fund believes that foreign currency might suffer a substantial
decline against the U.S. dollar, it could enter into a forward contract
to sell an amount of that foreign currency approximating the value of
some or all of the Fund's portfolio securities denominated in that
foreign currency. When the Fund believes that the U.S. dollar might
suffer a substantial decline against a foreign currency, it could enter
into a forward contract to buy that foreign currency for a fixed dollar
amount. Alternatively, the Fund might enter into a forward contract to
sell a different foreign currency for a fixed U.S. dollar amount if the
Fund believes that the U.S. dollar value of the foreign currency to be
sold pursuant to its forward contract will fall whenever there is a
decline in the U.S. dollar value of the currency in which portfolio
securities of the Fund are denominated. That is referred to as a "cross
hedge."

      The Fund will cover its short position in these cases by
identifying on its books liquid assets having a value equal to the
aggregate amount of the Fund's commitment under forward contracts. The
Fund will not enter into forward contracts or maintain a net exposure
to such contracts if the consummation of the contracts would obligate
the Fund to deliver an amount of foreign currency in excess of the
value of the Fund's portfolio securities or other assets denominated in
that currency or another currency that is the subject of the hedge.

      However, to avoid excess transactions and transaction costs, the
Fund may maintain a net exposure to forward contracts in excess of the
value of the Fund's portfolio securities or other assets denominated in
foreign currencies if the excess amount is "covered" by liquid
securities denominated in any currency. The cover must be at least
equal at all times to the amount of that excess. As one alternative,
the Fund may purchase a call option permitting the Fund to purchase the
amount of foreign currency being hedged by a forward sale contract at a
price no higher than the forward contract price. As another
alternative, the Fund may purchase a put option permitting the Fund to
sell the amount of foreign currency subject to a forward purchase
contract at a price as high or higher than the forward contact price.

      The precise matching of the amounts under forward contracts and
the value of the securities involved generally will not be possible
because the future value of securities denominated in foreign
currencies will change as a consequence of market movements between the
date the forward contract is entered into and the date it is sold. In
some cases the Manager might decide to sell the security and deliver
foreign currency to settle the original purchase obligation. If the
market value of the security is less than the amount of foreign
currency the Fund is obligated to deliver, the Fund might have to
purchase additional foreign currency on the "spot" (that is, cash)
market to settle the security trade. If the market value of the
security instead exceeds the amount of foreign currency the Fund is
obligated to deliver to settle the trade, the Fund might have to sell
on the spot market some of the foreign currency received upon the sale
of the security. There will be additional transaction costs on the spot
market in those cases.

      The projection of short-term currency market movements is
extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain. Forward contracts involve the
risk that anticipated currency movements will not be accurately
predicted, causing the Fund to sustain losses on these contracts and to
pay additional transactions costs. The use of forward contracts in this
manner might reduce the Fund's performance if there are unanticipated
changes in currency prices to a greater degree than if the Fund had not
entered into such contracts.

      At or before the maturity of a forward contract requiring the
Fund to sell a currency, the Fund might sell a portfolio security and
use the sale proceeds to make delivery of the currency. In the
alternative the Fund might retain the security and offset its
contractual obligation to deliver the currency by purchasing a second
contract. Under that contract the Fund will obtain, on the same
maturity date, the same amount of the currency that it is obligated to
deliver. Similarly, the Fund might close out a forward contract
requiring it to purchase a specified currency by entering into a second
contract entitling it to sell the same amount of the same currency on
the maturity date of the first contract. The Fund would realize a gain
or loss as a result of entering into such an offsetting forward
contract under either circumstance. The gain or loss will depend on the
extent to which the exchange rate or rates between the currencies
involved moved between the execution dates of the first contract and
offsetting contract.

      The costs to the Fund of engaging in forward contracts varies
with factors such as the currencies involved, the length of the
contract period and the market conditions then prevailing. Because
forward contracts are usually entered into on a principal basis, no
brokerage fees or commissions are involved. Because these contracts are
not traded on an exchange, the Fund must evaluate the credit and
performance risk of the counterparty under each forward contract.

      Although the Fund values its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign
currencies into U.S. dollars on a daily basis. The Fund may convert
foreign currency from time to time, and will incur costs in doing so.
Foreign exchange dealers do not charge a fee for conversion, but they
do seek to realize a profit based on the difference between the prices
at which they buy and sell various currencies. Thus, a dealer might
offer to sell a foreign currency to the Fund at one rate, while
offering a lesser rate of exchange if the Fund desires to resell that
currency to the dealer.

o   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 investment adviser as the Fund (or an investment
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 SEC regarding
applicable provisions of the Investment Company Act, when the Fund
purchases a 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.

         o Tax Aspects of Certain Hedging Instruments. Certain foreign
currency exchange contracts in which the Fund may invest are treated as
"Section 1256 contracts" under the Internal Revenue Code. In general,
gains or losses relating to Section 1256 contracts are characterized as
60% long-term and 40% short-term capital gains or losses under the
Code. However, foreign currency gains or losses arising from Section
1256 contracts that are forward contracts generally are treated as
ordinary income or loss. In addition, Section 1256 contracts held by
the Fund at the end of each taxable year are "marked-to-market," and
unrealized gains or losses are treated as though they were realized.
These contracts also may be marked-to-market for purposes of
determining the excise tax applicable to investment company
distributions and for other purposes under rules prescribed pursuant to
the Internal Revenue Code. An election can be made by the Fund to
exempt those transactions from this marked-to-market treatment.

      Certain forward contracts the Fund enters into may result in
"straddles" for federal income tax purposes. The straddle rules may
affect the character and timing of gains (or losses) recognized by the
Fund on straddle positions. Generally, a loss sustained on the
disposition of a position making up a straddle is allowed only to the
extent that the loss exceeds any unrecognized gain in the offsetting
positions making up the straddle. Disallowed loss is generally allowed
at the point where there is no unrecognized gain in the offsetting
positions making up the straddle, or the offsetting position is
disposed of.

      Under the Internal Revenue Code, the following gains or losses
are treated as ordinary income or loss:
      1.  gains or losses attributable to fluctuations in exchange
          rates that occur between the time the Fund accrues interest
          or other receivables or accrues expenses or other liabilities
          denominated in a foreign currency and the time the Fund
          actually collects such receivables or pays such liabilities,
          and
      2.  gains or losses attributable to fluctuations in the value of
          a foreign currency between the date of acquisition of a debt
          security denominated in a foreign currency or foreign
          currency forward contracts and the date of disposition.
      Currency gains and losses are offset against market gains and
losses on each trade before determining a net "Section 988" gain or
loss under the Internal Revenue Code for that trade, which may increase
or decrease the amount of the Fund's investment income available for
distribution to its shareholders.

Investment in Other Investment Companies. The Fund can also invest in
the securities of other investment companies, which can include open-end
funds, closed-end funds and unit investment trusts, subject to the
limits set forth in the Investment Company Act that apply to those types
of investments, and the following additional limitation: 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. For example, the
Fund can invest in Exchange-Traded Funds, which are typically open-end
funds or unit investment trusts, listed on a stock exchange. The Fund
might do so as a way of gaining exposure to the segments of the equity
or fixed-income markets represented by the Exchange-Traded Funds'
portfolio, at times when the Fund may not be able to buy those portfolio
securities directly.

      Investing in another investment company may involve the payment
of substantial premiums above the value of such investment company's
portfolio securities and is subject to limitations under the Investment
Company Act. The Fund does not intend to invest in other investment
companies unless the Manager believes that the potential benefits of
the investment justify the payment of any premiums or sales charges. As
a shareholder of an investment company, the Fund would be subject to
its ratable share of that investment company's expenses, including its
advisory and administration expenses. At the same time, the Fund would
bear its own management fees and other expenses. The Fund does not
anticipate investing a substantial amount of its net assets in shares
of other investment companies.

      o   Temporary Defensive and Interim Investments. When market,
economic or political conditions are unstable, or the Manager believes
it is otherwise appropriate to reduce holdings in stocks, the Fund can
invest in a variety of debt securities for defensive purposes. The Fund
can also purchase these securities for liquidity purposes to meet cash
needs due to the redemption of Fund shares, or to hold while waiting to
reinvest cash received from the sale of other portfolio securities. The
Fund can hold cash or buy:
o     high-quality (rated in the top rating categories of
         nationally-recognized rating organizations or deemed by the
         Manager to be of comparable quality), short-term money market
         instruments, including those issued by the U. S. Treasury or
         other government agencies,
o     commercial paper (short-term, unsecured, promissory notes of
         domestic or foreign companies) rated in the top two rating
         categories of a nationally recognizes rating organization,
o     debt obligations of corporate or foreign government issuers,
         rated investment grade (rated at least Baa by Moody's
         Investors Service, Inc. or at least BBB by Standard & Poor's
         Corporation, or a comparable rating by another rating
         organization), or unrated securities judge by the Manager to
         have a comparable quality to rated securities in those
         categories,
o     certificates of deposit and bankers' acceptances of domestic and
         foreign banks and savings and loan associations, and
o     repurchase agreements.

      Short-term debt securities would normally be selected for
defensive or cash management purposes because they can normally be
disposed of quickly, are not generally subject to significant
fluctuations in principal value and their value will be less subject to
interest rate risk than longer-term debt securities.

Other Investment Restrictions

      o   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, a "majority" vote is defined
as the vote of the holders of the lesser of:
o     67% or more of the shares present or represented by proxy at a
         shareholder meeting, if the holders of more than 50% of the
         outstanding shares are present or represented by proxy, or
o     more than 50% of the outstanding shares.

      The Fund's investment objective is a fundamental policy. Other
policies described in the Prospectus or this SAI are "fundamental" only
if they are identified as such. The Fund's Board of Trustees can change
non-fundamental policies without shareholder approval. However,
significant changes to investment policies will be described in
supplements or updates to the Prospectus or this SAI, as appropriate.
The Fund's principal investment policies are described in the
Prospectus.

      o   What Are The Fund's Additional Fundamental Policies? The following
investment restrictions are fundamental policies of the Fund.
o     The Fund cannot buy securities or other instruments issued or
           guaranteed by any one issuer if more than 5% of its total
           assets would be invested in securities or other
           instruments of that issuer or if it would then own more
           than 10% of 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.
o     The Fund cannot invest 25% or more of its total assets in any one
           industry.  That limit does not apply to securities issued
           or guaranteed by the U.S. government or its agencies and
           instrumentalities or securities issued by investment
           companies.
o     The Fund cannot make loans, except to the extent permitted under
           the Investment Company Act, the rules or regulations
           thereunder or any exemption therefrom that is applicable
           to the Fund, as such statute, rules or regulations may be
           amended or interpreted from time to time.
o     The Fund cannot invest in real estate, physical commodities or
           commodity contracts, except to the extent permitted under
           the Investment Company Act, the rules or regulations
           thereunder or any exemption therefrom, as such statute,
           rules or regulations may be amended or interpreted from
           time to time.
o     The Fund cannot 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.
o     The Fund may not borrow money, except to the extent permitted
           under the Investment Company Act, the rules or
           regulations thereunder or any exemption therefrom that is
           applicable to the Fund, as such statute, rules or
           regulations may be amended or interpreted from time to
           time.
o     The Fund cannot 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.

      In addition, the Fund may invest in funds selected by a Trustee
of the Fund under its Deferred Compensation Plan for Disinterested
Trustees.

      o   Does the Fund Have Additional Restrictions That Are Not
Fundamental? The Fund has a number of other investment restrictions
that are not fundamental policies, which means that they can be changed
by the Board of Trustees without shareholder approval.
o     The Fund cannot invest in companies for the purpose of acquiring
         control or management of them.
o     The Fund cannot purchase securities on margin. However, the Fund
         may make margin deposits in connection with any of the
         hedging instruments permitted by any of its other
         investment policies.
o     The Fund cannot invest in or hold securities of any issuer if
         officers and Trustees of the Fund or the Manager
         individually beneficially own more than 1/2 of 1% of the
         securities of that issuer and together own more than 5% of
         the securities of that issuer.
o     The Fund cannot mortgage or pledge any of its assets. However,
         this does not prohibit the escrow arrangements contemplated
         by the writing of covered call options or other collateral
         or margin arrangements in connection with any of the
         hedging instruments permitted by any of its other
         investment policies.
o     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.

      Another non-fundamental policy adopted by the Fund permits it to
invest all of its assets in the securities of a single open-end
management investment company for which the Manager, one of its
subsidiaries or a successor is the investment Advisor or sub-Advisor.
That fund must have substantially the same fundamental investment
objective, policies and limitations as the Fund. This policy 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 SAI
would be revised accordingly.

      Unless the Prospectus or this SAI 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). 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.

      For purposes of the Fund's policy not to concentrate its
investments as described above, the Fund has adopted the industry
classifications set forth in Appendix A to this SAI. This is not a
fundamental policy.

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, OppenheimerFunds Distributor, Inc., (the "Distributor") and
Transfer Agent. These policies are designed to assure that non-public
information about portfolio securities is distributed only for a
legitimate business purpose, and is done in a manner that (a) conforms
to applicable laws and regulations and (b) is designed to prevent that
information from being used in a way that could negatively affect the
Fund's investment program or enable third parties to use that
information in a manner that is harmful to the Fund.

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

Until publicly disclosed, the Fund's portfolio holdings are
proprietary, confidential business information. While recognizing the
importance of providing Fund shareholders with information about their
Fund's investments and providing portfolio information to a variety of
third parties to assist with the management, distribution and
administrative process, the need for transparency must be balanced
against the risk that third parties who gain access to the Fund's
portfolio holdings information could attempt to use that information to
trade ahead of or against the Fund, which could negatively affect the
prices the Fund is able to obtain in portfolio transactions or the
availability of the securities that portfolio managers are trading on
the Fund's behalf.

The Manager and its subsidiaries and affiliates, employees, officers,
and directors, shall neither solicit nor accept any compensation or
other consideration (including any agreement to maintain assets in the
Fund or in other investment companies or accounts managed by the
Manager or any affiliated person of the Manager) in connection with the
disclosure of the Fund's non-public portfolio holdings. The receipt of
investment advisory fees or other fees and compensation paid to the
Manager and its subsidiaries pursuant to agreements approved by the
Fund's Board shall not be deemed to be "compensation" or
"consideration" for these purposes. It is a violation of the Code of
Ethics for any covered person to release holdings in contravention of
portfolio holdings disclosure policies and procedures adopted by the
Fund.

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

Except under special limited circumstances discussed below, month-end
lists of the Fund's complete portfolio holdings may be disclosed no
sooner than 30-days after the relevant month-end, subject to the
procedures below. If the Fund's complete portfolio holdings have not
been disclosed publicly, they may be disclosed pursuant to special
requests for legitimate business reasons, provided that:

o     The third-party recipient must first submit a request for release
         of Fund portfolio holdings, explaining the business reason
         for the request;
o     Senior officers (a Senior Vice President or above) in the
         Manager's Portfolio and Legal departments must approve the
         completed request for release of Fund portfolio holdings;
         and
o     The third-party recipient must sign the Manager's portfolio
         holdings non-disclosure agreement before receiving the
         data, agreeing to keep information that is not publicly
         available regarding the Fund's holdings confidential and
         agreeing not to trade directly or indirectly based on the
         information.

The Fund's complete portfolio holdings positions may be released to the
following categories of entities or individuals on an ongoing basis,
provided that such entity or individual either (1) has signed an
agreement to keep such information confidential and not trade on the
basis of such information or (2) is subject to fiduciary obligations,
as a member of the Fund's Board, or as an employee, officer and/or
director of the Manager, Distributor, or Transfer Agent, or their
respective legal counsel, not to disclose such information except in
conformity with these policies and procedures and not to trade for
his/her personal account on the basis of such information:

o     Employees of the Fund's Manager, Distributor and Transfer Agent
            who need to have access to such information (as determined
            by senior officers of such entity),
o     The Fund's certified public accountants and independent
            registered public accounting firm,
o     Members of the Fund's Board and the Board's legal counsel,
o     The Fund's custodian bank,
o     A proxy voting service designated by the Fund and its Board,
o     Rating/ranking organizations (such as Lipper and Morningstar),
o     Portfolio pricing services retained by the Manager to provide
            portfolio security prices, and
o     Dealers, to obtain bids (price quotations if securities are not
            priced by the Fund's regular pricing services).

Portfolio holdings information of the Fund may be provided, under
limited circumstances, to brokers and/or dealers with whom the Fund
trades and/or entities that provide investment coverage and/or
analytical information regarding the Fund's portfolio, provided that
there is a legitimate investment reason for providing the information
to the broker, dealer or other entity. Month-end portfolio holdings
information may, under this procedure, be provided to vendors providing
research information and/or analytics to the fund, with at least a
15-day delay after the month end, but in certain cases may be provided
to a broker or analytical vendor with a 1-2 day lag to facilitate the
provision of requested investment information to the manager to
facilitate a particular trade or the portfolio manager's investment
process for the Fund. Any third party receiving such information must
first sign the Manager's portfolio holdings non-disclosure agreement as
a pre-condition to receiving this information.

Portfolio holdings information (which may include information on
individual securities positions or multiple securities) may be provided
to the entities listed below (1) by portfolio traders employed by the
Manager in connection with portfolio trading, and (2) by the members of
the Manager's Security Valuation Group and Accounting Departments in
connection with portfolio pricing or other portfolio evaluation
purposes:

o     Brokers and dealers in connection with portfolio transactions
            (purchases and sales)
o     Brokers and dealers to obtain bids or bid and asked prices (if
            securities held by the Fund are not priced by the fund's
            regular pricing services)
o     Dealers to obtain price quotations where the fund is not
            identified as the owner

Portfolio holdings information (which may include information on the
Fund's entire portfolio or individual securities therein) may be
provided by senior officers of the Manager or attorneys on the legal
staff of the Manager, Distributor, or Transfer Agent, in the following
circumstances:
o     Response to legal process in litigation matters, such as
            responses to subpoenas or in class action matters where the
            Fund may be part of the plaintiff class (and seeks recovery
            for losses on a security) or a defendant,
o     Response to regulatory requests for information (the SEC, NASD,
            state securities regulators, and/or foreign securities
            authorities, including without limitation requests for
            information in inspections or for position reporting
            purposes),
o     To potential sub-advisers of portfolios (pursuant to
            confidentiality agreements),
o     To consultants for retirement plans for plan sponsors/discussions
            at due diligence meetings (pursuant to confidentiality
            agreements),
o     Investment bankers in connection with merger discussions
            (pursuant to confidentiality agreements).

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

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

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

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


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


How the Fund is Managed

Organization and History. The Fund is an open-end, diversified
management investment company with an unlimited number of authorized
shares of beneficial interest.  The Fund was organized as a
Massachusetts business trust in May 1996.

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

      The Fund currently has five classes of shares: Class A, Class B,
Class C, Class N and Class Y. All classes invest in the same investment
portfolio. Only retirement plans may purchase Class N shares. Only
certain institutional investors may purchase Class Y shares. Each class
of shares:

o     has its own dividends and distributions,
o     pays certain expenses which may be different for the different
         classes,
o     will generally have a different net asset value,
o     will generally have separate voting rights on matters in which
         interests of one class are different from interests of another
         class, and
o     votes as a class on matters that affect that class alone.

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

o   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.

o   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. Each
committee is comprised solely of 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 August 31, 2006.
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 or non-audit services by the Fund's independent
Auditors, including tax services, that are not prohibited by the
Sarbanes-Oxley Act, to the Fund, the Manager and certain affiliates of
the Manager.

      The 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 August 31, 2006 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 8 meetings during the Fund's fiscal
year ended August 31, 2006. 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 the selection
and nomination of Trustees, including 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 Governance Committee may, upon
Board approval, retain an executive search firm to assist in screening
potential candidates. Upon Board approval, the Governance 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, New York 10281-1008, to the attention of the Board of Trustees of
Oppenheimer Developing Markets 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 Governance Committee has not established specific
qualifications that it believes must be met by a trustee nominee. In
evaluating trustee nominees, the Governance Committee considers, among
other things, an individual's background, skills, and experience;
whether the individual is an "interested person" as defined in the
Investment Company Act; and whether the individual would be deemed an
"audit committee financial expert" within the meaning of applicable SEC
rules. The Governance Committee also considers whether the individual's
background, skills, and experience will complement the background,
skills, and experience of other Trustees and will contribute to the
Board. There are no differences in the manner in which the Governance
Committee evaluates nominees for trustees based on whether the nominee
is recommended by a shareholder. Candidates are expected to provide a
mix of attributes, experience, perspective and skills necessary to
effectively advance the interests of shareholders.

      The members of the Proxy Committee are Russell S. Reynolds, Jr.
(Chairman), Matthew P. Fink and Mary F. Miller. The Proxy Committee
held 2 meetings during the Fund's fiscal year ended August 31, 2006.
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 Limited Term California
Oppenheimer AMT-Free Municipals         Municipal Fund
Oppenheimer AMT-Free New York
Municipals                              Oppenheimer Money Market Fund, Inc.
Oppenheimer Balanced Fund               Oppenheimer Multi-State Municipal Trust
Oppenheimer California Municipal Fund   Oppenheimer Portfolio Series
Oppenheimer Capital Appreciation Fund   Oppenheimer Real Estate Fund
                                        Oppenheimer Rochester Arizona Municipal
Oppenheimer Developing Markets Fund     Fund
                                        Oppenheimer Rochester Maryland Municipal
Oppenheimer Discovery Fund              Fund
                                        Oppenheimer Rochester Massachusetts
Oppenheimer Dividend Growth Fund        Municipal Fund
                                        Oppenheimer Rochester Michigan Municipal
Oppenheimer Emerging Growth Fund        Fund
                                        Oppenheimer Rochester Minnesota Municipal
Oppenheimer Emerging Technologies Fund  Fund
                                        Oppenheimer Rochester North Carolina
Oppenheimer Enterprise Fund             Municipal Fund
Oppenheimer Global Fund                 Oppenheimer Rochester Ohio Municipal Fund
                                        Oppenheimer Rochester Virginia Municipal
Oppenheimer Global Opportunities Fund   Fund
Oppenheimer Gold & Special Minerals
Fund                                    Oppenheimer Select Value Fund
Oppenheimer Growth Fund                 Oppenheimer Series Fund, Inc.
Oppenheimer International Diversified
Fund                                    OFI Tremont Core Strategies Hedge Fund
Oppenheimer International Growth Fund   OFI Tremont Market Neutral Hedge Fund
Oppenheimer International Small
Company Fund                            Oppenheimer Tremont Market Neutral Fund LLC
Oppenheimer International Value Fund    Oppenheimer Tremont Opportunity Fund LLC
                                        Oppenheimer U.S. Government Trust

      In addition to being a Board  member of each of the Board I Funds,
Messrs.  Galli  and  Wruble  are  directors  or  trustees  of ten  other
portfolios in the OppenheimerFunds complex..

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

      Messrs. Madden, Gillespie, Murphy, Petersen, Szilagyi, Vandehey,
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 3, 2006 the Trustees and officers of the Fund, as
a group, owned of record or beneficially less than 1% of any class of
shares of the Fund. The foregoing statement does not reflect ownership
of shares held of record by an employee benefit plan for employees of
the Manager, other than the shares beneficially owned under that plan
by the officers of the Fund listed above. In addition, none of the
Independent Trustees (nor any of their immediate family members) owns
securities of either the Manager or the Distributor of the Board I
Funds or of any entity directly or indirectly controlling, controlled
by or under common control with the Manager or the Distributor.

      Biographical Information. The Trustees and officers, their
positions with the Fund, length of service in such position(s) and
principal occupations and business affiliations during at least the
past five years are listed in the charts below. The charts also include
information about each Trustee's beneficial share ownership in the Fund
and in all of the registered investment companies that the Trustee
oversees in the Oppenheimer family of funds ("Supervised Funds"). The
address of each Trustee in the chart below is 6803 S. Tucson Way,
Centennial, Colorado 80112-3924. Each Trustee serves for an indefinite
term, or until his or her resignation, retirement, death or removal.

-------------------------------------------------------------------------------------------
                                   Independent Trustees
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
                                                                              Aggregate
                                                                  Dollar     Dollar Range
                                                                 Range of     Of Shares
Name, Position(s)   Principal Occupation(s) During the Past 5     Shares     Beneficially
Held with the       Years; Other Trusteeships/Directorships     Beneficially   Owned in
Fund, Length of     Held; Number of Portfolios in the Fund       Owned in     Supervised
Service, Age        Complex Currently Overseen                   the Fund       Funds
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
                                                                 As of December 31, 2005
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Clayton K.          Director of American Commercial Lines       None        Over $100,000
Yeutter, Chairman   (barge company) (since January 2005);
of the Board of     Attorney at Hogan & Hartson (law firm)
2003                (since June 1993); Director of Covanta
Trustee since 1996  Holding Corp. (waste-to-energy company)
Age: 75             (since 2002); Director of Weyerhaeuser
                    Corp. (1999-April 2004); Director of
                    Caterpillar, Inc. (1993-December 2002);
                    Director of ConAgra Foods (1993-2001);
                    Director of Texas Instruments (1993-2001);
                    Director of FMC Corporation (1993-2001).
                    Oversees 44 portfolios in the
                    OppenheimerFunds complex.
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Matthew P. Fink,    Trustee of the Committee for Economic       None        Over $100,000
Trustee since 2005  Development (policy research foundation)
Age: 65             (since 2005); Director of ICI Education
                    Foundation (education foundation) (October
                    1991-August 2006); President of the
                    Investment Company Institute (trade
                    association) (October 1991-June 2004);
                    Director of ICI Mutual Insurance Company
                    (insurance company) (October 1991-June
                    2004). Oversees 44 portfolios in the
                    OppenheimerFunds complex.
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Robert G. Galli,    A director or trustee of other Oppenheimer  Over        Over $100,000
Trustee since 1996  funds. Oversees 54 portfolios in the        $100,000
Age: 73             OppenheimerFunds complex.

-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Phillip A.          Distinguished Presidential Fellow for       Over        Over $100,000
Griffiths,          International Affairs (since 2002) and      $100,000
Trustee since 1999  Member (since 1979) of the National
Age: 68             Academy of Sciences; Council on Foreign
                    Relations (since 2002); Director of GSI
                    Lumonics Inc. (precision medical equipment
                    supplier) (since 2001); Senior Advisor of
                    The Andrew W. Mellon Foundation (since
                    2001); Chair of Science Initiative Group
                    (since 1999); Member of the American
                    Philosophical Society (since 1996);
                    Trustee of Woodward Academy (since 1983);
                    Foreign Associate of Third World Academy
                    of Sciences; Director of the Institute for
                    Advanced Study (1991-2004); Director of
                    Bankers Trust New York Corporation
                    (1994-1999); Provost at Duke University
                    (1983-1991). Oversees 44 portfolios in the
                    OppenheimerFunds complex.
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Mary F. Miller,     Trustee of the American Symphony Orchestra  $50,001-$100Over $100,000
Trustee since 2004  (not-for-profit) (since October 1998); and
Age: 63             Senior Vice President and General Auditor
                    of American Express Company (financial
                    services company) (July 1998-February
                    2003). Oversees 44 portfolios in the
                    OppenheimerFunds complex.
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Joel W. Motley,     Director of Columbia Equity Financial       $50,001-$100Over $100,000
Trustee since 2002  Corp. (privately-held financial adviser)
Age: 54             (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 and Board of Human Rights Watch
                    and the Investment Committee of Historic
                    Hudson Valley. Oversees 44 portfolios in
                    the OppenheimerFunds complex.
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Kenneth A.          Director of Dominion Resources, Inc.        None        Over $100,000
Randall,            (electric utility holding company)
Trustee since 1996  (February 1972-October 2005); Former
Age: 79             Director of Prime Retail, Inc. (real
                    estate investment trust), Dominion Energy
                    Inc. (electric power and oil & gas
                    producer), Lumberman's 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 44 portfolios
                    in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Russell S.          Chairman of The Directorship Search Group,  None        $10,001-$50,000
Reynolds, Jr.,      Inc. (corporate governance consulting and
Trustee since  1996 executive recruiting) (since 1993); Life
Age: 74             Trustee of International House (non-profit
                    educational organization); Founder,
                    Chairman and Chief Executive Officer of
                    Russell Reynolds Associates, Inc.
                    (1969-1993); Banker at J.P. Morgan & Co.
                    (1958-1966); 1st Lt. Strategic Air
                    Command, U.S. Air Force (1954-1958).
                    Oversees 44 portfolios in the
                    OppenheimerFunds complex.
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Joseph M. Wikler,   Director of the  following  medical  device None        Over $100,000
Trustee since 2005  companies:   Medintec   (since   1992)  and
Age: 65             Cathco  (since  1996);  Director  of  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    44     portfolios     in    the
                    OppenheimerFunds complex.
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Peter I. Wold,      President  of  Wold  Oil  Properties,  Inc. None        Over $100,000
Trustee since 2005  (oil  and gas  exploration  and  production
Age: 58             company)  (since  1994);   Vice  President,
                    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 44 portfolios in the
                    OppenheimerFunds complex.
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Brian F. Wruble,    General Partner of Odyssey  Partners,  L.P. $10,001-$50,Over $100,000
Trustee since 2005  (hedge   fund)  (since   September   1995);
Age: 63             Director  of  Special  Value  Opportunities
                    Fund, LLC (registered  investment  company)
                    (since  September  2004);  Member of Zurich
                    Financial    Investment    Advisory   Board
                    (insurance)  (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 54
                    portfolios in the OppenheimerFunds complex.
-------------------------------------------------------------------------------------------

      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. The address
of Mr. Murphy is Two World Financial Center, 225 Liberty Street, 11th
Floor, New York, New York 10281-1008. Mr. Murphy serves as a Trustee
for an indefinite term, or until his resignation, retirement, death or
removal and as an officer for an indefinite term, or until his
resignation, retirement, death or removal.

-------------------------------------------------------------------------------------------
                              Interested Trustee and Officer
-------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
                                                                             Aggregate
                                                                  Dollar    Dollar Range
                                                                 Range of     Of Shares
Name, Position(s)  Principal Occupation(s) During the Past 5      Shares    Beneficially
Held with Fund,    Years; Other Trusteeships/Directorships      Beneficially  Owned in
Length of          Held; Number of Portfolios in the Fund        Owned in    Supervised
Service, Age       Complex Currently Overseen                    the Fund       Funds
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
                                                                 As of December 31, 2005
------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
John V. Murphy,    Chairman, Chief Executive Officer and        None        Over $100,000
Trustee 2001-2004  Director (since June 2001) and President
and since 2005     (since September 2000) of the Manager;
and President and  President and a director or trustee of
Principal          other Oppenheimer funds; President and
Executive Officer  Director of Oppenheimer Acquisition Corp.
since 2001         ("OAC") (the Manager's parent holding
Age: 57            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 91 portfolios in
                   the OppenheimerFunds complex.
-------------------------------------------------------------------------------------------

      The addresses of the officers in the chart below are as follows:
for Messrs. Madden, Gillespie and Zack and Ms. Bloomberg, Two World
Financial Center, 225 Liberty Street, New York, New York 10281-1008,
for Messrs. Petersen, Szilagyi, Vandehey 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) Held  Principal Occupation(s) During Past 5 Years
with Fund, Length of
Service, Age
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Mark Madden,            Vice President of the Manager (since August 2004); Mr.
Vice President and      Madden held the following positions in Global Asset
Portfolio Manager       Management at Pioneer Investment Management, Inc.: Managing
since 2004              Director, Global Emerging Markets Team (November 2000-July
Age:  48                2004), Senior Vice President and Portfolio Manager,
                        International Equities (December 1998-October 2000) and Vice
                        President and Portfolio Manager, International Equities
                        (February 1993-November 1998). An officer of 1 portfolio 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: 56                 June 1983). Former Vice President and Director of Internal
                        Audit of the Manager (1997-February 2004). An officer of 91
                        portfolios in the OppenheimerFunds complex.
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Brian W. Wixted,        Senior Vice President and Treasurer of the Manager (since
Treasurer and           March 1999); Treasurer of the following: HarbourView Asset
Principal Financial &  Management Corporation, Shareholder Financial Services,
Accounting Officer      Inc., Shareholder Services, Inc., Oppenheimer Real Asset
since 1999              Management Corporation, and Oppenheimer Partnership
Age: 47                 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 91
                        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 91 portfolios in
Age: 36                 the OppenheimerFunds complex.

--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Brian C. Szilagyi,      Assistant Vice President of the Manager (since July 2004);
Assistant Treasurer     Director of Financial Reporting and Compliance of First Data
since 2005              Corporation (April 2003-July 2004); Manager of Compliance of
Age: 36                 Berger Financial Group LLC (May 2001-March 2003); Director
                        of Mutual Fund Operations at American Data Services, Inc.
                        (September 2000-May 2001). An officer of 91 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: 58                 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 91 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: 41                 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 91
                        portfolios in the OppenheimerFunds complex.
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Lisa I. Bloomberg,      Vice President and Associate Counsel of the Manager (since
Assistant Secretary     May 2004); First Vice President (April 2001-April 2004),
since 2004              Associate General Counsel (December 2000-April 2004),
Age: 38                 Corporate Vice President (May 1999-April 2001) and Assistant
                        General Counsel (May 1999-December 2000) of UBS Financial
                        Services Inc. (formerly, PaineWebber Incorporated). An
                        officer of 91 portfolios in the OppenheimerFunds complex.
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Phillip S. Gillespie,   Senior Vice President and Deputy General Counsel of the
Assistant Secretary     Manager (since September 2004); Mr. Gillespie held the
since 2004              following positions at Merrill Lynch Investment Management:
Age: 42                 First Vice President (2001-September 2004); Director
                        (2000-September 2004) and Vice President (1998-2000). An
                        officer of 91 portfolios in the OppenheimerFunds complex.
--------------------------------------------------------------------------------------

      Remuneration of the Officers and Trustees. The officers and the
interested Trustee of the Fund, who are affiliated with the Manager,
receive no salary or fee from the Fund. The Independent Trustees'
compensation from the Fund, shown below, is for serving as a Trustee
and member of a committee (if applicable), with respect to the Fund's
fiscal year ended August 31, 2006. The total compensation from the Fund
and fund complex represents compensation, including accrued retirement
benefits, for serving as a Trustee and member of a committee (if
applicable) of the Boards of the Fund and other funds in the
OppenheimerFunds complex during the calendar year ended December 31,
2005.


--------------------------------------------------------------------------------------
                                                                         Total
                        Aggregate     Retirement      Estimated        Benefits
Name and Other Fund   Compensation    Accrued as        Annual        Compensation
Position(s) (as          From the     Part of Fund   Benefits Upon    From the Fund
applicable)(20)           Fund(1)       Expenses     Retirement(2)  and Fund Complex
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
                         Fiscal year ended August                      Year ended
                                 31, 2006                           December 31, 2005
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Clayton K. Yeutter       19,370(3)       22,215        $103,146         $173,700
Chairman of the Board
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Matthew P. Fink           12,269         16,808          9,646           $61,936
Proxy Committee
Member and Regulatory
& Oversight Committee
Member
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Robert G. Galli           14,420         71,742        57,285(4)       $264,812(5)
Regulatory &
Oversight Committee
Chairman
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Phillip A. Griffiths     16,812(6)       39,573         42,876          $150,760
Governance Committee
Chairman and
Regulatory &
Oversight Committee
Member
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Mary F. Miller
Audit Committee
Member and Proxy          11,909         21,802         11,216          $103,254
Committee Member
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Joel W. Motley           16,812(7)       16,635         27,099          $150,760
Audit Committee
Chairman and
Regulatory &
Oversight Committee
Member
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Kenneth A. Randall        14,952        None(8)         91,953          $134,080
Audit Committee
Member and Governance
Committee Member
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Russell S. Reynolds,      12,280         38,953         72,817          $108,593
Jr.
Proxy Committee
Chairman and
Governance Committee
Member
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Joseph M. Wikler(9)     10,987(10)       64,819         25,656        $60,386(1)(1)
Audit Committee Member
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Peter I. Wold(9)
Governance Committee      10,987         38,678         26,121        $60,386(1)(2)
Member
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
Brian F. Wruble(13)       10,857         13,191       49,899(14)     $159,354(1)(5)
Regulatory &
Oversight Committee
Member
--------------------------------------------------------------------------------------
1.    "Aggregate Compensation From the Fund" includes fees and deferred
   compensation, if any.
2.    "Estimated Annual Benefits Upon Retirement" is based on a
   straight life payment plan election with the assumption that a
   Trustee will retire at the age of 75 and is eligible (after 7 years
   of service) to receive retirement plan benefits with respect to
   certain Board I Funds as described below under "Retirement Plan for
   Trustees."
3.    Includes $4,842 deferred by Mr. Yeutter under the "Deferred
   Compensation Plan" described below.
4.    Includes $49,811 estimated benefits to be paid to Mr. Galli for
   serving as a director or trustee of 10 other Oppenheimer funds that
   are not Board I Funds.
5.    Includes $135,500 paid to Mr. Galli for serving as a director or
   trustee of 10 other Oppenheimer funds (at December 31, 2005) that
   are not Board I Funds.
6.    Includes $16,812 deferred by Mr. Griffiths under the "Deferred
   Compensation Plan" described below.
7.    Includes $6,725 deferred by Mr. Motley under the "Deferred
   Compensation Plan" described below.
8.    Due to actuarial considerations, no additional retirement
   benefits were accrued with respect to Mr. Randall.
9.    Mr. Wikler and Mr. Wold were elected as Board members of 23 of
   the Board I Funds, including the Fund, as of August 17, 2005. They
   had served as Board members of 10 other Board I Funds prior to that
   date.
10.   Includes $5,389 deferred by Mr. Wikler under the "Deferred
   Compensation Plan" described below.
11.   Includes $6,686 paid to Mr. Wikler for serving as a director or
   trustee of one other Oppenheimer fund (at December 31, 2005) that
   was not a Board I Fund.
12.   Includes $6,686 paid to Mr. Wold for serving as a director or
   trustee of one other Oppenheimer fund (at December 31, 2005) that
   was not a Board I Fund.
13.   Mr. Wruble was appointed as Trustee of the Board I Funds on
   October 10, 2005.
14.   Includes $45,544 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.
15.   Includes $135,500 paid to Mr. Wruble for serving as a director or
   trustee of 10 other Oppenheimer funds (at December 31, 2005) that
   are not Board I Funds.

      Retirement Plan for Trustees. The Board I Funds have 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.

      o   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 certain Board I Funds.
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 a Fund's assets, liabilities or net income per share. The plan
will not obligate a 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, a 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.

      Major Shareholders. As of November 3, 2006, 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:

      Charles Schwab & Co Inc., Special Custody Acct for the
      Exclusive Benefit of Customers, Attn Mutual Funds, 101
      Montgomery Street, San Francisco, CA  94104-4122, which
      owned 18,115,976.184 Class A shares (9.98% of the Class A
      shares then outstanding).

      John Hancock Life Ins Co USA, Et-700, Attn: Laura Ross, PO
      Box 600, Buffalo, NY 14201-0600, which owned 16,082,161.986
      Class A shares (8.86% of the Class A shares then
      outstanding).

      MLPF&S for the Sole Benefit of its customers, Attn: Fund
      Admn/#97MF3, 4800 Deer Lake Drive E, Fl 3, Jacksonville, FL
      32246-6484, which owned 11,775,242.438 Class A shares (6.48%
      of the Class A shares then outstanding).

      Citigroup Global Mkts Inc, Attn Cindy Tempesta, 7th Fl, 333
      West 34th Street, New York, NY  1001-2483, which owned
      800,851.132 Class B shares (10.31% of Class B shares then
      outstanding).

      MLPF&S for the Sole Benefit of its Customers, Attn Fund
      Admn/#97MF4, 4800 Deer Lake Drive E, Fl 3, Jacksonville, FL
      32246-6484, which owned 589,620.232 Class B shares (7.59% of
      the Class B shares then outstanding).

      MLPF&S for the Sole Benefit of its Customers, Attn Fund
      Admn/#97MF5, 4800 Deer Lake Drive E, Fl 3, Jacksonville, FL
      32246-6484, which owned 5,577,746.612 Class C shares (22.42%
      of the Class C shares then outstanding).

      Citigroup Global Mkts Inc, Attn Cindy Tempesta, 7th Fl, 333
      West 34th Street, New York, NY  1001-2483, which owned
      4,265,804.757 Class C shares (17.14% of Class C shares then
      outstanding).

      Morgan Stanley DW, Attn Mutual Funds Operations, Harborside
      Financial Center, Plaza Two, 2nd Floor, Jersey City, NJ
      07311, which owned 1,368,691.883 Class C shares (5.50% of
      Class C shares then outstanding).

      UMB Bank NA Trust, AMFO&Co, FBO 789 Pooled, Attn: Employee
      Benefits, 1010 Grand Blvd, Kansas City, MO 64106-2202, which
      owned 1,169,027.898 Class N shares (18.21% of Class N shares
      then outstanding).

      Investors Bank & Trust Comp Tr, FBO Various Retirement
      Plans, c/o Diversified Investment Adv, 4 Manhattanville Rd,
      Purchase, NY  10577-2139 which owned 799,834.156 Class N
      shares (12.46% of Class N shares then outstanding).

      Hartford Life Insurance Co, Separate Account 457, Attn Dave
      Ten Broeck, PO Box 29999, Hartford, CT  06104-2999 which
      owned 467,013.150 Class N shares (7.27% of Class N shares
      then outstanding).

      Oppenheimer International Diversified Fund, Attn: FPA Trade
      Settle (2-FA), 6803 S. Tucson Way, Centennial, CO
      80113-3924, which owned 2,288,464.111 Class Y shares (27.59%
      of Class Y shares then outstanding).

      Knotfloat & Co., PO Box 5496, Boston, MA  02206-5496, which
      owned 1,694,652.984 Class Y shares (20.43% of Class Y shares
      then outstanding).

      Vanguard Fiduciary Trust Co Tr, Vanguard Fiduciary Trst Co,
      PO Box 2600, Valley Forge, PA 19482-2600, which owned
      1,557,366.501 Class Y shares (18.77% of Class Y shares then
      outstanding).

      Knotfloat & Co., PO Box 5496, Boston, MA  02206-5496, which
      owned 860,671.413 Class Y shares (10.37% of Class Y shares
      then outstanding).

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.

o   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.

o   Portfolio Proxy Voting. The Fund has adopted Portfolio Proxy
Voting Policies and Procedures, which include Proxy Voting Guidelines,
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 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 Proxy Voting Guidelines, the Manager will vote the portfolio
proxy in accordance with the Proxy Voting 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
Proxy Voting Guidelines or the Proxy Voting 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 Proxy Voting 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.

o   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. The portfolio manager of the Fund is employed by
the Manager and is the person who is principally responsible for the
day-to-day management of the Fund's portfolio. Other members of the
Manager's Equity Portfolio Department provide the portfolio managers
with counsel and support in managing the Fund's portfolio.

      The 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
administration for the Fund. Those responsibilities include the
compilation and maintenance of records with respect to its operations,
the preparation and filing of specified reports, and composition of
proxy materials and registration statements for continuous public sale
of shares of the 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, brokerage commissions, fees to certain Trustees, legal and audit
expenses, custodian and transfer agent expenses, share issuance costs,
certain printing and registration costs and non-recurring expenses,
including litigation costs. The management fees paid by the 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 were:

--------------------------------------------------------------------------------
 Fiscal Year ended August 31      Management Fees Paid to OppenheimerFunds, Inc.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
           2004                                   $12,974,384
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
           2005                                   $28,509,383
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
           2006                                   $68,374,830
--------------------------------------------------------------------------------

      The investment advisory agreement states that in the absence of
willful misfeasance, bad faith, gross negligence in the performance of
its duties or reckless disregard of its obligations and duties under
the investment advisory agreement, the Manager is not liable for any
loss the Fund sustains in connection with matters to which the
agreement relates.

      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 right of the Fund to use the name "Oppenheimer" as part of
its name.

 Portfolio Manager.  The Fund's portfolio is managed by Mark Madden
(referred to as the "Portfolio Manager").  He is the person responsible
for the day-to-day management of the Fund's investments.

      Other Accounts Managed.  In addition to managing the
Fund's investments, the Portfolio Manager also manages other investment
portfolios and accounts.  The following table provides information
regarding the other portfolios and accounts managed by the Portfolio
Manager as of August 31, 2006.  No account has a performance-based
advisory fee:

  --------------------------------------------------------------------------------
                                                       Total
                                 Total               Assets in
                               Assets in   Other       Other             Total
                  Registered  Registered  Pooled      Pooled            Assets
                  Investment  Investment  Investment Investment  Other  in Other
 Portfolio       Companies   Companies   Vehicles   Vehicles  Accounts Accounts
  Manager           Managed   Managed(1)  Managed    Managed(1) Managed Managed(1,2)
  --------------------------------------------------------------------------------
  --------------------------------------------------------------------------------
  Mark Madden          1       $1,257.7       6       $749.4       2     $350.9
  --------------------------------------------------------------------------------
    1. In millions.
    2. Does not include personal accounts of portfolio managers and
    their families, which are subject to the Code of Ethics.

      As indicated above, the Portfolio Manager also manages other
funds and accounts. Potentially, at times, those responsibilities could
conflict with the interests of the Fund. That may occur whether the
investment strategies of the other funds or accounts are the same as,
or different from, the Fund's investment objectives and strategies. For
example the Portfolio Manager 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 obligations to treat all of its
clients, including the Fund, fairly and equitably, and are designed to
preclude the Portfolio Manager from favoring one client over another.
It is possible, of course, that those compliance procedures and the
Code of Ethics may not always be adequate to do so. At various times,
the Fund's Portfolio Manager may manage other funds or accounts with
investment objectives and strategies that are similar to those of the
Fund, or may manage funds or accounts with investment objectives and
strategies that are different from those of the Fund.

      Compensation of the Portfolio Manager.  The Fund's Portfolio
Manager is 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 shareholders. The Manager's
compensation structure is designed to attract and retain highly
qualified investment management professionals and to reward individual
and team contributions toward creating shareholder value. As of August
31, 2006, the Portfolio Manager's compensation consisted of three
elements: a base salary, an annual discretionary bonus and eligibility
to participate in long-term awards of options and appreciation rights
in regard to the common stock of the Manager's holding company parent.
Senior portfolio managers may also be eligible to participate in the
Manager's deferred compensation plan.

      To help the Manager attract and retain talent, 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. The annual discretionary
bonus is determined by senior management of the Manager and is based on
a number of factors, including a fund's pre-tax performance for periods
of up to five years, measured against an appropriate Lipper benchmark
selected by management. The Lipper benchmark with respect to the Fund
is Lipper - Emerging Markets Funds. Other factors considered include
management quality (such as style consistency, risk management, sector
coverage, team leadership and coaching) and organizational development.
The Portfolio Manager's compensation is not based on the total value of
the 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 and accounts managed by the
Portfolio Manager. The compensation structure of the other funds and
accounts managed by the Portfolio Manager is the same as the
compensation structure of the Fund, described above.

      Ownership of Fund Shares.  As of August 31, 2006 the
Portfolio Manager beneficially owned shares of the Fund as follows:

            ---------------------------------------------------
            Portfolio Manager              Range of Shares
                                        Beneficially Owned in
                                              the Fund
            ---------------------------------------------------
            ---------------------------------------------------
            Mark Madden                  $10,001-$50,000
            ---------------------------------------------------


Brokerage Policies of the Fund

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

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

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

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

      Transactions in securities other than those for which an exchange
is the primary market are generally done with principals or market
makers. In transactions on foreign exchanges, the Fund may be required
to pay fixed brokerage commissions and therefore would not have the
benefit of negotiated commissions that are available in U.S. markets.
Brokerage commissions are paid primarily for transactions in listed
securities or for certain fixed-income agency transactions executed in
the secondary market. Otherwise, brokerage commissions are paid only if
it appears likely that a better price or execution can be obtained by
doing so. In an option transaction, the Fund ordinarily uses the same
broker for the purchase or sale of the option and any transaction in
the securities to which the option relates.

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

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

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

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

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

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

      The research services provided by brokers broaden the scope and
supplement the research activities of the Manager. That research
provides additional views and comparisons for consideration, and helps
the Manager to obtain market information for the valuation of
securities that are either held in the Fund's portfolio or are being
considered for purchase. The Manager provides information to the Board
about the commissions paid to brokers furnishing such services,
together with the Manager's representation that the amount of such
commissions was reasonably related to the value or benefit of such
services.

      During the fiscal years ended August 31, 2004, 2005 and 2006, the
Fund paid the total brokerage commissions indicated in the chart below.
During the fiscal year ended August 31, 2006, the Fund paid $26,393,487
in commissions to firms that provide brokerage and research services to
the Fund with respect to $11,090,295,004 of aggregate portfolio
transactions. All such transactions were on a "best execution" basis,
as described above. The provision of research services was not
necessarily a factor in the placement of all such transactions.


-------------------------------------------------------------------------
Fiscal Year Ended August 31  Total Brokerage Commissions Paid by the Fund*
-------------------------------------------------------------------------
-------------------------------------------------------------------------
            2004                              $3,586,565
-------------------------------------------------------------------------
-------------------------------------------------------------------------
            2005                            $10,826,499(2)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
            2006                             $26,591,399
-------------------------------------------------------------------------
  *  Amounts do not include spreads or commissions on principal
     transactions on a net trade basis.

Distribution and Service Plans

The Distributor. Under its General Distributor's Agreement with the
Fund, the Distributor acts as the Fund's principal underwriter in the
continuous public offering of the Fund's classes of shares. The
Distributor bears the expenses normally attributable to sales,
including advertising and the cost of printing and mailing
prospectuses, other than those furnished to existing shareholders. The
Distributor is not obligated to sell a specific number of shares.

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


---------------------------------------------
Fiscal         Aggregate         Class A
                                Front-End
Year Ended  Front-End Sales   Sales Charges
August 31:     Charges on      Retained by
             Class A Shares  Distributor(1)
---------------------------------------------
---------------------------------------------
   2004        $3,322,274       $673,973
---------------------------------------------
---------------------------------------------
   2005        $7,049,057      $1,493,238
---------------------------------------------
---------------------------------------------
   2006       $14,790,204      $2,392,405
---------------------------------------------
1.    Includes amounts retained by a broker-dealer that is an affiliate
    or a parent of the Distributor.

-------------------------------------------------------------------------------
             Concessions on  Concessions on   Concessions on   Concessions on
Fiscal       Class A Shares  Class B Shares   Class C Shares   Class N Shares
Year Ended    Advanced by      Advanced by     Advanced by      Advanced by
August 31:   Distributor(1)  Distributor(1)   Distributor(1)   Distributor(1)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
   2004         $517,051       $1,238,790        $972,194         $146,591
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
   2005        $1,105,603      $1,684,873       $1,918,897        $269,156
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
   2006        $2,235,588      $3,002,075       $5,048,133        $247,345
-------------------------------------------------------------------------------
1.    The Distributor advances concession payments to financial
   intermediaries for certain sales of Class A shares and for sales
   of Class B, Class C and Class N shares from its own resources at
   the time of sale.

--------------------------------------------------------------------------------
                Class A          Class B                           Class N
               Contingent      Contingent         Class C         Contingent
Fiscal       Deferred Sales  Deferred Sales     Contingent      Deferred Sales
Year  Ended     Charges          Charges      Deferred Sales       Charges
August 31:    Retained by      Retained by   Charges Retained    Retained by
              Distributor      Distributor    by Distributor     Distributor
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
   2004         $21,792         $222,817          $87,428          $44,033
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
   2005           $349          $261,113          $89,216          $68,815
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
   2006         $98,018         $445,350         $410,039          $82,937
--------------------------------------------------------------------------------

Distribution and Service Plans. The Fund has adopted a Service Plan for
Class A shares and Distribution and Service Plans for Class B, Class C
and Class N 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.  See "Payments to Financial Intermediaries" in this SAI.

      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.

o   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, except in the
case of the special arrangement described below, regarding
grandfathered retirement accounts. The Distributor makes payments to
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.

      With respect to purchases of Class A shares subject to a
contingent deferred sales charge by certain retirement plans that first
purchased such shares prior to March 1, 2001 ("grandfathered retirement
accounts"), the Distributor currently intends to pay the service fee to
recipients in advance for the first year after the shares are
purchased. During the first year the shares are sold, the Distributor
retains the service fee to reimburse itself for the costs of
distributing the shares. After the first year shares are outstanding,
the Distributor makes service fee payments to recipients 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 A shares purchased by
grandfathered retirement accounts 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 of the service fee made on those shares.

      For the fiscal year ended August 31, 2006 payments under the
Class A plan totaled $16,002,677, of which $22,273was retained by the
Distributor under the arrangement described above, regarding
grandfathered retirement accounts, and included $106,772 paid to an
affiliate of the Distributor's parent company. Any unreimbursed
expenses the Distributor incurs with respect to Class A shares in any
fiscal year cannot 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, or other financial costs, or
allocation of overhead.

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

      Each plan permits the Distributor to retain both the asset-based
sales charges and the service fees 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, Class C and Class N shares
are purchased. After the first year Class B, Class C or Class N 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, Class C or
Class N 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 of the
service fee made on those shares. Class B, Class C or Class N shares
may not be purchased by a new investor directly from the Distributor
without the investor designating another registered broker-dealer on
their account.  If the current 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, Class C and Class N 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% and the asset-based sales charge and
service fees increase Class N expenses by 0.50% of the net assets per
year of the respective classes.

      The Distributor retains the asset-based sales charge on Class B
and Class N 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, Class C or Class N 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, Class C and Class N
shares allow 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, Class C and Class N
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, Class C and
         Class N 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, Class C and Class N 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 many
         competitors 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, Class C and Class N shares may be more than the
payments it receives from the contingent deferred sales charges
collected on redeemed shares and from the asset-based sales charges
paid to the Distributor by the Fund under the distribution and service
plans. Those excess expenses are carried over on the Distributor's
books and may be recouped from asset-based sales charge payments from
the Fund in future years. However, the Distributor has voluntarily
agreed to cap the amount of expenses under the plans that may be
carried over from year to year and recouped that relate to (i) expenses
the Distributor has incurred that represent compensation and expenses
of its sales personnel and (ii) other direct distribution costs it has
incurred, such as sales literature, state registration fees,
advertising and prospectuses used to offer Fund shares. The cap on the
carry-over of those categories of expenses is set at 0.70% of annual
gross sales of shares of the Fund. If those categories of expenses
exceed the capped amount, the Distributor bears the excess costs. If
the Class B, Class C or Class N 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 for the Fiscal Year
                                 Ended 8/31/06
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                                                Distributor's    Distributor's
                                                  Aggregate      Unreimbursed
                                   Amount        Unreimbursed    Expenses as %
               Total Payments    Retained by    Expenses Under   of Net Assets
   Class:        Under Plan      Distributor         Plan          of Class
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class B Plan   $3,125,684(1)     $2,456,444       $3,583,211         1.16%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class C Plan   $8,303,648(2)     $3,961,186       $9,447,325         1.00%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class N Plan    $949,368(3)       $360,592        $1,378,238         0.57%
--------------------------------------------------------------------------------
1.    Includes $20,902 paid to an affiliate of the Distributor's parent
   company.
2.    Includes $34,027 paid to an affiliate of the Distributor's parent
   company.
3.    Includes $40,026 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 NASD on payments of asset-based
sales charges and service fees.

Payments to Fund Intermediaries

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

      Possible types of payments to financial intermediaries include,
without limitation, those discussed below.

o     Payments made by the Fund, or by an investor buying or selling
         shares of the Fund may include:

o     depending on the share class that the investor selects,
              contingent deferred sales charges or initial front-end
              sales charges, all or a portion of which front-end sales
              charges are payable by the Distributor to financial
              intermediaries (see "About Your Account" in the
              Prospectus);
o     ongoing asset-based payments attributable to the share class
              selected, including fees payable under the Fund's
              distribution and/or service plans adopted under Rule
              12b-1 under the Investment Company Act, which are paid
              from the Fund's assets and allocated to the class of
              shares to which the plan relates (see "About the Fund --
              Distribution and Service Plans" above);
o     shareholder servicing payments for providing omnibus accounting,
              recordkeeping, networking, sub-transfer agency or other
              administrative or shareholder services, including
              retirement plan and 529 plan administrative services
              fees, which are paid from the assets of a Fund as
              reimbursement to the Manager or Distributor for expenses
              they incur on behalf of the Fund.

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

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

      Some of these payments may provide an incentive to financial
intermediaries to actively market or promote the sale of shares of the
Fund or other Oppenheimer funds, or to support the marketing or
promotional efforts of the Distributor in offering shares of the Fund
or other Oppenheimer funds. In addition, some types of payments may
provide a financial intermediary with an incentive to recommend the
Fund or a particular share class. Financial intermediaries may earn
profits on these payments, since the amount of the payment may exceed
the cost of providing the service. Certain of these payments are
subject to limitations under applicable law. Financial intermediaries
may categorize and disclose these arrangements to their clients and to
members of the public in a manner different from the disclosures in the
Fund's Prospectus and this SAI. You should ask your financial
intermediary for information about any payments it receives from the
Fund, the Manager or the Distributor and any services it provides, as
well as the fees and commissions it charges.

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

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

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

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

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

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

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

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

Performance of the Fund

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

      The Fund's illustrations of its performance data in
advertisements must comply with rules of the SEC. Those rules describe
the types of performance data that may be used and how it is to be
calculated. In general, any advertisement by the Fund of its
performance data must include the average annual total returns for the
advertised class of shares of the Fund.

      Use of standardized performance calculations enables an investor
to compare the Fund's performance to the performance of other funds for
the same periods. However, a number of factors should be considered
before using the Fund's performance information as a basis for
comparison with other investments:

o     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 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     Total returns for any given past period represent historical
         performance information and are not, and should not be
         considered, a prediction of future 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 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.

      o   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, ten years). An average annual total
return shows the average rate of return for each year in a period that
would produce the cumulative total return over the entire period.
However, average annual total returns do not show actual year-by-year
performance. The 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 5.75% (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, a 1.0% contingent deferred
sales charge is deducted for returns for the one-year period.  For
Class N shares, a 1.0% contingent deferred sales charge is deducted for
returns for the one-year period, and total returns for the periods
prior to 03/01/01 (the inception date for Class N shares) are based on
the Fund's Class A returns, adjusted to reflect the higher Class N
12b-1 fees.  There is no sales charge on Class Y shares.

o     Average Annual Total Return. The "average annual total return" of
each class is an average annual compounded rate of return for each year
in a specified number of years. It is the rate of return based on the
change in value of a hypothetical initial investment of $1,000 ("P" in
the formula below) held for a number of years ("n" in the formula) to
achieve an Ending Redeemable Value ("ERV" in the formula) of that
investment, according to the following formula:

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

o     Average Annual Total Return (After Taxes on Distributions). The
"average annual total return (after taxes on distributions)" of Class A
shares is an average annual compounded rate of return for each year in
a specified number of years, adjusted to show the effect of federal
taxes (calculated using the highest individual marginal federal income
tax rates in effect on any reinvestment date) on any distributions made
by the Fund during the specified period. It is the rate of return based
on the change in value of a hypothetical initial investment of $1,000
("P" in the formula below) held for a number of years ("n" in the
formula) to achieve an ending value ("ATVD" in the formula) of that
investment, after taking into account the effect of taxes on Fund
distributions, but not on the redemption of Fund shares, according to
the following formula:

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

o     Average Annual Total Return (After Taxes on Distributions and
Redemptions). The "average annual total return (after taxes on
distributions and redemptions)" of Class A shares is an average annual
compounded rate of return for each year in a specified number of years,
adjusted to show the effect of federal taxes (calculated using the
highest individual marginal federal income tax rates in effect on any
reinvestment date) on any distributions made by the Fund during the
specified period and the effect of capital gains taxes or capital loss
tax benefits (each calculated using the highest federal individual
capital gains tax rate in effect on the redemption date) resulting from
the redemption of the shares at the end of the period. It is the rate
of return based on the change in value of a hypothetical initial
investment of $1,000 ("P" in the formula below) held for a number of
years ("n" in the formula) to achieve an ending value ("ATVDR" in the
formula) of that investment, after taking into account the effect of
taxes on Fund distributions and on the redemption of Fund shares,
according to the following formula:

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

o     Cumulative Total Return. The "cumulative total return"
calculation measures the change in value of a hypothetical investment
of $1,000 over an entire period of years. Its calculation uses some of
the same factors as average annual total return, but it does not
average the rate of return on an annual basis. Cumulative total return
is determined as follows:

 ERV - P   = Total Return
-----------
    P

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

---------------------------------------------------------------------------------
             The Fund's Total Returns for the Periods Ended 8/31/06
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
           Cumulative Total              Average Annual Total Returns
             Returns (10
Class of     years or
Shares     life-of-class)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
                                 1-Year           5-Years          10-Years
                                                (or life of       (or life of
                                               class if less)   class if less)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
          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      360.53%  388.63%   21.03%   28.41%   25.86%  27.36%   16.89%   17.60%
A(1)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class
B(2)       367.14%  367.14%   22.44%   27.44%   26.18%  26.34%   17.06%   17.06%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class
C(3)       353.44%  353.44%   26.50%   27.50%   26.39%  26.39%   16.70%   16.70%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class
N(4)       179.10%  179.10%   26.93%   27.93%   26.96%  26.96%   20.52%   20.52%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class
Y(5)        24.78%   24.78%      N/A      N/A      N/A     N/A      N/A      N/A
---------------------------------------------------------------------------------
1.    Inception of Class A:   11/18/96
2.    Inception of Class B:   11/18/96
3.    Inception of Class C:   11/18/96
4.    Inception of Class N:   03/01/01
5.    Inception of Class Y:   09/07/05

-------------------------------------------------------------------------------
   Average Annual Total Returns for Class A(1) Shares (After Sales Charge)
                        For the Periods Ended 8/31/06
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
                                1-Year          5-Years          10-Years
                                                               (or life of
                                                              class if less)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
After Taxes on                  19.71%          25.13%           16.05%(1)
Distributions
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
After Taxes on                  14.05%          22.72%           14.76%(1)
Distributions and
Redemption of Fund Shares
-------------------------------------------------------------------------------
   1. Inception of Class A: 11/18/96

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

      o   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.

      o   Morningstar Ratings. From time to time the Fund may publish the
star rating of the performance of its classes of shares by Morningstar,
Inc. ("Morningstar"), an independent mutual fund monitoring service.
Morningstar rates mutual funds in their specialized market sector. The
Fund is rated among diversified emerging markets funds.

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

      o   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 B 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 B to this SAI because the Distributor
or dealer or broker incurs little or no selling expenses.

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

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

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

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

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

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

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

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

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

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

      o   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 nor 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.

Retirement Plans.  Certain types of retirement plans are entitled to
purchase shares of the Fund without sales charges or at reduced sales
charge rates, as described in Appendix B to this SAI.  Certain special
sales charge arrangements described in that Appendix apply to
retirement plans whose records are maintained on a daily valuation
basis by Merrill Lynch Pierce Fenner & Smith, Inc. ("Merrill Lynch") or
an independent record keeper that has a contract or special arrangement
with Merrill Lynch.  If on the date the plan sponsor signed the Merrill
Lynch record keeping service agreement the plan has less than $1
million in assets invested in applicable investments (other than assets
invested in money market funds), then the retirement plan may purchase
only Class C shares of the Oppenheimer funds.  If on the date the plan
sponsor signed the Merrill Lynch record keeping service agreement the
plan has $1 million or more in assets but less than $5 million in
assets invested in applicable investments (other than assets invested
in money market funds), then the retirement plan may purchase only
Class N shares of the Oppenheimer funds.  If on the date the plan
sponsor signed the Merrill Lynch record keeping service agreement the
plan has $5 million or more in assets invested in applicable
investments (other than assets invested in money market funds), then
the retirement plan may purchase only Class A shares of the Oppenheimer
funds.

      OppenheimerFunds has entered into arrangements with certain
record keepers whereby the Transfer Agent or an affiliate compensates
the record keeper for its record keeping and account servicing
functions that it performs on behalf of the participant level accounts
of a retirement plan. While such compensation may act to reduce the
record keeping fees charged by the retirement plan's record keeper,
that compensation arrangement may be terminated at any time,
potentially affecting the record keeping fees charged by the retirement
plan's record keeper.

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, Class C or Class N shares and the
dividends payable on Class B, Class C or Class N shares will be reduced
by incremental expenses borne solely by that class. Those expenses
include the asset-based sales charges to which Class B, Class C and
Class N shares 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, Class C and Class N shares
have no initial sales charge, the purpose of the deferred sales charge
and asset-based sales charge on Class B, Class C and Class N 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, Class C or Class N shares may not be purchased by a new
investor directly from the Distributor without the investor designating
another registered broker-dealer.

      Class A Shares Subject to a Contingent Deferred Sales Charge. For
purchases of Class A shares at net asset value whether or not subject
to a contingent deferred sales charge as described in the Prospectus,
no sales concessions will be paid to the broker-dealer of record, as
described in the Prospectus, on sales of Class A shares purchased with
the redemption proceeds of shares of another mutual fund offered as an
investment option in a retirement plan in which Oppenheimer funds are
also offered as investment options under a special arrangement with the
Distributor, if the purchase occurs more than 30 days after the
Oppenheimer funds are added as an investment option under that plan.
Additionally, that concession will not be paid on purchases of Class A
shares by a retirement plan made with the redemption proceeds of Class
N shares of one or more Oppenheimer funds held by the plan for more
than 18 months.

      o   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.

      o   Availability of Class N Shares. In addition to the
description of the types of retirement plans which may purchase Class N
shares contained in the prospectus, Class N shares also are offered to
the following:
o     to all rollover IRAs (including SEP IRAs and SIMPLE IRAs),
o     to all rollover contributions made to Individual 401(k) plans,
            Profit-Sharing Plans and Money Purchase Pension Plans,
o     to all direct rollovers from OppenheimerFunds-sponsored Pinnacle
            and Ascender retirement plans,
o     to all trustee-to-trustee IRA transfers,
o     to all 90-24 type 403(b) transfers,
o     to Group Retirement Plans (as defined in Appendix B to this SAI)
            which have entered into a special agreement with the
            Distributor for that purpose,
o     to Retirement Plans qualified under Sections 401(a) or 401(k) of
            the Internal Revenue Code, the recordkeeper or the plan
            sponsor for which has entered into a special agreement with
            the Distributor,
o     to Retirement Plans of a plan sponsor where the aggregate assets
            of all such plans invested in the Oppenheimer funds is
            $500,000 or more,
o     to Retirement Plans with at least 100 eligible employees or
            $500,000 or more in plan assets, and
o     to certain customers of broker-dealers and financial advisors
            that are identified in a special agreement between the
            broker-dealer or financial advisor and the Distributor for
            that purpose.

      The sales concession and the advance of the service fee, as
described in the Prospectus, will not be paid to dealers of record on
sales of Class N shares on:
o     purchases of Class N shares in amounts of $500,000 or more by a
            retirement plan that pays for the purchase with the
            redemption proceeds of Class A shares of one or more
            Oppenheimer funds (other than rollovers from an
            OppenheimerFunds-sponsored Pinnacle or Ascender 401(k) plan
            to any IRA invested in the Oppenheimer funds),
o     purchases of Class N shares in amounts of $500,000 or more 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
            (other than rollovers from an OppenheimerFunds-sponsored
            Pinnacle or Ascender 401(k) plan to any IRA invested in the
            Oppenheimer funds), and
o     on purchases of Class N shares by an OppenheimerFunds-sponsored
            Pinnacle or Ascender 401(k) plan made with the redemption
            proceeds of Class A shares of one or more Oppenheimer
            funds.

      No sales concessions will be paid to the broker-dealer of record,
as described in the Prospectus, on sales of Class N shares purchased
with the redemption proceeds of shares of another mutual fund offered
as an investment option in a retirement plan in which Oppenheimer funds
are also offered as investment options under a special arrangement with
the Distributor, if the purchase occurs more than 30 days after the
Oppenheimer funds are added as an investment option under that plan.

      o   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 SAI mean "Eastern time." The NYSE's most recent annual
announcement (which is subject to change) states that it will close on
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day. It may also close on other days.

      Dealers other than NYSE members may conduct trading in certain
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.
Additionally, trading on many foreign stock exchanges and
over-the-counter markets normally is completed before the close of the
NYSE.

      Changes in the values of securities traded on foreign exchanges
or markets as a result of events that occur after the prices of those
securities are determined, but before the close of the NYSE, will not
be reflected in the Fund's calculation of its net asset values that day
unless the Manager determines that the event is likely to effect a
material change in the value of the security. The Manager, or an
internal valuation committee established by the Manager, as applicable,
may establish a valuation, under procedures established by the Board
and subject to the approval, ratification and confirmation by the Board
at its next ensuing meeting.

      o  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     Equity securities traded on a U.S. securities exchange are valued
as follows:
(1)   if last sale information is regularly reported, they are valued
               at the last reported sale price on the principal
               exchange on which they are traded on that day, or
(2)   if last sale information is not available on a valuation date,
               they are valued at the last reported sale price
               preceding the valuation date if it is within the spread
               of the closing "bid" and "asked" prices on the valuation
               date or, if not,  at the closing "bid" price on the
               valuation date.
o     Equity securities traded on a foreign securities exchange
generally are valued in one of the following ways:
(1)   at the last sale price available to the pricing service approved
               by the Board of Trustees, or
(2)   at the last sale price obtained by the Manager from the report of
               the principal exchange on which the security is traded
               at its last trading session on or immediately before the
               valuation date, or
(3)   at the mean between the "bid" and "asked" prices obtained from
               the principal exchange on which the security is traded
               or, on the basis of reasonable inquiry, from two market
               makers in the security.
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 U.S. government securities, mortgage-backed
securities, corporate bonds and foreign government 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.

      The closing prices in the New York foreign exchange market on a
particular business day that are provided to the Manager by a bank,
dealer or pricing service that the Manager has determined to be
reliable are used to value foreign currency, including forward
contracts, and to convert to U.S. dollars securities that are
denominated in foreign currency.

      Puts, calls, and futures are valued at the last sale price on the
principal exchange on which they are traded 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 on the valuation
date. If not, the value shall be the closing bid price on the principal
exchange on the valuation date. If the put, call or future is not
traded on an exchange, 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.

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, Class N or Class
Y shares. The Fund may amend, suspend or cease offering this reinvestment
privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation.

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

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

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

Involuntary Redemptions. The Fund's Board of Trustees has the right to
cause the involuntary redemption of the shares held in any account if
the aggregate net asset value of those shares is less than $500 or such
lesser amount as the Board may fix. The Board 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, Class C and Class N contingent deferred
sales charge will be followed in determining the order in which shares
are transferred.


Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, SEP-IRAs, SIMPLE IRAs, 403(b)(7)
custodial plans, 401(k) plans or pension or profit-sharing plans should
be addressed to "Trustee, OppenheimerFunds Retirement Plans," c/o the
Transfer Agent at its address listed in "How To Sell Shares" in the
Prospectus or on the back cover of this SAI. The request must:
(1)   state the reason for the distribution;
(2)   state the owner's awareness of tax penalties if the distribution
         is premature; and
(3)   conform to the requirements of the plan and the Fund's other
         redemption requirements.

      Participants (other than self-employed plan sponsors) in
OppenheimerFunds-sponsored pension or profit-sharing plans with shares
of the Fund held in the name of the plan or its fiduciary may not
directly request redemption of their accounts. The plan administrator
or fiduciary must sign the request.

      Distributions from pension and profit sharing plans are subject
to special requirements under the Internal Revenue Code and certain
documents (available from the Transfer Agent) must be completed and
submitted to the Transfer Agent before the distribution may be made.
Distributions from retirement plans are subject to withholding
requirements under the Internal Revenue Code, and IRS Form W-4P
(available from the Transfer Agent) must be submitted to the Transfer
Agent with the distribution request, or the distribution may be
delayed. Unless the shareholder has provided the Transfer Agent with a
certified tax identification number, the Internal Revenue Code requires
that tax be withheld from any distribution even if the shareholder
elects not to have tax withheld. The Fund, the Manager, the
Distributor, and the Transfer Agent assume no responsibility to
determine whether a distribution satisfies the conditions of applicable
tax laws and will not be responsible for any tax penalties assessed in
connection with a distribution.

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.

      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, Class C and Class N
shareholders should not establish automatic withdrawal plans, because
of the potential imposition of the contingent deferred sales charge on
such withdrawals (except where the Class B, Class C or Class N
contingent deferred sales charge is waived as described in Appendix B
to this SAI).

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

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

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

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

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

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

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

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

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

How to Exchange Shares

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

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

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

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

   The following funds do not offer Class Y shares:
   Limited Term New York Municipal Fund     Oppenheimer Principal Protected Main
                                            Street Fund
   Oppenheimer AMT-Free Municipals          Oppenheimer Principal Protected Main
                                            Street Fund II
   Oppenheimer AMT-Free New York Municipals Oppenheimer Principal Protected Main
                                            Street Fund III
   Oppenheimer Balanced Fund                Oppenheimer Quest Capital Value Fund,
                                            Inc.
   Oppenheimer California Municipal Fund    Oppenheimer Quest International Value
                                            Fund, Inc.
   Oppenheimer Capital Income Fund          Oppenheimer Rochester Arizona Municipal
                                            Fund
   Oppenheimer Cash Reserves                Oppenheimer Rochester Maryland Municipal
                                            Fund
   Oppenheimer Convertible Securities Fund  Oppenheimer Rochester Massachusetts
                                            Municipal Fund
   Oppenheimer Dividend Growth Fund         Oppenheimer Rochester Michigan Municipal
                                            Fund
   Oppenheimer Gold & Special Minerals Fund Oppenheimer Rochester Minnesota
                                            Municipal Fund
   Oppenheimer Institutional Money Market   Oppenheimer Rochester North Carolina
   Fund                                     Municipal Fund
   Oppenheimer Limited Term California
   Municipal Fund                           Oppenheimer Rochester Ohio Municipal Fund
   Oppenheimer Limited Term Municipal Fund  Oppenheimer Rochester Virginia Municipal
                                            Fund
   Oppenheimer New Jersey Municipal Fund    Oppenheimer Rochester National Municipals
   Oppenheimer Pennsylvania Municipal Fund

o     Oppenheimer Money Market Fund, Inc. only offers Class A and Class
      Y shares.
o     Class B and Class C shares of Oppenheimer Cash Reserves are
      generally available only by exchange from the same class of
      shares of other Oppenheimer funds or through
      OppenheimerFunds-sponsored 401(k) plans.
o     Class M shares of Oppenheimer Convertible Securities Fund may be
      exchanged only for Class A shares of other Oppenheimer funds.
      They may not be acquired by exchange of shares of any class of
      any other Oppenheimer funds except Class A shares of Oppenheimer
      Money Market Fund, Inc. or Oppenheimer Cash Reserves acquired by
      exchange of Class M shares.
o     Class A shares of Oppenheimer funds may be exchanged at net asset
      value for shares of certain money market funds offered by the
      Distributor. Shares of a 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.
o     Shares of the Fund acquired by reinvestment of dividends or
      distributions from any of the other Oppenheimer funds or from any
      unit investment trust for which reinvestment arrangements have
      been made with the Distributor may be exchanged at net asset
      value for shares of the same class of any of the other
      Oppenheimer funds into which you may exchange shares.
o     Shares of Oppenheimer Principal Protected Main Street Fund may be
      exchanged at net asset value for shares of the same class of any
      of the other Oppenheimer funds into which you may exchange
      shares. However, shareholders are not permitted to exchange
      shares of other Oppenheimer funds for shares of Oppenheimer
      Principal Protected Main Street Fund until after the expiration
      of the warranty period (8/5/2010).
o     Shares of Oppenheimer Principal Protected Main Street Fund II may
      be exchanged at net asset value for shares of the same class of
      any of the other Oppenheimer funds into which you may exchange
      shares. However, shareholders are not permitted to exchange
      shares of other Oppenheimer funds for shares of Oppenheimer
      Principal Protected Main Street Fund II until after the
      expiration of the warranty period (3/3/2011).
o     Shares of Oppenheimer Principal Protected Main Street Fund III
      may be exchanged at net asset value for shares of the same class
      of any of the other Oppenheimer funds into which you may exchange
      shares. However, shareholders are not permitted to exchange
      shares of other Oppenheimer funds for shares of Oppenheimer
      Principal Protected Main Street Fund III until after the
      expiration of the warranty period (12/16/2011).
o     Class A, Class B, Class C and Class N shares of the Oppenheimer
      International Small Company Fund may be acquired by exchange only
      with a minimum initial investment of $50,000.  An existing
      shareholder of each fund may make additional exchanges into that
      fund with as little as $50.

      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.

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

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

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

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

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

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

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

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

o     With respect to Class C shares purchased subject to a contingent
deferred sales charge, 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     With respect to Class N shares purchased subject to a contingent
deferred sales charge, a 1% contingent deferred sales charge will be
imposed if the retirement plan (not including IRAs and 403(b) plans) is
terminated or Class N shares of all Oppenheimer funds are terminated as
an investment option of the plan and Class N shares are redeemed within
18 months after the plan's first purchase of Class N shares of any
Oppenheimer fund or with respect to an individual retirement plan or
403(b) plan, Class N shares are redeemed within 18 months of the plan's
first purchase of Class N shares of any Oppenheimer fund.

o     When Class B, Class C or Class N 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, Class C or Class N
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.

      o   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.

      o   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.

      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 features that are available in the new
fund (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.

      In connection with any exchange request, the number of shares
exchanged may be less than the number requested if the exchange or the
number requested would include shares subject to a restriction cited in
the Prospectus or this SAI, or would include shares covered by a share
certificate that is not tendered with the request. In those cases, only
the shares available for exchange without restriction will be exchanged.

      The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks. A shareholder
should assure that the fund selected is appropriate for his or her
investment and should be aware of the tax consequences of an exchange.
For federal income tax purposes, an exchange transaction is treated as
a redemption of shares of one fund and a purchase of shares of another.
"Reinvestment Privilege," above, discusses some of the tax consequences
of reinvestment of redemption proceeds in such cases. The Fund, the
Distributor, and the Transfer Agent are unable to provide investment,
tax or legal advice to a shareholder in connection with an exchange
request or any other investment transaction.

Dividends, Capital Gains and Taxes

Dividends and Distributions. The Fund has no fixed dividend rate and
there can be no assurance as to the payment of any dividends or the
realization of any capital gains. The dividends and distributions paid
by a class of shares will 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 each class
of shares. However, dividends on Class B, Class C and Class N shares
are expected to be lower than dividends on Class A and Class Y shares.
That is because of the effect of the asset-based sales charge on Class
B, Class C and Class N shares. Those dividends will also differ in
amount as a consequence of any difference in the net asset values of
the different classes of shares.

      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.

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

      The tax discussion in the Prospectus and this SAI is based on tax
law in effect on the date of the Prospectus and this SAI. Those laws
and regulations may be changed by legislative, judicial, or
administrative action, sometimes with retroactive effect. State and
local tax treatment of ordinary income dividends and capital gain
dividends 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.

      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. That qualification enables the Fund to "pass through" its
income and realized capital gains to shareholders without having to pay
tax on them. This avoids a "double tax" on that income and capital
gains, since shareholders normally will be taxed on the dividends and
capital gains they receive from the Fund (unless their Fund shares are
held in a retirement account or the shareholder is otherwise exempt
from tax).

      The Internal Revenue Code contains a number of complex tests
relating to qualification that the Fund might not meet in a particular
year. If it did not qualify as a regulated investment company, the Fund
would be treated for tax purposes as an ordinary corporation and would
receive no tax deduction for payments made 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) 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.

      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.

      Taxation of Fund Distributions. The Fund anticipates distributing
substantially all of its investment company taxable income for each
taxable year. Those distributions will be taxable to shareholders as
ordinary income and treated as dividends for federal income tax
purposes.

      Special provisions of the Internal Revenue Code govern the
eligibility of the Fund's dividends for the dividends-received
deduction for corporate shareholders. Long-term capital gains
distributions are not eligible for the deduction. The amount of
dividends paid by the Fund that may qualify for the deduction is
limited to the aggregate amount of qualifying dividends that the Fund
derives from portfolio investments that the Fund has held for a minimum
period, usually 46 days. A corporate shareholder will not be eligible
for the deduction on dividends paid on Fund shares held for 45 days or
less. To the extent the Fund's dividends are derived from gross income
from option premiums, interest income or short-term gains from the sale
of securities or dividends from foreign corporations, those dividends
will not qualify for the deduction.

      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 net long term capital gains are
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.

      Investment income that may be received by the Fund from sources
within foreign countries may be subject to foreign taxes withheld at
the source. The United States has entered into tax treaties with many
foreign countries which entitle the Fund to a reduced rate of, or
exemption from, taxes on such income.  The Fund may be subject to U.S.
Federal income tax, and an interest charge, on certain distributions or
gains from the sale of shares of a foreign company considered to be a
PFIC, even if those amounts are paid out as dividends to shareholders.
To avoid imposition of the interest charge, the Fund may elect to "mark
to market" all PFIC shares that it holds at the end of each taxable
year. In that case, any increase or decrease in the value of those
shares would be recognized as ordinary income or as ordinary loss (but
only to the extent of previously recognized "mark-to-market" gains).

      Distributions by the Fund that do not constitute ordinary income
dividends or capital gain distributions will be treated as a return of
capital to the extent of the shareholder's tax basis in their shares.
Any excess will be treated as gain from the sale of those shares, as
discussed below. Shareholders will be advised annually as to the U.S.
federal income tax consequences of distributions made (or deemed made)
during the year. If prior distributions made by the Fund must be
re-characterized as a non-taxable return of capital at the end of the
fiscal year as a result of the effect of the Fund's investment
policies, they will be identified as such in notices sent to
shareholders.

      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, 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.

      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.

      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 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,
capital gains distributions and the proceeds of the redemption of
shares, paid to any foreign person. Any tax withheld by the Fund is
remitted by the Fund to the U.S. Treasury and all income and any tax
withheld is identified in reports mailed to shareholders in January of
each year with a copy sent to the IRS.

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

Dividend Reinvestment in Another Fund. Shareholders of the Fund may
elect to reinvest all dividends and/or capital gains distributions in
shares of the same class of any of the other Oppenheimer funds into
which you may exchange shares. Reinvestment will be made without sales
charge at the net asset value per share in effect at the close of
business on the payable date of the dividend or distribution. To elect
this option, the shareholder must notify the Transfer Agent in writing
and must have an existing account in the fund selected for
reinvestment. Otherwise the shareholder first must obtain a prospectus
for that fund and an application from the Distributor to establish an
account. Dividends and/or distributions from shares of certain other
Oppenheimer funds may be invested in shares of this Fund on the same
basis.

Additional Information About the Fund

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

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

The Custodian.  J.P. Morgan Chase Bank is the custodian of the Fund's
assets. The custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities and handling the delivery
of such securities to and from the Fund. It is the practice of the Fund
to deal with the custodian in a manner uninfluenced by any banking
relationship the custodian may have with the Manager and its
affiliates. The Fund's cash balances with the custodian in excess of
$100,000 are not protected by federal deposit insurance. Those
uninsured balances at times may be substantial.

Independent Registered Public Accounting Firm. KPMG LLP serves as the
independent registered public accounting firm for the Fund.  KPMG LLP
audits the Fund's financial statements and performs other related audit
services.  KPMG LLP also acts as the independent registered public
accounting firm for the Manager and certain other funds advised by the
Manager and its affiliates. Audit and non-audit services provided by
KPMG LLP to the Fund must be pre-approved by the Audit Committee.


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

--------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER DEVELOPING MARKETS FUND:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Developing Markets Fund, including the statement of investments, as
of August 31, 2006, 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 August 31, 2006, 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 Developing Markets Fund as of August 31, 2006, 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.


/s/ KPMG LLP
------------
KPMG LLP

Denver, Colorado
October 16, 2006





STATEMENT OF INVESTMENTS  August 31, 2006
--------------------------------------------------------------------------------

                                                                          VALUE
                                                       SHARES        SEE NOTE 1
--------------------------------------------------------------------------------
COMMON STOCKS--98.7%
--------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--12.3%
--------------------------------------------------------------------------------
AUTO COMPONENTS--0.8%
Amtek Auto Ltd. 1                                   9,513,158   $    59,734,496
--------------------------------------------------------------------------------
Rico Auto Industries
Ltd. 1,2                                            8,990,692        13,842,980
                                                                ----------------
                                                                     73,577,476

--------------------------------------------------------------------------------
AUTOMOBILES--4.5%
Bajaj Auto Ltd.                                       627,393        36,346,595
--------------------------------------------------------------------------------
China Motor Corp.                                   6,679,250         5,055,654
--------------------------------------------------------------------------------
Ford Otomotiv
Sanayi AS                                           2,922,632        20,951,482
--------------------------------------------------------------------------------
Hyundai Motor Co.                                   1,012,235        85,291,829
--------------------------------------------------------------------------------
Hyundai Motor Co.
Ltd., Preference                                      359,820        17,359,476
--------------------------------------------------------------------------------
Kia Motors Corp.                                    4,312,985        68,294,533
--------------------------------------------------------------------------------
Mahindra &
Mahindra Ltd.                                       3,990,210        55,413,629
--------------------------------------------------------------------------------
PT Astra International
Tbk                                                45,562,500        55,594,564
--------------------------------------------------------------------------------
Ssangyong Motor
Co. 1,2                                            12,552,839        59,414,769
                                                                ----------------
                                                                    403,722,531

--------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--0.3%
Danubius Hotel &
Spa Rt. 2                                              42,989         1,153,494
--------------------------------------------------------------------------------
Jollibee Foods Corp.                               38,294,000        24,122,205
                                                                ----------------
                                                                     25,275,699

--------------------------------------------------------------------------------
HOUSEHOLD DURABLES--5.1%
Consorcio ARA,
SA de CV                                            6,052,000        28,172,181
--------------------------------------------------------------------------------
Corporacion GEO
SA de CV, Series B 2                               10,090,500        40,683,958
--------------------------------------------------------------------------------
Cyrela Brazil Realty SA
Empreendimentos e
Participacoes, GDR 3                                  474,320        81,955,381
--------------------------------------------------------------------------------
Gafisa SA 2                                         2,868,400        37,995,597
--------------------------------------------------------------------------------
Humax Co. Ltd. 1                                    3,550,683        92,837,592

                                                                          VALUE
                                                       SHARES        SEE NOTE 1
--------------------------------------------------------------------------------
HOUSEHOLD DURABLES Continued
Inventec Appliances
Corp. 1                                            22,053,200   $    57,853,910
--------------------------------------------------------------------------------
LG Electronics, Inc.,
Preference                                            166,401         6,447,974
--------------------------------------------------------------------------------
SARE Holding SA
de CV, Cl. B 1,2                                   45,037,950        50,762,331
--------------------------------------------------------------------------------
Steinhoff
International
Holdings Ltd. 2                                    17,641,600        57,533,867
                                                                ----------------
                                                                    454,242,791

--------------------------------------------------------------------------------
INTERNET & CATALOG RETAIL--0.1%
GS Home Shopping,
Inc.                                                  130,624         9,463,700
--------------------------------------------------------------------------------
MEDIA--0.5%
Corporacion
Interamericana de
Entretenimiento
SA de CV 2                                         11,154,039        19,930,794
--------------------------------------------------------------------------------
Television
Broadcasts Ltd.                                     3,084,000        17,507,294
--------------------------------------------------------------------------------
Yedang
Entertainment
Co. Ltd. 1,2                                        1,887,737         7,272,471
                                                                ----------------
                                                                     44,710,559

--------------------------------------------------------------------------------
MULTILINE RETAIL--0.7%
Lojas Americanas
SA, Preference                                  1,341,870,000        59,464,118
--------------------------------------------------------------------------------
SPECIALTY RETAIL--0.2%
JD Group Ltd.                                       1,610,192        14,863,311
--------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--0.1%
Folli-Follie SA                                       296,650         7,943,098
--------------------------------------------------------------------------------
CONSUMER STAPLES--8.0%
--------------------------------------------------------------------------------
BEVERAGES--1.5%
Companhia de
Bebidas das
Americas, ADR                                         238,200         9,337,440
--------------------------------------------------------------------------------
Companhia de
Bebidas das
Americas, ADR,
Preference                                            948,500        42,549,710



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

                                                                          VALUE
                                                       SHARES        SEE NOTE 1
--------------------------------------------------------------------------------
BEVERAGES Continued
Fomento Economico
Mexicano SA de CV,
Sponsored ADR                                         566,000   $    53,158,720
--------------------------------------------------------------------------------
United Breweries
Holdings Ltd. 1                                     2,606,594        12,748,701
--------------------------------------------------------------------------------
United Breweries
Ltd. 1                                              7,133,890        17,729,330
                                                                ----------------
                                                                    135,523,901

--------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--2.1%
Companhia Brasileira
de Distribuicao
Grupo Pao de
Acucar, Sponsored
ADR                                                 2,909,100        80,174,796
--------------------------------------------------------------------------------
Jeronimo Martins
Sociedade Gestora
de Participacoes SA                                 1,600,732        28,628,811
--------------------------------------------------------------------------------
Massmart Holdings
Ltd.                                                3,675,012        28,070,674
--------------------------------------------------------------------------------
President Chain
Store Corp.                                        12,892,074        26,257,169
--------------------------------------------------------------------------------
Shinsegae
Department Store
Co.                                                    50,586        25,100,928
                                                                ----------------
                                                                    188,232,378

--------------------------------------------------------------------------------
FOOD PRODUCTS--1.6%
Bunge Ltd.                                            354,200        19,955,628
--------------------------------------------------------------------------------
Sadia SA,
Preference 1                                       33,135,000        90,101,236
--------------------------------------------------------------------------------
Tiger Brands Ltd.                                     907,200        19,175,052
--------------------------------------------------------------------------------
Uni-President
Enterprises Corp.                                  14,130,000        10,781,177
                                                                ----------------
                                                                    140,013,093

--------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS--0.2%
Able C&C 1                                            589,454         4,384,267
--------------------------------------------------------------------------------
Trent Ltd.                                            701,326        12,587,999
                                                                ----------------
                                                                     16,972,266

--------------------------------------------------------------------------------
PERSONAL PRODUCTS--0.9%
Amorepacific Corp. 2                                   80,402        34,961,028

                                                                          VALUE
                                                       SHARES        SEE NOTE 1
--------------------------------------------------------------------------------
PERSONAL PRODUCTS
Natura Cosmeticos
SA                                                  2,950,500   $    37,734,473
--------------------------------------------------------------------------------
Pacific Corp.                                          49,072         6,355,419
                                                                ----------------
                                                                     79,050,920

--------------------------------------------------------------------------------
TOBACCO--1.7%
Eastern Tobacco Co.                                   888,822        46,462,206
--------------------------------------------------------------------------------
ITC Ltd.                                           12,240,625        50,372,401
--------------------------------------------------------------------------------
PT Gudang Garam
Tbk                                                43,454,500        48,245,625
                                                                ----------------
                                                                    145,080,232

--------------------------------------------------------------------------------
ENERGY--15.3%
--------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--3.2%
China Oilfield
Services Ltd.                                      12,406,000         6,938,969
--------------------------------------------------------------------------------
GlobalSantaFe
Corp.                                               1,755,900        86,425,398
--------------------------------------------------------------------------------
Hydril Co. 2                                          797,529        52,198,273
--------------------------------------------------------------------------------
Technip SA                                          1,174,184        67,753,824
--------------------------------------------------------------------------------
Tenaris SA, ADR                                     1,782,900        65,450,259
                                                                ----------------
                                                                    278,766,723

--------------------------------------------------------------------------------
OIL & GAS--12.1%
Bharat Petroleum
Corp. Ltd. 2                                        4,218,879        32,912,113
--------------------------------------------------------------------------------
China Petroleum
& Chemical Corp.                                  117,978,000        69,851,623
--------------------------------------------------------------------------------
China Shenhua
Energy Co. Ltd.                                    26,987,500        47,747,983
--------------------------------------------------------------------------------
Det Norske
Oljeselskap ASA 2                                  18,370,344        31,963,585
--------------------------------------------------------------------------------
LUKOIL, Sponsored
ADR                                                 1,012,900        84,779,730
--------------------------------------------------------------------------------
Oil & Natural Gas
Corp. Ltd.                                            798,640        20,896,617
--------------------------------------------------------------------------------
PetroChina Co. Ltd.                                38,142,000        42,794,277
--------------------------------------------------------------------------------
Petroleo Brasileiro
SA, ADR                                             3,369,800       302,136,268
--------------------------------------------------------------------------------
Petroleo Brasileiro
SA, ADR                                               680,300        54,845,786



                                                                          VALUE
                                                       SHARES        SEE NOTE 1
--------------------------------------------------------------------------------
OIL & GAS Continued
Reliance Industries
Ltd.                                                4,130,963   $    99,188,385
--------------------------------------------------------------------------------
S-Oil Corp.                                           839,750        57,392,671
--------------------------------------------------------------------------------
S-Oil Corp.,
Preference                                            215,948        10,895,119
--------------------------------------------------------------------------------
Surgutneftegaz OJSC,
Sponsored ADR                                       1,734,227       128,315,456
--------------------------------------------------------------------------------
Tupras-Turkiye Petrol
Rafinerileri AS                                     3,109,200        56,783,710
--------------------------------------------------------------------------------
Yanzhou Coal Mining
Co. Ltd.                                           44,961,000        31,738,197
                                                                ----------------
                                                                  1,072,241,520

--------------------------------------------------------------------------------
FINANCIALS--18.5%
--------------------------------------------------------------------------------
CAPITAL MARKETS--0.8%
Korea Investment
Holdings Co. Ltd.                                     830,850        33,386,731
--------------------------------------------------------------------------------
Mirae Asset Securities
Co. Ltd.                                              572,960        36,059,586
                                                                ----------------
                                                                     69,446,317

--------------------------------------------------------------------------------
COMMERCIAL BANKS--10.7%
Banco Bradesco SA,
Preference                                          2,254,256        73,873,147
--------------------------------------------------------------------------------
Banco
Latinoamericano de
Exportaciones SA,
Cl. E 1                                             3,299,385        54,307,877
--------------------------------------------------------------------------------
Banco Nossa Caixa
SA                                                  1,360,500        27,920,709
--------------------------------------------------------------------------------
Bank Hapoalim Ltd.                                 10,467,391        46,055,561
--------------------------------------------------------------------------------
Bank Leumi
Le-Israel                                          12,956,600        46,205,740
--------------------------------------------------------------------------------
Commercial
International Bank,
Sponsored GDR 3                                     2,675,100        20,999,535
--------------------------------------------------------------------------------
Commercial
International Bank,
Sponsored GDR                                       4,228,723        33,195,476
--------------------------------------------------------------------------------
Daegu Bank                                          1,667,800        27,932,570
--------------------------------------------------------------------------------
Grupo Financiero
Banorte SA de CV                                    4,258,300        12,463,184

                                                                          VALUE
                                                       SHARES        SEE NOTE 1
--------------------------------------------------------------------------------
COMMERCIAL BANKS Continued
Grupo Financiero
Inbursa SA de CV                                   23,827,500   $    38,100,594
--------------------------------------------------------------------------------
Hana Financial
Group, Inc.                                           816,033        35,186,277
--------------------------------------------------------------------------------
ICICI Bank Ltd.,
Sponsored ADR                                       2,300,200        61,392,338
--------------------------------------------------------------------------------
Israel Discount
Bank, Cl. A 2                                      13,230,853        21,600,898
--------------------------------------------------------------------------------
Jeonbuk Bank 1                                      2,466,548        17,960,924
--------------------------------------------------------------------------------
Kookmin Bank,
Sponsored ADR                                         635,100        51,176,358
--------------------------------------------------------------------------------
Orszagos
Takarekpenztar es
Kereskedelmi Bank
plc                                                 2,279,500        65,909,726
--------------------------------------------------------------------------------
PT Bank Mandiri                                   240,263,500        55,463,708
--------------------------------------------------------------------------------
Shinhan Financial
Group Co. Ltd.                                        672,490        30,132,853
--------------------------------------------------------------------------------
Standard Bank
Group Ltd.                                          2,491,736        26,878,976
--------------------------------------------------------------------------------
TMB Bank Public
Co. Ltd. 2                                        582,693,189        50,547,626
--------------------------------------------------------------------------------
Turkiye Is Bankasi,
Cl. C                                               5,414,300        31,235,635
--------------------------------------------------------------------------------
Turkiye Vakiflar
Bankasi TAO, Cl. D                                 14,841,200        68,394,961
--------------------------------------------------------------------------------
Woori Finance
Holdings Co. Ltd.                                   2,380,110        46,558,452
                                                                ----------------
                                                                    943,493,125

--------------------------------------------------------------------------------
CONSUMER FINANCE--0.3%
Kiatnakin Bank
Public Co. Ltd.                                    17,401,420        13,196,926
--------------------------------------------------------------------------------
Tisco Bank Public
Co. Ltd.                                           24,094,980        13,280,059
                                                                ----------------
                                                                     26,476,985

--------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--2.2%
Fubon Financial
Holding Co. Ltd.                                  109,057,000        81,221,300
--------------------------------------------------------------------------------
Fubon Financial
Holding Co. Ltd.,
GDR                                                 1,624,400        12,426,660



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

                                                                          VALUE
                                                       SHARES        SEE NOTE 1
--------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES Continued
Haci Omer Sabanci
Holding AS                                         21,635,376   $    81,980,158
--------------------------------------------------------------------------------
Haci Omer Sabanci
Holding AS,
Sponsored ADR                                      17,834,250        17,388,394
                                                                ----------------
                                                                    193,016,512

--------------------------------------------------------------------------------
INSURANCE--1.8%
Aksigorta AS                                       12,983,810        47,424,990
--------------------------------------------------------------------------------
Anadolu Anonim
Turk Sigorta Sirketi                                1,691,866         2,887,735
--------------------------------------------------------------------------------
Cathay Financial
Holding Co. Ltd.                                   43,506,642        83,187,202
--------------------------------------------------------------------------------
Liberty Group Ltd.                                  2,228,783        21,929,495
--------------------------------------------------------------------------------
Shin Kong Financial
Holding Co. Ltd.                                    9,336,411         8,088,633
                                                                ----------------
                                                                    163,518,055

--------------------------------------------------------------------------------
REAL ESTATE--0.3%
Solidere, GDR 3                                     1,557,045        28,338,219
--------------------------------------------------------------------------------
REAL ESTATE MANAGEMENT & DEVELOPMENT--1.2%
Medinet Nasr for
Housing &
Development Co. 1                                   1,532,459        20,125,707
--------------------------------------------------------------------------------
Midland Holdings
Ltd.                                               35,704,000        15,884,257
--------------------------------------------------------------------------------
SM Prime Holdings,
Inc.                                              443,971,755        69,042,852
                                                                ----------------
                                                                    105,052,816

--------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--1.2%
Housing
Development
Finance Corp. Ltd.                                  3,839,500       108,097,581
--------------------------------------------------------------------------------
HEALTH CARE--2.0%
--------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--0.7%
Diagnosticos da
America 1,2                                         3,273,900        63,859,374
--------------------------------------------------------------------------------
PHARMACEUTICALS--1.3%
Divi's Laboratories
Ltd. 1                                                788,816        30,371,153
--------------------------------------------------------------------------------
Dr. Reddy's
Laboratories Ltd.                                     328,368         5,097,166

                                                                          VALUE
                                                       SHARES        SEE NOTE 1
--------------------------------------------------------------------------------
PHARMACEUTICALS Continued
Ranbaxy
Laboratories Ltd.                                   2,226,116   $    19,455,493
--------------------------------------------------------------------------------
Teva Pharmaceutical
Industries Ltd.,
Sponsored ADR                                       1,757,000        61,073,320
                                                                ----------------
                                                                    115,997,132

--------------------------------------------------------------------------------
INDUSTRIALS--9.1%
--------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.8%
Bharat Electronics
Ltd.                                                  818,900        20,393,751
--------------------------------------------------------------------------------
Elbit Systems Ltd.                                    157,177         4,518,029
--------------------------------------------------------------------------------
Empresa Brasileira
de Aeronautica SA                                   4,787,100        46,397,359
                                                                ----------------
                                                                     71,309,139

--------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING--3.6%
Aveng Ltd.                                          2,274,805         8,418,197
--------------------------------------------------------------------------------
Continental
Engineering Corp.                                  14,736,210         7,794,448
--------------------------------------------------------------------------------
Empresas ICA
SA de CV 2                                         14,452,483        49,000,671
--------------------------------------------------------------------------------
GS Engineering &
Construction Corp.                                    324,560        22,079,528
--------------------------------------------------------------------------------
Hyundai
Development Co.                                       556,520        22,692,789
--------------------------------------------------------------------------------
Hyundai Engineering
& Construction Co.
Ltd. 2                                              1,069,542        56,520,060
--------------------------------------------------------------------------------
Impulsora del
Desarrollo y el
Empleo en America
Latina SA de CV 2                                  32,277,200        31,824,820
--------------------------------------------------------------------------------
Joongang
Construction
Co. Ltd.                                              325,260         4,710,395
--------------------------------------------------------------------------------
Kyeryong
Construction
Industrial Co. Ltd. 1                                 585,682        18,399,663
--------------------------------------------------------------------------------
Larsen & Toubro
Ltd.                                                1,877,531        96,983,241



                                                                          VALUE
                                                       SHARES        SEE NOTE 1
--------------------------------------------------------------------------------
CONSTRUCTION & ENGINEERING Continued
Orascom
Construction
Industries                                            112,200   $     4,711,266
                                                                ----------------
                                                                    323,135,078

--------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT--0.8%
Bharat Heavy
Electricals Ltd.                                    1,129,247        54,866,820
--------------------------------------------------------------------------------
Motech Industries,
Inc. 2                                                531,000        13,090,785
--------------------------------------------------------------------------------
Ormat Industries
Ltd.                                                  589,662         5,865,557
                                                                ----------------
                                                                     73,823,162

--------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--2.1%
Empresas Copec SA                                     412,827         3,853,561
--------------------------------------------------------------------------------
Far Eastern Textile
Ltd.                                               17,434,880        12,242,814
--------------------------------------------------------------------------------
Keppel Corp. Ltd.                                   4,566,000        43,520,254
--------------------------------------------------------------------------------
Koc Holding AS 2                                   19,152,936        71,266,130
--------------------------------------------------------------------------------
LG Corp.                                              609,490        18,092,373
--------------------------------------------------------------------------------
Murray & Roberts
Holdings Ltd.                                       8,101,300        32,730,824
                                                                ----------------
                                                                    181,705,956

--------------------------------------------------------------------------------
MACHINERY--0.3%
SembCorp Marine
Ltd.                                               11,840,000        26,031,072
--------------------------------------------------------------------------------
ROAD & RAIL--1.4%
All America Latina
Logistica                                           1,331,820       113,304,090
--------------------------------------------------------------------------------
All America Latina
Logistica, GDR 4                                      118,900        10,274,149
                                                                ----------------
                                                                    123,578,239

--------------------------------------------------------------------------------
TRANSPORTATION INFRASTRUCTURE--0.1%
Gateway Distriparks
Ltd.                                                2,828,000        10,504,347
--------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--14.8%
--------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--3.1%
High Tech Computer
Corp.                                               3,523,280        88,894,636

                                                                          VALUE
                                                       SHARES        SEE NOTE 1
--------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS Continued
Inventec Co. Ltd.                                  68,670,160   $    41,749,220
--------------------------------------------------------------------------------
Lite-On Technology
Corp. 2                                            41,931,075        52,068,895
--------------------------------------------------------------------------------
Mitac International
Corp.                                              30,230,211        30,784,797
--------------------------------------------------------------------------------
Quanta Computer,
Inc.                                               44,834,761        64,329,054
                                                                ----------------
                                                                    277,826,602

--------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--2.6%
Hon Hai Precision
Industry Co. Ltd.                                  25,051,200       141,261,155
--------------------------------------------------------------------------------
Merry Electronics
Co. Ltd. 1                                         12,873,090        45,784,552
--------------------------------------------------------------------------------
Synnex Technology
International Corp.                                31,548,088        28,003,106
--------------------------------------------------------------------------------
Varitronix
International Ltd. 1                               25,033,000        15,128,111
                                                                ----------------
                                                                    230,176,924

--------------------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES--0.2%
NHN Corp. 2                                           180,117        17,013,028
--------------------------------------------------------------------------------
Tech Mahindra
Ltd. 2                                                 36,412           421,318
                                                                ----------------
                                                                     17,434,346

--------------------------------------------------------------------------------
IT SERVICES--3.6%
HCL Technologies
Ltd.                                                4,421,393        55,259,099
--------------------------------------------------------------------------------
Infosys Technologies
Ltd.                                                3,033,200       118,282,070
--------------------------------------------------------------------------------
Infosys Technologies
Ltd., Sponsored
ADR                                                 1,157,512        51,914,413
--------------------------------------------------------------------------------
Tata Consultancy
Services Ltd.                                       4,398,746        94,341,215
                                                                ----------------
                                                                    319,796,797

--------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--5.3%
Mtekvision Co. Ltd.                                    19,279           411,130
--------------------------------------------------------------------------------
Powerchip
Semiconductor
Corp.                                              32,018,797        21,169,694



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

                                                                          VALUE
                                                       SHARES        SEE NOTE 1
--------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT Continued
Samsung
Electronics Co.                                       195,328   $   131,393,506
--------------------------------------------------------------------------------
Sunplus Technology
Co. Ltd. 1                                         53,455,983        51,267,954
--------------------------------------------------------------------------------
Taiwan
Semiconductor
Manufacturing Co.
Ltd.                                               21,761,000        38,433,089
--------------------------------------------------------------------------------
Taiwan
Semiconductor
Manufacturing Co.
Ltd., ADR                                          11,799,400       109,852,414
--------------------------------------------------------------------------------
Telechips, Inc. 1                                     655,280        14,090,002
--------------------------------------------------------------------------------
United
Microelectronics
Corp.                                             181,412,798        99,263,763
                                                                ----------------
                                                                    465,881,552

--------------------------------------------------------------------------------
MATERIALS--8.6%
--------------------------------------------------------------------------------
CHEMICALS--0.4%
Finetec Corp. 1                                     1,676,105        26,422,589
--------------------------------------------------------------------------------
Taiwan Fertilizer
Co. Ltd.                                            3,098,000         4,661,621
                                                                ----------------
                                                                     31,084,210

--------------------------------------------------------------------------------
CONSTRUCTION MATERIALS--0.5%
Cemex SAB,
Sponsored ADR                                       1,689,264        48,802,837
--------------------------------------------------------------------------------
METALS & MINING--7.3%
Anglo Platinum Ltd.                                 1,250,261       140,015,369
--------------------------------------------------------------------------------
AngloGold Ashanti
Ltd., Sponsored
ADR                                                 2,931,700       135,239,321
--------------------------------------------------------------------------------
Companhia Vale do
Rio Doce, ADR                                       1,053,700        22,591,328
--------------------------------------------------------------------------------
Companhia Vale do
Rio Doce, Sponsored
ADR                                                 2,941,400        52,945,200
--------------------------------------------------------------------------------
Harmony Gold
Mining Co. Ltd.,
Sponsored ADR 2                                     1,858,100        25,548,875

                                                    PRINCIPAL             VALUE
                                                       AMOUNT        SEE NOTE 1
--------------------------------------------------------------------------------
METALS & MINING Continued
Highland Gold
Mining Ltd. 1,2                                     8,931,119   $    32,139,785
--------------------------------------------------------------------------------
Impala Platinum
Holdings Ltd.                                         459,510        85,023,680
--------------------------------------------------------------------------------
Inco Ltd.                                             857,200        66,843,452
--------------------------------------------------------------------------------
PT Aneka Tambang
Tbk 1                                             141,942,900        84,257,630
                                                                ----------------
                                                                    644,604,640

--------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS--0.4%
Aracruz Celulose
SA, Sponsored ADR                                     708,700        36,802,791
--------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--9.0%
--------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--3.1%
PT Indosat Tbk                                    203,451,500        98,404,595
--------------------------------------------------------------------------------
PT Telekomunikasi
Indonesia Tbk                                     117,957,000       102,876,271
--------------------------------------------------------------------------------
Tele Norte Leste
Participacoes SA                                    2,429,585        61,816,167
--------------------------------------------------------------------------------
Tele Norte Leste
Participacoes SA,
Preference                                            864,100        11,244,585
                                                                ----------------
                                                                    274,341,618

--------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--5.9%
Advanced Info
Service Public Co.
Ltd.                                                9,667,700        23,281,715
--------------------------------------------------------------------------------
America Movil SA
de CV, Series L                                     4,847,200       180,849,032
--------------------------------------------------------------------------------
Bharti Airtel Ltd. 2                                7,820,593        69,080,364
--------------------------------------------------------------------------------
Far EasTone
Telecommunications
Co. Ltd.                                           20,507,000        22,192,306
--------------------------------------------------------------------------------
Hutchison
Telecommunications
International Ltd. 2                               17,286,000        30,494,573
--------------------------------------------------------------------------------
Orascom Telecom
Holding SAE                                         2,030,402       109,981,870
--------------------------------------------------------------------------------
SK Telecom Co. Ltd.,
ADR                                                   902,800        19,771,320
--------------------------------------------------------------------------------
Turkcell Iletisim
Hizmetleri AS                                       1,293,856         6,006,842



                                                                          VALUE
                                                       SHARES        SEE NOTE 1
--------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES Continued
Vodafone Egypt
Telecommunications
Co. SAE                                             4,051,475   $    60,337,963
                                                                ----------------
                                                                    521,995,985

--------------------------------------------------------------------------------
UTILITIES--1.1%
--------------------------------------------------------------------------------
ELECTRIC UTILITIES--0.5%
Eletropaulo
Metropolitana SA,
Preference 2                                      913,058,900        40,329,607
--------------------------------------------------------------------------------
Reliance Energy Ltd.                                  375,822         3,540,973
                                                                ----------------
                                                                     43,870,580

--------------------------------------------------------------------------------
GAS UTILITIES--0.6%
Gail India Ltd.                                     9,409,920        52,585,144
--------------------------------------------------------------------------------
Reliance Natural
Resources 2                                         5,010,963         2,148,248
                                                                ----------------
                                                                     54,733,392
                                                                ----------------
Total Common
Stocks
(Cost $7,041,011,164)                                             8,743,879,699

                                                    PRINCIPAL             VALUE
                                                       AMOUNT        SEE NOTE 1
--------------------------------------------------------------------------------
NON-CONVERTIBLE CORPORATE BONDS AND NOTES--0.0%
--------------------------------------------------------------------------------
Trent Ltd., 2% Sec.
Debs., 7/7/10 [INR]
(Cost $743,366)                                    32,425,500   $       600,709

                                                        UNITS
--------------------------------------------------------------------------------
RIGHTS, WARRANTS AND CERTIFICATES--0.0%
--------------------------------------------------------------------------------
Trent Ltd. Wts., Exp.
1/7/10 2 (Cost $0)                                     63,757           369,924

                                                    PRINCIPAL
                                                       AMOUNT
--------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.2%
--------------------------------------------------------------------------------
Undivided interest of 2.55% in joint repurchase
agreement (Principal Amount/Value $886,796,000,
with a maturity value of $886,924,585) with
UBS Warburg LLC, 5.22%, dated 8/31/06,
to be repurchased at $22,640,282 on
9/1/06, collateralized by Federal
National Mortgage Assn., 5%-5.50%,
9/1/35-12/1/35, with a value of
$906,809,462
(Cost $22,637,000)                              $  22,637,000        22,637,000
--------------------------------------------------------------------------------
TOTAL INVESTMENTS,
AT VALUE
(COST $7,064,391,530)                                    98.9%    8,767,487,332
--------------------------------------------------------------------------------
OTHER ASSETS NET
OF LIABILITIES                                            1.1        94,927,158
                                                --------------------------------
NET ASSETS                                              100.0%  $ 8,862,414,490
                                                ================================

FOOTNOTES TO STATEMENT OF INVESTMENTS

PRINCIPAL AMOUNT IS REPORTED IN U.S. DOLLARS, EXCEPT FOR THOSE DENOTED IN THE
FOLLOWING CURRENCY:

INR               Indian Rupee

1. Represents ownership of at least 5% of the voting securities of the issuer,
and is or was an affiliate, as defined in the Investment Company Act of 1940, at
or during the period ended August 31, 2006. Transactions during the period in
which the issuer was an affiliate are as follows:



                                                             SHARES           GROSS              GROSS               SHARES
                                                    AUGUST 31, 2005       ADDITIONS         REDUCTIONS      AUGUST 31, 2006
----------------------------------------------------------------------------------------------------------------------------

Able C&C                                                    537,778         124,981             73,305              589,454
Aksigorta AS*                                             8,762,905       6,491,905**        2,271,000           12,983,810
Amtek Auto Ltd.                                           7,296,853       2,304,705             88,400            9,513,158
Banco Latinoamericano de Exportaciones SA, Cl. E          3,805,885          53,800            560,300            3,299,385
Coca-Cola Femsa SA de CV, Sponsored ADR                   1,360,000              --          1,360,000                   --
Companhia Brasileira de Distribuicao Grupo
Pao de Acucar, Sponsored ADR*                             2,892,100         311,400            294,400            2,909,100
Corporacion GEO SA de CV, Series B*                      28,915,000              --         18,824,500           10,090,500
Courts (Singapore) Ltd.                                  11,425,000              --         11,425,000                   --
Diagnosticos da America                                   2,139,100       1,976,600**          841,800            3,273,900



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



                                                       SHARES         GROSS              GROSS              SHARES
                                              AUGUST 31, 2005     ADDITIONS         REDUCTIONS     AUGUST 31, 2006
-------------------------------------------------------------------------------------------------------------------

Divi's Laboratories Ltd.                              796,149            --              7,333             788,816
Finetec Corp.                                       1,538,406       388,809            251,110           1,676,105
GS Home Shopping, Inc.*                               698,292            --            567,668             130,624
Highland Gold Mining Ltd.                                  --     8,931,119                 --           8,931,119
Humax Co Ltd.                                       1,272,452     2,493,233            215,002           3,550,683
Inventec Appliances Corp.                                  --    22,053,200**               --          22,053,200
Jeonbuk Bank                                               --     2,477,728***          11,180           2,466,548
Kiatnakin Bank plc*                                25,718,220     2,408,200         10,725,000          17,401,420
Kyeryong Construction Industrial Co. Ltd.             657,218            --             71,536             585,682
Lojas Americanas SA, Preference*                2,226,500,000   390,164,000      1,274,794,000       1,341,870,000
Medinet Nasr for Housing & Development Co.          1,316,496       228,063             12,100           1,532,459
Merry Electronics Co. Ltd.                                 --    12,873,090**               --          12,873,090
Mtekvision Co. Ltd.*                                  823,668        94,289            898,678              19,279
PT Aneka Tambang Tbk                              178,972,100            --         37,029,200         141,942,900
Rico Auto Industries Ltd.                                  --     8,990,692                 --           8,990,692
Sadia SA, Preference                               16,547,000    20,763,000          4,175,000          33,135,000
SARE Holding SA de CV, Cl. B                        1,174,416    50,643,925          6,780,391          45,037,950
Sinotrans Ltd.                                     91,900,000            --         91,900,000                  --
Ssangyong Motor Co.                                 7,796,210     4,853,709             97,080          12,552,839
Sunplus Technology Co. Ltd.                                --    53,455,983**               --          53,455,983
Telechips, Inc.                                       608,145        55,376              8,241             655,280
United Breweries Holdings Ltd.                      1,465,724     1,303,297**          162,427           2,606,594
United Breweries Ltd.                                 719,989            --            719,989**                --
United Breweries Ltd.                                      --     7,133,890**               --           7,133,890
Varitronix International Ltd.                      11,577,000    17,968,000          4,512,000          25,033,000
Yedang Entertainment Co. Ltd.                              --     2,651,447            763,710           1,887,737




                                                                      VALUE           DIVIDEND            REALIZED
                                                                 SEE NOTE 1             INCOME         GAIN (LOSS)
-------------------------------------------------------------------------------------------------------------------

Able C&C                                                     $    4,384,267      $     169,361      $   (2,779,116)
Aksigorta AS*                                                            --*         1,533,370          14,464,637
Amtek Auto Ltd.                                                  59,734,496            295,112             (84,640)
Banco Latinoamericano de Exportaciones SA, Cl. E                 54,307,877          6,304,365          (3,866,355)
Coca-Cola Femsa SA de CV, Sponsored ADR                                  --                 --           8,232,349
Companhia Brasileira de Distribuicao Grupo Pao de Acucar,
Sponsored ADR*                                                           --*           796,384            (475,849)
Corporacion GEO SA de CV, Series B*                                      --*                --          53,326,839
Courts (Singapore) Ltd.                                                  --                 --             (42,532)
Diagnosticos da America                                          63,859,374                 --          (3,026,240)
Divi's Laboratories Ltd.                                         30,371,153            169,565              (3,105)
Finetec Corp.                                                    26,422,589            196,259             267,252
GS Home Shopping, Inc.*                                                  --*         1,354,360          18,745,780
Highland Gold Mining Ltd.                                        32,139,785                 --                  --
Humax Co Ltd.                                                    92,837,592            288,509          (1,878,038)
Inventec Appliances Corp.                                        57,853,910          2,271,400                  --
Jeonbuk Bank                                                     17,960,924            168,841             (13,030)
Kiatnakin Bank plc*                                                      --*         1,146,086          (1,673,573)
Kyeryong Construction Industrial Co. Ltd.                        18,399,663            421,850             310,428





                                                                      VALUE           DIVIDEND            REALIZED
                                                                 SEE NOTE 1             INCOME         GAIN (LOSS)
-------------------------------------------------------------------------------------------------------------------

Lojas Americanas SA, Preference*                             $           --*     $   1,770,523      $   38,405,700
Medinet Nasr for Housing & Development Co.                       20,125,707            736,147              62,731
Merry Electronics Co. Ltd.                                       45,784,552            716,996                  --
Mtekvision Co. Ltd.*                                                     --*           749,461          (3,831,606)
PT Aneka Tambang Tbk                                             84,257,630          1,933,645           4,830,170
Rico Auto Industries Ltd.                                        13,842,980                 --                  --
Sadia SA, Preference                                             90,101,236          3,191,227          (3,122,551)
SARE Holding SA de CV, Cl. B                                     50,762,331                 --            (991,012)
Sinotrans Ltd.                                                           --            860,240          (4,725,198)
Ssangyong Motor Co.                                              59,414,769                 --             (89,623)
Sunplus Technology Co. Ltd.                                      51,267,954          2,476,237                  --
Telechips, Inc.                                                  14,090,002             84,971              (4,476)
United Breweries Holdings Ltd.                                   12,748,701             14,339           1,471,001
United Breweries Ltd.                                                    --             24,376              26,490
United Breweries Ltd.                                            17,729,330                 --                  --
Varitronix International Ltd.                                    15,128,111          1,275,680          (1,053,979)
Yedang Entertainment Co. Ltd.                                     7,272,471                 --          (9,278,098)
                                                             ------------------------------------------------------
                                                             $  940,797,404      $  28,949,304      $  103,204,356
                                                             ======================================================


* No longer an affiliate as of August 31, 2006.

** Result of a corporate action.

*** All or a portion of the transactions were the result of a stock split or
dividend.

2. Non-income producing security.

3. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $131,293,135 or 1.48% of the Fund's net
assets as of August 31, 2006.

4. Illiquid or restricted security. The aggregate value of illiquid securities
as of August 31, 2006 was $10,274,149, which represents 0.12% of the Fund's net
assets. In addition, the Fund has restricted currency of $7,114,229, which
represents 0.08% of the Fund's net assets. See Note 6 of accompanying Notes.

DISTRIBUTION OF INVESTMENTS REPRESENTING GEOGRAPHIC HOLDINGS, AS A PERCENTAGE OF
TOTAL INVESTMENTS AT VALUE, IS AS FOLLOWS:



GEOGRAPHIC HOLDINGS                                                                            VALUE       PERCENT
-------------------------------------------------------------------------------------------------------------------

Brazil                                                                               $ 1,357,653,311          15.5%
India                                                                                  1,267,478,613          14.5
Taiwan                                                                                 1,157,716,008          13.2
Korea, Republic of South                                                               1,115,461,910          12.7
South Africa                                                                             595,427,641           6.8
Mexico                                                                                   553,749,122           6.3
Indonesia                                                                                444,842,393           5.1
Turkey                                                                                   404,320,037           4.6
Egypt                                                                                    295,814,023           3.4
Russia                                                                                   213,095,186           2.4
Israel                                                                                   185,319,105           2.1
United States                                                                            161,260,671           1.8
Hong Kong                                                                                146,037,451           1.7
Thailand                                                                                 100,306,326           1.1
Philippines                                                                               93,165,057           1.1
China                                                                                     86,425,149           1.0
Singapore                                                                                 69,551,326           0.8
France                                                                                    67,753,824           0.8
Hungary                                                                                   67,063,220           0.8



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



GEOGRAPHIC HOLDINGS                                                                            VALUE       PERCENT
-------------------------------------------------------------------------------------------------------------------

Canada                                                                               $    66,843,452           0.8%
Luxembourg                                                                                65,450,259           0.7
Panama                                                                                    54,307,877           0.6
Bermuda                                                                                   35,083,739           0.4
Jersey, Channel Islands                                                                   32,139,785           0.4
Norway                                                                                    31,963,585           0.4
Cayman Islands                                                                            30,494,573           0.3
Portugal                                                                                  28,628,811           0.3
Lebanon                                                                                   28,338,219           0.3
Greece                                                                                     7,943,098           0.1
Chile                                                                                      3,853,561           0.0
                                                                                     ------------------------------
Total                                                                                $ 8,767,487,332         100.0%
                                                                                     ==============================


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



STATEMENT OF ASSETS AND LIABILITIES  August 31, 2006
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
ASSETS
--------------------------------------------------------------------------------
Investments, at value--see accompanying statement
of investments:
Unaffiliated companies (cost $6,246,859,275)                    $ 7,826,689,928
Affiliated companies (cost $817,532,255)                            940,797,404
                                                                ----------------
                                                                  8,767,487,332
--------------------------------------------------------------------------------
Cash                                                                  7,852,578
--------------------------------------------------------------------------------
Cash--foreign currencies (cost $62,157,906)                          62,137,439
--------------------------------------------------------------------------------
Unrealized appreciation on foreign currency contracts                       370
--------------------------------------------------------------------------------
Receivables and other assets:
Investments sold                                                     41,587,366
Interest and dividends                                               14,403,949
Shares of beneficial interest sold                                   12,413,725
Other                                                                    77,986
                                                                ----------------
Total assets                                                      8,905,960,745

--------------------------------------------------------------------------------
LIABILITIES
--------------------------------------------------------------------------------
Unrealized depreciation on foreign currency contracts                    16,409
--------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed                               18,361,525
Investments purchased                                                10,075,562
Foreign capital gains tax                                             6,495,394
Distribution and service plan fees                                    3,494,729
Custodian fees                                                        2,284,226
Transfer and shareholder servicing agent fees                         1,320,613
Shareholder communications                                              785,757
Trustees' compensation                                                  560,870
Other                                                                   151,170
                                                                ----------------
Total liabilities                                                    43,546,255

--------------------------------------------------------------------------------
NET ASSETS                                                      $ 8,862,414,490
                                                                ================

--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
--------------------------------------------------------------------------------
Paid-in capital                                                 $ 6,434,982,785
--------------------------------------------------------------------------------
Accumulated net investment income                                    21,332,483
--------------------------------------------------------------------------------
Accumulated net realized gain on investments
and foreign currency transactions                                   709,385,166
--------------------------------------------------------------------------------
Net unrealized appreciation on investments
and translation of assets and liabilities
denominated in foreign currencies                                 1,696,714,056
                                                                ----------------
NET ASSETS                                                      $ 8,862,414,490
                                                                ================



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 $7,069,819,065 and 184,943,427
shares of beneficial interest outstanding)                              $ 38.23
Maximum offering price per share (net asset
value plus sales charge of 5.75% of offering price)                     $ 40.56
--------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $308,973,068
and 8,184,634 shares of beneficial interest outstanding)                $ 37.75
--------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $945,369,222
and 25,326,382 shares of beneficial interest outstanding)               $ 37.33
--------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price
per share (based on net assets of $240,672,689
and 6,401,789 shares of beneficial interest outstanding)                $ 37.59
--------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering
price per share (based on net assets of $297,580,446
and 7,774,642 shares of beneficial interest outstanding)                $ 38.28

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



STATEMENT OF OPERATIONS  For the Year Ended August 31, 2006
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
INVESTMENT INCOME
--------------------------------------------------------------------------------
Dividends:
Unaffiliated companies (net of foreign
withholding taxes of $16,402,216)                               $   161,986,388
Affiliated companies (net of foreign
withholding taxes of $3,086,739)                                     28,949,304
--------------------------------------------------------------------------------
Interest (net of foreign withholding taxes of $4)                     8,891,113
--------------------------------------------------------------------------------
Other income                                                             13,931
                                                                ----------------
Total investment income                                             199,840,736

--------------------------------------------------------------------------------
EXPENSES
--------------------------------------------------------------------------------
Management fees                                                      68,374,830
--------------------------------------------------------------------------------
Distribution and service plan fees:
Class A                                                              16,002,677
Class B                                                               3,125,684
Class C                                                               8,303,648
Class N                                                                 949,368
--------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A                                                              10,205,457
Class B                                                                 503,245
Class C                                                               1,031,598
Class N                                                                 583,615
Class Y                                                                  11,004
--------------------------------------------------------------------------------
Shareholder communications:
Class A                                                                 965,604
Class B                                                                 107,451
Class C                                                                 154,778
Class N                                                                  12,340
Class Y                                                                     982
--------------------------------------------------------------------------------
Custodian fees and expenses                                           7,339,017
--------------------------------------------------------------------------------
Trustees' compensation                                                  521,234
--------------------------------------------------------------------------------
Other                                                                   313,922
                                                                ----------------
Total expenses                                                      118,506,454
Less reduction to custodian expenses                                    (49,891)
Less waivers and reimbursements of expenses                             (35,719)
                                                                ----------------
Net expenses                                                        118,420,844

--------------------------------------------------------------------------------
NET INVESTMENT INCOME                                                81,419,892



STATEMENT OF OPERATIONS  Continued
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
--------------------------------------------------------------------------------
Net realized gain on:
Investments:
  Unaffiliated companies (net of foreign
  capital gains tax of $5,778,185)                              $   779,615,936
  Affiliated companies                                              103,204,356
Foreign currency transactions                                        62,973,234
Net increase from payment by affiliate                                1,146,863
                                                                ----------------
Net realized gain                                                   946,940,389
--------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments (net of foreign capital gains tax of $863,035)          420,895,694
Translation of assets and liabilities
denominated in foreign currencies                                   (11,863,318)
                                                                ----------------
Net change in unrealized appreciation                               409,032,376

--------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS            $ 1,437,392,657
                                                                ================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



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



YEAR ENDED AUGUST 31,                                                           2006              2005
-------------------------------------------------------------------------------------------------------

OPERATIONS
-------------------------------------------------------------------------------------------------------
Net investment income                                                $    81,419,892   $    61,764,538
-------------------------------------------------------------------------------------------------------
Net realized gain                                                        946,940,389       160,898,642
-------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation                                    409,032,376       952,477,007
                                                                     ----------------------------------
Net increase in net assets resulting from operations                   1,437,392,657     1,175,140,187

-------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
-------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A                                                                  (68,674,628)      (31,307,183)
Class B                                                                   (1,912,990)         (879,176)
Class C                                                                   (5,631,498)       (1,898,747)
Class N                                                                   (1,612,601)         (545,843)
Class Y                                                                   (1,210,164)               --
-------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A                                                                 (168,966,879)      (10,889,372)
Class B                                                                   (8,946,174)         (742,531)
Class C                                                                  (20,858,379)       (1,173,811)
Class N                                                                   (4,578,511)         (217,007)
Class Y                                                                   (2,421,023)               --

-------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
-------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial
 interest transactions:
Class A                                                                2,007,139,730     1,608,133,391
Class B                                                                   32,982,481        42,129,047
Class C                                                                  385,516,073       173,879,187
Class N                                                                  119,755,258        53,161,881
Class Y                                                                  288,912,376                --

-------------------------------------------------------------------------------------------------------
NET ASSETS
-------------------------------------------------------------------------------------------------------
Total increase                                                         3,986,885,728     3,004,790,023
-------------------------------------------------------------------------------------------------------
Beginning of period                                                    4,875,528,762     1,870,738,739
                                                                     ----------------------------------
End of period (including accumulated net investment income
of $21,332,483 and $20,945,106, respectively)                        $ 8,862,414,490   $ 4,875,528,762
                                                                     ==================================


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



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



CLASS A   YEAR ENDED AUGUST 31,                         2006            2005             2004              2003            2002
--------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period             $     31.11     $     21.09      $     16.92       $     13.43     $     12.93
--------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                    .42 1           .55 1            .48               .19             .25
Net realized and unrealized gain                        8.26            9.97             4.31              3.50             .45
                                                 -------------------------------------------------------------------------------
Total from investment operations                        8.68           10.52             4.79              3.69             .70
--------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                    (.45)           (.37)            (.62)             (.20)           (.20)
Distributions from net realized gain                   (1.11)           (.13)              --                --              --
                                                 -------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                        (1.56)           (.50)            (.62)             (.20)           (.20)
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                   $     38.23     $     31.11      $     21.09       $     16.92     $     13.43
                                                 ===============================================================================

--------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                     28.41%          50.42%           28.61%            27.93%           5.44%
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)         $ 7,069,819     $ 4,104,558      $ 1,549,854       $   588,450     $   337,405
--------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                $ 6,540,507     $ 2,739,224      $ 1,145,452       $   374,841     $   257,746
--------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                   1.11%           2.01%            1.64%             1.42%           1.91%
Total expenses                                          1.37%           1.43%            1.52%             1.81%           1.81%
Expenses after payments and waivers
and reduction to custodian expenses                     1.37%           1.43%            1.52%             1.76%           1.77%
--------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                   65%             28%              15%                6%             10%


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.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.





CLASS B   YEAR ENDED AUGUST 31,                         2006            2005             2004              2003            2002
--------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period             $     30.78     $     20.87      $     16.79       $     13.32     $     12.82
--------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                    .11 1           .31 1            .12               .09             .15
Net realized and unrealized gain                        8.21            9.88             4.46              3.47             .44
                                                 -------------------------------------------------------------------------------
Total from investment operations                        8.32           10.19             4.58              3.56             .59
--------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                    (.24)           (.15)            (.50)             (.09)           (.09)
Distributions from net realized gain                   (1.11)           (.13)              --                --              --
                                                 -------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                        (1.35)           (.28)            (.50)             (.09)           (.09)
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                   $     37.75     $     30.78      $     20.87       $     16.79     $     13.32
                                                 ===============================================================================

--------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                     27.44%          49.14%           27.50%            26.98%           4.61%
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)         $   308,973     $   222,723      $   119,749       $    84,705     $    63,005
--------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                $   313,463     $   169,763      $   117,271       $    62,676     $    54,744
--------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                   0.30%           1.15%            0.61%             0.66%           1.14%
Total expenses                                          2.14%           2.24%            2.41%             2.67%           2.58%
Expenses after payments and waivers
and reduction to custodian expenses                     2.14%           2.24%            2.41%             2.52%           2.54%
--------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                   65%             28%              15%                6%             10%


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.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



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



CLASS C   YEAR ENDED AUGUST 31,                         2006            2005             2004              2003            2002
--------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period             $     30.49     $     20.70      $     16.67       $     13.25     $     12.78
--------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                    .15 1           .34 1            .31               .10             .17
Net realized and unrealized gain                        8.10            9.79             4.25              3.44             .41
                                                 -------------------------------------------------------------------------------
Total from investment operations                        8.25           10.13             4.56              3.54             .58
--------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                    (.30)           (.21)            (.53)             (.12)           (.11)
Distributions from net realized gain                   (1.11)           (.13)              --                --              --
                                                 -------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                        (1.41)           (.34)            (.53)             (.12)           (.11)
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                   $     37.33     $     30.49      $     20.70       $     16.67     $     13.25
                                                 ===============================================================================

--------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                     27.50%          49.29%           27.60%            27.05%           4.54%
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)         $   945,369     $   450,012      $   175,025       $    77,081     $    46,722
--------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                $   832,650     $   294,791      $   145,460       $    52,236     $    33,334
--------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                   0.42%           1.28%            0.83%             0.66%           1.15%
Total expenses                                          2.09%           2.17%            2.31%             2.57%           2.57%
Expenses after payments and waivers
and reduction to custodian expenses                     2.09%           2.17%            2.31%             2.52%           2.53%
--------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                   65%             28%              15%                6%             10%


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.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.





CLASS N   YEAR ENDED AUGUST 31,                         2006            2005             2004              2003            2002
--------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period             $     30.67     $     20.84      $     16.77       $     13.36     $     12.91
--------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                    .30 1           .45 1            .45               .22             .32
Net realized and unrealized gain                        8.12            9.83             4.22              3.41             .34
                                                 -------------------------------------------------------------------------------
Total from investment operations                        8.42           10.28             4.67              3.63             .66
--------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                    (.39)           (.32)            (.60)             (.22)           (.21)
Distributions from net realized gain                   (1.11)           (.13)              --                --              --
                                                 -------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                        (1.50)           (.45)            (.60)             (.22)           (.21)
--------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                   $     37.59     $     30.67      $     20.84       $     16.77     $     13.36
                                                 ===============================================================================

--------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2                     27.93%          49.84%           28.16%            27.73%           5.13%
--------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)         $   240,673     $    98,236      $    26,110       $     8,709     $     1,741
--------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                $   194,085     $    57,727      $    18,770       $     4,196     $       686
--------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income                                   0.81%           1.67%            1.31%             1.27%           1.68%
Total expenses                                          1.75%           1.82%            1.99%             2.08%           2.04%
Expenses after payments and waivers
and reduction to custodian expenses                     1.73%           1.80%            1.88%             1.99%           2.00%
--------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                   65%             28%              15%                6%             10%


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.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



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

CLASS Y   PERIOD ENDED AUGUST 31,                                        2006 1
--------------------------------------------------------------------------------
PER SHARE OPERATING DATA
--------------------------------------------------------------------------------
Net asset value, beginning of period                                  $   32.15
--------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2                                                     .65
Net realized and unrealized gain                                           7.15
                                                                      ----------
Total from investment operations                                           7.80
--------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                                       (.56)
Distributions from net realized gain                                      (1.11)
                                                                      ----------
Total dividends and/or distributions to shareholders                      (1.67)
--------------------------------------------------------------------------------
Net asset value, end of period                                        $   38.28
                                                                      ==========

--------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3                                        24.78%
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------
Net assets, end of period (in thousands)                              $ 297,580
--------------------------------------------------------------------------------
Average net assets (in thousands)                                     $ 159,042
--------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income                                                      1.76%
Total expenses                                                             0.97%
Expenses after payments and waivers
and reduction to custodian expenses                                        0.97%
--------------------------------------------------------------------------------
Portfolio turnover rate                                                      65%

1. For the period from September 7, 2005 (inception of offering) to August 31,
2006.

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

3. Assumes an investment on the business day before the first day of the fiscal
period, with all dividends and distributions reinvested in additional shares on
the reinvestment date, and redemption at the net asset value calculated on the
last business day of the fiscal period. 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.

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



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

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

Oppenheimer Developing Markets Fund (the Fund) is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund's investment objective is to aggressively seek
capital appreciation. The Fund's investment advisor is OppenheimerFunds, Inc.
(the Manager).

      The Fund offers Class A, Class B, Class C, Class N and Class Y shares.
Class A shares are sold at their offering price, which is normally net asset
value plus a front-end sales charge. Class B, Class C and Class N shares are
sold without a front-end sales charge but may be subject to a contingent
deferred sales charge (CDSC). Class N shares are sold only through retirement
plans. Retirement plans that offer Class N shares may impose charges on those
accounts. Class Y shares are sold to certain institutional investors without
either a front-end sales charge or a CDSC, however, the institutional investor
may impose charges on those accounts. All classes of shares have identical
rights and voting privileges with respect to the Fund in general and exclusive
voting rights on matters that affect that class alone. Earnings, net assets and
net asset value per share may differ due to each class having its own expenses,
such as transfer and shareholder servicing agent fees and shareholder
communications, directly attributable to that class. Class A, B, C and N have
separate distribution and/or service plans. No such plan has been adopted for
Class Y shares. Class B shares will automatically convert to Class A shares six
years after the date of purchase. The Fund assesses a 2% fee on the proceeds of
fund shares that are redeemed (either by selling or exchanging to another
Oppenheimer fund) within 30 days of their purchase. The fee, which is retained
by the Fund, is accounted for as an addition to paid-in capital.

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

--------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of the New York Stock Exchange (the "Exchange"), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. Securities listed or traded on National
Stock Exchanges or other domestic exchanges are valued based on the last sale
price of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ(R) 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, as 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



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

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

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
(including restricted securities) for which market quotations are not readily
available are valued at their fair value. Foreign and domestic securities whose
values have been materially affected by what the Manager identifies as a
significant event occurring before the Fund's assets are valued but after the
close of their respective exchanges will be fair valued. Fair value is
determined in good faith using consistently applied procedures under the
supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).

--------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income are translated into U.S. dollars 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. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Trustees.

      Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.

      The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.

--------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other affiliated funds
advised by the Manager, may transfer uninvested cash balances into joint trading
accounts on a daily basis. These balances are invested in one or more repurchase
agreements. Securities pledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.



--------------------------------------------------------------------------------
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
    ------------------------------------------------------------------------
    $299,150,456      $541,645,449           $9,897,244       $1,597,062,384

1. The Fund had $9,897,244 of post-October foreign currency losses which were
deferred.

2. During the fiscal year ended August 31, 2006, the Fund did not utilize any
capital loss carryforward.

3. During the fiscal year ended August 31, 2005, 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. Accordingly, the
following amounts have been reclassified for August 31, 2006. Net assets of the
Fund were unaffected by the reclassifications.

                                   REDUCTION TO       REDUCTION TO
                                    ACCUMULATED    ACCUMULATED NET
               INCREASE TO       NET INVESTMENT      REALIZED GAIN
               PAID-IN CAPITAL           INCOME   ON INVESTMENTS 4
               ---------------------------------------------------
               $160,564,322          $1,990,634       $158,573,688

4. $160,564,322, including $120,249,881 of long-term capital gain, was
distributed in connection with Fund share redemptions.



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

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

The tax character of distributions paid during the years ended August 31, 2006
and August 31, 2005 was as follows:

                                             YEAR ENDED        YEAR ENDED
                                        AUGUST 31, 2006   AUGUST 31, 2005
        -----------------------------------------------------------------
        Distributions paid from:
        Ordinary income                  $  145,815,535     $  34,630,949
        Long-term capital gain              138,997,312        13,022,721
                                         --------------------------------
        Total                            $  284,812,847     $  47,653,670
                                         ================================

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 August 31, 2006 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.

        Federal tax cost of securities               $ 7,164,042,832
        Federal tax cost of other investments             55,071,045
                                                     ----------------
        Total federal tax cost                       $ 7,219,113,877
                                                     ================

        Gross unrealized appreciation                $ 2,039,518,335
        Gross unrealized depreciation                   (442,455,951)
                                                     ----------------
        Net unrealized appreciation                  $ 1,597,062,384
                                                     ================

Certain foreign countries impose a tax on capital gains which is accrued by the
Fund based on unrealized appreciation, if any, on affected securities. The tax
is paid when the gain is realized.

--------------------------------------------------------------------------------
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 August
31, 2006, the Fund's projected benefit obligations were increased by $361,563
and payments of $21,653 were made to retired trustees, resulting in an
accumulated liability of $463,502 as of August 31, 2006.

      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 and capital gain distributions, if
any, are declared and paid annually.

--------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income, which includes accretion of discount and amortization
of premium, is accrued as earned.

--------------------------------------------------------------------------------
CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts, to the extent they are not
offset by positive cash balances maintained by the Fund, 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.

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

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



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

--------------------------------------------------------------------------------
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 AUGUST 31, 2006 1            YEAR ENDED AUGUST 31, 2005
                                      SHARES              AMOUNT             SHARES             AMOUNT
---------------------------------------------------------------------------------------------------------

CLASS A
Sold                             116,245,460    $  4,343,069,164         88,754,718    $ 2,427,698,410
Dividends and/or
distributions reinvested           5,748,226         200,498,088          1,371,503         34,603,027
Redeemed                         (68,996,408)     (2,536,427,522) 2     (31,652,270)      (854,168,046) 3
                                 ------------------------------------------------------------------------
Net increase                      52,997,278    $  2,007,139,730         58,473,951    $ 1,608,133,391
                                 ========================================================================

---------------------------------------------------------------------------------------------------------
CLASS B
Sold                               3,502,775    $    127,972,810          2,990,642    $    82,326,626
Dividends and/or
distributions reinvested             273,758           9,482,971             57,208          1,437,052
Redeemed                          (2,826,769)       (104,473,300) 2      (1,550,934)       (41,634,631) 3
                                 ------------------------------------------------------------------------
Net increase                         949,764    $     32,982,481          1,496,916    $    42,129,047
                                 ========================================================================

---------------------------------------------------------------------------------------------------------
CLASS C
Sold                              15,529,886    $    567,774,372          8,093,292    $   221,658,558
Dividends and/or
distributions reinvested             599,503          20,526,987            103,479          2,573,527
Redeemed                          (5,562,089)       (202,785,286) 2      (1,891,282)       (50,352,898) 3
                                 ------------------------------------------------------------------------
Net increase                      10,567,300    $    385,516,073          6,305,489    $   173,879,187
                                 ========================================================================

---------------------------------------------------------------------------------------------------------
CLASS N
Sold                               5,347,732    $    199,082,912          2,555,275    $    69,740,342
Dividends and/or
distributions reinvested             172,439           5,930,182             30,025            749,123
Redeemed                          (2,321,584)        (85,257,836) 2        (634,917)       (17,327,584) 3
                                 ------------------------------------------------------------------------
Net increase                       3,198,587    $    119,755,258          1,950,383    $    53,161,881
                                 ========================================================================

---------------------------------------------------------------------------------------------------------
CLASS Y
Sold                               9,611,236    $    359,268,212                 --    $            --
Dividends and/or
distributions reinvested              53,371           1,858,372                 --                 --
Redeemed                          (1,889,965)        (72,214,208) 2              --                 --
                                 ------------------------------------------------------------------------
Net increase                       7,774,642    $    288,912,376                 --    $            --
                                 ========================================================================


1. For the year ended August 31, 2006, for Class A, Class B, Class C and Class N
shares and for the period from September 7, 2005 (inception of offering) to
August 31, 2006, for Class Y shares.

2. Net of redemption fees of $151,090, $7,241, $19,235, $4,484 and $3,674 for
Class A, Class B, Class C, Class N and Class Y, respectively.

3. Net of redemption fees of $67,827, $4,203, $7,299 and $1,429 for Class A,
Class B, Class C and Class N, respectively.



--------------------------------------------------------------------------------
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 August 31, 2006, were as
follows:

                                             PURCHASES            SALES
        ---------------------------------------------------------------
        Investment securities           $7,632,346,894   $4,955,545,776

--------------------------------------------------------------------------------
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
average annual rate as shown in the following table:



FEE SCHEDULE AUG. 31, 2005 TO DEC. 31, 2005      FEE SCHEDULE EFFECTIVE JAN. 1, 2006
-------------------------------------------      ---------------------------------------------

Up to $250 million of net assets      1.00%      Up to $250 million of net assets        1.00%
Next $250 million of net assets       0.95       Next $250 million of net assets         0.95
Next $500 million of net assets       0.90       Next $500 million of net assets         0.90
Over $1 billion of net assets         0.85       Next $6 billion of net assets           0.85
                                                 Next $3 billion of net assets           0.80
                                                 Over $10 billion of net assets          0.75


--------------------------------------------------------------------------------
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 August 31, 2006, the Fund paid
$11,694,704 to OFS for services to the Fund.

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

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

--------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
periodically at an annual rate of up to 0.25% of the average annual net assets
of Class A shares of the Fund. The Distributor currently uses all of those fees
to pay dealers, brokers, banks and other financial institutions periodically for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
periods. Fees incurred by the Fund under the plan are detailed in the Statement
of Operations.

--------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to compensate the Distributor for its services in connection with the
distribution of those shares



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

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

and servicing accounts. Under the plans, the Fund pays the Distributor an annual
asset-based sales charge of 0.75% on Class B and Class C shares and 0.25% on
Class N shares. The Distributor also receives a service fee of 0.25% per year
under each plan. If either the Class B, Class C or Class N 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 August 31, 2006 for Class B, Class C and Class N shares were $3,583,211,
$9,447,325 and $1,378,238, 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 following table for the period
indicated.



                                             CLASS A         CLASS B         CLASS C         CLASS N
                             CLASS A      CONTINGENT      CONTINGENT      CONTINGENT      CONTINGENT
                           FRONT-END        DEFERRED        DEFERRED        DEFERRED        DEFERRED
                       SALES CHARGES   SALES CHARGES   SALES CHARGES   SALES CHARGES   SALES CHARGES
                         RETAINED BY     RETAINED BY     RETAINED BY     RETAINED BY     RETAINED BY
YEAR ENDED               DISTRIBUTOR     DISTRIBUTOR     DISTRIBUTOR     DISTRIBUTOR     DISTRIBUTOR
----------------------------------------------------------------------------------------------------

August 31, 2006           $2,392,405         $98,018        $431,611        $424,710         $78,663


--------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. During the year ended August 31, 2006,
the Manager voluntarily reimbursed the Fund $1,146,863 for certain transactions.

      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.
During the year ended August 31, 2006, OFS waived $35,719 for Class N shares.
This undertaking may be amended or withdrawn at any time.

--------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS

A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.

      The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and



depreciation on foreign currency contracts are reported in the Statement of
Assets and Liabilities as a receivable or payable and in the Statement of
Operations with the change in unrealized appreciation or depreciation.

      The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.

As of August 31, 2006, the Fund had outstanding foreign currency contracts as
follows:



                                            CONTRACT             VALUATION
                              EXPIRATION      AMOUNT                 AS OF     UNREALIZED     UNREALIZED
CONTRACT DESCRIPTION               DATES      (000s)       AUGUST 31, 2006   APPRECIATION   DEPRECIATION
---------------------------------------------------------------------------------------------------------

CONTRACTS TO PURCHASE
Singapore Dollar [SGD]            9/1/06       2,932SGD         $1,862,970         $   --      $     274
                                                                                   ----------------------

CONTRACTS TO SELL
Hungarian Forint [HUF]            9/5/06      12,484HUF             57,740            370             --
New Turkish Lira [TRY]            9/1/06       2,824TRY          1,928,211             --         16,135
                                                                                   ----------------------
                                                                                      370         16,135
                                                                                   ----------------------
Total unrealized appreciation and depreciation                                     $  370      $  16,409
                                                                                   ======================


--------------------------------------------------------------------------------
6. ILLIQUID OR RESTRICTED SECURITIES AND CURRENCY

As of August 31, 2006, investments in securities included issues that are
illiquid or restricted. Restricted securities are purchased in private placement
transactions, are not registered under the Securities Act of 1933, may have
contractual restrictions on resale, and are valued under methods approved by the
Board of Trustees as reflecting fair value. A security may also 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 10% of
its net assets (determined at the time of purchase and reviewed periodically) in
illiquid or restricted securities. Certain restricted securities, eligible for
resale to qualified institutional investors, are not subject to that limitation.
Securities that are illiquid or restricted are marked with the applicable
footnote on the Statement of Investments. Information concerning restricted
currency is as follows:



                                ACQUISITION                 VALUATION AS OF     UNREALIZED
SECURITY                              DATES          COST   AUGUST 31, 2006   DEPRECIATION
-------------------------------------------------------------------------------------------

CURRENCY
Argentine Peso [ARP]       10/14/05-2/22/06    $7,209,012        $7,114,229        $94,783


--------------------------------------------------------------------------------
7. RECENT ACCOUNTING PRONOUNCEMENT

In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires



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

--------------------------------------------------------------------------------
7. RECENT ACCOUNTING PRONOUNCEMENT Continued

the evaluation of tax positions taken in the course of preparing the Fund's tax
returns to determine whether it is "more-likely-than-not" that tax positions
taken in the Fund's tax return will be ultimately sustained. A tax liability and
expense must be recorded in respect of any tax position that, in Management's
judgment, will not be fully realized. FIN 48 is effective for fiscal years
beginning after December 15, 2006. As of August 31, 2006, the Manager is
evaluating the implications of FIN 48. Its impact in the Fund's financial
statements has not yet been determined.

--------------------------------------------------------------------------------
8. LITIGATION

A consolidated amended complaint was filed as a putative class action against
the Manager and the Transfer Agent and other defendants (including 51 of the
Oppenheimer funds including the Fund) in the U.S. District Court for the
Southern District of New York on January 10, 2005 and was amended on March 4,
2005. The complaint alleged, among other things, that the Manager charged
excessive fees for distribution and other costs, and that by permitting and/or
participating in those actions, the Directors/Trustees and the Officers of the
funds breached their fiduciary duties to fund shareholders under the Investment
Company Act of 1940 and at common law. The plaintiffs sought unspecified
damages, an accounting of all fees paid, and an award of attorneys' fees and
litigation expenses.

      In response to the defendants' motions to dismiss the suit, seven of the
eight counts in the complaint, including the claims against certain of the
Oppenheimer funds, as nominal defendants, and against certain present and former
Directors, Trustees and Officers of the funds, and the Distributor, as
defendants, were dismissed with prejudice, by court order dated March 10, 2006,
and the remaining count against the Manager and the Transfer Agent was dismissed
with prejudice by court order dated April 5, 2006. The plaintiffs filed an
appeal of those dismissals on May 11, 2006.

      The Manager believes that the allegations contained in the complaint are
without merit and that there are substantial grounds to sustain the district
court's rulings. The Manager also believes that it is premature to render any
opinion as to the likelihood of an outcome unfavorable to it, the funds, the
Directors/Trustees or the Officers on the appeal of the decisions of the
district court, and that no estimate can yet be made with any degree of
certainty as to the amount or range of any potential loss.


                                  A-1
                               Appendix A

                        Industry Classifications

Aerospace & Defense                  Household Products
Air Freight & Couriers               Industrial Conglomerates
Airlines                             Insurance
Auto Components                      Internet & Catalog Retail
Automobiles                          Internet Software & Services
Beverages                            IT Services
Biotechnology                        Leisure Equipment & Products
Building Products                    Machinery
Chemicals                            Marine
Consumer Finance                     Media
Commercial Banks                     Metals & Mining
Commercial Services & Supplies       Multiline Retail
Communications Equipment             Multi-Utilities
Computers & Peripherals              Office Electronics
Construction & Engineering           Oil & Gas
Construction Materials               Paper & Forest Products
Containers & Packaging               Personal Products
Distributors                         Pharmaceuticals
Diversified Financial Services       Real Estate
Diversified Telecommunication        Road & Rail
Services
Electric Utilities                   Semiconductors and Semiconductor
                                     Equipment
Electrical Equipment                 Software
Electronic Equipment & Instruments   Specialty Retail
Energy Equipment & Services          Textiles, Apparel & Luxury Goods
Food & Staples Retailing             Thrifts & Mortgage Finance
Food Products                        Tobacco
Gas Utilities                        Trading Companies & Distributors
Health Care Equipment & Supplies     Transportation Infrastructure
Health Care Providers & Services     Water Utilities
Hotels Restaurants & Leisure         Wireless Telecommunication Services
Household Durables


                                  B-12
                               Appendix B

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

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:
o   Purchases of Class A shares aggregating $1 million or more.
o   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 projected to have annual
         plan purchases of $200,000 or more.
o   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.
o   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. or certain affiliates ("Merrill
            Lynch") on a daily valuation basis for the Retirement Plan.
            On the date the plan sponsor signs the record-keeping
            service agreement with Merrill Lynch, the Plan must have $3
            million or more of its assets invested in (a) mutual funds,
            other than those advised or managed by Merrill Lynch
            Investment Management, L.P. ("MLIM"), that are made
            available under a Service Agreement between Merrill Lynch
            and the mutual fund's principal underwriter or distributor,
            and  (b)  funds advised or managed by MLIM (the funds
            described in (a) and (b) are referred to as "Applicable
            Investments").
         2) The record keeping for the Retirement Plan is performed on
            a daily valuation basis by a record keeper whose services
            are provided under a contract or arrangement between the
            Retirement Plan and Merrill Lynch. On the date the plan
            sponsor signs the record keeping service agreement with
            Merrill Lynch, the Plan must have $5 million or more of its
            assets (excluding assets invested in money market funds)
            invested in Applicable Investments.
         3) The record keeping for a Retirement Plan is handled under a
            service agreement with Merrill Lynch and on the date the
            plan sponsor signs that agreement, the Plan has 500 or more
            eligible employees (as determined by the Merrill Lynch plan
            conversion manager).

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

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

Class A shares purchased by the following investors are not subject to
any Class A sales charges (and no concessions are paid by the
Distributor on such purchases):
o   The Manager or its affiliates.
o   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.
o   Registered management investment companies, or separate accounts
         of insurance companies having an agreement with the Manager or
         the Distributor for that purpose.
o   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.
o   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).
o   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.
o   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.
o   "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.
o   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.
o   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.
o   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.
o   A unit investment trust that has entered into an appropriate
         agreement with the Distributor.
o   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.
o   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.
o   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.
o   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.
o   Effective October 1, 2005, taxable accounts established with the
         proceeds of Required Minimum Distributions from Retirement
         Plans.
o
B.    Waivers of the Class A Initial and Contingent Deferred Sales
Charges in Certain Transactions.

1.    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):
o   Shares issued in plans of reorganization, such as mergers, asset
         acquisitions and exchange offers, to which the Fund is a
         party.
o   Shares purchased by the reinvestment of dividends or other
         distributions reinvested from the Fund or other Oppenheimer
         funds or unit investment trusts for which reinvestment
         arrangements have been made with the Distributor.
o   Shares purchased by certain Retirement Plans that are part of a
         retirement plan or platform offered by banks, broker-dealers,
         financial advisors or insurance companies, or serviced by
         recordkeepers.
o   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.
o   Shares purchased in amounts of less than $5.

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

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

The Class A contingent deferred sales charge is also waived if shares
that would otherwise be subject to the contingent deferred sales charge
are redeemed in the following cases:
o   To make Automatic Withdrawal Plan payments that are limited
         annually to no more than 12% of the account value adjusted
         annually.
o   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).
o   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.
o   For distributions from 401(k) plans sponsored by broker-dealers
         that have entered into a special agreement with the
         Distributor allowing this waiver.
o   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.
o   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.

D.    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:
o   Shares redeemed involuntarily, as described in "Shareholder
         Account Rules and Policies," in the applicable Prospectus.
o   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.
o   The contingent deferred sales charges are generally not waived
         following the death or disability of a grantor or trustee for
         a trust account. The contingent deferred sales charges will
         only be waived in the limited case of the death of the trustee
         of a grantor trust or revocable living trust for which the
         trustee is also the sole beneficiary. The death or disability
         must have occurred after the account was established, and for
         disability you must provide evidence of a determination of
         disability (as defined in the Internal Revenue Code).
o   Distributions from accounts for which the broker-dealer of record
         has entered into a special agreement with the Distributor
         allowing this waiver.
o   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.
o   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.
o   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.
o   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 applicable 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.
o   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.

E.    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:
o   Shares sold to the Manager or its affiliates.
o   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.
o   Shares issued in plans of reorganization to which the Fund is a
         party.
o   Shares sold to present or former officers, directors, trustees or
         employees (and their "immediate families" as defined above in
         Section I.A.) of the Fund, the Manager and its affiliates and
         retirement plans established by them for their employees.

IV.  Special Sales Charge Arrangements for Shareholders of Certain
   Oppenheimer Funds Who Were Shareholders of Former Quest for Value
   Funds
-------------------------------------------------------------------------

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

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

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

      All of the funds listed above are referred to in this Appendix as
the "Former Quest for Value Funds."  The waivers of initial and
contingent deferred sales charges described in this Appendix apply to
shares of an Oppenheimer fund that are either:
o   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
o   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.
o
F.    Reductions or Waivers of Class A Sales Charges.

o   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.

o   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.

o   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.

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

o   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.

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

V.  Special Sales Charge Arrangements for Shareholders of Certain
      Oppenheimer Funds Who Were Shareholders of Connecticut Mutual
      Investment Accounts, Inc.
---------------------------------------------------------------------

The initial and contingent deferred sale charge rates and waivers for
Class A and Class B shares described in the respective Prospectus (or
this Appendix) of the following Oppenheimer funds (each is referred to
as a "Fund" in this section):
   Oppenheimer U. S. Government Trust,
   Oppenheimer Core Bond Fund,
   Oppenheimer Value Fund and
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

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

o   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.

o   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.

I.    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:
o   the Manager and its affiliates,
o   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,
o   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,
o   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,
o   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,
o   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
o   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 Developing Markets 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
      JPMorgan Chase Bank
      4 Chase Metro Tech Center
      Brooklyn, New York 11245

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



PX785.001.1106



(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.
(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 separation from service in or after the
year the investor reaches 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.