Oppenheimer Commodity Strategy Total Return Fund
6803 S. Tucson Way, Centennial CO 80112
1.800.CALL OPP (225.5677)

Statement of Additional Information dated April 30, 2007, revised as of
May 25, 2007

This Statement of Additional Information is not a prospectus. This document
contains additional information about the Fund and supplements information in the
Prospectus dated April 30, 2007.  It should be read together with the Prospectus,
which may be obtained by writing to the Fund's Transfer Agent, OppenheimerFunds
Services, at P.O. Box 5270, Denver, Colorado 80217, 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...........................  18
   Other Investment Restrictions........................................  38
   Disclosure of Portfolio Holdings.....................................  40
How the Fund is Managed.................................................  44
   Organization and History.............................................  44
   Board of Trustees and Oversight Committees...........................  45
   Trustees and Officers of the Fund....................................  47
   The Manager and the Sub-Advisor......................................  56
Brokerage Policies of the Fund..........................................  62
Distribution and Service Plans..........................................  65
Payments to Fund Intermediaries.........................................  69
Performance of the Fund.................................................  74

About Your Account
How To Buy Shares.......................................................  79
How To Sell Shares......................................................  89
How To Exchange Shares..................................................  93
Dividends, Capital Gains and Taxes......................................  97
Additional Information About the Fund...................................  103

Financial Information About the Fund
Report of Independent Registered Public Accounting Firm...................104
Financial Statements ...................................................  124

Appendix A: Ratings Definitions......................................... A-1
Appendix B: Industry Classifications.................................... B-1
Appendix C: OppenheimerFunds Special Sales Charge Arrangements and Waivers
 C-1
Appendix D: Qualifying Hybrid Instruments............................... D-1
Appendix E: Qualifying Swap Transactions................................ E-1


ABOUT THE FUND

Additional Information About the Fund's Investment Policies and Risks

The investment objective and policies of the Fund are discussed in the
Prospectus. Set forth below is supplemental information about those policies
and the types of securities in which the Fund may invest, as well as the
strategies the Fund may use to try to achieve its investment objective. Certain
capitalized terms used in this Statement of Additional Information have the
same meanings as those terms have in the Prospectus.

The Fund's Investment Policies. The Fund intends to invest in a portfolio
consisting primarily of (1) commodity-linked derivatives, including
commodity-linked notes and options, futures forward and swap contracts, and (2)
debt securities such as corporate debt and U.S. government securities for
liquidity and income.  Commodity-linked derivatives are derivative instruments
the value of which is linked to the price movement of a commodity, commodity
index, or commodity futures or option contract.  Commodity-linked derivatives
include commodity-linked notes, futures, options and swaps the value of which
is linked to the value of a commodity, commodity index, or commodity futures or
option contract.

      The prices of commodity-linked derivatives may move in different
directions than investments in traditional equity and debt securities. For
example, during periods of rising inflation, historically debt securities have
tended to decline in value due to the general increase in prevailing interest
rates. Conversely, during those same periods of rising inflation, historically
the prices of certain commodities, such as oil and metals, have tended to
increase. Of course, there cannot be any guarantee that these investments will
perform in that manner in the future, and certain times the price movements of
commodity-linked investments have been parallel to debt and equity securities.

      From 1970 through 2006, the correlation between the quarterly investment
returns of commodities and the quarterly investment returns of traditional
financial assets such as stocks and bonds generally was negative. This inverse
relationship occurred generally because commodities have historically tended to
increase and decrease in value during different parts of the business cycle
than financial assets. Nevertheless, at various times, commodities prices may
move in tandem with the prices of financial assets and thus may not provide
overall portfolio diversification benefits.

      The reverse may be true during "bull markets," when the value of
traditional securities such as stocks and bonds is increasing. The Fund's
investments may be expected not to perform as well as an investment in
traditional securities. Over the long term, the returns on the Fund's
investments are expected to exhibit low or negative correlation with stocks and
bonds.

      The Fund intends to spread its investments among instruments linked to at
least five broad commodity market sectors under normal market conditions. The
five principal sectors of the S&P GSCI Commodity Index (formerly, Goldman Sachs
Commodity Index) include:(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,
and zinc; and (5) precious metals, which includes gold and silver.


      In selecting investments for the Fund's portfolio, Oppenheimer Real Asset
Management, Inc. (the "Sub-Advisor") evaluates the merits of the Fund's
investments primarily through the exercise of its own investment analysis. In
the case of commodity-linked notes, that process may include the evaluation of
the underlying commodity, futures or options contract, index or other economic
variable to which the note is linked, the issuer of the instrument, and whether
the principal of the note is protected by any form of credit enhancement or
guarantee.

      The percentage of the Fund's assets linked to particular commodity
markets will vary from time to time based on the Sub-Advisor's assessment of
the appreciation possibilities of particular markets as well as rates of
inflation, interest rates, current spot market prices and other non-economic
and political factors that may affect specific markets. In addition, the Fund
may invest in mortgage-backed securities, collateralized mortgages,
obligations, other debt securities, equities, real estate investment trusts,
money market instruments, and government securities to maintain liquidity and
provide income.

|X|   Investment in Wholly-Owned Subsidiary.  The Fund will invest up to 25% of
its total assets in a wholly-owned and controlled Cayman Islands subsidiary
(the "Subsidiary"), which is expected to invest primarily in commodity and
financial futures and option contracts, as well as fixed income securities and
other investments intended to serve as margin or collateral for the
Subsidiary's derivatives positions.  As a result, the Fund may be considered to
be investing indirectly in these investments through the Subsidiary.  For that
reason, and for the sake of convenience, references in this Statement of
Additional Information to the Fund may also include the Subsidiary.

      The Subsidiary will not be registered under the 1940 Act but, will be
subject to certain of the investor protections of that Act, as noted in this
Statement of Additional Information. The Fund, as the sole shareholder of the
Subsidiary, will not have all of the protections offered to investors in
registered investment companies. However, since the Fund wholly owns and
controls the Subsidiary, and the Fund and Subsidiary are both managed by the
OppenheimerFunds, Inc. (the "Manager") and the Sub-Advisor, it is unlikely that
the Subsidiary will take action contrary to the interests of the Fund or its
shareholders.  The Fund's Board has oversight responsibility for the investment
activities of the Fund, including its investment in the Subsidiary, and the
Fund's role as the sole shareholder of the Subsidiary. Also, in managing the
Subsidiary's portfolio, the Manager and Sub-Advisor will be subject to the same
investment restrictions and operational guidelines that apply to the management
of the Fund.

      Changes in the laws of the United States and/or the Cayman Islands, under
which the Fund and the Subsidiary, respectively, are organized, could result in
the inability of the Fund and/or the Subsidiary to operate as described in this
Statement of Additional Information and could negatively affect the Fund and
its shareholders.  For example, the Cayman Islands does not currently impose
any income, corporate or capital gains tax, estate duty, inheritance tax, gift
tax or withholding tax on the Subsidiary.  If Cayman Islands law changes such
that the Subsidiary must pay Cayman Islands taxes, Fund shareholders would
likely suffer decreased investment returns.

     |X| Investments in  Commodity-linked  notes.  An important  vehicle for the
Fund's gaining exposure to the commodities  markets is through  commodity-linked
notes.   A   commodity-linked   note  is  a  derivative   instrument   that  has
characteristics  of a debt  security  and of a  commodity-linked  derivative.  A
commodity-linked  note typically  provides for interest payments and a principal
payment at maturity  linked to the price movement of the  underlying  commodity,
commodity index or commodity futures or option contract.

o     Qualifying Hybrid Instruments. The Fund may invest in commodity-linked
notes that are considered to be "qualifying hybrid instruments" excluded from
regulation under the Commodity Exchange Act and the regulations adopted
thereunder. See Appendix D to this Statement of Additional Information.

o     Principal Protection. Commodity-linked notes may be principal protected,
partially protected, or offer no principal protection. A principal protected
commodity-linked note means that the issuer will pay, at a minimum, the par
value of the note at maturity. Therefore, if the commodity value to which the
commodity-linked note is linked declines over the life of the note, the Fund
will receive at maturity the face or stated value of the note.

      With a principal protected commodity-linked note, the Fund will receive
at maturity the greater of the par value of the note or the value of the
underlying commodity or index. This protection is, in effect, an option whose
value is subject to the volatility and price level of the underlying commodity.
This optionality can be added to the note's structure, but only for a cost
higher than that of a partially protected (or no protection) commodity-linked
note. The Sub-Advisor's decision on whether to use principal protection depends
in part on the cost of the protection. In addition, the protection feature
depends upon the ability of the issuer to meet its obligation to buy back the
security, and therefore depends on the creditworthiness of the issuer.

      With full principal protection, the Fund will receive at maturity of the
commodity-linked note either the stated par value of the commodity-linked note,
or potentially, an amount greater than the stated par value if the underlying
commodity, index, futures or option contract or other underlying economic
variable increases in value. Partially protected commodity-linked notes may
suffer some loss of principal if the underlying commodity, index, futures or
options contract or other economic variable declines in value during the term
of the note. However, partially protected commodity-linked notes have a
specified limit as to the amount of principal that they may lose.

o     Commodity-Linked Notes Without Principal Protection. The Fund may also
invest in commodity-linked notes that offer no principal protection. At
maturity, there is a risk that the underlying commodity price, futures or
option contract, index or other economic variable may have declined
sufficiently in value such that some or all of the face value of the
commodity-linked note might not be returned. Some of the commodity-linked notes
that the Fund may invest in may have no principal protection and the note could
lose all of its value.

      With a partially-protected or no-principal-protection commodity-linked
note, the Fund may receive at maturity an amount less than the note's par value
if the commodity, index or other economic variable value to which the note is
linked declines over the term of the note. The Sub-Advisor, at its discretion,
may invest in a partially protected principal commodity-linked note or a note
without principal protection. In deciding to purchase a note without principal
protection, the Sub-Advisor may consider, among other things, the expected
performance of the underlying commodity futures or option contract, index or
other economic variable over the term of the note, the cost of the note, and
any other economic factors which the Sub-Advisor believes are relevant.

o     Limitations on Leverage. As discussed in the Prospectus, some of the
commodity-linked notes in which the Fund invests may involve leverage. To avoid
being subject to undue leverage risk, the Fund will seek to limit the amount of
economic leverage it has under one commodity-linked note in which it invests
and the leverage of the Fund's overall portfolio. The Fund will not invest in a
commodity-linked note if, at the time of purchase:

1.    the note's "leverage ratio" exceeds 300% of the price increase in the
            underlying commodity, futures or option contract, index or other
            economic variable; or
2.    the Fund's "portfolio leverage ratio" exceeds 150%, measured at the time
            of purchase.

      "Leverage ratio" is the expected increase in the value of a
commodity-linked note, assuming a one percent price increase in the underlying
commodity, commodity index or other economic factor. In other words, for a
commodity-linked note with a leverage factor of 150%, a 1% gain in the
underlying economic variable would be expected to result in a 1.5% gain in
value for the commodity-linked note. "Portfolio leverage ratio" is defined as
the average (mean) leverage ratio of all instruments in the Fund's portfolio,
weighted by the market values of such instruments or, in the case of futures
contracts, their notional values.

      The Fund's use of commodity-linked notes and other commodity-linked
derivatives is also subject to regulatory requirements that are intended to
reduce the effects of the instruments' economic leverage.  Please see
"Regulatory Aspects of Use of Derivative Instruments," below.

o     Counterparty Risk. A significant risk of commodity-linked notes is
counterparty risk. The Fund will take on the counterparty credit risk of the
issuer. That is, at maturity of a commodity-linked note, there is a risk that
the issuer may be unable to perform its obligations under the terms of the
commodity-linked note. Issuers of commodity-linked notes are typically large
money center banks, broker-dealers, other financial institutions and large
corporations. To minimize this risk the Fund will transact, to the extent
possible, with issuers who have an investment-grade credit rating from a
nationally recognized statistical rating organization ("NRSRO").

|X|   Options and Futures. The Fund can buy and sell option and futures
contracts for various purposes:
o     to try to manage the risk that the prices of its portfolio securities and
            instruments may decline;
o     to establish a position in the futures or options market as a temporary
            substitute for purchasing individual securities or instruments;
o     to attempt to enhance its income or return by purchasing and selling call
            and put options on commodity futures, commodity indices, financial
            indices or securities;
o     to gain exposure to price movements of various commodity sectors in
            accordance with the Fund's investment strategies.

             The Fund can buy futures related to:
o     foreign currencies (these are called forward contracts),
o     financial indices, such as U.S. or foreign government securities indices,
            corporate debt securities indices or equity securities indices
            (these are referred to as financial futures),

o     interest rates (these are referred to as interest rate futures), and
o     commodities (these are referred to as commodities futures)

       The Fund may enter into futures contracts or related options for purposes
that may be considered speculative. In those cases, the aggregate initial
margin for futures contracts and premiums for options (or, in the case of
non-qualifying commodity-linked notes, the portion of the margin attributable
to the options premium) will not exceed 5% of the Fund's net assets. That
amount is calculated after taking into account realized profits and unrealized
losses on such futures contracts.

|X|   Commodity Futures Contracts. The Fund can hold substantial positions in
commodity futures contracts. The Fund's investments in commodity futures
contracts and related instruments may involve substantial risks. Some of the
special characteristics and risks of these investments are described below.

      Commodity futures contracts are agreements between two parties. One party
agrees to buy an asset from the other party at a later date at a price and
quantity agreed-upon when the contract is made. Commodity futures contracts are
traded on futures exchanges. These futures exchanges offer a central
marketplace in which to transact futures contracts, a clearing corporation to
process trades, a standardization of expiration dates and contract sizes, and
the availability of a secondary market. Futures markets also specify the terms
and conditions of delivery as well as the maximum permissible price movement
during a trading session. Additionally, the commodity futures exchanges have
position limit rules that limit the amount of futures contracts that any one
party may hold in a particular commodity at any point in time. These position
limit rules are designed to prevent any one participant from controlling a
significant portion of the market.

      In the futures markets, the exchange clearing corporation takes the other
side in all transactions, either buying or selling directly to the market
participants. The clearinghouse acts as the counterparty to all exchange-traded
futures contracts. That is, the Fund's obligation is to the clearinghouse, and
the Fund will look to the clearinghouse to satisfy the Fund's rights under the
futures contract.

      When purchasing stocks or bonds, the buyer acquires ownership in the
security, however buyers of futures contracts are not entitled to ownership of
the underlying commodity until and unless they decide to accept delivery at
expiration of the contract. In practice, delivery of the
underlying commodity to satisfy a futures contract rarely occurs because most
futures traders use the liquidity of the central marketplace to sell their
futures contract before expiration.

o     Price Limits. The commodity futures exchanges often impose on each
commodity futures contract a maximum permissible price movement for each
trading session. If the maximum permissible price movement is achieved on any
trading day, no more trades may be executed above (or below, if the price has
moved downward) that limit. If the Fund wishes to execute a trade outside the
daily permissible price movement, it would be prevented from doing so by
exchange rules, and would have to wait for another trading session to execute
its transaction.


o     Price Volatility. Despite the daily price limits on the futures
exchanges, the price volatility of commodity futures contracts has been
historically greater than that for traditional securities such as stocks and
bonds. To the extent that the Fund invests in commodity futures contracts, the
assets of the Fund, and therefore the prices of Fund shares, may be subject to
greater volatility.

o     Marking-to-Market Futures Positions. The futures clearinghouse marks
every futures contract to market at the end of each trading day, to ensure that
the outstanding futures obligations are limited by the maximum daily
permissible price movement. This process of marking-to-market is designed to
prevent losses from accumulating in any futures account. Therefore, if the
Fund's futures positions have declined in value, the Fund may be required to
post additional margin to cover this decline. Alternatively, if the Fund's
futures positions have increased in value, this increase will be credited to
the Fund's account. Commodity futures contracts, when entered into directly by
the Fund, are taxed on the "marked-to-market" basis applicable to section 1256
contracts, as discussed below under "Hedging - Tax Aspects of Certain Hedging
Instruments."  For information about the tax treatment of the Subsidiary and
its investments, please refer to "Dividends, Capital Gains and Taxes - U.S. Tax
Considerations."

o     Special Risks of Commodity Futures Contracts.

o     Storage Costs  The price of the commodity futures contract will reflect
the storage costs of purchasing the physical commodity. These storage costs
include the time value of money invested in the physical commodity plus the
actual costs of storing the commodity less any benefits from ownership of the
physical commodity that are not obtained by the holder of a futures contract
(this is sometimes referred to as the "convenience yield"). To the extent that
these storage costs change for an underlying commodity while the Fund is long
futures contracts on that commodity, the value of the futures contract may
change proportionately.

o     Reinvestment Risk. In the commodity futures markets, if producers of the
underlying commodity wish to hedge the price risk of selling the commodity,
they will sell futures contracts today to lock in the price of the commodity at
delivery tomorrow. In order to induce speculators to take the corresponding
long side of the same futures contract, the commodity producer must be willing
to sell the futures contract at a price that is below the expected future spot
price. Conversely, if the predominate hedgers in the futures market are the
purchasers of the underlying commodity who purchase futures contracts to hedge
against a rise in prices, then speculators will only take the short side of the
futures contract if the futures price is greater than the expected future spot
price of the commodity.

      The changing nature of the hedgers and speculators in the commodity
markets will influence whether futures prices are above or below the expected
future spot price. This can have significant implications for the Fund when it
is time to replace an expiring contract with a new contract. If the nature of
hedgers and speculators in futures markets has shifted such that commodity
purchasers are the predominate hedgers in the market, the Fund might open the
new futures position at a higher price or choose other related commodity
investments

o     Additional Economic Factors. The values of commodities which underlie
commodity futures contracts are subject to additional variables which may be
less significant to the values of traditional securities such as stocks and
bonds. Variables such as drought, floods, weather, livestock disease, embargoes
and tariffs may have a larger impact on commodity prices and commodity-linked
instruments, including futures contracts, commodity-linked notes, commodity
options and commodity swaps, than on traditional securities. These additional
variables may create additional investment risks which subject the Fund's
investments to greater volatility than investments in traditional securities.

o     Leverage. There is much greater leverage in futures trading than in
stocks. As a registered investment company, the Fund must pay in full for all
securities it purchases. In other words, the Fund is not allowed to purchase
securities on margin. However, the Fund is allowed to purchase futures
contracts on margin. The initial margin requirements are typically between 3%
and 6% of the face value of the contract. That means the Fund is only required
to pay up front between 3% to 6% percent of the face value of the futures
contract. Therefore, the Fund has a higher degree of leverage in its futures
contract purchases than in its stock purchases. As a result there may be
differences in the volatility of rates of return between securities purchases
and futures contract purchases, with the returns from futures contracts being
more volatile.

|X|   Options. The Fund may purchase and sell call and put options on futures
contracts, including commodity futures contracts, commodity indices, financial
indices, securities indices, currencies, financial futures, swaps and
securities. A call option gives the buyer the right, but not the obligation, to
purchase an underlying asset at a specified (strike) price. A put option gives
the buyer the right, but not the obligation, to sell an underlying asset at a
specified price. Options may be exchange traded or traded over-the-counter (off
the exchange markets) directly with dealers. The Fund may use options as part
of its trading strategy as well as for hedging purposes, as described in
"Hedging," below.

o     Over-The-Counter Options. The Fund may buy and sell over-the-counter
options. Over-the-counter options are not traded on an exchange. They are
traded directly with dealers. To the extent an over-the-counter option is a
tailored investment for the Fund, it may be less liquid than an exchange-traded
option. Further, as with other derivative investments, over-the-counter options
are subject to counterparty risk. The Fund will have the credit risk that the
seller of an over-the-counter option will not perform its obligations under the
option agreement if the Fund exercises the option. To reduce this risk, the
Fund intends to transact these trades, to the extent practicable, with issuers
that have an investment-grade credit rating. The Fund may buy
and sell over-the-counter options on commodity indices, individual commodities,
commodity futures contracts, securities, financial indices, interest rates,
currencies and swaps.

o     Exchange-Traded Options. The Fund may buy and sell trade listed options
on commodity futures contracts. Options on commodity futures contracts are
traded on the same exchange on which the underlying futures contract is listed.
The Fund may purchase and sell options on commodity futures listed on U.S. and
foreign futures exchanges. Options purchased on futures contracts on foreign
exchanges may be exposed to the risk of foreign currency fluctuations against
the U.S. dollar. The Fund may also buy and sell exchange listed options on
securities, commodity indices, financial indices, interest rates and
currencies.

o     Options on Swaps. The Fund may trade options on swap contracts or "swap
options." Swap call options provide the holder of the option with the right to
enter a swap contract having a specified (strike) swap formula, while swap put
options provide the holder with the right to sell or terminate a swap contract.
Swap options are not exchange-traded and the Fund will bear the credit risk of
the option seller. Additionally, if the Fund exercises a swap call option with
the option seller, the credit risk of the counterparty is extended to include
the term of the swap agreement.


|X|   Swaps. A swap contract is essentially like a portfolio of forward
contracts, under which one party agrees to exchange an asset (for example,
bushels of wheat) for another asset (cash) at specified dates in the future. A
one-period swap contract operates in a manner similar to a forward or futures
contract because there is an agreement to swap a commodity for cash at only one
forward date. The Fund may engage in swap transactions that have more than one
period and therefore more than one exchange of assets.

      The Fund may invest in total return swaps to gain exposure to the overall
commodity markets. In a total return commodity swap the Fund will receive the
price appreciation of a commodity index, a portion of the index, or a single
commodity in exchange for paying an agreed-upon fee. If the commodity swap is
for one period, the Fund will pay a fixed fee, established at the outset of the
swap. However, if the term of the commodity swap is more than one period, with
interim swap payments, the Fund will pay an adjustable or floating fee. With a
"floating" rate, the fee is pegged to a base rate such as the London Interbank
Offered Rate ("LIBOR"), and is adjusted each period. Therefore, if interest
rates increase over the term of the swap contract, the Fund may be required to
pay a higher fee at each swap reset date.

o     Counterparty Risk. Swap contracts are private transactions that are
customized to meet the specific investment requirements of the parties. The
Fund will be exposed to the performance risk of its counterparty. If the
counterparty is unable to perform its obligations under the swap contract at
maturity of the swap or any interim payment date, the Fund may not receive the
payments due it under the swap agreement. To reduce this risk, the Fund will
enter in swaps, to the extent possible, with counterparties who have an
investment-grade rating from an NRSRO.

o     Contractual Liability. Swaps are privately negotiated transactions
between the Fund and a counterparty. All of the rights and obligations of the
Fund are detailed in the swap contract, which binds the Fund and its
counterparty. Because a swap transaction is a privately-negotiated contract,
the Fund remains liable for all obligations under the contract until the swap
contract matures or is purchased by the swap counterparty. Therefore, even if
the Fund
were to sell the swap contract to a third party, the Fund would remain
primarily liable for the obligations under the swap transaction. The only way
for the Fund to eliminate its primary obligations under the swap agreement is
to sell the swap contract back to the original counterparty. Additionally, the
Fund must identify liquid assets on its books to the extent of the Fund's
obligations to pay the counterparty under the swap agreement.

o     Price Risk. Total return commodity swaps expose the Fund to the price
risk of the underlying commodity, index, futures or option contract or other
economic variable. If the price of the underlying commodity, index, futures or
option contract or other economic variable increases in value during the term
of the swap, the Fund will receive the resulting price appreciation. However,
if the price declines in value during the term of the swap, the Fund will be
required to pay to its counterparty the amount of the price depreciation. The
amount of the price depreciation paid by the Fund to its counterparty would be
in addition to the financing fee paid by the Fund to the same counterparty.

o     Lack of Liquidity. Although the swap market is well-developed for primary
participants, there is only a limited secondary market. Swaps are not traded or
listed on an exchange and over-the-counter trading of existing swap contracts
is limited. Therefore, if the Fund wishes to sell its swap contract to a third
party, it may not be able to do so at a favorable price.

o     Regulatory Risk. Qualifying swap transactions are excluded from
regulation under the Commodity Exchange Act (the "CEA") and the regulations
adopted thereunder. See Appendix E to this Statement of Additional Information.
Additionally, swap contracts have not been determined to be securities under
the Securities Act of 1933 or the rules promulgated by the Securities and
Exchange Commission (the "SEC"). While certain swap dealers or counterparties
may be regulated by either the SEC or CFTC, swap contracts themselves are not
directly regulated by either the Commodities Futures Trading Commission
("CFTC") or the SEC, and swap participants may not be afforded the protections
of the CEA or the federal securities laws.

      To reduce this risk, the Sub-Advisor will only enter into swap agreements
with counterparties who use standard International Swap and Dealers
Association, Inc. ("ISDA") contract documentation. ISDA establishes industry
standards for the documentation of swap agreements. Virtually all principal
swap participants use ISDA documentation because it has an established set of
definitions, contract terms, and counterparty obligations.

      ISDA documentation also includes a "master netting agreement" which
provides that all swaps transacted between the Fund and a counterparty under
the master agreement shall be regarded as parts of an integral agreement. If,
on any date, amounts are payable in the same currency in respect of one or more
swap transactions, the net amount payable on that date in that currency shall
be paid. In addition, the master netting agreement may provide that if one
party defaults generally or on one swap, the counterparty may terminate the
remaining swaps with that party. Under such agreements, if there is a default
resulting in a loss to one party, the measure of that party's damages is
calculated by reference to the average cost of a replacement swap with respect
to each swap (i.e., the mark-to-market value at the time of the termination of
each swap). The gains and losses on all swaps are then netted, and the result
is the counterparty's gain or loss on termination. The termination of all swaps
and the netting of gains and losses on termination is generally referred to as
"aggregation."

|X|   Credit Derivatives. The Fund may enter into credit default swaps, both
directly ("unfunded swaps") and indirectly in the form of a swap embedded
within a structured security ("funded swaps"), to protect against the risk that
a security will default.  Unfunded and funded credit default swaps may be on a
single security, or on a basket of securities. The Fund pays a fee to enter
into the swap and receives a fixed payment during the life of the swap. The
Fund may take a short position in the credit default swap (also known as
"buying credit protection"), or may take a long position in the credit default
swap (also known as "selling credit protection").

      The Fund would take a short position in a credit default swap (the
"unfunded swap") against a long portfolio position to decrease exposure to
specific high yield issuers.  If the Fund takes a short position in the credit
default swap and there is a credit event (including bankruptcy, failure to
timely pay interest or principal, or a restructuring), the Fund will deliver
the defaulted bonds and the swap counterparty will pay the par amount of the
bonds.  An associated risk is adverse pricing when purchasing bonds to satisfy
the delivery obligation.  If the swap is on a basket of securities, the
notional amount of the swap is reduced by the par amount of the defaulted bond,
and the fixed payments are then made on the reduced notional amount.

      Taking a long position in the credit default swap (i.e., purchasing the
"funded swap") would increase the Fund's exposure to specific high yield
corporate issuers.  The goal would be to increase liquidity in that market
sector via the swap and its associated increase in the number of trading
instruments, the number and type of market participants, and market
capitalization.

      If the Fund takes a long position in the credit default swap and there is
a credit event the Fund will pay the par amount of the bonds and the swap
counterparty will deliver the bonds.  If the swap is on a basket of securities,
the notional amount of the swap is reduced by the par amount of the defaulted
bond, and the fixed payments are then made on the reduced notional amount.

      Other risks of credit default swaps include the cost of paying for credit
protection if there are no credit events, pricing transparency when assessing
the cost of a credit default swap, counterparty risk, and the need to fund the
delivery obligation (either cash or the defaulted bonds, depending on whether
the Fund is long or short the swap, respectively).

|X|   Debt Securities. Additional information is provided below about the types
of debt and fixed income securities the Fund may invest in, primarily for
liquidity purposes.

o     U.S. Treasury Obligations. These include Treasury Bills (which have
maturities of one year or less when issued), Treasury Notes (which have
maturities of one to ten years when issued) and Treasury Bonds (which have
maturities generally greater than ten years when issued). U.S. Treasury
obligations are backed by the full faith and credit of the United States and
are considered to be of the highest credit quality, although they are generally
not rated by rating organizations.

o     Treasury Inflation-Protection Securities. The Fund can buy these U.S.
Treasury securities, called "TIPS," that are designed to provide an investment
vehicle that is not vulnerable to inflation. The interest rate paid by TIPS is
fixed. The principal value rises or falls semi-annually based on changes in the
published Consumer Price Index. If inflation occurs, the principal and interest
payments on TIPS are adjusted to protect investors from inflationary loss. If
deflation occurs, the principal and interest payments will be adjusted
downward, although the principal will not fall below its face amount at
maturity.

o     Zero-Coupon U.S. Government Securities. Some of the U.S. government
securities the Fund can buy may be zero-coupon bonds that pay no interest and
are issued at a substantial discount from their face value. They are subject to
greater fluctuations in market value as interest rates change than
interest-paying securities. For financial and tax purposes, interest accrues on
zero-coupon bonds even though cash is not actually received by the Fund. The
Fund may have to pay out the imputed income on zero-coupon securities without
receiving the actual cash currently.

      Zero-coupon securities do not make periodic interest payments and are
sold at a deep discount from their face value at maturity. The buyer recognizes
a rate of return determined by the gradual appreciation of the security, which
is redeemed at face value on a specified maturity date. This discount depends
on the time remaining until maturity, as well as prevailing interest rates, the
liquidity of the security and the credit quality of the issuer. The discount
typically decreases as the maturity date approaches.

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

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

o     Mortgage-Related Securities. Mortgage-related securities are a form of
derivative investment collateralized by pools of commercial or residential
mortgages. Pools of mortgage loans are assembled as securities for sale to
investors by government agencies or entities or by private-issuers. These
securities include collateralized mortgage obligations ("CMOs"), mortgage
pass-through securities, stripped mortgage pass-through securities, interests
in real estate mortgage investment conduits ("REMICs") and other real-estate
related securities.

      Mortgage-related securities that are issued or guaranteed by agencies or
instrumentalities of the U.S. government have relatively little credit risk
(depending on the nature of the issuer) but are subject to interest rate risks
and prepayment risks, as described in the Prospectus.

      As with other debt securities, the prices of mortgage-related securities
tend to move inversely to changes in interest rates. The Fund can buy
mortgage-related securities that have interest rates that move inversely to
changes in general interest rates, based on a multiple of a specific index.
Although the value of a mortgage-related security may decline when interest
rates rise, the converse is not always the case.

      In periods of declining interest rates, mortgages are more likely to be
prepaid. Therefore, a mortgage-related security's maturity can be shortened by
unscheduled prepayments on the underlying mortgages. Therefore, it is not
possible to predict accurately the security's yield. The principal that is
returned earlier than expected may have to be reinvested in other investments
having a lower yield than the prepaid security. Therefore, these securities may
be less effective as a means of "locking in" attractive long-term interest
rates, and they may have less potential for appreciation during periods of
declining interest rates, than conventional bonds with comparable stated
maturities.

      Prepayment risks can lead to substantial fluctuations in the value of a
mortgage-related security. In turn, this can affect the value of the Fund's
shares. If a mortgage-related security has been purchased at a premium, all or
part of the premium the Fund paid may be lost if there is a decline in the
market value of the security, whether that results from interest rate changes
or prepayments on the underlying mortgages. In the case of stripped
mortgage-related securities, if they experience greater rates of prepayment
than were anticipated, the Fund may fail to recoup its initial investment on
the security.


      During periods of rapidly rising interest rates, prepayments of
mortgage-related securities may occur at slower than expected rates. Slower
prepayments effectively may lengthen a mortgage-related security's expected
duration. Generally, that would cause the value of the security to fluctuate
more widely in responses to changes in interest rates. If the prepayments on
the Fund's mortgage-related securities were to decrease broadly, the Fund's
effective duration, and therefore its sensitivity to interest rate changes,
would increase.

      As with other debt securities, the values of mortgage-related securities
may be affected by changes in the market's perception of the creditworthiness
of the entity issuing the securities or guaranteeing them. Their values may
also be affected by changes in government regulations and tax policies.

o     Collateralized Mortgage Obligations. CMOs are multi-class bonds that are
backed by pools of mortgage loans or mortgage pass-through certificates. They
may be collateralized by:
(1)   pass-through certificates issued or guaranteed by Ginnie Mae, Fannie Mae,
                  or Freddie Mac,
(2)   unsecuritized mortgage loans insured by the Federal Housing
                  Administration or guaranteed by the Department of Veterans'
                  Affairs,
(3)   unsecuritized conventional mortgages,
(4)   other mortgage-related securities, or
(5)   any combination of these.

      Each class of CMO, referred to as a "tranche," is issued at a specific
coupon rate and has a stated maturity or final distribution date. Principal
prepayments on the underlying mortgages may cause the CMO to be retired much
earlier than the stated maturity or final distribution date. The principal and
interest on the underlying mortgages may be allocated among the several classes
of a series of a CMO in different ways. One or more tranches may have coupon
rates that reset periodically at a specified increase over an index. These are
floating rate CMOs, and typically have a cap on the coupon rate. Inverse
floating rate CMOs have a coupon rate that moves in the reverse direction to an
applicable index. The coupon rate on these CMOs will increase as general
interest rates decrease. These are usually much more volatile than fixed rate
CMOs or floating rate CMOs.

o     U.S. Government Mortgage-Related Securities. The Fund can invest in a
variety of mortgage-related securities that are issued by U.S. government
entities or instrumentalities, some of which are described below.

o     GNMA Certificates. The Government National Mortgage Association ("GNMA")
is a wholly-owned corporate instrumentality of the United States within the
U.S. Department of Housing and Urban Development. GNMA's principal programs
involve its guarantees of privately-issued securities backed by pools of
mortgages. Ginnie Maes are debt securities representing an interest in one or a
pool of mortgages that are insured by the Federal Housing Administration or the
Farmers Home Administration or guaranteed by the Veterans Administration

            The Ginnie Maes in which the Fund invests are of the "fully
modified pass-through" type. They provide that the registered holders of the
Ginnie Maes will receive timely monthly payments of the pro-rata share of the
scheduled principal payments on the underlying mortgages, whether or not those
amounts are collected by the issuers. Amounts paid include, on a pro rata
basis, any prepayment of principal of such mortgages and interest (net of
servicing and other charges) on the aggregate unpaid principal balance of the
Ginnie Maes, whether or not the interest on the underlying mortgages has been
collected by the issuers.

      The Ginnie Maes purchased by the Fund are guaranteed as to timely payment
of principal and interest by GNMA. In giving that guaranty, GNMA expects that
payments received by the issuers of Ginnie Maes on account of the mortgages
backing the Ginnie Maes will be sufficient to make the required payments of
principal of and interest on those Ginnie Maes. However if those payments are
insufficient, the guaranty agreements between the issuers of the Ginnie Maes
and GNMA require the issuers to make advances sufficient for the payments. If
the issuers fail to make those payments, GNMA will do so.

      Under federal law, the full faith and credit of the United States is
pledged to the payment of all amounts that may be required to be paid under any
guaranty issued by GNMA as to such mortgage pools. An opinion of an Assistant
Attorney General of the United States, dated December 9, 1969, states that such
guaranties "constitute general obligations of the United States backed by its
full faith and credit." GNMA is empowered to borrow from the United States
Treasury to the extent necessary to make any payments of principal and interest
required under those guaranties.

      Ginnie Maes are backed by the aggregate indebtedness secured by the
underlying FHA-insured, FMHA-insured or VA-guaranteed mortgages. Except to the
extent of payments received
by the issuers on account of such mortgages, Ginnie Maes do not constitute a
liability of those issuer, nor do they evidence any recourse against those
issuers. Recourse is solely against GNMA. Holders of Ginnie Maes (such as the
Fund) have no security interest in or lien on the underlying mortgages.

      Monthly payments of principal will be made, and additional prepayments of
principal may be made, to the Fund with respect to the mortgages underlying the
Ginnie Maes owned by the Fund. All of the mortgages in the pools relating to
the Ginnie Maes in the Fund are subject to prepayment without any significant
premium or penalty, at the option of the mortgagors. While the mortgages on
1-to-4-family dwellings underlying certain Ginnie Maes have a stated maturity
of up to 30 years, it has been the experience of the mortgage industry that the
average life of comparable mortgages, as a result of prepayments, refinancing
and payments from foreclosures, is considerably less.

o     Federal Home Loan Mortgage Corporation ("FHLMC") Certificates. FHLMC, a
corporate instrumentality of the United States, issues FHLMC certificates
representing interests in mortgage loans. FHLMC guarantees to each registered
holder of a FHLMC certificate timely payment of the amounts representing a
holder's proportionate share in:
(i)   interest payments less servicing and guarantee fees,
(ii)  principal prepayments and

(iii) the ultimate collection of amounts representing the holder's
                 proportionate interest in principal payments on the mortgage
                 loans in the pool represented by the FHLMC certificate, in
                 each case whether or not such amounts are actually received.


      The obligations of FHLMC under its guarantees are obligations solely of
FHLMC and are not backed by the full faith and credit of the United States.

o     Federal National Mortgage Association (Fannie Mae) Certificates.
      Fannie Mae, a federally-chartered and privately-owned corporation, issues
Fannie Mae certificates which are backed by a pool of mortgage loans. Fannie
Mae guarantees to each registered holder of a Fannie Mae certificate that the
holder will receive amounts representing the holder's proportionate interest in
scheduled principal and interest payments, and any principal prepayments, on
the mortgage loans in the pool represented by such certificate, less servicing
and guarantee fees, and the holder's proportionate interest in the full
principal amount of any foreclosed or other liquidated mortgage loan. In each
case the guarantee applies whether or not those amounts are actually received.
The obligations of Fannie Mae under its guarantees are obligations solely of
Fannie Mae and are not backed by the full faith and credit of the United States
or any of its agencies or instrumentalities other than Fannie Mae.

o     Commercial (Privately-Issued) Mortgage-Related Securities. The Fund may
invest in commercial mortgage-related securities issued by private entities.
Generally these are multi-class debt or pass through certificates secured by
mortgage loans on commercial properties. They are subject to the credit risk of
the issuer. These securities typically are structured to provide protection to
investors in senior classes from possible losses on the underlying loans. They
do so by having holders of subordinated classes take the first loss if there
are defaults on the underlying loans. They may also be protected to some extent
by guarantees, reserve funds or additional collateralization mechanisms.

o     "Stripped" Mortgage-related Securities. The Fund may invest in stripped
mortgage-related securities that are created by segregating the cash flows from
underlying mortgage loans or mortgage securities to create two or more new
securities. Each has a specified percentage of the underlying security's
principal or interest payments. These are a form of derivative investment.

      Mortgage securities may be partially stripped so that each class receives
some interest and some principal. However, they may be completely stripped. In
that case all of the interest is distributed to holders of one type of
security, known as an "interest-only" security, or "I/O," and all of the
principal is distributed to holders of another type of security, known as a
"principal-only" security or "P/O." Strips can be created for pass through
certificates or CMOs.

      The yields to maturity of I/Os and P/Os are very sensitive to principal
repayments (including prepayments) on the underlying mortgages. If the
underlying mortgages experience greater than anticipated prepayments of
principal, the Fund might not fully recoup its investment in an I/O based on
those assets. If underlying mortgages experience less than anticipated
prepayments of principal, the yield on the P/Os based on them could decline
substantially.


o     Forward Rolls. The Fund can enter into "forward roll" transactions with
respect to mortgage-related securities (also referred to as "mortgage dollar
rolls"). In this type of transaction, the Fund sells a mortgage-related
security to a buyer and simultaneously agrees to repurchase a similar security
(the same type of security, and having the same coupon and maturity) at a later
date at a set price. The securities that are repurchased will have the same
interest rate as the securities that are sold, but typically will be
collateralized by different pools of mortgages (with different prepayment
histories) than the securities that have been sold. Proceeds from the sale are
invested in short-term instruments, such as repurchase agreements. The income
from those investments, plus the fees from the forward roll transaction, are
expected to generate income to the Fund in excess of the yield on the
securities that have been sold.

      The Fund will only enter into "covered" rolls. To assure its future
payment of the purchase price, the Fund will identify on its books cash, liquid
assets in an amount equal to the payment obligation under the roll.

      These transactions have risks. During the period between the sale and the
repurchase, the Fund will not be entitled to receive interest and principal
payments on the securities that have been sold. It is possible that the market
value of the securities the Fund sells may decline below the price at which the
Fund is obligated to repurchase securities.

o     Commercial Paper. The Fund may invest in commercial paper, including the
following:
o     Variable Amount Master Demand Notes. Master demand notes are corporate
obligations that permit the investment of fluctuating amounts by the Fund at
varying rates of interest under direct arrangements between the Fund, as
lender, and the borrower. They permit daily changes in the amounts borrowed.
The Fund has the right to increase the amount under the note at any time up to
the full amount provided by the note agreement, or to decrease the amount. The
borrower may prepay up to the full amount of the note without penalty. These
notes may or may not be backed by bank letters of credit.

      Because these notes are direct lending arrangements between the lender
and borrower, it is not expected that there will be a trading market for them.
There is no secondary market for
these notes, although they are redeemable (and thus are immediately repayable
by the borrower) at principal amount, plus accrued interest, at any time.
Accordingly, the Fund's right to redeem such notes is dependent upon the
ability of the borrower to pay principal and interest on demand.

      The Fund has no limitations on the type of issuer from whom these notes
will be purchased. However, in connection with such purchases and on an ongoing
basis, the Sub-Advisor will consider the earning power, cash flow and other
liquidity ratios of the issuer, and its ability to pay principal and interest
on demand, including a situation in which all holders of such notes made demand
simultaneously. Investments in master demand notes that are deemed illiquid are
subject to the limitation on investments by the Fund in illiquid securities,
described in the Prospectus.

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

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


potential for capital appreciation or depreciation is less than that for
fixed-rate obligations of the same maturity. The Sub-Advisor may determine that
an unrated floating rate or variable rate demand obligation meets the Fund's
quality standards by reason of being backed by a letter of credit or guarantee
issued by a bank that meets those quality standards.

      Floating rate and variable rate demand notes that have a stated maturity
in excess of one year may have features that permit the holder to recover the
principal amount of the underlying security at specified intervals not
exceeding one year and upon no more than 30 days' notice. The issuer of that
type of note normally has a corresponding right in its discretion, after a
given period, to prepay the outstanding principal amount of the note plus
accrued interest. Generally the issuer must provide a specified number of days'
notice to the holder.

o     Asset-Backed Securities. Asset-backed securities are typically based on
account receivables or consumer loans. The value of an asset-backed security is
affected by changes in the market's perception of the asset backing the
security, the creditworthiness of the servicing agent for the loan pool, the
originator of the loans, or the financial institution providing any credit
enhancement, and is also affected if any credit enhancement has been exhausted.
The risks of investing in asset-backed securities are ultimately related to
payment of consumer loans by the individual borrowers. As a purchaser of an
asset-backed security, the Fund would generally have no recourse to the entity
that originated the loans in the event of default by a borrower. The underlying
loans are subject to prepayments, which may shorten the weighted average life
of asset-backed securities and may lower their return, in the same manner as in
the case of mortgage-backed securities and CMOs, described above, for
prepayments of a pool of mortgage loans underlying mortgage-backed securities.

o     Zero-Coupon Securities of Private-Issuers. The Fund may also invest in
zero-coupon securities issued by private-issuers such as domestic or foreign
corporations. These securities have the same interest rate risks as described
above for zero-coupon U.S. Treasury securities. An additional risk of
private-issuer zero-coupon securities is the credit risk that the issuer will
be unable to make payment at maturity of the obligation.

o     Bank Obligations and Instruments Secured By Them. The bank obligations
the Fund may invest in include time deposits, certificates of deposit, and
bankers' acceptances. They must be (i) obligations of a domestic bank with
total assets of at least $1 billion or (ii) obligations of a foreign bank with
total assets of at least U.S. $1 billion. The Fund may also invest in
instruments secured by such obligations (for example, debt that is guaranteed
by the bank). For purposes of this policy, the term "bank" includes commercial
banks, savings banks, and savings and loan associations which may or may not be
members of the Federal Deposit Insurance Corporation.

      Time deposits are non-negotiable deposits in a bank for a specified
period of time at a stated interest rate. They may or may not be subject to
early withdrawal penalties. However, time deposits that are subject to
withdrawal penalties, other than those maturing in seven days or less, are
subject to the limitation on investments by the Fund in illiquid investments.

      Bankers' acceptances are marketable short-term credit instruments used to
finance the import, export, transfer or storage of goods. They are deemed
"accepted" when a bank guarantees their payment at maturity.


o     Other Board-Approved Instruments. The Fund may invest in other debt
instruments (including new instruments that may be developed in the future)
that the Fund's Board of Trustees determines are consistent with the Fund's
investment objective and investment policies.

o     High-Yield Securities. The Fund may invest up to 10% of its total assets
in high-risk, high-yield, lower-grade debt securities (commonly called "junk
bonds"), whether they are rated or unrated. While the Fund may invest in
lower-grade debt securities, it is not currently contemplated that the Fund
will do so to a significant extent. The Sub-Advisor will not rely solely on the
ratings assigned by rating services, and the Fund may invest in unrated
securities which offer, in the opinion of the Sub-Advisor, comparable yields
and risks as those rated securities in which the Fund may invest.

      High-yield securities are rated "BB" or below by Standard & Poor's
Corporation or "Ba" or below by Moody's Investors Service, Inc., or have a
similar credit risk rating by another rating organization. If they are unrated,
the Sub-Advisor will assign a rating to them that the Sub-Advisor believes is
of comparable quality to rated securities. High-yield securities are considered
more risky than investment-grade bonds because there is greater uncertainty
regarding the economic viability of the issuer. The Fund may invest in
securities rated as low as "C" by Moody's or "D" by S&P.

o     Special Risks of High-Yield Securities. Risks of high-yield securities
may include:
(1)   limited liquidity and secondary market support,
(2)   substantial market price volatility resulting from changes in prevailing
                  interest rates,
(3)   subordination to the prior claims of banks and other senior lenders,
(4)   the operation of mandatory sinking fund or call/redemption provisions
                  during periods of declining interest rates that could cause
                  the Fund to reinvest premature redemption proceeds only in
                  lower yielding portfolio securities,
(5)   the possibility that earnings of the issuer may be insufficient to meet
                  its debt service, and
(6)   the issuer's low creditworthiness and potential for insolvency during
                  periods of rising interest rates and economic downturn.

      As a result of the limited liquidity of high-yield securities, their
prices have at times experienced significant and rapid decline when a
substantial number of holders decided to sell. A decline is also likely in the
high-yield bond market during an economic downturn. An economic downturn or an
increase in interest rates could severely disrupt the market for high-yield
bonds and adversely affect the value of outstanding bonds and the ability of
the issuers to repay principal and interest.

Other Investment Techniques and Strategies

|X|   Foreign Investments. The Fund may invest in securities (which may be
denominated in U.S. dollars or non-U.S. currencies) issued or guaranteed by
foreign corporations, certain supranational entities and foreign governments or
their agencies or instrumentalities, and in securities issued by U.S.
corporations denominated in non-U.S. currencies. The types of foreign debt
obligations and other securities in which the Fund may invest are the same
types of debt securities identified above. Foreign securities are subject,
however, to additional risks not associated with domestic securities, as
discussed below. These additional risks may be more pronounced as to
investments in securities issued by emerging market countries or by companies
located in emerging market countries.

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 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     foreign exchange contracts;
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, nationalization,
               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     Special Risks of Emerging Markets. Emerging and developing markets abroad
may also offer special opportunities for investing but have greater risks than
more developed foreign markets, such as those in Europe, Canada, Australia, New
Zealand and Japan. There may be even less liquidity in their securities
markets, and settlements of purchases and sales of securities may be subject to
additional delays. They are subject to greater risks of limitations on the
repatriation of income and profits because of currency restrictions imposed by
local governments. Those countries may also be subject to the risk of greater
political and economic instability, which can greatly affect the volatility of
prices of securities in those countries. The Sub-Advisor will consider these
factors when evaluating securities in these markets, because the selection of
those securities must be consistent with the Fund's investment objective. The
Fund currently does not anticipate that a significant percentage of its assets
will be invested in securities of issuers in emerging market countries.

|X|   Passive Foreign Investment Companies. Some securities of corporations
domiciled outside the U.S. that 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 is also the risk 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 of 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 varying 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".

|X|   Investment-Grade Bonds. The Fund may invest in investment-grade debt
obligations rated in the four highest investment categories by Standard &
Poor's Corporation, Moody's Investors Service, Inc., or by another NRSRO. If
they are unrated, they will be assigned a rating by the Sub-Advisor to be
considered of similar quality to obligations that are rated investment grade.
These investments may include:

o     Corporate Bonds. The Fund may invest in debt securities issued by
domestic corporations.

o     Foreign Bonds. The Fund may invest in bonds and other debt securities
denominated in currencies other than the U.S. dollar. Generally, these
securities are issued by foreign corporations and foreign governments and are
traded on foreign markets. Investment in foreign debt securities that are
denominated in foreign currencies involve certain additional risks, which are
described above, in "Foreign Securities."

|X|   Convertible Securities. The Fund may invest in convertible securities,
however the Fund currently does not anticipate that a significant percentage of
its assets will be invested in such 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
Sub-Advisor more as "equity equivalents." As a result, the rating assigned to
the security has less impact on the Sub-Advisor's investment decision with
respect to convertible securities than in the case of non-convertible debt
fixed-income securities. Convertible securities are subject to the credit risks
and interest rate risks described above.

      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 Sub-Advisor 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.

|X|   Participation Interests. Participation interests are interests in loans
made to U.S. or foreign companies or to foreign governments. These interests
are typically acquired from banks or brokers that have made the loan or are
members of the lending syndicate.

      The value of loan participation interests depends primarily upon the
creditworthiness of the borrower, and its ability to pay interest and
principal. Borrowers may have difficulty making payments. If a borrower fails
to make scheduled interest or principal payments, the Fund could experience a
decline in the net asset value of its shares. Certain participation interests
may be illiquid and are subject to the Fund's limitations on investments in
illiquid securities. The Manager has set, and the Sub-Advisor follows, certain
creditworthiness standards for issuers of loan participations, and monitors
their creditworthiness. Some borrowers may have senior securities rated as low
as "C" by Moody's or "D" by S&P, but may be deemed acceptable credit risks.

      Participation interests provide the Fund an undivided interest in a loan
made by the issuing financial institution in the proportion that the Fund's
participation interest bears to the total principal amount of the loan. The
issuing financial institution may have no obligation to the Fund other than to
pay the Fund the proportionate amount of the principal and interest payments it
receives. In the event of a failure by the financial institution to perform its
obligation in connection with the participation agreement, the Fund might incur
certain costs and delays in realizing payment or may suffer a loss of principal
and/or interest.

|X|   When-Issued and Delayed-Delivery Transactions. The Fund can purchase
securities on a "when-issued" basis, and may purchase or sell such securities
on a "delayed-delivery" basis. "When-issued" or "delayed-delivery" refers to
securities whose terms and indenture are available and for which a market
exists, but which are not available for immediate delivery.

      When such transactions are negotiated, the price (which is generally
expressed in yield terms) is fixed at the time the commitment is made. Delivery
and payment for the securities take place at a later date. 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 Sub-Advisor
before settlement will affect the value of such securities and may cause a loss
to the Fund.
During the period between purchase and settlement, the Fund makes no payment to
the issuer and no interest accrues to the Fund from the investment until it
receives the security at settlement. There is a risk of loss to the Fund if the
value of the security changes prior to the settlement date, and there is the
risk that the other party may not perform.

      The Fund may engage in when-issued transactions to secure what the
Sub-Advisor considers to be an advantageous price and yield at the time the
obligation is entered into. 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 Sub-Advisor 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 purposes of
investment leverage. Although the Fund will enter into when-issued or
delayed-delivery purchase transactions to acquire securities, the Fund may
dispose of a commitment prior to settlement. If the Fund chooses to dispose of
the right to acquire a when-issued security prior to its acquisition or to
dispose of its right to deliver or receive against a forward commitment, it may
incur a gain or loss.

      At the time the Fund makes 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 assets 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.

|X|   Repurchase Agreements. The Fund can acquire securities subject to
repurchase agreements. It might do so:
o     for liquidity purposes to meet anticipated repurchases of Fund shares, or
o     pending the investment of the proceeds from sales of Fund shares, or
o     pending the settlement of portfolio securities transactions, or 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. Approved vendors include U.S. commercial banks, U.S. branches of
foreign banks, or broker-dealers that have been designated as primary dealers
in government securities. They must meet credit requirements set by the Manager
from time to time. The resale price exceeds the purchase price by an amount
that reflects an agreed-upon interest rate effective for the period during
which the repurchase agreement is in effect.

      The majority of these transactions run from day to day, and delivery
pursuant to the resale typically 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 Sub-Advisor 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 SEC, the Fund, along with
other affiliated entities managed by the Manager or Sub-Advisor, may transfer
uninvested cash balances into one or more joint repurchase accounts. These
balances are invested in one or more repurchase agreements, secured by U.S.
government securities. Securities that are pledged as collateral for repurchase
agreements are held by a custodian bank until the agreements mature. Each joint
repurchase arrangement requires that the market value of the collateral be
sufficient to cover payments of interest and principal; however, in the event
of default by the other party to the agreement, retention or sale of the
collateral may be subject to legal proceedings.

o     Reverse Repurchase Agreements. The Fund can use reverse repurchase
agreements on debt obligations it owns. Under a reverse repurchase agreement,
the Fund sells an underlying debt obligation and simultaneously agrees to
repurchase the same security at an agreed-upon price at an agreed-upon date.
The Fund will identify on its books liquid assets in an amount sufficient to
cover its obligations under reverse repurchase agreements, including interest,
until payment is made to the seller.

      These transactions involve the risk that the market value of the
securities sold by the Fund under a reverse repurchase agreement could decline
below the price at which the Fund is obligated to repurchase them. These
agreements are considered borrowings by the Fund and will be subject to the
asset coverage requirement under the Fund's policy on borrowing discussed below.

|X|   Illiquid and Restricted Securities. Under the policies and procedures
established by the Fund's Board of Trustees, the Sub-Advisor determines the
liquidity of certain of the Fund's investments. To enable the Fund to sell
restricted securities not registered under the Securities Act of 1933, the Fund
may have to cause those securities to be registered. The expenses of
registration of restricted securities may be negotiated by the Fund with the
issuer at the time such securities are purchased by the Fund, if such
registration is required before such securities may be sold publicly. When
registration must be arranged because the Fund wishes to sell the security, a
considerable period may elapse between the time the decision is made to sell
the securities and the time the Fund would be permitted to sell them. The Fund
would bear the risks of any downward price fluctuation during that period. The
Fund expects to acquire commodity-linked notes having regulatory or contractual
restrictions on their resale, which might limit the
Fund's ability to dispose of such notes and might lower the amount realizable
upon the sale of such securities.

      The Fund has percentage limitations that apply to purchases of restricted
and illiquid 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 pursuant to Rule 144A under the
Securities Act of 1933, provided that those securities have been determined to
be liquid by the Board of Trustees of the Fund or 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 holding of that security may be
deemed to be illiquid.

|X|   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.

|X|   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.

|X|   Derivatives and Hedging Transactions. As described in the Prospectus, the
Fund can use derivative instruments for hedging.  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, 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 may also be
            used to increase the Fund's income, but the Sub-Advisor does not
            expect to engage extensively in that practice.

      The Fund may use hedging to establish a position in an investment as a
temporary substitute for purchasing the investment. In that case the Fund will
normally seek to purchase the investment 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 investments 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.

      When hedging to protect against declines in the dollar value of a foreign
currency-denominated investment, the Fund may:
o     buy puts on that foreign currency and on foreign currency futures,
o     write calls on that currency or on such futures contracts, or
o     enter into forward contracts at a higher or lower rate than the spot
         ("cash") rate.

      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 may buy and sell interest rate futures contracts,
commodities, futures contracts, financial futures, and forward contracts.

      No payment 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.

      The  Fund  can hold a  portion  of its  investments  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, and
           zinc; and
(5)   precious  metals,  which  includes  gold 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.

      The Fund does not pay or receive money 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. Alternatively, the Fund may maintain accounts with futures brokers,
provided that the Fund and the futures brokers comply with the requirements of
the rules under the Investment Company Act.

      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 are effected through a
clearinghouse associated with the exchange on which the contracts are traded.
While the terms of interest rate futures contracts call for settlement by
delivery or acquisition of debt securities, in most cases the obligation is
fulfilled by entering into an offsetting position. Financial futures contracts
are similar to interest rate futures, but settlement is made in cash.



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 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 may 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 may 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 may 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 may suffer a substantial decline against the
U.S. dollar, it may 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 may suffer a substantial decline against a foreign currency, it
may enter into a forward contract to buy that foreign currency for a fixed
dollar amount. Alternatively, the Fund may 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 identify on its books liquid assets in an amount sufficient
to cover its obligations 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 Sub-Advisor may 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 may 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 may 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 may 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     Comparison of Commodity Futures and Forward Contracts. Futures contracts
and forward contracts achieve the same economic effect: both are an agreement
to purchase a specified amount of a specified commodity at a specified future
date for a price agreed-upon today. However, there are significant differences
in the operation of the two contracts. Forward contracts are individually
negotiated transactions and are not exchange traded. Therefore, with a forward
contract, the Fund would make a commitment to carry out the purchase or sale of
the underlying commodity at expiration.

      For example, if the Fund were to buy a forward contract to purchase a
certain amount of gold at a set price per ounce for delivery in three months'
time and then, two months later, the Fund wished to liquidate that position, it
would contract for the sale of the gold at a new price per ounce for delivery
in one months' time. At expiration of both forward contracts, the Fund would be
required to buy the gold at the set price under the first forward contract and
sell it at the agreed-upon price under the second forward contract. Even though
the Fund has effectively offset its gold position with the purchase and sale of
the two forward contracts, it must still honor the original commitment at
maturity of the two contracts. By contrast, futures exchanges have central
clearinghouses which keep track of all positions. To offset a long position in
a futures contract, the Fund simply needs to sell a similar contract on the
exchange. The exchange clearinghouse will record both the original futures
contract purchase and the offsetting sale, and there is no further commitment
on the part of the Fund.

      Only a very small percentage of commodity futures contracts result in
actual delivery of the underlying commodity. Additionally, any gain or loss on
the purchase and sale of the futures contracts is recognized immediately upon
the offset, while with a forward contract, profit or loss is recognized upon
maturity of the forward contracts.

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 swaps and the other types of futures described above.

o     Writing Covered Call Options. The Fund may 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 the
call may be covered by segregating liquid assets to enable the Fund to satisfy
its obligations if the call is exercised. There is no limit on the amount of
assets that 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.

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

      When the Fund writes a call on an index, it receives cash (a premium). If
the buyer of the call exercises it, the Fund will pay an amount of cash equal
to the difference between the closing price of the call and the exercise price,
multiplied by the specified multiple that determines the total value of the
call for each point of difference. If the value of the underlying investment
does
not rise above the call price, it is likely that the call will lapse without
being exercised. In that case the Fund would keep the cash premium.

      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 realize a profit if a call it has written 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. Because of the Fund's fundamental policies prohibiting the
purchase of call options, the Fund cannot effect closing purchase transactions
to terminate calls it has written.

      The Fund may write call options on financial and commodity indices. When
writing a call on an index, the Fund receives a premium and agrees to pay to
the call buyer a cash amount equal to the appreciation of the index in excess
of the option strike price over the call period. If the index declines in value
the Fund has no payment obligation and retains the option premium. When writing
a call option on an index, the Fund will segregate liquid assets equal to the
settlement value of the option.

      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 on its
books an equivalent dollar amount of liquid assets. The Fund will segregate
additional liquid assets if the value of the segregated assets drops below 100%
of the current value of the future. Because of this segregation 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 may 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.

      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 deposit in escrow liquid assets with
a value equal to or greater than the exercise price of the underlying
securities. The Fund therefore foregoes the opportunity of investing the
segregated assets or writing calls against those assets.

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

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

o     Purchasing Calls and Puts. The Fund may 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 may 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.

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
would 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 Sub-Advisor 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 Sub-Advisor anticipates a decline in the
dollar value of a foreign currency, the decline in the dollar value of
portfolio securities denominated in that currency may 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 held in a
segregated account by its custodian bank) upon conversion or exchange of other
foreign currency held in its portfolio.

      The Fund may 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 may 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 maintaining cash, U.S.
government securities or other liquid, high-grade debt securities in an amount
equal to the exercise price of the option, in a segregated account with the
Fund's custodian bank.

o     Interest Rate Swap Transactions. The Fund can enter into interest rate
swap agreements. In an interest rate swap, the Fund and another party exchange
their right to receive or their obligation to pay interest on a security. For
example, they might swap the right to receive floating rate payments for fixed
rate payments. Also, the Fund will identify on its books liquid assets (such as
cash or U.S. government securities) to cover any amounts it could owe under
swaps that exceed the amounts it is entitled to receive, and it will adjust
that amount daily, as needed.

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



      The Fund can enter into swap transactions with certain counterparties
pursuant to master netting agreements. A master netting agreement provides that
all swaps done between the Fund and that counterparty shall be regarded as
parts of an integral agreement. If amounts are payable on a particular date in
the same currency in respect of one or more swap transactions, the amount
payable on that date in that currency shall be the net amount. In addition, the
master netting agreement may provide that if one party defaults generally or on
one swap, the counterparty can terminate all of the swaps with that party.
Under these agreements, if a default results in a loss to one party, the
measure of that party's damages is calculated by reference to the average cost
of a replacement swap for each swap. It is measured by the mark-to-market value
at the time of the termination of each swap. The gains and losses on all swaps
are then netted, and the result is the counterparty's gain or loss on
termination. The termination of all swaps and the netting of gains and losses
on termination is generally referred to as "aggregation."

o     Swaption Transactions. The Fund may enter into a swaption transaction,
which is a contract that grants the holder, in return for payment of the
purchase price (the "premium") of the option, the right, but not the
obligation, to enter into an interest rate swap at a preset rate within a
specified period of time, with the writer of the contract. The writer of the
contract receives the premium and bears the risk of unfavorable changes in the
preset rate on the underlying interest rate swap. Unrealized gains/losses on
swaptions are reflected in investment assets and investment liabilities in the
Fund's statement of financial condition.

o     Risks of Derivative Instruments. The use of derivative instruments
requires special skills and knowledge of investment techniques that are
different than what is required for normal portfolio management. If the
Sub-Advisor uses a derivative 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 may affect its portfolio turnover rate and
brokerage commissions. The exercise of calls written by the Fund may cause the
Fund to sell related portfolio securities, thus increasing its turnover rate.
The exercise by the Fund of puts on securities will cause the sale of
underlying investments, increasing portfolio turnover. Although the decision
whether to exercise a put it holds is within the Fund's control, holding a put
might
cause the Fund to sell the related investments for reasons that would not exist
in the absence of the put.

      The Fund could pay a brokerage commission each time it buys a call or
put, sells a call or put, or buys or sells an underlying investment in
connection with the exercise of a call or put. Those commissions may be higher
on a relative basis than the commissions for direct purchases or sales of the
underlying investments. Premiums paid for options are small in relation to the
market value of the underlying investments. Consequently, put and call options
offer large amounts of leverage. The leverage offered by trading in options
could result in the Fund's net asset value being more sensitive to changes in
the value of the underlying investment.

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

      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 could 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 may advance and the value of the securities held in the Fund's portfolio
may 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 may 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 may decline. If the Fund then concludes not to invest in
securities because of concerns that the market may 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     Regulatory Aspects of Use of Derivatives. 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 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 advisor as the Fund (or an advisor that is
an affiliate of the Fund's advisor). 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.

      As an open-end investment company registered with the SEC, the Fund is
subject to the federal securities laws, including the Investment Company Act,
related rules, and various SEC and SEC staff positions. In accordance with
these positions, with respect to certain kinds of derivatives, the Fund must
set aside (referred to sometimes as "asset segregation") liquid assets, or
engage in other SEC- or staff-approved measures, while the derivatives
contracts are open. For example, with respect to forwards and futures contracts
that are not contractually required to "cash-settle," the Fund must cover its
open positions by setting aside liquid assets equal to the contracts' full,
notional value. With respect to forwards and futures that are contractually
required to "cash-settle," however, the Fund is permitted to set aside liquid
assets in an amount equal to the Fund's daily marked-to-market (net)
obligations, if any (i.e., the Fund's daily net liability, if any), rather than
the notional value. By setting aside assets equal to only its net obligations
under cash-settled forward and futures contracts, the Fund will have the
ability to employ leverage to a greater extent than if the Fund were required
to segregate assets equal to the full notional value of such contracts. The use
of leverage involves certain risks.  See "Risks of Derivatives Instruments."
The Fund reserves the right to modify its asset segregation policies in the
future to comply with any changes in the positions articulated from time to
time by the SEC and its staff.  The Subsidiary will comply with these asset
segregation requirements to the same extent as the Fund itself.

o     Tax Aspects of Certain Hedging Instruments. Certain exchange contracts in
which the Fund may invest directly (such as regulated futures contracts,
certain foreign currency contracts and options on stock indexes and futures
contracts) 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 Internal Revenue 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 certain contracts 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.

      For information about the tax treatment of the Subsidiary and its
investments, please refer to "Dividends, Capital Gains and Taxes - U.S. Tax
Considerations."

|X|   Portfolio Turnover. "Portfolio turnover" describes the rate at which the
Fund traded its portfolio investments during its last fiscal year. For example,
if the Fund sold all of its investments during the fiscal year, its portfolio
turnover rate would be 100%. The Fund's portfolio turnover rate will fluctuate
from year to year. Increased portfolio turnover creates higher brokerage and
transaction costs for the Fund, which may reduce its overall performance.
However, the Fund purchases many of its investments directly from dealers
without using brokers. Additionally, the realization of capital gains from
selling portfolio investments 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.

|X|   Temporary  Defensive  and Interim  Investments.  When  market,  economic or
political  conditions  are  unstable,  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 buy:
o     high-quality (rated in the top two 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-recognized rating organization,
o     debt obligations of corporate issuers, rated investment grade (rated at
            least Baa by Moody's or at least BBB by Standard & Poor's, or a
            comparable rating by another rating organization), or unrated
            securities judged by the Manager to be of a quality comparable 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.

         |  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 is subject to limitations under
the Investment Company Act and, for investments in a closed-end investment
company, may involve the payment of substantial premiums above the value of
such investment company's portfolio securities. The Fund does not intend to
invest in other investment companies unless the Sub-Advisor 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. The Fund does not anticipate
investing a substantial amount of its net assets in shares of other investment
companies.

Other Investment Restrictions

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 Statement of Additional Information are
"fundamental" only if they are identified as such. The Fund's Board of Trustees
can change non-fundamental policies without shareholder approval. However,
significant changes to investment policies will be described in supplements or
updates to the Prospectus or this Statement of Additional Information, as
appropriate. The Fund's most significant investment policies are described in
the Prospectus.

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

o     The Fund will not purchase the securities, commodity-linked notes and
other instruments of any issuer if, as a result, 25% or more of the Fund's
total assets would be invested in the securities of companies whose principal
business activities are in the same industry or group of industries. This
restriction does not apply to securities issued or guaranteed by the U.S.
government or any of its agencies or instrumentalities, or repurchase
agreements secured by them.

o     The Fund will invest 25% or more of its total assets in securities,
commodity-linked notes and other instruments, including futures and forward
contracts, related options and swaps, linked to one or more of the energy and
natural resources, agriculture, livestock, industrial metals, and precious
metals sectors. The individual components of an index will be considered as
separate industries for this purpose. The Fund may also invest more than 25% in
a group of industries.

o     The Fund will not issue any senior security. However, the Fund may enter
into commitments to purchase securities in accordance with the Fund's
investment program, including reverse repurchase agreements, delayed-delivery
and when-issued securities, which may be considered the issuance of senior
securities. Additionally, the Fund may engage in transactions that may result
in the issuance of a senior security to the extent permitted under the
Investment Company Act and applicable regulations, interpretations of the
Investment Company Act or an exemptive order. The Fund may also engage in short
sales of securities to the extent permitted in its investment program and other
restrictions. The purchase or sale of commodity-linked notes, futures or swap
contracts and related options shall not be considered to involve the issuance
of senior securities. Moreover, the Fund may borrow money as authorized by the
Investment Company Act.

o     The Fund will not purchase or sell physical commodities unless acquired
as a result of ownership of securities or other instruments. This restriction
shall not prevent the Fund from purchasing or selling commodity-linked notes,
or options and futures contracts with respect to individual commodities or
indices, or from investing in securities or other instruments backed by
physical commodities or indices.

o     The Fund will not purchase or sell real estate unless acquired as a
result of direct ownership of securities or other instruments. This restriction
shall not prevent the Fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real estate
business, including real estate investment trusts. This restriction does not
preclude the Fund from buying securities backed by mortgages on real estate or
securities of companies engaged in such activities. The Fund can also invest in
real estate operating companies and shares of companies engaged in other real
estate related businesses.

o     The Fund cannot underwrite securities issued by other persons. A
permitted exception is in case it is deemed to be an underwriter under the
Securities Act of 1933 when reselling securities held in its own portfolio.

o     The Fund cannot make loans except (a) through lending of securities, (b)
through the purchase of debt instruments or similar evidences of indebtedness,
(c) through an interfund lending program with other affiliated funds, provided
that no such loan may be made if, as a result, the aggregate of such loans
would exceed 33 1/3% of the value of its total assets (taken at market value at
the time of such loans), and (d) through repurchase agreements. Currently, the
Investment Company Act permits (a) lending of securities, (b) purchasing debt
securities or similar evidences of indebtedness, (c) repurchase agreements and
(d) interfund lending consistent with the Fund's exemptive order; or

o     The Fund cannot borrow money in excess of 33 1/3% of the value of its
total assets. The Fund may borrow only from banks and/or affiliated investment
companies. With respect to this fundamental policy, the Fund can borrow only if
it maintains a 300% ratio of assets to borrowings at all times in the manner
set forth in the Investment Company Act. Currently, the Investment Company Act
permits a mutual fund to borrow from banks and/or affiliated investment
companies up to one-third of its total assets (including the amount borrowed).
The Fund may borrow up to 5% of its total assets for temporary purposes from
any person. Interfund borrowing must be consistent with the Fund's exemptive
order.

      The percentage restrictions described above and in the Fund's Prospectus
(other than the percentage limitations that apply on an on-going basis and
except in the case of borrowing and investments in illiquid securities) apply
only at the time of investment and require no action by the Fund as a result of
subsequent changes in relative values.

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

o     The Fund 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 purposes of the Fund's concentration policy, the Fund has adopted the
industry classifications set forth in Appendix B to this Statement of
Additional Information. This classification is not a fundamental policy and may
be changed by the Fund's Board of Trustees.

      The   Subsidiary   will   also   follow   the   Fund's    fundamental   and
non-fundamental  investment  restrictions,  described above,  with respect to its
investments.

    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,
    Sub-Adviser , 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 its semi-annual report to shareholders,
      its annual report to shareholders, or its Statements of Investments
      on Form N-Q. Those documents are publicly available at the SEC. In
      addition, the top 20 month-end holdings may be posted on the
      OppenheimerFunds' website at www.oppenheimerfunds.com (select the
      Fund's name under the "View Fund Information for:" menu) with a
      15-day lag.  The Fund may release a more restrictive list of
      holdings (e.g., the top five or top 10 portfolio holdings) or may
      release no holdings if that is in the best interests of the Fund
      and its shareholders.  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.

          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, the Sub-Adviser
    and their 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 20 portfolio securities holdings (based on invested
    assets), listed by security or by issuer, as of the end of each month may
    be disclosed to third parties (subject to the procedures below) no sooner
    than 15 days after month-end.

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

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

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

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

    Portfolio holdings information (which may include information on the Fund's
    entire portfolio or individual securities therein) may be provided by
    senior officers of the Manager or attorneys on the legal staff of the
    Manager, Distributor, or Transfer Agent, in the following circumstances:

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

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

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

    Any permitted release of otherwise non-public portfolio holdings
    information must be in accordance with the Fund's then-current policy on
    approved methods for communicating confidential information, including but
    not limited to the Fund's policy as to use of secure e-mail technology.

    The Chief Compliance Officer (the "CCO") of the Fund and the Manager,
    Distributor, and Transfer Agent shall oversee the compliance by the
    Manager, Sub-Adviser , Distributor, Transfer Agent, and their personnel
    with these policies and procedures. At least annually, the CCO shall report
    to the Fund's Board on such compliance oversight and on the categories of
    entities and individuals to which disclosure of portfolio holdings of the
    Fund has been made during the preceding year pursuant to these policies.
    The CCO shall report to the Fund's Board any material violation of these
    policies and procedures 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:

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

How the 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 July
1996.  On January 1, 2007, the Fund changed its name from "Oppenheimer Real
Asset Fund(R)to "Oppenheimer Commodity Strategy Total Return Fund."

|X|   Classes of Shares. The Trustees are authorized, without shareholder
approval, to create new series and classes of shares, to reclassify unissued
shares into additional series or classes and to divide or combine the shares of
a class into a greater or lesser number of shares without changing the
proportionate beneficial interest of a shareholder in the Fund. Shares do not
have cumulative voting rights, 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.

|X|   Meetings of Shareholders. As a Massachusetts business trust, the Fund is
 not required to hold, and does not plan to hold, regular annual meetings of
 shareholders, but may hold shareholder meetings from time to time on important
 matters or when required to do so by the Investment Company Act or other
 applicable law. Shareholders have the right, upon a vote or declaration in
 writing of two-thirds of the outstanding shares of the Fund, to remove a
 Trustee or to take other action described in the Fund's Declaration of Trust.

      The Trustees will call a meeting of shareholders to vote on the removal
of a Trustee upon the written request of the record holders of 10% of its
outstanding shares. If the Trustees receive a request from at least 10
shareholders stating that they wish to communicate with other shareholders to
request a meeting to remove a Trustee, the Trustees will then either make the
Fund's shareholder list available to the applicants or mail their communication
to all other shareholders at the applicants' expense. The shareholders making
the request must have been shareholders for at least six months and must hold
shares of the Fund valued at $25,000 or more or constituting at least 1% of the
Fund's outstanding shares. The Trustees may also take other action as permitted
by the Investment Company Act.

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

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

Board of Trustees and Oversight Committees. The 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 Review Committee and a
Governance 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 Edward L. Cameron (Chairman),
George C. Bowen, Robert J. Malone and F. William Marshall, Jr. The Audit
Committee held 6 meetings during the Fund's fiscal year ended December 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)
reviewing certain reports from and meet periodically with the Funds' Chief
Compliance Officer; (v) maintaining a separate line of communication between the
Fund's independent Auditors and the Independent Trustees; (vi) reviewing the
independence of the Fund's independent Auditors; and (vii) 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 Review Committee is comprised solely of Independent Trustees. The
members of the Review Committee are Sam Freedman (Chairman), Robert G. Avis, Jon
S. Fossel and Beverly L. Hamilton. The Review Committee held 6 meetings during
the Fund's fiscal year ended December 31, 2006. Among other duties, as set forth
in the Review Committee's Charter, the Review Committee reports and makes
recommendations to the Board concerning the fees paid to the Fund's transfer
agent and the Manager and the services provided to the Fund by the transfer
agent and the Manager. The Review Committee also reviews the Fund's investment
performance as well as the policies and procedures adopted by the Fund to comply
with the Investment Company Act and other applicable law.

      The Governance Committee is comprised solely of Independent Trustees. The
members of the Governance Committee are Robert J. Malone (Chairman), William
Armstrong, Beverly L. Hamilton and F. William Marshall, Jr. The Governance
Committee held 6 meetings during the Fund's fiscal year ended December 31,
2006. The Governance Committee has adopted a charter setting forth its duties
and responsibilities. Among other duties, the Governance Committee reviews and
oversees the Fund's governance guidelines, the adequacy of the Fund's Codes of
Ethics and the nomination of Trustees, including Independent Trustees. The
Governance Committee has adopted a process for shareholder submission of
nominees for board positions. Shareholders may submit names of individuals,
accompanied by complete and properly supported resumes, for the Governance
Committee's consideration by mailing such information to the Governance
Committee in care of the Fund. The Governance Committee may consider such
persons at such time as it meets to consider possible nominees. The Governance
Committee, however, reserves sole discretion to determine which candidates for
Trustees and Independent Trustees it will recommend to the Board and/or
shareholders and it may identify candidates other than those submitted by
Shareholders. The Governance Committee may, but need not, consider the advice
and recommendation of the Manager and/or its affiliates in selecting nominees.
The full Board elects new Trustees except for those instances when a
shareholder vote is required.

      Shareholders who desire to communicate with the Board should address
correspondence to the Board or an individual Board member and may submit their
correspondence electronically at www.oppenheimerfunds.com under the caption
"contact us" or by mail to the Fund at the address below.

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

                                           Oppenheimer   Principal   Protected
Oppenheimer Cash Reserves                  Trust III
                                           Oppenheimer    Commodity   Strategy
Oppenheimer Capital Income Fund            Total Return Fund
                                           Oppenheimer  Senior  Floating  Rate
Oppenheimer Champion Income Fund           Fund
Oppenheimer Equity Fund, Inc.              Oppenheimer Strategic Income Fund
Oppenheimer Integrity Funds                Oppenheimer Variable Account Funds
Oppenheimer International Bond Fund        Panorama Series Fund, Inc.
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
                                           Centennial  California  Tax  Exempt
Oppenheimer Main Street Opportunity Fund   Trust
Oppenheimer Main Street Small Cap Fund     Centennial Government Trust
Oppenheimer Municipal Fund                 Centennial Money Market Trust
                                           Centennial   New  York  Tax  Exempt
Oppenheimer Principal Protected Trust      Trust
Oppenheimer Principal Protected Trust II   Centennial Tax Exempt Trust

      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. Bomfim, Caan, Gillespie, Gord, Manioudakis, Murphy, Petersen,
Swaney, 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 II Funds. As of March 30, 2007, 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 Board II
Funds. In addition, none of the Independent Trustees (nor any of their
immediate family members) owns securities of either the Manager or the
Distributor or of any entity directly or indirectly controlling, controlled by
or under common control with the Manager or the Distributor of the Board II
Funds.

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

---------------------------------------------------------------------------------------------
                                    Independent Trustees
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Name, Position(s)    Principal Occupation(s) During the Past 5         Dollar     Aggregate
                                                                                   Dollar
                                                                                  Range of
                                                                                   Shares
                                                                      Range of   Beneficially
                                                                       Shares     Owned in
with the Fund,       Years; Other Trusteeships/Directorships Held;  Beneficially     All
Length of Service,   Number of Portfolios in the Fund Complex         Owned in   Supervised
Age                  Currently Overseen                               the Fund      Funds
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
                                                                    As of December 31, 2006
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
William L.           President, Colorado Christian University       None         Over
Armstrong,           (since 2006); Chairman, Cherry Creek Mortgage               $100,000
Chairman of the      Company (since 1991), Chairman, Centennial
Board of Trustees    State Mortgage Company (since 1994),
since 2003, Trustee  Chairman,The El Paso Mortgage Company (since
since 1999           1993); Chairman, Ambassador Media Corporation
Age: 70              (since 1984); Chairman, Broadway Ventures
                     (since 1984); Director of Helmerich & Payne,
                     Inc. (oil and gas drilling/production
                     company) (since 1992), Campus Crusade for
                     Christ (non-profit) (since 1991); Former
                     Director, The Lynde and Harry Bradley
                     Foundation, Inc. (non-profit organization)
                     (2002-2006); former Chairman of: Transland
                     Financial Services, Inc. (private mortgage
                     banking company) (1997-2003), Great Frontier
                     Insurance (1995-2000), Frontier Real Estate,
                     Inc. (residential real estate brokerage)
                     (1994-2000) and Frontier Title (title
                     insurance agency) (1995-2000); former
                     Director of the following: UNUMProvident
                     (insurance company) (1991-2004), Storage
                     Technology Corporation (computer equipment
                     company) (1991-2003) and International Family
                     Entertainment (television channel)
                     (1992-1997); U.S. Senator (January
                     1979-January 1991). Oversees 37 portfolios in
                     the OppenheimerFunds complex.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Robert G. Avis,      Director and President of A.G. Edwards         None         Over
Trustee since 1997   Capital, Inc. (General Partner of private                   $100,000
Age: 75              equity funds) (until February 2001);
                     Chairman, President and Chief Executive
                     Officer of A.G. Edwards Capital, Inc. (until
                     March 2000); Director of A.G. Edwards & Sons,
                     Inc. (brokerage company) (until 2000) and
                     A.G. Edwards Trust Company (investment
                     adviser) (until 2000); Vice Chairman and
                     Director of A.G. Edwards, Inc. (until March
                     1999); Vice Chairman of A.G. Edwards & Sons,
                     Inc. (until March 1999); Chairman of A.G.
                     Edwards Trust Company (until March 1999) and
                     A.G.E. Asset Management (investment adviser)
                     (until March 1999). Oversees 37 portfolios in
                     the OppenheimerFunds complex.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
George C. Bowen,     Assistant Secretary and Director of            $50,001-$100,Over
Trustee since 1998   Centennial Asset Management Corporation                     $100,000
Age: 70              (December 1991-April 1999); President,
                     Treasurer and Director of Centennial Capital
                     Corporation (June 1989-April 1999); Chief
                     Executive Officer and Director of MultiSource
                     Services, Inc. (March 1996-April 1999); Mr.
                     Bowen held several positions with the Manager
                     and with subsidiary or affiliated companies
                     of the Manager (September 1987-April 1999).
                     Oversees 37 portfolios in the
                     OppenheimerFunds complex.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Edward L. Cameron,   Member of The Life Guard of Mount Vernon       None         Over
Trustee since 1999   (George Washington historical site) (June                   $100,000
Age: 68              2000 - May 2006); Director of Genetic ID,
                     Inc. (biotech company) (March 2001-May 2002);
                     Partner at PricewaterhouseCoopers LLP
                     (accounting firm) (July 1974-June 1999);
                     Chairman of Price Waterhouse LLP Global
                     Investment Management Industry Services Group
                     (financial services firm) (July 1994-June
                     1998). Oversees 37 portfolios in the
                     OppenheimerFunds complex.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Jon S. Fossel,       Director of UNUMProvident (insurance company)  None         Over
Trustee since 1997   (since June 2002); Director of Northwestern                 $100,000
Age: 65              Energy Corp. (public utility corporation)
                     (since November 2004); Director of P.R.
                     Pharmaceuticals (October 1999-October 2003);
                     Director of Rocky Mountain Elk Foundation
                     (non-profit organization) (February
                     1998-February 2003 and since February 2005);
                     Chairman and Director (until October 1996)
                     and President and Chief Executive Officer
                     (until October 1995) of the Manager;
                     President, Chief Executive Officer and
                     Director of the following: Oppenheimer
                     Acquisition Corp. ("OAC") (parent holding
                     company of the Manager), Shareholders
                     Services, Inc. and Shareholder Financial
                     Services, Inc. (until October 1995). Oversees
                     37 portfolios in the OppenheimerFunds complex.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Sam Freedman,        Director of Colorado Uplift (charitable        $50,001-$100,Over
Trustee since 1997   organization) (since September 1984). Mr.                   $100,000
Age: 66              Freedman held several positions with the
                     Manager and with subsidiary or affiliated
                     companies of the Manager (until October
                     1994). Oversees 37 portfolios in the
                     OppenheimerFunds complex.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Beverly L. Hamilton, Trustee of Monterey Institute for              None         None
Trustee since 2002   International Studies (educational
Age: 60              organization) (since February 2000); Board
                     Member of Middlebury College (educational
                     organization) (since December 2005); Director
                     of The California Endowment (philanthropic
                     organization) (since April 2002); Director
                     (February 2002-2005) and Chairman of Trustees
                     (since 2006) of the Community Hospital of
                     Monterey Peninsula; Director (October
                     1991-2005) and Vice Chairman (since 2006) of
                     American Funds' Emerging Markets Growth Fund,
                     Inc. (mutual fund); President of ARCO
                     Investment Management Company (February
                     1991-April 2000); Member of the investment
                     committees of The Rockefeller Foundation
                     (since 2001) and The University of Michigan
                     (since 2000); Advisor at Credit Suisse First
                     Boston's Sprout venture capital unit (venture
                     capital fund) (1994-January 2005); Trustee of
                     MassMutual Institutional Funds (investment
                     company) (1996-June 2004); Trustee of MML
                     Series Investment Fund (investment company)
                     (April 1989-June 2004); Member of the
                     investment committee of Hartford Hospital
                     (2000-2003); and Advisor to Unilever
                     (Holland) pension fund (2000-2003). Oversees
                     37 portfolios in the OppenheimerFunds complex.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Robert J. Malone,    Director of Jones International University     None         Over
Trustee since 2002   (educational organization) (since August                    $100,000
Age: 62              2005); Chairman, Chief Executive Officer and
                     Director of Steele Street State Bank
                     (commercial banking) (since August 2003);
                     Director of Colorado UpLIFT (charitable
                     organization) (since 1986); Trustee of the
                     Gallagher Family Foundation (non-profit
                     organization) (since 2000); Former Chairman
                     of U.S. Bank-Colorado (subsidiary of U.S.
                     Bancorp and formerly Colorado National Bank)
                     (July 1996-April 1999); Director of
                     Commercial Assets, Inc. (real estate
                     investment trust) (1993-2000); Director of
                     Jones Knowledge, Inc. (2001-July 2004); and
                     Director of U.S. Exploration, Inc. (oil and
                     gas exploration) (1997-February 2004).
                     Oversees 37 portfolios in the
                     OppenheimerFunds complex.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
F. William           Trustee of MassMutual Select Funds (formerly   None         Over
Marshall, Jr.,       MassMutual Institutional Funds) (investment                 $100,000
Trustee since 2000   company) (since 1996) and MML Series
Age: 64              Investment Fund (investment company) (since
                     1996); Trustee of Worchester Polytech
                     Institute (since 1985); Chairman (since 1994)
                     of the Investment Committee of the Worcester
                     Polytech Institute (private university);
                     President and Treasurer of the SIS Funds
                     (private charitable fund) (since January
                     1999); Chairman of SIS & Family Bank, F.S.B.
                     (formerly SIS Bank) (commercial bank)
                     (January 1999-July 1999); and Executive Vice
                     President of Peoples Heritage Financial
                     Group, Inc. (commercial bank) (January
                     1999-July 1999). Oversees 39 portfolios in
                     the OppenheimerFunds complex.*
---------------------------------------------------------------------------------------------
*  Includes two open-end investment companies: MassMutual Select Funds and MML
   Series Investment Fund. In accordance with the instructions for SEC Form
   N-1A, for purposes of this section only, MassMutual Select Funds and MML
   Series Investment Fund are included in the "Fund Complex." The Manager does
   not consider MassMutual Select Funds and MML Series Investment Fund to be
   part of the OppenheimerFunds' "Fund Complex" as that term may be otherwise
   interpreted.

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. Mr. Murphy was
elected as a Trustee of the Fund with the understanding that in the event he
ceases to be the chief executive officer of the Manager, he will resign as a
Trustee of the Fund and the other Board II Funds (defined below) for which he
is a director or trustee.

----------------------------------------------------------------------------------------------
                               Interested Trustee and Officer
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Name,             Principal Occupation(s) During the Past 5 Years;      Dollar     Aggregate
                                                                                    Dollar
                                                                                   Range Of
                                                                                    Shares
                                                                       Range of   Beneficially
Position(s) Held                                                        Shares     Owned in
with the Fund,                                                        Beneficially    All
Length of         Other Trusteeships/Directorships Held; Number of     Owned in   Supervised
Service, Age      Portfolios in the Fund Complex Currently Overseen    the Fund      Funds
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
                                                                      As of December 31, 2006
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
John V. Murphy,   Chairman, Chief Executive Officer and Director of   Over       Over
Trustee,          the Manager (since June 2001); President of the     $100,000   $100,000
President and     Manager (September 2000-March 2007); President and
Principal         director or trustee of other Oppenheimer funds;
Executive         President and Director of OAC and of Oppenheimer
Officer since     Partnership Holdings, Inc. (holding company
2001              subsidiary of the Manager) (since July 2001);
Age: 56           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 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 99 portfolios in
                  the OppenheimerFunds complex.
----------------------------------------------------------------------------------------------

The addresses of the officers in the chart below are as follows: for Messrs.
Baum, Bomfim, Caan, Gillespie, Gord, Manioudakis, Swaney 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)      Principal Occupation(s) During Past 5 Years
Held with the Fund,
Length of Service, Age
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Kevin Baum,            Vice President of the Manager since October 2000; a Chartered
Vice President since   Financial Analyst; he was the Fund's principal trader from
2000 and Portfolio     inception in March 1997 to May 1999 when he became portfolio
Manager since 1999     manager.
Age: 36
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Angelo Manioudakis,    Senior Vice President of the Manager (since April 2002), of
Vice President and     HarbourView Asset Management Corporation (since April, 2002) and
Portfolio Manager      of OFI Institutional Asset Management, Inc. (since June 2002);
since 2002             Vice President of Oppenheimer Real Asset Management, Inc. (since
Age:  40               November 2006); Executive Director and portfolio manager for
                       Miller, Anderson & Sherrerd, a division of Morgan Stanley
                       Investment Management (August 1993-April 2002). An officer of 15
                       portfolios in the OppenheimerFunds complex.
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Antulio Bomfim,        Vice President of the Manager since October 2003; Senior
Vice President and     Economist at the Board of Governors of the Federal Reserve
Portfolio Manager      System from June 1992 to October 2003. A portfolio manager of 12
since 2003             portfolios in the OppenheimerFunds complex
Age: 40

-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Geoffrey Caan,         Vice President and Portfolio Manager of the Manager since August
Vice President and     2003; Vice President of ABN AMRO NA, Inc. (June 2002-August
Portfolio Manager      2003); Vice President of Zurich Scudder Investments (January
since 2003             1999-June 2002). A portfolio manager of 12 portfolios in the
Age: 38                OppenheimerFunds complex.
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Benjamin J. Gord,      Vice President of the Manager (since April 2002), of HarbourView
Vice President and     Asset Management Corporation (since April 2002) and of OFI
Portfolio Manager      Institutional Asset Management, Inc. (as of June 2002);
since 2002             Executive Director and senior fixed income analyst at Miller
Age:  44               Anderson & Sherrerd, a division of Morgan Stanley Investment
                       Management (April 1992-March 2002). A portfolio manager of 12
                       portfolios in the OppenheimerFunds complex.
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Thomas Swaney          Vice President of the Manager (since April 2006); senior
Vice President and     analyst, high grade investment team (June 2002-March 2006);
Portfolio Manager      senior fixed income analyst at Miller Anderson & Sherrerd, a
since 2006             division of Morgan Stanley Investment Management (May 1998-May
Age: 34                2002). A portfolio manager of 12 portfolios in the
                       OppenheimerFunds complex.

-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Mark S. Vandehey,      Senior Vice President and Chief Compliance Officer of the
Vice President and     Manager (since March 2004); Vice President of OppenheimerFunds
Chief Compliance       Distributor, Inc., Centennial Asset Management Corporation and
Officer since 2004     Shareholder Services, Inc. (since June 1983); Vice President and
Age: 56                Director of Internal Audit of the Manager (1997-February 2004).
                       An officer of 98 portfolios in the OppenheimerFunds complex.
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Brian W. Wixted,       Senior Vice President and Treasurer of the Manager (since March
Treasurer and          1999); Treasurer of the following: HarbourView Asset Management
Principal Financial &  Corporation, Shareholder Financial Services, Inc., Shareholder
Accounting Officer     Services, Inc., Oppenheimer Real Asset Management Corporation,
since 1999             and Oppenheimer Partnership Holdings, Inc. (since March 1999),
Age: 47                OFI Private Investments, Inc. (since March 2000),
                       OppenheimerFunds International Ltd. and OppenheimerFunds plc
                       (since May 2000), OFI Institutional Asset Management, Inc.
                       (since November 2000), and OppenheimerFunds Legacy Program
                       (since June 2003); Treasurer and Chief Financial Officer of OFI
                       Trust Company (trust company subsidiary of 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 98 portfolios in the
                       OppenheimerFunds complex.
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Brian Petersen,        Vice President of the Manager (since February 2007); Assistant
Assistant Treasurer    Vice President of the Manager (August 2002-February 2007);
since 2004             Manager/Financial Product Accounting of the Manager (November
Age: 36                1998-July 2002). An officer of 98 portfolios in 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: 37                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 98 portfolios in the
                       OppenheimerFunds complex.
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Robert G. Zack,        Executive Vice President (since January 2004) and General
Vice President and     Counsel (since March 2002) of the Manager; General Counsel and
Secretary since 2001   Director of the Distributor (since December 2001); General
Age: 58                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 98 portfolios in the
                       OppenheimerFunds complex.
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Lisa I. Bloomberg,     Vice President and Associate Counsel of the Manager (since May
Assistant Secretary    2004); First Vice President (April 2001-April 2004), Associate
since 2004             General Counsel (December 2000-April 2004), Corporate Vice
Age: 39                President (May 1999-April 2001) and Assistant General Counsel
                       (May 1999-December 2000) of UBS Financial Services Inc.
                       (formerly, PaineWebber Incorporated). An officer of 98
                       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; Vice
since 2001             President (since 1999) and Assistant Secretary (since October
Age: 41                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 98 portfolios in the OppenheimerFunds
                       complex.
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Phillip S. Gillespie,  Senior Vice President and Deputy General Counsel of the Manager
Assistant Secretary    (since September 2004); First Vice President (2000-September
since 2004             2004), Director (2000-September 2004) and Vice President
Age: 43                (1998-2000) of Merrill Lynch Investment Management. An officer
                       of 98 portfolios in the OppenheimerFunds complex.
-----------------------------------------------------------------------------------------

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


----------------------------------------------------------------------------------
Name of Trustee and Other Fund    Aggregate Compensation     Total Compensation
                                                             From the Fund and
                                  From the Fund(1) Fiscal     Fund Complex(2)
                                  year ended December 31,        Year ended
Position(s) (as applicable)                2006              December 31, 2006
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
William L. Armstrong                      $5,808                  $214,504
Chairman of the Board and
Governance Committee Member
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Robert G. Avis                            $3,872                  $143,000
Review Committee Member
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
George C. Bowen                           $3,872                  $143,000
Audit Committee Member
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Edward L. Cameron                         $4,646                  $171,600
Audit Committee Chairman
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Jon S. Fossel                             $4,165                  $154,174
Review Committee Member
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Sam Freedman                              $3,872                  $143,000
Review Committee Chairman
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Beverly Hamilton                         $3,872(3)                $143,000
Review Committee Member and
Governance Committee Member
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Robert J. Malone                         $4,453(4)                $164,452
Governance Committee Chairman
and
Audit Committee Member
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
F. William Marshall, Jr.
Audit Committee Member and                $3,872                $205,500(5)
Governance Committee Member
----------------------------------------------------------------------------------
1.    "Aggregate Compensation From the Fund" includes fees and deferred
   compensation, if any.
2.    In accordance with SEC regulations, for purposes of this section only,
   "Fund Complex" includes the Oppenheimer funds, the MassMutual Institutional
   Funds, the MassMutual Select Funds and the MML Series Investment Fund, the
   investment adviser for which is the indirect parent company of the Fund's
   Manager. The Manager also serves as the Sub-Advisor to the following:
   MassMutual Premier International Equity Fund, MassMutual Premier Main Street
   Fund, MassMutual Premier Strategic Income Fund, MassMutual Premier Capital
   Appreciation Fund, and MassMutual Premier Global Fund. The Manager does not
   consider MassMutual Institutional Funds, MassMutual Select Funds and MML
   Series Investment Fund to be part of the OppenheimerFunds' "Fund Complex" as
   that term may be otherwise interpreted.
3.    Includes $3,872 deferred by Ms. Hamilton under the "Deferred Compensation
   Plan" described below.
4.    Mr. Malone has elected not to participate in the "Deferred Compensation
   Plan" effective 1/01/06.
5.    Includes $62,500 compensation paid to Mr. Marshall for serving as a
   Trustee for MassMutual Select Funds and MML Series Investment Fund.

|X|   Compensation Deferral Plan For Trustees. The Board of Trustees has
adopted a Compensation Deferral Plan for Independent Trustees that enables them
to elect to defer receipt of all or a portion of the annual fees they are
entitled to receive from the Fund. Under the plan, the compensation deferred by
a Trustee is periodically adjusted as though an equivalent amount had been
invested in shares of one or more Oppenheimer funds selected by the Trustee.
The amount paid to the Trustee under the plan will be determined based upon the
amount of compensation deferred and the performance of the selected funds.

      Deferral of Trustees' fees under the plan will not materially affect the
Fund's assets, liabilities or net income per share. The plan will not obligate
the Fund to retain the services of any Trustee or to pay any particular level
of compensation to any Trustee. Pursuant to an Order
issued by the SEC, the Fund may invest in the funds selected by the Trustees
under the plan without shareholder approval for the limited purpose of
determining the value of the Trustees' deferred compensation account.

|X|   Major Shareholders. As of March 30, 2007, 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,  who owned 11,619,230.119 Class A shares (11.03%
      of the then outstanding Class A shares).

      MLPF&S for the Sole  Benefit of its  Customers,  Attn.:  Fund  Admn/#97N04,
      4800 Deer Lake Drive E, Floor 3,  Jacksonville,  FL  32246-6484,  who owned
      891,108.383 Class B shares (7.34% of the then outstanding Class B shares).

      MLPF&S for the Sole  Benefit of its  Customers,  Attn.:  Fund  Admn/#97N05,
      4800 Deer Lake Drive E, Floor 3,  Jacksonville,  FL  32246-6484,  who owned
      4,446,267.819  Class C  shares  (18.37%  of the  then  outstanding  Class C
      shares).

      Citigroup Global Markets Inc., Attn.:  Cindy Tempesta,  7th Floor, 333 West
      34th Street,  New York,  NY  10001-2483,  who owned  1,326,020.438  Class C
      shares (5.48% of the then outstanding Class C shares).

      MLPF&S for the Sole Benefit of its Customers,  Attn.:  Fund Admn, 4800 Deer
      Lake Drive E, Floor 3, Jacksonville,  FL 32246-6484,  who owned 332,355.995
      Class N shares (11.36% of the then outstanding Class N shares).

      Orchard  Trust Co. LLC,  FBO Oppen  RecordkeeperPro,  8515 E.  Orchard Rd.,
      Greenwood  Village,  CO  80111-500,  who  owed  195,762.548  Class N shares
      (6.69% of the then outstanding Class N shares).

      European  Patent  Organisation,   Reserve  Fund  for  Pensions  and  Social
      Security,    Erhardstrasse   27,   Munich   80331,   Germany,   who   owned
      15,836,595.611  Class Y  shares  (35.26%  of the then  outstanding  Class Y
      shares).

      Charles Schwab & Co Inc.,  Special  Custody Acct for the Exclusive  Benefit
      of Customers,  Attn.:  Mutual Funds, 101 Montgomery  Street, San Francisco,
      CA 94104-4122,  who owned  6,957,214.261 Class Y shares (15.49% of the then
      outstanding Class Y shares).

      NFS  LLC  FEBO,  The  Norther  Trust  Company,  P.O.  Box  92956,  Chicago,
      Illinois 60675, who owned  4,129,909.770  Class Y shares (9.19% of the then
      outstanding Class Y shares).

      Oppenheimer  Portfolio  Series - Moderate  Investor Fund,  Attn.: FPA Trade
      Settle (2-FA),  6803 S. Tuscon Way,  Centennial  Colorado  80112-3924,  who
      owned  4,414,078.687  Class Y shares (9.82% of the then outstanding Class Y
      shares).

The Manager and the Sub-Advisor.  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.  The Sub-Advisor is a wholly-owned subsidiary of the Manager. The
Sub-Advisor is located at Two World Financial Center, 225 Liberty Street, 11th
Floor, New York, New York, 10281-1008.

      |X|   Code of Ethics.  The Fund, the Manager,  the Sub-adviser 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  1.202.551.8090.  The  Code of
Ethics can also be viewed as part of the Fund's  registration  statement
on  the  SEC's  EDGAR  database  at  the  SEC's   Internet   website  at
www.sec.gov.  Copies may be obtained,  after paying a  duplicating  fee,
by    electronic    request   at   the   following    E-mail    address:
publicinfo@sec.gov.,  or  by  writing  to  the  SEC's  Public  Reference
Section, Washington, D.C. 20549-0102.

|X|   Portfolio Proxy Voting. The Fund has adopted Portfolio Proxy Voting
Policies and Procedures, 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.

|X|   The Investment Advisory Agreement and the Sub-Advisory Agreement.  The
Investment Advisory Agreement (the "Advisory Agreement") between the Manager
and the Fund requires the Manager, at its expense, to provide the Fund with
adequate office space, facilities and equipment, and to provide and supervise
the activities of all administrative and clerical personnel required to provide
effective corporate administration for the Fund, including 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.
Under the Sub-Advisory Agreement between the Manager and the Sub-Advisor, the
Sub-Advisor shall regularly provide investment advise with respect to the Fund
and invest and reinvest cash, securities and the property comprising the assets
of the Fund.

      Expenses not expressly assumed by the Manager under the Advisory
Agreement or the Sub-Advisor under the Sub-Advisory Agreement are paid by the
Fund.  The Advisory Agreement lists examples of expenses paid by the Fund. The
major categories relate to interest, taxes, brokerage concessions, fees to
certain Trustees, legal and audit expenses, custodian and transfer agent and
custodian expenses, share issuance costs, certain printing and registration
costs and non-recurring expenses, including litigation costs. The fees are
allocated to each class of shares based upon the relative proportion of the
Fund's net assets represented by that class. In addition, as described below
under "Organization and Management of Wholly-Owned Subsidiary", the Subsidiary
has entered into a separate contract with the Manager for the management of the
Subsidiary's portfolio.  The Manager has contractually agreed to waive the
management fee it receives from the Fund in an amount equal to the management
fee paid to the Manager by the Subsidiary.  This undertaking will continue in
effect for so long as the Fund invests in the Subsidiary, and may not be
terminated by the Manager unless the Manager first obtains the prior approval
of the Fund's Board of Trustees for such termination.

      The management fees paid by the Fund to the Manager during its last three
fiscal years were:

 -------------------------------------------------------------------------------
   Fiscal Years Ended 8/31    Management Fees Paid to OppenheimerFunds, Inc.*
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
            2004                                 $5,195,892
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
            2005                                $10,191,671
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
            2006                                $14,699,964
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
  Fiscal Years Ended 12/31    Management Fees Paid to OppenheimerFunds, Inc.*
 -------------------------------------------------------------------------------
 -------------------------------------------------------------------------------
            2006                                 $3,940,973
 -------------------------------------------------------------------------------
* Includes sub-advisory fees paid by the Manager to the Sub-Advisor.

      The advisory agreement and the sub-advisory agreement state that in the
absence of willful misfeasance, bad faith or gross negligence in the
performance of its duties, or reckless disregard for their obligations and
duties under the advisory agreement, the Manager and the Sub-Advisor are not
liable for any loss resulting from a good faith error or omission on their part
with respect to any of their duties thereunder.  The respective advisory and
sub-advisory agreements permit the Manager and the Sub-Advisor to act as
investment advisor for any other person, firm or corporation, and the advisory
agreement permits the Fund to use the name


"Oppenheimer" in connection with other investment companies for which the
Manager acts as investment advisor or general distributor.  If the Manager
shall no longer act as an investment advisor to the Fund, the right of the Fund
to use the name "Oppenheimer" as part of its name may be withdrawn.

 Portfolio Manager. The Fund's portfolio is managed by Kevin Baum, Robert Baker
and Angelo Manioudakis, together with a team of investment professionals
comprised of, Antulio N. Bomfim, Geoffrey Caan,  Benjamin J. Gord and Thomas
Swaney (each is referred to as a "portfolio manager" and collectively they are
referred to as the "portfolio managers") who are responsible for the day-to-day
management of the Fund's investments.

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

   ----------------------------------------------------------------------------
   Portfolio       RegistereTotal      Other        Total    Other   Total
                                                  Assets in
                            Assets in               Other
                            Registered Pooled      Pooled             Assets
                   InvestmenInvestment InvestmentInvestment          in Other  2)
                   CompaniesCompanies  Vehicles   Vehicles   AccountsAccounts
   Manager         Managed  Managed(1)  Managed  Managed(1)  Managed Managed(1,
   ----------------------------------------------------------------------------
   ----------------------------------------------------------------------------
   Kevin Baum        None      None        3       $106.9       1      $37.9
   ----------------------------------------------------------------------------
   ----------------------------------------------------------------------------
   Robert Baker(3)   None      None      None       None      None     None
   ----------------------------------------------------------------------------
   ----------------------------------------------------------------------------
   Angelo             17    $14,171.2      6        $198        2     $157.1
   Manioudakis
   ----------------------------------------------------------------------------
   ----------------------------------------------------------------------------
   Benjamin J.        14    $13,723.4      6        $198        1      $41.3
   Gord
   ----------------------------------------------------------------------------
   ----------------------------------------------------------------------------
   Geoffrey Caan      14    $13,723.4      6        $198        1      $41.3
   ----------------------------------------------------------------------------
   ----------------------------------------------------------------------------
   Thomas Swaney      14    $13,723.4      6        $198        1      $41.3
   ----------------------------------------------------------------------------
   ----------------------------------------------------------------------------
   Antulio N.         14    $13,723.4      6        $198        1      $41.3
   Bomfim
   ----------------------------------------------------------------------------
1.    In millions.
2.    Does not include personal accounts of portfolio managers and their
     families, which are subject to the Code of Ethics.
3.    Mr. Baker became a portfolio manager of the Fund as of May 8, 2007.

      As indicated above, each of the Portfolio Managers also manage other
funds and accounts. Potentially, at times, those responsibilities could
conflict with the interests of the Fund. That may occur whether the investment
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
Managers may need to allocate investment opportunities between the Fund and
another fund or account having similar objectives or strategies, or they may
need to execute transactions for another fund or account that could have a
negative impact on the value of securities held by the Fund. Not all funds and
accounts advised by the Manager have the same management fee. If the management
fee structure of another fund or account is more advantageous to the Manager
than the fee structure of the Fund, the Manager could have an incentive to
favor the other fund or account. However, the Manager's compliance procedures
and Code of Ethics recognize the Manager's fiduciary obligations to treat all
of its clients, including the Fund, fairly and equitably, and are designed to
preclude the Portfolio Managers from favoring one client over another. It is
possible, of course, that those compliance procedures and the Code of Ethics
may not always be adequate to do so. At various times, the Fund's Portfolio
Managers 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 Managers.  The Fund's Portfolio Managers
are employed and compensated by the Manager, not the Fund. Under the Manager's
compensation program for its portfolio managers and portfolio analysts, their
compensation is based primarily on the investment performance results of the
funds and accounts they manage, rather than on the financial success of the
Manager. This is intended to align the portfolio managers and analysts'
interests with the success of the funds and accounts and their 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 December 31, 2006, each
Portfolio Managers' compensation consisted of three elements: a base salary, an
annual discretionary bonus and eligibility to participate in long-term awards
of options and appreciation rights in regard to the common stock of the
Manager's holding company parent. Senior portfolio managers may also be eligible
to participate in the Manager's deferred compensation plan.

      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 the S&P GSCI Commodity Index
(formerly, Goldman Sachs Commodity Index) benchmark. Other factors considered
include management quality (such as style consistency, risk management, sector
coverage, team leadership and coaching) and organizational development. The
Portfolio Managers' compensation is not based on the total value of the Fund's
portfolio assets, although the Fund's investment performance may increase those
assets. The compensation structure is also intended to be internally equitable
and serve to reduce potential conflicts of interest between the Fund and other
funds and accounts managed by the Portfolio Managers. The compensation
structure of the other funds and accounts managed by the Portfolio Managers is
the same as the compensation structure of the Fund, described above. A portion
of the Portfolio Managers' compensation with regard to those portfolios may,
under certain circumstances, include an amount based in part on the amount of
the portfolios' management fee.

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

            ----------------------------------------------------------
            Portfolio Manager                   Range of Shares
                                                  Beneficially
                                               Owned in the Fund
            ----------------------------------------------------------
            ----------------------------------------------------------
            Kevin Baum                        $100,001 - $500,000
            ----------------------------------------------------------
            ----------------------------------------------------------
            Robert Baker                        $10,001-$50,000
            ----------------------------------------------------------
            ----------------------------------------------------------
            Angelo Manioudakis                        None
            ----------------------------------------------------------
            ----------------------------------------------------------
            Benjamin J. Gord                          None
            ----------------------------------------------------------
            ----------------------------------------------------------
            Thomas Swaney                             None
            ----------------------------------------------------------
            ----------------------------------------------------------
            Geoffrey Caan                          $1-$10,000
            ----------------------------------------------------------
            ----------------------------------------------------------
            Antulio N. Bomfim                         None
            ----------------------------------------------------------

Organization and Management of Wholly-Owned Subsidiary.  The Fund may invest up
to 25% of its total assets in the Subsidiary.  It is expected that the
Subsidiary will invest primarily in commodity and financial futures and option
contracts, as well as fixed income securities and other investments intended to
serve as margin or collateral for the Subsidiary's derivatives positions.


      The Subsidiary is a company organized under the laws of the Cayman
Islands, whose registered office is located at the offices of M&C Corporate
Services Limited, PO Box 309GT, Ugland House, South Church Street , George
Town, Grand Cayman, Cayman Islands.  The Subsidiary's affairs are overseen by a
board of directors consisting of the following directors:

      Karen Cameron: Ms. Cameron is a Vice President with Maples Finance
      Limited, a company based in the Cayman Islands that offers a
      comprehensive range of services to finance vehicles and investment funds.
      Ms. Cameron joined Maples Finance Limited in 2006 and works on a wide
      range of products including multi-manager funds, hedge funds, private
      equity funds and unit trust structures.  From 2003 to 2006, Ms. Cameron
      worked at Fortis Prime Fund Solutions (Cayman) Limited as an Account
      Manager with responsibility for a portfolio of hedge funds with a value
      in excess of $6 billion invested in fixed income securities including
      distressed debt, bank debt, mortgage-backed securities and cat bonds,
      equities, and derivative instruments. From 2002 to 2003, she worked in
      the financial services division of Ernst & Young (Cayman), specializing
      in banking and fund services. From 1998 to 2002 she worked for Grant
      Thornton LLP in Canada, where she was promoted to the position of audit
      manager. Ms. Cameron graduated with a Bachelor of Business Administration
      from University of Prince Edward Island in 1998. She is also a member of
      the Canadian Institute of Chartered Accountants and will be awarded the
      CFA Charter in October of 2006

      Dwight  Dube:  Mr. Dube is a Senior  Vice  President  with  Maples  Finance
      Limited,   a  company   based  in  the  Cayman   Islands   that   offers  a
      comprehensive  range of services to finance vehicles and investment  funds.
      Mr. Dube joined  Maples  Finance  Limited in 2004 and works on a wide range
      of products  including  multi-manager  funds,  hedge funds,  private equity
      funds and unit trust  structures.  From 1998 to 2004,  Mr.  Dube  worked at
      Coutts (Cayman)  Limited where he was the Manager of the Private  Corporate
      Clients  department.  Previously,  from  1997 to  1998,  he  worked  in the
      corporate  services  department  of KPMG in the  Cayman  Islands.  He has a
      B.Com from the University of  Saskatchewan  and is a member of the Canadian
      Institute of Chartered Accountants.

      Brian W. Wixted: Mr. Wixted's biographical information appears above in
      the chart "Other Officers of the Fund."

      The Subsidiary has entered into separate contracts with the Manager and
the Sub-Advisor for the management of the Subsidiary's portfolio.  The
Subsidiary has also entered into arrangements with Deloitte & Touche LLP to
serve as the Subsidiary's independent auditor, with J.P. Morgan Chase Bank to
serve as the Subsidiary's custodian, and with OppenheimerFunds Services to
serve as the Subsidiary's transfer agent.  The Subsidiary has adopted
compliance policies and procedures that are substantially similar to the
policies and procedures adopted by the Fund.  The Fund's Chief Compliance
Officer oversees implementation of the Subsidiary's policies and procedures,
and makes periodic reports to the Fund's Board regarding the Subsidiary's
compliance with its policies and procedures.

       The Fund pays the Manager a fee for its services, and the Manager pays a
sub-advisory fee to the Sub-Advisor. The Manager has contractually agreed to
waive the management fee it receives from the Fund in an amount equal to the
management fee paid to the Manager by the Subsidiary.  This undertaking will
continue in effect for so long as the Fund invests in the Subsidiary, and may
not be terminated by the Manager unless the Manager first obtains the prior
approval of the Fund's Board of Trustees for such termination.  The Subsidiary
will bear the fees and expenses incurred in connection with the custody,
transfer agency, and audit services that it receives.  The Fund expects that
the expenses borne by the Subsidiary will not be material in relation to the
value of the Fund's assets. It is also anticipated that the Fund's own expense
will be reduced to some extent as a result of the payment of such expenses at
the Subsidiary level. It is therefore expected that the Fund's investment in
the Subsidiary will not result in the Fund's paying duplicative fees for
similar services provided to the Fund and Subsidiary.

      Please refer to the section in this Statement of Additional Information
titled "Tax Implications of Investment in Wholly- Owned Subsidiary" for
information about certain tax aspects of the Fund's investment in the
Subsidiary.


Brokerage Policies of the Fund

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

      Under the investment advisory and sub-advisory agreements, in choosing
brokers to execute portfolio transactions for the Fund, the Manager and
Sub-Adviser may select brokers (other than affiliates) that provide brokerage
and/or research services to the Fund and/or the other accounts over which the
Manager or its affiliates have investment discretion.  The concessions paid to
those brokers may be higher than another qualified broker would charge, if the
Manager or Sub-Adviser makes a good faith determination that the concession is
fair and reasonable in relation to the services provided.

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

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


Brokerage Practices Followed by the Sub-Advisor.  The Sub-Advisor allocates
brokerage for the Fund subject to the provisions of the Sub-Advisory Agreement
and the procedures and rules described above. Generally, the Sub-Advisor's
portfolio traders allocate brokerage based upon recommendations from the
Sub-Advisor's portfolio managers. In certain instances, portfolio managers may
directly place trades and allocate brokerage. In either case, the Sub-Advisor'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 available in U.S. markets. Brokerage commissions are paid primarily
for effecting transactions in listed securities or for certain fixed-income
agency transactions 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. When possible, the Sub-Advisor tries to combine
concurrent orders to purchase or sell the same security by more than one of the
accounts managed by the Sub-Advisor or its affiliates. The transactions under
those combined orders are averaged as to price and allocated in accordance with
the purchase or sale orders actually placed for each account.

      The investment advisory agreement and the Sub-Advisory Agreement permit
the Manager and the Sub-Advisor to allocate brokerage for research services.
The investment research services provided by a particular broker may be useful
only to one or more of the advisory accounts of the Manager, the Sub-Advisor
and their affiliates. The investment research received for the commissions of
those other accounts may be useful both to the Fund and one or more of the
Manager's or the Sub-Advisor's other accounts. Investment research may be
supplied to the Sub-Advisor 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 or the Sub-Advisor in a non-research capacity (such as bookkeeping
or other administrative functions), then only the percentage or component that
provides assistance to the Manager or the Sub-Advisor in the investment
decision-making process may be paid in commission dollars.

      The Board of Trustees permits the Manager and the Sub-Advisor to use
stated commissions on secondary fixed-income agency trades to obtain research
if the broker represents to the Manager or to the Sub-Advisor 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
permits the Manager and the Sub-Advisor 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 broadens the scope and
supplement the research activities of the Manager and the Sub-Advisor. That
research provides additional views and comparisons for consideration, and helps
the Manager and the Sub-Advisor 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 Sub-Advisor provides information to the Board
about the commissions paid to brokers furnishing such services, together with
the Sub-Advisor's representation that the amount of such commissions was
reasonably related to the value or benefit of such services.

      Other funds advised by the Manager 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 funds advised by the Manager
or the Sub-Advisor purchase the same security on the same day from the same
dealer, the Manager or the Sub-Advisor may average the price of the
transactions and allocate the average among the funds.

      During the fiscal years ended August 31, 2004, 2005, 2006 and December
31, 2006, the Fund paid the total brokerage commissions indicated in the chart
below.  During the fiscal year ended December 31, 2006, the Fund did not
execute any transactions through or pay any commissions to firms that provide
research services.


---------------------------------------------------------------------------------
   Fiscal Year Ended 8/31:      Total Brokerage Commissions Paid by the Fund*
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
            2004                                  $1,060,155
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
            2005                                  $1,640,053
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
            2006                                  $1,200,424
---------------------------------------------------------------------------------

---------------------------------------------------------------------------------
  Fiscal Year Ended 12/31:      Total Brokerage Commissions Paid by the Fund*
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
            2006                                   $800,381
---------------------------------------------------------------------------------
 *  Amounts do not include  spreads or commissions on principal  transactions  on
 a net trade basis.

      The Manager and the Sub-Advisor will effect brokerage transactions for
the Subsidiary under the same provisions that apply to the brokerage
transactions of the Funds, as described above.

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 Year    Aggregate         Class A Front-End
               Front-End Sales   Sales Charges
Ended 8/31:    Charges on Class  Retained by
               A Shares          Distributor*
-------------------------------------------------------
-------------------------------------------------------
     2004         $3,050,872           $735,882
-------------------------------------------------------
-------------------------------------------------------
     2005         $5,436,816          $1,350,675
-------------------------------------------------------
-------------------------------------------------------
     2006         $3,403,901           $853,469
-------------------------------------------------------

-------------------------------------------------------
Fiscal Year    Aggregate         Class A Front-End
               Front-End Sales   Sales Charges
Ended 12/31:   Charges on Class  Retained by
               A Shares          Distributor*
-------------------------------------------------------
-------------------------------------------------------
     2006         $1,801,966            $61,247
-------------------------------------------------------
* Includes amounts  retained by a broker-dealer  that is an affiliate or a parent
of the Distributor.

-----------------------------------------------------------------------------
Fiscal    Concessions on   Concessions on   Concessions on   Concessions on
Year      Class A Shares   Class B Shares   Class C Shares   Class N Shares
Ended     Advanced by      Advanced by      Advanced by      Advanced by
8/31:     Distributor*     Distributor*     Distributor*     Distributor*
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
  2004        $81,643         $1,032,272        $690,049         $41,338
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
  2005        $281,363        $1,572,495       $1,180,366        $62,331
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
  2006        $257,894         $779,279         $833,698         $37,541
-----------------------------------------------------------------------------

-----------------------------------------------------------------------------
Fiscal    Concessions on   Concessions on   Concessions on   Concessions on
Year      Class A Shares   Class B Shares   Class C Shares   Class N Shares
Ended     Advanced by      Advanced by      Advanced by      Advanced by
12/31:    Distributor*     Distributor*     Distributor*     Distributor*
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
  2006        $12,658          $39,368          $33,619          $1,036
-----------------------------------------------------------------------------
* 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.

-----------------------------------------------------------------------------
Fiscal    Class A         Class B          Class C          Class N
          Contingent      Contingent       Contingent       Contingent
Year      Deferred Sales  Deferred Sales   Deferred Sales   Deferred Sales
Ended     Charges         Charges          Charges          Charges
8/31      Retained by     Retained by      Retained by      Retained by
          Distributor     Distributor      Distributor      Distributor
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
  2004        $2,156          $194,545         $91,638           $6,646
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
  2005        $23,963         $316,782         $154,457         $31,646
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
  2006        $25,692         $313,499         $131,263         $45,282
-----------------------------------------------------------------------------

-----------------------------------------------------------------------------
Fiscal    Class A         Class B          Class C          Class N
          Contingent      Contingent       Contingent       Contingent
Year      Deferred Sales  Deferred Sales   Deferred Sales   Deferred Sales
Ended     Charges         Charges          Charges          Charges
12/31     Retained by     Retained by      Retained by      Retained by
          Distributor     Distributor      Distributor      Distributor
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
  2006        $19,422         $100,496         $34,873           $1,275
-----------------------------------------------------------------------------

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.

      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.

|X|   Class A Service Plan Fees. Under the Class A service plan, the
Distributor currently uses the fees it receives from the Fund to pay brokers,
dealers and other financial institutions (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 Distributor makes
payments to recipients periodically at an annual rate not to exceed 0.25% of
the average annual Class A share net assets held in the accounts of the
recipients or their customers.

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 shares purchased prior to March 1, 2007 with
respect to certain group retirement plans that were established prior to March
1, 2001 ("grandfathered retirement plans"). Prior to March 1, 2007, the
Distributor paid the 0.25% service fee for grandfathered retirement plans in
advance for the first year and retained the first year's service fee paid by
the Fund with respect to those shares. After the shares were held for a year,
the Distributor paid the ongoing service fees to recipients on a periodic
basis. Such shares are subject to a contingent deferred sales charge if they
are redeemed within 18 months. If Class A shares purchased in a grandfathered
retirement plan prior to March 1, 2007 are redeemed within 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
those fees. For Class A shares purchased in grandfathered retirement plans on
or after March 1, 2007, the Distributor does not make any payment in advance
and does not retain the service fee for the first year. Such shares are not
subject to the contingent deferred sales charge.

      For the fiscal year ended December 31, 2006 payments under the Class A
plan totaled $688,193, of which $408 was retained by the Distributor under the
arrangement described above, regarding grandfathered retirement accounts, and
included $16,332 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.

|X|   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.  If a 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 most competitor funds have
         plans that pay dealers for rendering distribution services as much or
         more than the amounts currently being paid by the Fund, and
o     may not be able to continue providing, at the same or at a lesser cost,
         the same quality distribution sales efforts and services, or to obtain
         such services from brokers and dealers, if the plan payments were to
         be discontinued.

      The Distributor's actual expenses in selling Class B, 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 Fund under the plans.
If either the Class B, Class C or Class N plan is terminated by the Fund, the
Board of Trustees may allow the Fund to continue payments of the asset-based
sales charge to the Distributor for distributing shares before the plan was
terminated.

--------------------------------------------------------------------------------
   Distribution and Service Fees Paid to the Distributor for the Year Ended
                                   12/31/06
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class:        Total Payments   Amount          Distributor's    Distributor's
                                               Aggregate        Unreimbursed
                                               Unreimbursed     Expenses as %
                               Retained by     Expenses Under   of Net Assets
              Under Plan       Distributor     Plan             of Class
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class B Plan      $315,908       $254,643(1)      $3,612,714         4.24%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class C Plan      $661,375       $185,280(2)      $3,355,819         1.97%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class N Plan      $34,437        $15,111(3)        $309,878          1.59%
--------------------------------------------------------------------------------
1.    Includes $3,724 paid to an affiliate of the Distributor's parent company.
2.    Includes $10,187 paid to an affiliate of the Distributor's parent company.
3.    Includes $1,512 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.

      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, 2006, 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:

 1st Global Capital Co.                 Advantage Capital Corporation /
                                       FSC
  Aegon                                 Aetna Life Ins & Annuity Co.
  AG Edwards                            AIG Financial Advisors
  AIG Life                              Allianz Life Insurance Company
                                        American Enterprise Life
  Allstate Life                        Insurance
  American General Annuity              American Portfolios
  Ameriprise                            Ameritas
  Annuity Investors Life                Associated Securities
  AXA Advisors                          AXA Equitable Life Insurance
  Banc One Securities Corporation       BNY Investment Center
  Cadaret Grant & Co, Inc.              Chase Investment Services
                                        Citigroup Global Markets Inc
  Citicorp Investment Services, Inc.   (SSB)
  CitiStreet                            Citizen's Bank of Rhode Island
  Columbus Life                         Commonwealth Financial Network
  CUNA Brokerage Services, Inc.         CUSO Financial Services, L.P.
  Edward D Jones & Co.                  Federal Kemper
  Financial Network (ING)               GE Financial Assurance
  GE Life & Annuity                     Genworth Financial
  GlenBrook Life and Annuity Co.        Great West Life
  Hartford Life Insurance Co.           HD Vest Investment Services
  Hewitt Associates                     IFMG Securities, Inc.
  ING Financial Advisers                ING Financial Partners
                                        Kemper Investors Life Insurance
  Jefferson Pilot Securities Co.       Co.
  Legend Equities Co.                   Legg Mason Wood Walker
  Lincoln Benefit National Life         Lincoln Financial
  Lincoln Investment Planning, Inc.     Linsco Private Ledger Financial
  Mass Mutual                           McDonald Investments, Inc.
  Merrill Lynch                         Minnesota Life
  Mony Life                             Morgan Stanley Dean Witter
  Multifinancial (ING)                  Mutual Service Co.
  National Planning Co.                 Nationwide
  NFP                                   Park Avenue Securities LLC
  PFS Investments, Inc.                 Phoenix Life Insurance Co.
  Plan Member Securities                Prime Capital Services, Inc.
  Primevest Financial Services, Inc.    Protective Life Insurance Co.
  Provident Mutual Life & Annuity       Prudential
  Raymond James & Associates, Inc.      RBC Daine Rauscher
  Royal Alliance                        Securities America, Inc.
  Security Benefit                      Security First-Metlife
  Signator Investments                  Sun Life Insurance Co.
  Sun Trust Securities, Inc.            Thrivent Financial
  Travelers Life & Annuity Co.          UBS Financial Services, Inc.
  Union Central                         United Planners
                                        Walnut Street Securities (Met
  Wachovia                             Life)
  Waterstone Financial Group            Wells Fargo

      For the year ended December 31, 2006, the following firms, which in some
cases are broker-dealers, received payments from the Manager or Distributor for
administrative or other services provided (other than revenue sharing
arrangements), as described above:

 1st Global Capital Co.                A G Edwards
 ACS HR Solutions                      ADP
 AETNA Life Ins & Annuity Co.          Alliance Benefit Group
 American Enterprise Investments       American Express Retirement Service
 American Funds (Fascorp)              American United Life Insurance Co.
 Ameriprise                            Ameritrade, Inc.
 AMG Administrative Management Group   AST (American Stock & Transfer)
 AXA Advisors                          Baden Retirement
 BCG - New                             BCG (Programs for Benefit Plans)
 Bear Stearns Securities Co.           Benefit Administration, Inc.(WA)
 Benefit Administration, Inc.(WIS)     Benefit Plans Administration
 Benetech, Inc.                        Bisys
 Boston Financial Data Services        Ceridian
 Charles Schwab & Co, Inc.             Citigroup Global Markets Inc (SSB)
 CitiStreet                            City National Investments
 Clark Consulting                      CPI
 DA Davidson & Co.                     Daily Access. Com, Inc.
 Davenport & Co, LLC                   David Lerner Associates
 Digital Retirement Solutions          DR, Inc.
 Dyatech                               E*Trade Clearing LLC
 Edgewood                              Edward D Jones & Co.
 Equitable Life / AXA                  ERISA Administrative Svcs, Inc
 ExpertPlan.com                        FAS Co. (FASCore/RK Pro)
 FBD Consulting                        Ferris Baker Watts, Inc.
 Fidelity                              First Clearing LLC
 First Southwest Co.                   First Trust - Datalynx
 First Trust Corp                      Franklin Templeton
 Geller Group                          Great West Life
 H&R Block Financial Advisors, Inc.    Hartford Life Insurance Co.
 HD Vest Investment Services           Hewitt Associates
 HSBC Brokerage USA, Inc.              ICMA - RC Services
 Independent Plan Coordinators         Ingham Group
 Interactive Retirement Systems        Invesmart
 Janney Montgomery Scott, Inc.         JJB Hillard W L Lyons, Inc.
 John Hancock                          JP Morgan
 July Business Services                Kaufman & Goble
 Legend Equities Co.                   Legg Mason Wood Walker
 Lehman Brothers, Inc.                 Liberty-Columbia 529 Program
 Lincoln Investment Planning, Inc.     Lincoln National Life Insurance Co.
 Linsco Private Ledger Financial       MassMutual
 Matrix Settlement & Clearance
 Services                              McDonald Investments, Inc.
 Mercer HR Services                    Merrill Lynch
 Mesirow Financial, Inc.               MetLife
 MFS Investment Management             Mid Atlantic Capital Co.
 Milliman USA                          Morgan Keegan & Co, Inc.
 Morgan Stanley Dean Witter            Nathan & Lewis Securities, Inc.
 National City Bank                    National Deferred Comp
 National Financial                    National Investor Services Co.
 Nationwide                            Newport Retirement Services
 Northwest Plan Services               NY Life Benefits
 Oppenheimer & Co, Inc.                Peoples Securities, Inc.
 Pershing                              PFPC
 Piper Jaffray & Co.                   Plan Administrators
 Plan Member Securities                Primevest Financial Services, Inc.
 Principal Life Insurance              Prudential
 PSMI Group                            Quads Trust Company
 Raymond James & Associates, Inc.      Reliastar
 Robert W Baird & Co.                  RSM McGladrey
 Scott & Stringfellow, Inc.            Scottrade, Inc.
 Southwest Securities, Inc.            Standard Insurance Co
 Stanley, Hunt, Dupree & Rhine         Stanton Group, Inc.
 Sterne Agee & Leach, Inc.             Stifel Nicolaus & Co, Inc.
 Sun Trust Securities, Inc.            Symetra
 T Rowe Price                          The 401k Company
 The Princeton Retirement Group Inc.   The Retirement Plan Company, LLC
 TruSource                             TruSource Union Bank of CA
 UBS Financial Services, Inc.          Unified Fund Services (UFS)
 US Clearing Co.                       USAA Investment Management Co.
 USI Consulting Group                  Valic
 Vanguard Group                        Wachovia
 Web401K.com                           Wedbush Morgan Securities
 Wells Fargo                           Wilmington Trust


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.

     |X| Total Return Information.  There are different types of "total returns"
to measure  the  Fund's  performance.  Total  return is the change in value of a
hypothetical  investment  in the Fund  over a given  period,  assuming  that all
dividends and capital gains  distributions  are reinvested in additional  shares
and that  the  investment  is  redeemed  at the end of the  period.  Because  of
differences  in expenses  for each class of shares,  the total  returns for each
class are separately  measured.  The cumulative total return measures the change
in value over the entire  period (for  example,  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,  the 1.0%  contingent  deferred
sales  charge is  deducted  for  returns  for the  one-year  period.  For Class N
shares,  the 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:

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

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

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

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

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

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

 ERV - P   = Total Return
-----------
    P
o     Total Returns at Net Asset Value. From time to time the Fund may also
quote a cumulative or an average annual total return "at net asset value"
(without deducting sales charges) for 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 December 31, 2006
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class of  Cumulative Total              Average Annual Total Returns
             Returns (10
              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      30.63%   38.61%  -18.08%  -13.08%   14.12%  15.48%   2.78%    3.41%
A(1)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class      32.25%   32.25%  -17.99%  -13.81%   14.23%  14.46%   2.91%    2.91%
B(2)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class      28.26%   28.26%  -14.50%  -13.66%   14.54%  14.54%   2.59%    2.59%
C(3)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class      49.95%   49.95%  -14.19%  -13.35%   15.23%  15.23%   7.19%    7.19%
N(4)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class      43.84%   43.84%  -12.50%  -12.50%   16.00%  16.00%   3.80%    3.80%
Y(5)
---------------------------------------------------------------------------------
1.    Inception of Class A:   03/31/97
2.    Inception of Class B:   03/31/97
3.    Inception of Class C:   03/31/97
4.    Inception of Class N:   03/01/01
5.    Inception of Class Y:   03/31/97

-----------------------------------------------------------------------------
   Average Annual Total Returns for Class A* Shares (After Sales Charge)
                  For the Periods Ended December 31, 2006
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
                                 1-Year         5-Years         10-Years
                                              (or life of      (or life of
                                             class if less)  class if less)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
After Taxes on Distributions       -19.18%        11.39%           0.54%
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
After Taxes on                     -11.72%        11.16%           1.13%
Distributions and
Redemption of Fund Shares
-----------------------------------------------------------------------------
   *  Inception of Class A: 03/31/97

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

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

|X|   Morningstar Ratings. From time to time the Fund may publish the star
rating of the performance of its classes of shares by Morningstar, Inc.
("Morningstar"), an independent mutual fund monitoring service. Morningstar
rates mutual funds in their specialized market sector. The Fund is rated among
specialty-natural resources funds category.

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

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

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

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

      From time to time the Fund may include in its advertisements and sales
literature the total return performance of a hypothetical investment account
that includes shares of the Fund and other Oppenheimer funds. The combined
account may be part of an illustration of an asset allocation model or similar
presentation. The account performance may combine total return performance of
the Fund and the total return performance of other Oppenheimer funds included
in the account. Additionally, from time to time, the Fund's advertisements and
sales literature may include, for illustrative or comparative purposes,
statistical data or other information about general or specific market and
economic conditions. That may include, for example,
o     information about the performance of certain securities or commodities
         markets or segments of those markets,
o     information about the performance of the economies of particular
         countries or regions,
o     the earnings of companies included in segments of particular industries,
         sectors, securities markets, countries or regions,
o     the availability of different types of securities or offerings of
         securities,
o     information relating to the gross national or gross domestic product of
         the United States or other countries or regions,
o     comparisons of various market sectors or indices to demonstrate
         performance, risk, or other characteristics of the Fund.

ABOUT YOUR ACCOUNT

 How to Buy Shares

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

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

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

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


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

LifeCycle Funds
  Oppenheimer Transition 2010 Fund
  Oppenheimer Transition 2015 Fund
  Oppenheimer Transition 2020 Fund
  Oppenheimer Transition 2030 Fund

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


      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. Purchases made up to 90
days before the date that you submit a Letter of Intent will be included in
that determination. 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"). 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 Oppenheimer funds by OppenheimerFunds prototype 401(k) plans under a Letter.
If the intended purchase amount under a Letter entered into by an
OppenheimerFunds prototype 401(k) plan is not purchased by the plan by the end
of the Letter period, there will be no adjustment of concessions paid to the
broker-dealer or financial institution of record for accounts held in the name
of that plan.


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

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

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

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

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

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

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

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


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

      If you make payments from your bank account to purchase shares of the
Fund, your bank account will be debited automatically. Normally the debit will
be made two business days prior to the investment dates you selected on your
application. Neither the Distributor, the Transfer Agent 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 C 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 had 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 had $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 had $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 compensates the record keeper for its record
keeping and account servicing functions that it performs on behalf of the
participant accounts in 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.

      |X|   Class A Shares Subject to a Contingent Deferred Sales Charge. Under
a special arrangement with the Distributor, 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 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, 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 Class A share purchases by a
retirement plan that are made with the redemption proceeds of Class N shares of
an Oppenheimer fund held by the plan for more than 18 months.

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

      |X|   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 C 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,
o     to OppenheimerFunds-sponsored Ascender 401(k) plans that pay for the
            purchase with the redemption proceeds of Class A shares of one or
            more Oppenheimer funds, 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.

o     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.

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

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

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

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

      Listed below are certain cases in which the Fund has elected, in its
discretion, not to assess the Fund Account Fees.  These exceptions are subject
to change:
o     A fund account whose shares were acquired after September 30th of the
            prior year;
o     A fund account that has a balance below $500 due to the automatic
            conversion of shares from Class B to Class A shares. However, once
            all Class B shares held in the account have been converted to Class
            A shares the new account balance may become subject to the Minimum
            Balance Fee;
o     Accounts of shareholders who elect to access their account documents
            electronically via eDoc Direct;
o     A fund account that has only certificated shares and, has a balance below
            $500 and is being escheated;
o     Accounts of shareholders that are held by broker-dealers under the NSCC
            Fund/SERV system;
o     Accounts held under the Oppenheimer Legacy Program and/or holding certain
            Oppenheimer Variable Account Funds;
o     Omnibus accounts holding shares pursuant to the Pinnacle, Ascender,
            Custom Plus, Record(k)eeper 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 and click the
hyperlink "Sign Up for Electronic Document Delivery" under the heading "I Want
To," 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.

      |X|   Securities Valuation. The Fund's Board of Trustees has established
procedures for the valuation of the Fund's securities. In general those
procedures are as follows:
o     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 $200 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 C to this
SAI).

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

      |X|   Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent to automatically exchange a pre-determined amount of shares of the Fund
for shares (of the same class) of other Oppenheimer funds that offer the
exchange privilege 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 Rochester Arizona
                                             Municipal Fund
   Oppenheimer AMT-Free Municipals           Oppenheimer Rochester Maryland
                                             Municipal Fund
   Oppenheimer AMT-Free New York Municipals  Oppenheimer Rochester Massachusetts
                                             Municipal Fund
   Oppenheimer California Municipal Fund     Oppenheimer Rochester Michigan
                                             Municipal Fund
   Oppenheimer Institutional Money Market    Oppenheimer Rochester Minnesota
   Fund                                      Municipal Fund
   Oppenheimer International Value Fund      Oppenheimer Rochester National
                                             Municipals
   Oppenheimer Limited Term California       Oppenheimer Rochester North Carolina
   Municipal Fund                            Municipal Fund
   Oppenheimer Limited Term Municipal Fund   Oppenheimer Rochester Ohio Municipal
                                             Fund
   Oppenheimer Money Market Fund, Inc.       Oppenheimer Rochester Virginia
                                             Municipal Fund
   Oppenheimer New Jersey Municipal Fund     Oppenheimer Senior Floating Rate Fund
   Oppenheimer Principal Protected Main      Rochester Fund Municipals
   Street Fund II
   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 National
   Fund                                      Municipals
   Oppenheimer Limited Term California       Oppenheimer Rochester North Carolina
   Municipal Fund                            Municipal Fund
   Oppenheimer Limited Term Municipal Fund   Oppenheimer Rochester Ohio Municipal
                                             Fund
   Oppenheimer New Jersey Municipal Fund     Oppenheimer Rochester Virginia
                                             Municipal Fund
   Oppenheimer Pennsylvania Municipal Fund

o     Oppenheimer Money Market Fund, Inc. only offers Class A and Class Y
   shares.
o     Oppenheimer  Institutional  Money Market Fund only offers Class E and Class
   L 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 any money market fund purchased without a sales charge may be
      exchanged for shares of Oppenheimer funds offered with a sales charge
      upon payment of the sales charge.
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 each of Oppenheimer
      Developing Markets Fund and 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.

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

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

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

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

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

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

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

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

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

o     With respect to Class N shares, 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.



      |X|   Telephone Exchange Requests. When exchanging shares by telephone, a
shareholder must have an existing account in the fund to which the exchange is
to be made. Otherwise, the investors must obtain a prospectus of that fund
before the exchange request may be submitted. If all telephone lines are busy
(which might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.

      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 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.

U.S. Tax Considerations.  The Fund intends to invest a portion of its assets in
the Subsidiary, which will be classified as a corporation for U.S. federal
income tax purposes. A foreign corporation, such as the Subsidiary, will
generally not be subject to U.S. federal income taxation unless it is deemed to
be engaged in a U.S. trade or business. It is expected that the Subsidiary will
conduct its activities in a manner so as to meet the requirements of a safe
harbor under Section 864(b)(2) of the Internal Revenue Code (the "Safe Harbor")
pursuant to which the Subsidiary, provided it is not a dealer in stocks,
securities or commodities, may engage in the following activities without being
deemed to be engaged in a U.S. trade or business: (1) trading in stocks or
securities (including contracts or options to buy or sell securities) for its
own account; and (2) trading, for its own account, in commodities that are "of
a kind customarily dealt in on an organized commodity exchange" if the
transaction is of a kind customarily consummated at such place. Thus, the
Subsidiary's securities and commodities trading activities should not
constitute a U.S. trade or business. However, if certain of the Subsidiary's
activities were determined not to be of the type described in the Safe Harbor
or if the Subsidiary's gains are attributable to investments in securities that
constitute U.S. real property interests (which is not expected), then the
activities of the Subsidiary may constitute a U.S. trade or business, or be
taxed as such.

      In general, a foreign corporation that does not conduct a U.S. trade or
business is nonetheless subject to tax at a flat rate of 30 percent (or lower
tax treaty rate), generally payable through withholding, on the gross amount of
certain U.S.-source income that is not effectively connected with a U.S. trade
or business. There is presently no tax treaty in force between the U.S. and the
Cayman Islands that would reduce this rate of withholding tax.  Income subject
to such a flat tax includes dividends and certain interest income.  The 30
percent tax does not apply to U.S.-source capital gains (whether long-term or
short-term) or to interest paid to a foreign corporation on its deposits with
U.S. banks. The 30 percent tax also does not apply to interest which qualifies
as "portfolio interest." The term "portfolio interest" generally includes
interest (including original issue discount) on an obligation in registered
form which has been issued after July 18, 1984 and with respect to which the
person, who would otherwise be required to deduct and withhold the 30 percent
tax, received the required statement that the beneficial owner of the
obligation is not a U.S. person within the meaning of the Internal Revenue
Code. Under certain circumstances, interest on bearer obligations may also be
considered portfolio interest.

      The Subsidiary will be wholly-owned by the Fund. A U.S. person who owns
(directly, indirectly or constructively) 10 percent or more of the total
combined voting power of all classes of stock of a foreign corporation is a
"U.S. Shareholder" for purposes of the controlled foreign corporation ("CFC")
provisions of the Internal Revenue Code.  A foreign corporation is a CFC if, on
any day of its taxable year, more than 50 percent of the voting power or value
of its stock is owned (directly, indirectly or constructively) by "U.S.
Shareholders." Because the Fund is a U.S. person that will own all of the stock
of the Subsidiary, the Fund will be a "U.S. Shareholder" and the Subsidiary
will be a CFC. As a "U.S. Shareholder," the Fund will be required to include in
gross income for United States federal income tax purposes all of the
Subsidiary's "subpart F income" (defined, in part, below), whether or not such
income is distributed by the Subsidiary. It is expected that all of the
Subsidiary's income will be "subpart F income."  "Subpart F income" generally
includes interest, original issue discount, dividends, net gains from the
disposition of stocks or securities, receipts with respect to securities loans
and net payments received with respect to equity swaps and similar
derivatives.  "Subpart F income" also includes the excess of gains over losses
from transactions (including futures, forward and similar transactions) in any
commodities. The Fund's recognition of the Subsidiary's "subpart F income" will
increase the Fund's tax basis in the Subsidiary. Distributions by the
Subsidiary to the Fund will be tax-free, to the extent of its previously
undistributed "subpart F income," and will correspondingly reduce the Fund's
tax basis in the Subsidiary. "Subpart F income" is generally treated as
ordinary income, regardless of the character of the Subsidiary's underlying
income.

      In general, each "U.S. Shareholder" is required to file IRS Form 5471
with its U.S. federal income tax (or information) returns providing information
about its ownership of the CFC and the CFC. In addition, a "U.S. Shareholder"
may in certain circumstances be required to report a disposition of shares in
the Subsidiary by attaching IRS Form 5471 to its U.S. federal income tax (or
information) return that it would normally file for the taxable year in which
the disposition occurs. In general, these filing requirements will apply to
investors of the Fund if the investor is a U.S. person who owns directly,
indirectly or constructively (within the meaning of Sections 958(a) and (b) of
the Internal Revenue Code) 10 percent or more of the total combined voting
power of all classes of voting stock of a foreign corporation that is a CFC for
an uninterrupted period of 30 days or more during any tax year of the foreign
corporation, and who owned that stock on the last day of that year.

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



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

--------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Commodity Strategy Total Return Fund (the "Fund"), formerly
Oppenheimer Real Asset Fund, including the statement of investments as of
December 31, 2006, and the related statement of operations for the four-month
period then ended, the statements of changes in net assets for the four-month
period then ended and the years ended August 31, 2006 and 2005, and the
financial highlights for the four-month period ended December 31, 2006 and for
each of the five years in the period ended August 31, 2006. 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.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of December 31, 2006, by correspondence with the
custodian and brokers; where replies were not received from brokers, we
performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.

      In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Fund as of December 31, 2006, and the results of its operations for the
four-month period then ended, the changes in its net assets for the four-month
period then ended and the years ended August 31, 2006 and 2005, and the
financial highlights for the four-month period ended December 31, 2006 and for
each of the five years in the period ended August 31, 2006, in conformity with
accounting principles generally accepted in the United States of America.


DELOITTE & TOUCHE LLP

Denver, Colorado
February 16, 2007


              51 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND




STATEMENT OF INVESTMENTS  December 31, 2006
--------------------------------------------------------------------------------



                                                                                                         VALUE
                                                                                    SHARES          SEE NOTE 1
---------------------------------------------------------------------------------------------------------------

WHOLLY-OWNED SUBSIDIARY--22.0%
---------------------------------------------------------------------------------------------------------------
RAF Fund Ltd. 1,2 (Cost $354,830,539)                                            4,000,000     $   279,288,243


                                                                                 PRINCIPAL
                                                                                    AMOUNT
---------------------------------------------------------------------------------------------------------------

ASSET-BACKED SECURITIES--2.6%
---------------------------------------------------------------------------------------------------------------
Argent Securities Trust 2006-M3, Asset-Backed Pass-Through
Certificates, Series 2006-M3, Cl. A2B, 5.42%, 9/25/36 3,4                     $  1,890,000           1,891,208
---------------------------------------------------------------------------------------------------------------
Capital Auto Receivables Asset Trust 2004-2, Automobile
Asset-Backed Securities, Series 2004-2, Cl. A3, 3.58%, 1/15/09                   2,250,000           2,225,675
---------------------------------------------------------------------------------------------------------------
Citigroup Mortgage Loan Trust 2006-WFH3, Asset-Backed
Pass-Through Certificates, Series 2006-WFH3, Cl. A2, 5.45%, 10/31/36 4           1,920,000           1,920,000
---------------------------------------------------------------------------------------------------------------
First Franklin Mortgage Loan Trust 2006-FF10, Mtg. Pass-Through
Certificates, Series 2006-FF10, Cl. A3, 5.41%, 7/25/36 4                         3,520,000           3,522,250
---------------------------------------------------------------------------------------------------------------
First Franklin Mortgage Loan Trust 2006-FF9, Mtg. Pass-Through
Certificates, Series 2006-FF9, Cl. 2A2, 5.43%, 7/7/36 4                          1,937,000           1,938,239
---------------------------------------------------------------------------------------------------------------
Lehman XS Trust, Mtg. Pass-Through Certificates, Series 2005-2,
Cl. 2A1B, 5.18%, 8/25/35 4                                                       2,190,535           2,185,741
---------------------------------------------------------------------------------------------------------------
Mastr Asset Backed Securities Trust 2006-WMC3, Mtg.
Pass-Through Certificates, Series 2006-WMC3, Cl. A3, 5.42%, 8/25/36 3,4          4,690,000           4,692,997
---------------------------------------------------------------------------------------------------------------
NC Finance Trust, CMO Pass-Through Certificates, Series 1999-I,
Cl. ECFD, 1.762%, 1/25/29 3                                                        405,715              85,200
---------------------------------------------------------------------------------------------------------------
RAMP Series 2004-RS7 Trust, Mtg. Asset-Backed Pass-Through Certificates,
Series 2004-RS7, Cl. AI32, 4.45%, 7/25/28                                        1,982,691           1,968,867
---------------------------------------------------------------------------------------------------------------
RAMP Series 2006-RS4 Trust, Mtg. Asset-Backed Pass-Through Certificates,
Series 2006-RS4, Cl. A1, 5.43%, 7/25/36 4                                        1,912,590           1,913,943
---------------------------------------------------------------------------------------------------------------
RASC, Series 2006-KS7 Trust, Home Equity Mtg. Asset-Backed
Pass-Through Certificates, Series 2006-KS7, Cl. A2, 5.42%, 9/25/36 4             6,913,000           6,917,419
---------------------------------------------------------------------------------------------------------------
Salomon Smith Barney Mutual Fund Fee Trust XIV, Asset-Backed Nts.,
Series 2000-14, Cl. 2, 8.61%, 9/30/08 3                                          3,034,804             575,108
---------------------------------------------------------------------------------------------------------------
Wells Fargo Home Equity Asset-Backed Securities 2006-2 Trust, Home
Equity Asset-Backed Certificates, Series 2006-2, Cl. A2, 5.59%, 7/25/36 4        3,605,000           3,607,303
                                                                                               ----------------
Total Asset-Backed Securities (Cost $36,217,502)                                                    33,443,950

---------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--40.7%
---------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--35.0%
---------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--35.0%
Fannie Mae Whole Loan, CMO Pass-Through Certificates,
Trust 2004-W9, Cl. 2A2, 7%, 2/25/44                                                209,172             215,676
---------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
4.50%, 9/1/18-10/1/18                                                            1,463,043           1,414,077
6%, 7/1/17                                                                       1,346,282           1,365,900
6.50%, 6/1/16-8/1/32                                                             7,567,290           7,749,989
7%, 11/1/22-12/1/34                                                              5,176,376           5,324,747
8%, 4/1/16                                                                         103,026             109,003
9%, 8/1/22-5/1/25                                                                   33,304              35,690



              17 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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



                                                                                 PRINCIPAL               VALUE
                                                                                    AMOUNT          SEE NOTE 1
---------------------------------------------------------------------------------------------------------------

FHLMC/FNMA/SPONSORED Continued
Federal Home Loan Mortgage Corp., CMO Gtd. Real Estate Mtg.
Investment Conduit Multiclass Pass-Through Certificates:
Series 2001-81, Cl. HE, 6.50%, 1/25/32                                        $  1,534,545     $     1,569,693
Series 2002-66, Cl. FG, 6.35%, 9/25/32 4                                         1,541,892           1,566,369
Series 2002-84, Cl. FB, 6.35%, 12/25/32 4                                        8,118,088           8,364,048
Series 2003-11, Cl. FA, 6.35%, 9/25/32 4                                         5,775,388           5,953,322
Series 2080, Cl. C, 6.50%, 8/15/28                                               2,651,856           2,708,823
Series 2080, Cl. Z, 6.50%, 8/15/28                                               1,449,357           1,472,777
Series 2116, Cl. ZA, 6%, 1/15/29                                                 6,880,411           6,972,437
Series 2191, Cl. TZ, 7%, 10/15/29                                                3,127,180           3,235,855
Series 2341, Cl. FP, 6.25%, 7/15/31 4                                            1,287,833           1,320,119
Series 2427, Cl. ZM, 6.50%, 3/15/32                                              4,595,371           4,707,384
Series 2436, Cl. MC, 7%, 4/15/32                                                 1,690,064           1,748,907
Series 2465, Cl. PG, 6.50%, 6/15/32                                              6,868,294           7,031,595
Series 3153, Cl. FJ, 5.73%, 5/15/36 4                                            2,220,621           2,229,985
---------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 177, Cl. IO, 10.673%, 7/1/26 5                        683,553             156,317
---------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
4.50%, 9/1/18-12/1/20                                                           36,914,523          35,687,250
5%, 10/1/17-3/1/34                                                             110,753,397         108,525,136
5%, 1/1/22 6                                                                     1,299,000           1,277,079
5.50%, 1/1/22 6                                                                 33,878,000          33,878,000
6%, 6/1/30-11/1/33                                                              35,825,295          36,187,923
6%, 1/1/22 6                                                                    57,846,000          58,659,430
6.50%, 5/1/17-5/1/33                                                            15,730,681          16,121,419
6.50%, 1/1/37 6                                                                 30,350,000          30,928,532
7%, 11/1/17-4/1/33                                                              19,621,428          20,207,946
8.50%, 7/1/32                                                                       17,007              18,314
---------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., CMO Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates:
Trust 1993-215, Cl. ZQ, 6.50%, 11/25/23                                          4,021,541           4,113,504
Trust 1999-64, Cl. TH, 7.50%, 12/25/29                                           8,071,127           8,481,664
Trust 2002-9, Cl. PC, 6%, 3/25/17                                                5,129,507           5,199,282
Trust 2003-84, Cl. PW, 3%, 6/25/22                                               4,311,591           4,238,010
Trust 2006-44, Cl. OA, 5.50%, 12/25/26                                           9,590,000           9,614,128
---------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security:
Trust 294, Cl. 2, 10.279%, 2/1/28 5                                                541,135             121,106
Trust 321, Cl. 2, 9.828%, 4/1/32 5                                               2,436,178             560,165
Trust 340, Cl. 2, 7.032%, 9/1/33 5                                               3,429,770             827,161
Trust 342, Cl. 2, 9.01%, 9/1/33 5                                                5,029,949           1,142,971
---------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Principal-Only Stripped
Mtg.-Backed Security, Trust 340, Cl. 1, 5.532%, 9/1/33 7                         3,429,770           2,506,495
                                                                                               ----------------
                                                                                                   443,548,228



              18 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND




                                                                                 PRINCIPAL               VALUE
                                                                                    AMOUNT          SEE NOTE 1
---------------------------------------------------------------------------------------------------------------

GNMA/GUARANTEED--0.0%
Government National Mortgage Assn., 8.50%, 8/15/17-12/15/17                   $     55,016     $        58,668
---------------------------------------------------------------------------------------------------------------
NON-AGENCY--5.7%
---------------------------------------------------------------------------------------------------------------
COMMERCIAL--5.0%
Banc of America Commercial Mortgage, Inc., Commercial Mtg.
Pass-Through Certificates, Series 2006-5, Cl. A2, 5.348%, 10/10/11               5,325,000           5,336,440
---------------------------------------------------------------------------------------------------------------
Banc of America Funding Corp., CMO Pass-Through Certificates,
Series 2004-2, Cl. 2A1, 6.50%, 7/20/32                                           1,544,963           1,565,997
---------------------------------------------------------------------------------------------------------------
Bear Stearns Commercial Mortgage Securities, Inc., Commercial
Mtg. Obligations, Series 2003-T10, Cl. A1, 4%, 3/13/40                             662,524             641,826
---------------------------------------------------------------------------------------------------------------
ChaseFlex Trust 2006-2, Multiclass Mtg. Pass-Through Certificates,
Series 2006-2, Cl. A1B, 5.607%, 8/25/08 3,4                                      4,541,284           4,546,051
---------------------------------------------------------------------------------------------------------------
Deutsche Alt-A Securities Mortgage Loan Trust, Mtg.
Pass-Through Certificates:
Series 2006-AB2, Cl. A7, 5.961%, 6/25/36                                         4,365,845           4,357,898
Series 2006-AB3, Cl. A7, 6.36%, 4/25/08                                          1,786,457           1,786,959
Series 2006-AB4, Cl. A1A, 6.005%, 10/25/36                                       5,807,450           5,807,904
---------------------------------------------------------------------------------------------------------------
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations:
Series 2003-C1, Cl. A2, 4.093%, 1/10/38                                            681,000             664,704
Series 2004-C3, Cl. A2, 4.433%, 7/10/39                                          1,300,000           1,276,527
Series 2005-C3, Cl. A2, 4.853%, 7/10/45                                          2,750,000           2,719,256
---------------------------------------------------------------------------------------------------------------
Greenwich Capital Commercial Funding Corp., Commercial Mtg.
Pass-Through Certificates, Series 2005-GG5, Cl. A2, 5.117%, 4/10/37              5,992,000           5,974,438
---------------------------------------------------------------------------------------------------------------
GS Mortgage Securities Corp. II, Commercial Mtg. Obligations,
Series 2006-GG8, Cl. A2, 5.479%, 11/10/39 4                                      5,066,000           5,109,770
---------------------------------------------------------------------------------------------------------------
JPMorgan Chase Commercial Mortgage Securities Corp.,
Commercial Mtg. Pass-Through Certificates:
Series 2005-LDP2, Cl. A2, 4.575%, 7/15/42                                          950,000             930,741
Series 2005-LDP4, Cl. A2, 4.79%, 10/15/42                                        2,585,000           2,547,404
---------------------------------------------------------------------------------------------------------------
LB-UBS Commercial Mortgage Trust, Commercial Mtg.
Pass-Through Certificates, Series 2005-C5, Cl. A2, 4.885%, 9/15/30               3,320,000           3,290,074
---------------------------------------------------------------------------------------------------------------
RALI, Series 2006-QS13 Trust, Mtg. Asset-Backed Pass-Through
Certificates, Series 2006-QS13, Cl. 1A8, 6%, 9/25/36                             6,283,950           6,278,356
---------------------------------------------------------------------------------------------------------------
Residential Asset Securitization Trust 2006-A9CB, CMO Pass-Through
Certificates, Series 2006-A9CB, Cl. A5, 6%, 9/25/36                              7,390,520           7,379,059
---------------------------------------------------------------------------------------------------------------
Wachovia Bank Commercial Mortgage Trust 2006-C29, Commercial
Asset-Backed Securities, Series 2006-C29, Cl. A2, 5.272%, 11/15/48               3,683,000           3,680,017
                                                                                               ----------------
                                                                                                    63,893,421



              19 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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



                                                                                 PRINCIPAL               VALUE
                                                                                    AMOUNT          SEE NOTE 1
---------------------------------------------------------------------------------------------------------------

RESIDENTIAL--0.7%
Countrywide Alternative Loan Trust, CMO:
Series 2005-J1, Cl. 3A1, 6.50%, 8/25/32                                       $  7,819,211     $     7,904,738
Series 2005-J3, Cl. 3A1, 6.50%, 9/25/34                                            551,419             560,824
                                                                                               ----------------
                                                                                                     8,465,562
                                                                                               ----------------
Total Mortgage-Backed Obligations (Cost $516,099,129)                                              515,965,879

---------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--0.2%
---------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. Unsec. Nts.:
4%, 8/17/07 8                                                                      990,000             982,564
5%, 9/16/08                                                                      1,440,000           1,439,215
                                                                                               ----------------
Total U.S. Government Obligations (Cost $2,420,289)                                                  2,421,779

---------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--25.1%
---------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--6.0%
---------------------------------------------------------------------------------------------------------------
AUTOMOBILES--1.0%
DaimlerChrysler North America Holding Corp., 7.30% Nts., 1/15/12                 5,305,000           5,637,316
---------------------------------------------------------------------------------------------------------------
Residential Capital LLC, 6.375% Sr. Unsec. Nts., 6/30/10                         7,080,000           7,167,941
                                                                                               ----------------
                                                                                                    12,805,257

---------------------------------------------------------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES--0.4%
Block Financial Corp., 8.50% Sr. Unsec. Unsub. Nts., 4/15/07                     4,980,000           5,018,520
---------------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--0.4%
P&O Princess/Carnival plc, 7.30% Nts., 6/1/07                                      935,000             941,656
---------------------------------------------------------------------------------------------------------------
Yum! Brands, Inc., 7.70% Sr. Nts., 7/1/12                                        3,900,000           4,268,183
                                                                                               ----------------
                                                                                                     5,209,839

---------------------------------------------------------------------------------------------------------------
HOUSEHOLD DURABLES--1.3%
Black & Decker Holdings, Inc., 6.55% Sr. Unsec. Nts., 7/1/07 9,10                6,425,000           6,434,869
---------------------------------------------------------------------------------------------------------------
Centex Corp., 8.75% Sub. Debs., 3/1/07                                           5,485,000           5,508,547
---------------------------------------------------------------------------------------------------------------
D.R. Horton, Inc., 7.50% Sr. Unsec. Nts., 12/1/07                                4,460,000           4,539,067
                                                                                               ----------------
                                                                                                    16,482,483

---------------------------------------------------------------------------------------------------------------
MEDIA--2.5%
British Sky Broadcasting Group plc, 8.20% Sr. Unsec. Nts., 7/15/09               4,075,000           4,341,538
---------------------------------------------------------------------------------------------------------------
CBS Corp., 5.625% Sr. Unsec. Nts., 5/1/07                                        4,400,000           4,402,622
---------------------------------------------------------------------------------------------------------------
Chancellor Media CCU, 8% Sr. Unsec. Nts., 11/1/08                                3,885,000           4,040,781
---------------------------------------------------------------------------------------------------------------
Clear Channel Communications, Inc., 6.25% Nts., 3/15/11                          3,870,000           3,764,334
---------------------------------------------------------------------------------------------------------------
Comcast Corp., 5.85% Sr. Unsec. Unsub. Nts., 1/15/10                             6,305,000           6,397,368
---------------------------------------------------------------------------------------------------------------
Gannett Co., Inc., 5.50% Unsec. Nts., 4/1/07                                     1,270,000           1,268,796
---------------------------------------------------------------------------------------------------------------
News America, Inc., 6.625% Sr. Nts., 1/9/08                                        283,000             286,150



              20 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND




                                                                                 PRINCIPAL               VALUE
                                                                                    AMOUNT          SEE NOTE 1
---------------------------------------------------------------------------------------------------------------

MEDIA Continued
Reed Elsevier Capital, Inc., 4.625% Nts., 6/15/12                             $    630,000     $       602,432
---------------------------------------------------------------------------------------------------------------
Time Warner, Inc.:
5.50% Nts., 11/15/11                                                             2,500,000           2,496,233
6.75% Sr. Unsec. Unsub. Nts., 4/15/11 10                                         4,145,000           4,343,036
                                                                                               ----------------
                                                                                                    31,943,290

---------------------------------------------------------------------------------------------------------------
MULTILINE RETAIL--0.4%
May Department Stores Co., 7.90% Unsec. Debs., 10/15/07                          5,150,000           5,227,925
---------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--1.9%
---------------------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--1.0%
CVS Corp., 4% Sr. Unsec. Nts., 9/15/09                                           1,590,000           1,538,160
---------------------------------------------------------------------------------------------------------------
Kroger Co. (The), 5.50% Unsec. Unsub. Nts., 2/1/13                               3,810,000           3,773,664
---------------------------------------------------------------------------------------------------------------
Safeway, Inc., 6.50% Sr. Unsec. Nts., 3/1/11                                     7,488,000           7,753,817
                                                                                               ----------------
                                                                                                    13,065,641

---------------------------------------------------------------------------------------------------------------
FOOD PRODUCTS--0.4%
Bunge Ltd. Finance Corp., 4.375% Unsec. Nts., 12/15/08                           1,440,000           1,410,299
---------------------------------------------------------------------------------------------------------------
Earthgrains Co. (The), 6.50% Nts., 4/15/09                                       3,465,000           3,525,835
                                                                                               ----------------
                                                                                                     4,936,134

---------------------------------------------------------------------------------------------------------------
TOBACCO--0.5%
Philip Morris Cos., 7.20% Unsec. Nts., 2/1/07                                    6,020,000           6,024,900
---------------------------------------------------------------------------------------------------------------
ENERGY--3.5%
---------------------------------------------------------------------------------------------------------------
OIL & GAS--3.5%
Energy Transfer Partners LP, 5.65% Sr. Unsec. Unsub. Nts., 8/1/12                  995,000             991,983
---------------------------------------------------------------------------------------------------------------
Enterprise Products Operating LP, 7.50% Sr. Unsec. Unsub. Nts., 2/1/11           5,070,000           5,411,591
---------------------------------------------------------------------------------------------------------------
Kaneb Pipe Line Operating Partnership LP:
5.875% Sr. Unsec. Nts., 6/1/13                                                     890,000             893,783
7.75% Sr. Unsec. Nts., 2/15/12                                                     470,000             512,780
---------------------------------------------------------------------------------------------------------------
Kinder Morgan Energy Partners LP, 7.50% Sr. Unsec. Nts., 11/1/10                 5,225,000           5,575,848
---------------------------------------------------------------------------------------------------------------
Ocean Energy, Inc., 4.375% Sr. Unsec. Nts., 10/1/07                              3,264,000           3,238,955
---------------------------------------------------------------------------------------------------------------
ONEOK Partners LP, 7.10% Sr. Unsec. Nts., 3/15/11                                1,775,000           1,867,765
---------------------------------------------------------------------------------------------------------------
Pemex Project Funding Master Trust, 7.875% Unsec. Unsub. Nts., 2/1/09            4,640,000           4,874,320
---------------------------------------------------------------------------------------------------------------
Petroleum Export Ltd. Cayman SPV, 4.623% Sr. Nts., Cl. A1, 6/15/10 9             5,693,333           5,606,527
---------------------------------------------------------------------------------------------------------------
Talisman Energy, Inc., 7.125% Unsec. Unsub. Debs., 6/1/07                        6,565,000           6,607,732
---------------------------------------------------------------------------------------------------------------
TEPPCO Partners LP:
6.125% Nts., 2/1/13                                                              2,280,000           2,283,080
7.625% Sr. Unsec. Nts., 2/15/12                                                  1,550,000           1,668,367
---------------------------------------------------------------------------------------------------------------
Valero Logistics Operations LP, 6.05% Nts., 3/15/13                              4,930,000           4,972,694
                                                                                               ----------------
                                                                                                    44,505,425



              21 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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



                                                                                 PRINCIPAL               VALUE
                                                                                    AMOUNT          SEE NOTE 1
---------------------------------------------------------------------------------------------------------------

FINANCIALS--4.6%
---------------------------------------------------------------------------------------------------------------
CAPITAL MARKETS--0.5%
Amvescap plc, 5.90% Sr. Unsec. Nts., 1/15/07                                  $  5,780,000     $     5,780,590
---------------------------------------------------------------------------------------------------------------
Bank of New York Co., Inc. (The), 3.75% Unsec. Unsub. Nts., 2/15/08                300,000             294,806
                                                                                               ----------------
                                                                                                     6,075,396

---------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS--0.5%
ABN Amro Bank NV (Chicago Branch), 7.125% Unsec. Sub. Nts., 6/18/07              4,475,000           4,510,165
---------------------------------------------------------------------------------------------------------------
Regions Financial Corp., 4.50% Bonds, 8/8/08                                     1,385,000           1,368,100
                                                                                               ----------------
                                                                                                     5,878,265

---------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--0.7%
Bank of America Corp., 3.875% Nts., 1/15/08                                        320,000             315,251
---------------------------------------------------------------------------------------------------------------
CIT Group, Inc., 5.40% Sr. Nts., 3/7/13                                          7,000,000           6,956,187
---------------------------------------------------------------------------------------------------------------
Citigroup, Inc., 6% Nts., 2/21/12                                                  490,000             505,783
---------------------------------------------------------------------------------------------------------------
FleetBoston Financial Corp., 4.20% Nts., 11/30/07                                  270,000             267,314
---------------------------------------------------------------------------------------------------------------
JPMorgan Chase & Co., 4% Nts., 2/1/08                                              510,000             503,365
---------------------------------------------------------------------------------------------------------------
MBNA Corp., 5.625% Nts., 11/30/07                                                  320,000             320,653
                                                                                               ----------------
                                                                                                     8,868,553

---------------------------------------------------------------------------------------------------------------
INSURANCE--0.5%
Allstate Financial Global Funding, 5.25% Nts., 2/1/07 9                            190,000             189,988
---------------------------------------------------------------------------------------------------------------
John Hancock Global Funding II, 5% Nts., 7/27/07 9                               1,532,000           1,527,360
---------------------------------------------------------------------------------------------------------------
Lincoln National Corp., 5.25% Sr. Unsec. Nts., 6/15/07                           2,265,000           2,260,939
---------------------------------------------------------------------------------------------------------------
Marsh & McLennan Cos., Inc., 3.625% Nts., 2/15/08                                  720,000             704,627
---------------------------------------------------------------------------------------------------------------
Pricoa Global Funding I, 3.90% Nts., 12/15/08 9                                  1,140,000           1,108,366
---------------------------------------------------------------------------------------------------------------
Prudential Insurance Co. of America, 7.65% Surplus Nts., 7/1/07 9                  630,000             637,358
                                                                                               ----------------
                                                                                                     6,428,638

---------------------------------------------------------------------------------------------------------------
REAL ESTATE--1.3%
EOP Operating LP, 8.10% Unsec. Nts., 8/1/10                                      5,760,000           6,351,684
---------------------------------------------------------------------------------------------------------------
iStar Financial, Inc., 5.15% Sr. Unsec. Nts., 3/1/12                             5,180,000           5,043,352
---------------------------------------------------------------------------------------------------------------
Vornado Realty LP, 5.625% Sr. Unsec. Unsub. Nts., 6/15/07                        5,498,000           5,494,954
                                                                                               ----------------
                                                                                                    16,889,990

---------------------------------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--1.1%
Countrywide Home Loans, Inc.:
5.50% Nts., Series K, 2/1/07                                                       405,000             405,026
5.625% Nts., Series K, 5/15/07                                                   3,170,000           3,172,704
---------------------------------------------------------------------------------------------------------------
MGIC Investment Corp., 6% Sr. Unsec. Nts., 3/15/07                               3,230,000           3,232,716



              22 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND




                                                                                 PRINCIPAL               VALUE
                                                                                    AMOUNT          SEE NOTE 1
---------------------------------------------------------------------------------------------------------------

THRIFTS & MORTGAGE FINANCE Continued
Washington Mutual, Inc., 5.625% Sr. Unsec. Nts., 1/15/07                      $  7,882,000     $     7,882,457
                                                                                               ----------------
                                                                                                    14,692,903

---------------------------------------------------------------------------------------------------------------
HEALTH CARE--0.6%
---------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--0.6%
CIGNA Corp.:
7% Sr. Unsec. Nts., 1/15/11                                                      1,900,000           1,998,390
7.40% Unsec. Nts., 5/15/07                                                       3,810,000           3,835,279
---------------------------------------------------------------------------------------------------------------
UnitedHealth Group, Inc., 5.20% Sr. Unsec. Nts., 1/17/07 10                      1,310,000           1,309,876
                                                                                               ----------------
                                                                                                     7,143,545

---------------------------------------------------------------------------------------------------------------
INDUSTRIALS--1.1%
---------------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--0.5%
BAE Systems Holdings, Inc., 4.75% Nts., 8/15/10 9                                6,020,000           5,862,938
---------------------------------------------------------------------------------------------------------------
Boeing Capital Corp., 5.75% Sr. Nts., 2/15/07                                      436,000             436,335
                                                                                               ----------------
                                                                                                     6,299,273

---------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--0.1%
Waste Management, Inc., 7.125% Sr. Unsec. Nts., 10/1/07                          1,765,000           1,781,716
---------------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--0.2%
Textron Financial Corp., 5.875% Unsec. Unsub. Nts., 6/1/07                       2,630,000           2,635,691
---------------------------------------------------------------------------------------------------------------
ROAD & RAIL--0.3%
Erac USA Finance Co., 6.75% Nts., 5/15/07 9                                      3,490,000           3,504,051
---------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--0.4%
---------------------------------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--0.0%
NCR Corp., 7.125% Sr. Unsec. Unsub. Nts., 6/15/09                                  465,000             477,157
---------------------------------------------------------------------------------------------------------------
OFFICE ELECTRONICS--0.4%
Xerox Corp., 9.75% Sr. Unsec. Nts., 1/15/09                                      4,330,000           4,698,050
---------------------------------------------------------------------------------------------------------------
MATERIALS--0.5%
---------------------------------------------------------------------------------------------------------------
CHEMICALS--0.3%
Praxair, Inc., 4.75% Unsec. Nts., 7/15/07                                        3,510,000           3,501,678
---------------------------------------------------------------------------------------------------------------
METALS & MINING--0.2%
Barrick Gold Finance Co., 7.50% Unsec. Debs., 5/1/07                             3,170,000           3,191,819
---------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--1.6%
---------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.6%
Telecom Italia Capital SpA:
4% Sr. Unsec. Nts., 11/15/08                                                     3,455,000           3,366,148
4% Unsec. Unsub. Nts., 1/15/10                                                   2,970,000           2,838,013
---------------------------------------------------------------------------------------------------------------
Telefonos de Mexico SA de CV, 4.50% Nts., 11/19/08                               5,740,000           5,665,168
---------------------------------------------------------------------------------------------------------------
Telus Corp., 8% Nts., 6/1/11                                                     4,565,000           4,996,653
---------------------------------------------------------------------------------------------------------------
Verizon Global Funding Corp., 6.125% Nts., 6/15/07 10                            2,850,000           2,857,510
                                                                                               ----------------
                                                                                                    19,723,492



              23 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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



                                                                                 PRINCIPAL               VALUE
                                                                                    AMOUNT          SEE NOTE 1
---------------------------------------------------------------------------------------------------------------

UTILITIES--4.9%
---------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--1.5%
FPL Group Capital, Inc., 4.086% Nts., Series A, 2/16/07                       $  5,020,000     $     5,011,958
---------------------------------------------------------------------------------------------------------------
MidAmerican Energy Holdings Co., 4.625% Sr. Nts., 10/1/07                          580,000             576,333
---------------------------------------------------------------------------------------------------------------
Pepco Holdings, Inc., 5.50% Unsec. Unsub. Nts., 8/15/07                          6,580,000           6,575,703
---------------------------------------------------------------------------------------------------------------
Southern Co. Capital Funding, Inc., 5.30% Sr. Unsec. Unsub. Nts.,
Series A, 2/1/07                                                                 1,270,000           1,269,507
---------------------------------------------------------------------------------------------------------------
Westar Energy, Inc., 7.125% Sr. Unsec. Nts., 8/1/09                              5,315,000           5,520,228
                                                                                               ----------------
                                                                                                    18,953,729

---------------------------------------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--3.4%
CenterPoint Energy, Inc., 7.25% Sr. Nts., Series B, 9/1/10                       6,830,000           7,202,016
---------------------------------------------------------------------------------------------------------------
Niagara Mohawk Power Corp., 8.875% Sr. Nts., 5/15/07                             4,745,000           4,800,312
---------------------------------------------------------------------------------------------------------------
NiSource Finance Corp., 7.875% Sr. Unsec. Nts., 11/15/10                         7,175,000           7,747,292
---------------------------------------------------------------------------------------------------------------
Panhandle Eastern Pipe Line Co., 2.75% Sr. Unsec. Nts., Series B, 3/15/07        5,140,000           5,109,880
---------------------------------------------------------------------------------------------------------------
PSEG Funding Trust I, 5.381% Nts., 11/16/07                                      3,570,000           3,563,263
---------------------------------------------------------------------------------------------------------------
Public Service Co. of New Mexico, 4.40% Sr. Unsec. Nts., 9/15/08                 1,235,000           1,212,860
---------------------------------------------------------------------------------------------------------------
Sempra Energy, 7.95% Sr. Unsec. Unsub. Nts., 3/1/10                              6,220,000           6,677,786
---------------------------------------------------------------------------------------------------------------
Texas Eastern Transmission Corp., 5.25% Sr. Unsec. Unsub. Nts., 7/15/07          6,723,000           6,705,533
                                                                                               ----------------
                                                                                                    43,018,942
                                                                                               ----------------
Total Corporate Bonds and Notes (Cost $318,624,859)                                                318,982,302

---------------------------------------------------------------------------------------------------------------
HYBRID INSTRUMENTS--17.9%
---------------------------------------------------------------------------------------------------------------
AIG International, Inc., Goldman Sachs Commodity Index Excess Return
Linked Securities:
5.20%, 12/6/07 11                                                               26,000,000          22,829,370
5.25%, 11/6/07 11                                                               40,000,000          29,046,260
---------------------------------------------------------------------------------------------------------------
Cargill, Inc., Goldman Sachs Commodity Index Total Return
Linked Securities:
4.90%, 2/27/07 11                                                               60,000,000          34,187,316
4.944%, 3/27/07 11                                                              34,000,000          21,250,221
4.95%, 3/19/07 11                                                               40,000,000          24,948,356
4.98%, 4/3/07 11                                                                38,000,000          19,749,090
---------------------------------------------------------------------------------------------------------------
Core Investment Grade Bond Trust I, Pass-Through Certificates,
Series 2002-1, 4.642%, 11/30/07 4                                                5,434,321           5,388,483
---------------------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The), AB Svensk Exportkredit
Linked Nts., 5.114%, 1/29/08 4                                                  15,000,000          14,619,000



              24 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND




                                                                                 PRINCIPAL               VALUE
                                                                                    AMOUNT          SEE NOTE 1
---------------------------------------------------------------------------------------------------------------

HYBRID INSTRUMENTS Continued
---------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital Services, Inc., Goldman Sachs Commodity
Index Total Return Linked Securities, 5.25%, 3/5/07 4,11                      $ 90,000,000     $    54,797,000
                                                                                               ----------------
Total Hybrid Instruments (Cost $348,460,958)                                                       226,815,096

---------------------------------------------------------------------------------------------------------------
INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--0.1% 12
---------------------------------------------------------------------------------------------------------------
Undivided interest of 0.0004% in joint repurchase agreement (Principal
Amount/Value $4,100,000,000, with a maturity value of $4,102,437,222)
with Nomura Securities, 5.35%, dated 12/29/06, to be repurchased at
$14,723 on 1/2/07, collateralized by U.S. Agency Mortgages,
0.00%-22.12%, 3/15/14-5/1/46, with a value of $4,182,000,000                        14,714              14,714
---------------------------------------------------------------------------------------------------------------
Undivided interest of 0.008% in joint repurchase agreement (Principal
Amount/Value $3,000,000,000, with a maturity value of $3,001,776,667)
with Morgan Stanley, 5.33%, dated 12/29/06, to be repurchased at
$250,148 on 1/2/07, collateralized by U.S. Agency Mortgages,
4%-6.50%, 1/1/18-11/1/46, with a value of $3,060,000,000                           250,000             250,000
---------------------------------------------------------------------------------------------------------------
Undivided interest of 0.02% in joint repurchase agreement (Principal
Amount/Value $1,500,000,000, with a maturity value of 1,500,887,083)
with Banc of America Securities LLC, 5.3225%, dated 12/29/06,
to be repurchased at $250,148 on 1/2/07, collateralized by
U.S. Agency Mortgages, 0.00%-6%, 8/1/34-11/15/36, with
a value of $1,530,000,000                                                          250,000             250,000
---------------------------------------------------------------------------------------------------------------
Undivided interest of 0.05% in joint repurchase agreement (Principal
Amount/Value $500,000,000 with a maturity value of $500,294,444)
with ING Financial Markets LLC, 5.30%, dated 12/29/06,
to be repurchased at $250,147 on 1/2/07, collateralized by
U.S. Agency Mortgages, 0.00%-6%, 3/15/20-10/25/36, with
a value of $510,000,022                                                            250,000             250,000
---------------------------------------------------------------------------------------------------------------
Undivided interest of 0.08% in joint repurchase agreement (Principal
Amount/Value $300,000,000, with a maturity value of $300,178,333)
with GX Clarke, 5.35%, dated 12/29/06, to be repurchased at $250,149
on 1/2/07, collateralized by U.S. Agency Mortgages, 0.00%-8.20%,
1/5/07-7/15/36, with a value of $306,001,910                                       250,000             250,000
                                                                                               ----------------
Total Investments Purchased with Cash Collateral
from Securities Loaned (Cost $1,014,714)                                                             1,014,714

---------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $1,577,667,990)                                    108.6%      1,377,931,963
---------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS                                                 (8.6)       (108,647,919)
                                                                              ---------------------------------
NET ASSETS                                                                           100.0%    $ 1,269,284,044
                                                                              =================================



              25 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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

FOOTNOTES TO STATEMENT OF INVESTMENTS

1. Non-income producing security.

2. Investment in a wholly-owned subsidiary. See Note 1 of accompanying Notes and
individual financial statements of the entity included herein beginning on page
63.

3. Illiquid security. The aggregate value of illiquid securities as of December
31, 2006 was $11,790,564, which represents 0.93% of the Fund's net assets. See
Note 6 of accompanying Notes.

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

5. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows. These securities amount to $2,807,720 or 0.22% of the Fund's net assets
as of December 31, 2006.

6. When-issued security or forward commitment to be delivered and settled after
December 31, 2006. See Note 1 of accompanying Notes.

7. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
These securities amount to $2,506,495 or 0.20% of the Fund's net assets as of
December 31, 2006.

8. Partial or fully-loaned security. See Note 7 of accompanying Notes.

9. 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 $24,871,457 or 1.96% of the Fund's net
assets as of December 31, 2006.

10. All or a portion of the security is held in collateralized accounts to cover
initial margin requirements on open futures contracts. The aggregate market
value of such securities is $6,888,889. See Note 5 of accompanying Notes.

11. Security is linked to the Goldman Sachs Commodity Index, the Goldman Sachs
Commodity Excess Return Index or the Goldman Sachs Commodity Index Total Return
Index. The indexes currently contain twenty-four commodities from the sectors of
energy, metals, livestock and agricultural products. Individual components in
the index are weighted by their respective world production values.

12. The security/securities have been segregated to satisfy the forward
commitment to return the cash collateral received in securities lending
transactions upon the borrower's return of the securities loaned. See Note 7 of
accompanying Notes.

Represents ownership of at least 5% of the voting securities of the issuer, and
was an affiliate, as defined in the Investment Company Act of 1940, during the
period ended December 31, 2006. There were no affiliate securities held by the
Fund as of December 31, 2006. Transactions during the period in which the issuer
was an affiliate are as follows:



                                                 SHARES             GROSS                 GROSS           SHARES
                                        AUGUST 31, 2006         ADDITIONS            REDUCTIONS    DEC. 31, 2006
----------------------------------------------------------------------------------------------------------------

Oppenheimer Institutional Money
Market Fund, Cl. E, 5.25%*                           --       319,317,516           319,317,516               --




                                                                                                        DIVIDEND
                                                                                                          INCOME
----------------------------------------------------------------------------------------------------------------

Oppenheimer Institutional Money
Market Fund, Cl. E, 5.25%*                                                                             $ 396,181


* The money market fund and the Fund are affiliated by having the same
investment advisor.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


              26 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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



---------------------------------------------------------------------------------------------------------------
ASSETS
---------------------------------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $1,222,837,451)                                                   $ 1,098,643,720
Investment in wholly-owned subsidiary (cost $354,830,539)                                          279,288,243
                                                                                               ----------------
                                                                                                 1,377,931,963
---------------------------------------------------------------------------------------------------------------
Cash                                                                                                10,935,894
---------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest and principal paydowns                                                                     16,147,459
Shares of beneficial interest sold                                                                   6,579,292
Investments sold                                                                                       784,258
Futures margins                                                                                        294,446
Other                                                                                                    9,197
                                                                                               ----------------
Total assets                                                                                     1,412,682,509

---------------------------------------------------------------------------------------------------------------
LIABILITIES
---------------------------------------------------------------------------------------------------------------
Return of collateral for securities loaned                                                           1,014,714
---------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $125,156,139 purchased on a when-issued basis
or forward commitment)                                                                             125,920,257
Shares of beneficial interest redeemed                                                              15,033,825
Distribution and service plan fees                                                                     693,820
Shareholder communications                                                                             321,533
Transfer and shareholder servicing agent fees                                                          318,433
Dividends                                                                                                   27
Trustees' compensation                                                                                       5
Other                                                                                                   95,851
                                                                                               ----------------
Total liabilities                                                                                  143,398,465

---------------------------------------------------------------------------------------------------------------
NET ASSETS                                                                                     $ 1,269,284,044
                                                                                               ================

---------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
---------------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest                                                     $       195,160
---------------------------------------------------------------------------------------------------------------
Additional paid-in capital                                                                       1,607,075,729
---------------------------------------------------------------------------------------------------------------
Accumulated net investment income                                                                   14,708,308
---------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments                                                      (157,298,254)
---------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments                                                        (195,396,899)
                                                                                               ----------------
NET ASSETS                                                                                     $ 1,269,284,044
                                                                                               ================



              27 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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



---------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
---------------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $729,958,993 and 111,910,537 shares of beneficial interest outstanding)                               $6.52
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price)                                                                              $6.92
---------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets
of $85,124,103 and 13,234,016 shares of beneficial interest outstanding)                                 $6.43
---------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent
deferred sales charge) and offering price per share (based on net assets
of $170,179,718 and 26,605,805 shares of beneficial interest outstanding)                                $6.40
---------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred
sales charge) and offering price per share (based on net assets
of $19,428,458 and 3,006,953 shares of beneficial interest outstanding)                                  $6.46
---------------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net
assets of $264,592,772 and 40,403,060 shares of beneficial interest outstanding)                         $6.55


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


              28 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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



                                                                         FOUR MONTHS ENDED          YEAR ENDED
                                                                           DEC. 31, 2006 1       AUG. 31, 2006
---------------------------------------------------------------------------------------------------------------

INVESTMENT INCOME
---------------------------------------------------------------------------------------------------------------
Interest (net of foreign withholding taxes of $3,334
for the year ended August 31, 2006)                                           $ 20,126,215     $    77,233,596
---------------------------------------------------------------------------------------------------------------
Dividends--affiliated companies                                                    396,181                  --
---------------------------------------------------------------------------------------------------------------
Portfolio lending fees                                                               5,203               4,920
---------------------------------------------------------------------------------------------------------------
Other income                                                                        15,758               7,145
                                                                              ---------------------------------
Total investment income                                                         20,543,357          77,245,661

---------------------------------------------------------------------------------------------------------------
EXPENSES
---------------------------------------------------------------------------------------------------------------
Management fees                                                                  3,940,973          14,699,964
---------------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A                                                                            688,193           2,810,643
Class B                                                                            315,908           1,305,314
Class C                                                                            661,375           2,603,073
Class N                                                                             34,437             122,830
---------------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A                                                                            855,228           2,446,914
Class B                                                                            140,921             441,690
Class C                                                                            230,197             641,489
Class N                                                                             30,842              94,274
Class Y                                                                             25,216              57,579
---------------------------------------------------------------------------------------------------------------
Shareholder communications:
Class A                                                                            163,817             249,695
Class B                                                                             35,432              52,705
Class C                                                                             45,825              68,806
Class N                                                                              3,164               5,274
Class Y                                                                              4,554               6,128
---------------------------------------------------------------------------------------------------------------
Custodian fees and expenses                                                         53,007              28,435
---------------------------------------------------------------------------------------------------------------
Trustees' compensation                                                              12,672              28,013
---------------------------------------------------------------------------------------------------------------
Administration service fees                                                            500               1,500
---------------------------------------------------------------------------------------------------------------
Other                                                                               78,263              89,452
                                                                              ---------------------------------
Total expenses                                                                   7,320,524          25,753,778
Less reduction to custodian expenses                                                (1,556)            (28,435)
Less waivers and reimbursements of expenses                                     (1,214,715)           (105,484)
                                                                              ---------------------------------
Net expenses                                                                     6,104,253          25,619,859

---------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME                                                           14,439,104          51,625,802


1. The Fund changed its fiscal year end from August 31 to December 31.


              29 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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



                                                                         FOUR MONTHS ENDED          YEAR ENDED
                                                                           DEC. 31, 2006 1       AUG. 31, 2006
---------------------------------------------------------------------------------------------------------------

REALIZED AND UNREALIZED GAIN (LOSS)
---------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments (including premiums on options exercised
for the year ended August 31, 2006)                                          $ (36,720,995)    $    23,846,676
Closing and expiration of option contracts written                                      --           2,034,344
Closing and expiration of futures contracts                                    (15,444,574)        (31,001,161)
Swap contracts                                                                     (17,208)            452,635
                                                                             ----------------------------------
Net realized loss                                                              (52,182,777)         (4,667,506)
---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments                                                                   (199,110,996)       (115,596,706)
Futures contracts                                                                6,700,256        (112,888,517)
Option contracts written                                                                --              (6,451)
Swap contracts                                                                      39,345             (39,345)
                                                                             ----------------------------------
Net change in unrealized depreciation                                         (192,371,395)       (228,531,019)

---------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS                         $(230,115,068)    $  (181,572,723)
                                                                             ==================================


1. The Fund changed its fiscal year end from August 31 to December 31.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


              30 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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



                                                        FOUR MONTHS ENDED                  YEAR ENDED AUG. 31,
                                                          DEC. 31, 2006 1             2006                2005
---------------------------------------------------------------------------------------------------------------

OPERATIONS
---------------------------------------------------------------------------------------------------------------
Net investment income                                     $    14,439,104   $   51,625,802     $    14,420,818
---------------------------------------------------------------------------------------------------------------
Net realized gain (loss)                                      (52,182,777)      (4,667,506)        249,900,489
---------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)         (192,371,395)    (228,531,019)        225,089,316
                                                          -----------------------------------------------------
Net increase (decrease) in net assets resulting
from operations                                              (230,115,068)    (181,572,723)        489,410,623

---------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
---------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A                                                       (26,007,032)     (11,433,271)         (7,247,857)
Class B                                                        (2,239,937)        (821,899)           (190,261)
Class C                                                        (4,746,117)      (1,750,765)           (467,943)
Class N                                                          (627,304)        (208,442)            (86,194)
Class Y                                                        (9,688,707)      (2,600,912)           (970,044)
                                                          -----------------------------------------------------
                                                              (43,309,097)     (16,815,289)         (8,962,299)
---------------------------------------------------------------------------------------------------------------

Distributions from net realized gain:
Class A                                                                --      (98,053,603)       (176,519,945)
Class B                                                                --      (11,828,387)        (21,692,760)
Class C                                                                --      (22,813,258)        (33,838,230)
Class N                                                                --       (2,151,295)         (2,633,667)
Class Y                                                                --      (14,899,429)        (14,050,224)
                                                          -----------------------------------------------------
                                                                       --     (149,745,972)       (248,734,826)

---------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
---------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from beneficial interest transactions:
Class A                                                      (127,188,990)       1,916,130         452,635,213
Class B                                                       (12,307,113)      (4,458,453)         51,758,221
Class C                                                       (38,105,624)      35,205,734         120,499,718
Class N                                                          (754,032)       3,626,279          13,842,607
Class Y                                                        (9,903,830)     208,030,457          81,631,447
                                                          -----------------------------------------------------
                                                             (188,259,589)     244,320,147         720,367,206

---------------------------------------------------------------------------------------------------------------
NET ASSETS
---------------------------------------------------------------------------------------------------------------
Total increase (decrease)                                    (461,683,754)    (103,813,837)        952,080,704
---------------------------------------------------------------------------------------------------------------
Beginning of period                                         1,730,967,798    1,834,781,635         882,700,931
                                                          -----------------------------------------------------
End of period (including accumulated net
investment income of $14,708,308, $43,447,519
and $6,684,985, respectively)                             $ 1,269,284,044   $1,730,967,798     $ 1,834,781,635
                                                          =====================================================


1. The Fund changed its fiscal year end from August 31 to December 31.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


              31 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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



                                               FOUR MONTHS                                                                   YEAR
                                                     ENDED                                                                  ENDED
                                                  DEC. 31,                                                               AUG. 31,
CLASS A                                             2006 1             2006            2005          2004         2003       2002
-----------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period             $    7.82      $      9.59      $     9.13     $    7.51     $   6.15   $   6.93
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                  .07 2            .24 2           .11 2         .01          .03        .29
Net realized and unrealized gain (loss)              (1.14)           (1.17)           2.84          1.85         1.38       (.71)
                                                 ----------------------------------------------------------------------------------
Total from investment operations                     (1.07)            (.93)           2.95          1.86         1.41       (.42)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income                  (.23)            (.08)           (.07)           -- 3       (.05)      (.36)
Distributions from net realized gain                    --             (.76)          (2.42)         (.24)          --         --
                                                 ----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                       (.23)            (.84)          (2.49)         (.24)        (.05)      (.36)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                   $    6.52      $      7.82      $     9.59     $    9.13     $   7.51   $   6.15
                                                 ==================================================================================

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4                  (13.79)%          (9.98)%         44.66%        25.44%       23.08%     (5.54)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)         $ 729,959      $ 1,017,895      $1,246,436     $ 638,254     $238,828   $148,319
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                $ 835,927      $ 1,140,904      $  844,342     $ 413,618     $193,837   $115,458
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income                                 3.10%            2.95%           1.34%         0.22%        0.46%      4.73%
Total expenses                                        1.47% 6,7        1.30% 6         1.32%         1.40%        1.49%      1.68%
Expenses after payments and waivers
and reduction to custodian expenses                   1.23%            1.29%           1.32%         1.40%        1.49%      1.68%
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                 32% 8            89% 8,9         94% 8         87%          61%        49%


1. The Fund changed its fiscal year end from August 31 to December 31.

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

3. Less than $0.005 per share.

4. 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.

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

6. Expenses paid including all expenses of the wholly-owned subsidiary were as
follows:

     Four Months Ended December 31, 2006   1.71%
     Year Ended August 31, 2006            1.31%

7. Expenses including indirect expenses from affiliated fund were as follows:

     Four Months Ended December 31, 2006   1.47%

8. The portfolio turnover rate excludes purchase and sales of To Be Announced
(TBA) mortgage-related securities as follows:



                                      PURCHASE TRANSACTIONS     SALE TRANSACTIONS
---------------------------------------------------------------------------------

Four Months Ended December 31, 2006          $  642,777,532        $  686,348,366
Year Ended August 31, 2006                    4,236,251,723         4,418,930,664
Year Ended August 31, 2005                    4,827,248,691         4,809,916,669


9. The portfolio turnover rate including the transfer of securities to RAF Fund
Ltd. would have been 119%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


              32 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND




                                               FOUR MONTHS                                                                   YEAR
                                                     ENDED                                                                  ENDED
                                                  DEC. 31,                                                               AUG. 31,
CLASS B                                             2006 1             2006            2005          2004         2003       2002
-----------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period             $    7.67      $      9.46      $     9.05     $    7.51     $   6.16   $   6.95
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss)                           .05 2            .17 2           .04 2        (.05)        (.04)       .23
Net realized and unrealized gain (loss)              (1.12)           (1.15)           2.80          1.83         1.40       (.70)
                                                 ----------------------------------------------------------------------------------
Total from investment operations                     (1.07)            (.98)           2.84          1.78         1.36       (.47)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income                  (.17)            (.05)           (.01)           --         (.01)      (.32)
Distributions from net realized gain                    --             (.76)          (2.42)         (.24)          --         --
                                                 ----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                       (.17)            (.81)          (2.43)         (.24)        (.01)      (.32)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                   $    6.43      $      7.67      $     9.46     $    9.05     $   7.51   $   6.16
                                                 ==================================================================================

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3                  (14.03)%         (10.72)%         43.33%        24.32%       22.12%     (6.38)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)         $  85,124      $   115,174      $  147,663     $  78,125     $ 37,589   $ 24,738
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                $  94,533      $   130,837      $  102,816     $  52,436     $ 32,101   $ 20,032
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss)                          2.28%            2.05%           0.46%        (0.69)%      (0.41)%     4.10%
Total expenses                                        2.42% 5,6        2.19% 5         2.19%         2.32%        2.44%      2.45%
Expenses after payments and waivers
and reduction to custodian expenses                   2.05%            2.18%           2.19%         2.31%        2.36%      2.45%
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                 32% 7            89% 7,8         94% 7         87%          61%        49%


1. The Fund changed its fiscal year end from August 31 to December 31.

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.

5. Expenses paid including all expenses of the wholly-owned subsidiary were as
follows:

     Four Months Ended December 31, 2006       2.66%
     Year Ended August 31, 2006                2.20%

6. Expenses including indirect expenses from affiliated fund were as follows:

     Four Months Ended December 31, 2006       2.42%

7. The portfolio turnover rate excludes purchase and sales of To Be Announced
(TBA) mortgage-related securities as follows:



                                           PURCHASE TRANSACTIONS     SALE TRANSACTIONS
     ---------------------------------------------------------------------------------

     Four Months Ended December 31, 2006          $  642,777,532        $  686,348,366
     Year Ended August 31, 2006                    4,236,251,723         4,418,930,664
     Year Ended August 31, 2005                    4,827,248,691         4,809,916,669


8. The portfolio turnover rate including the transfer of securities to RAF Fund
Ltd. would have been 119%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


              33 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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



                                               FOUR MONTHS                                                                   YEAR
                                                     ENDED                                                                  ENDED
                                                  DEC. 31,                                                               AUG. 31,
CLASS C                                             2006 1             2006            2005          2004         2003       2002
-----------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period             $    7.64      $      9.42      $     9.02     $    7.48     $   6.14   $   6.93
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss)                           .05 2            .17 2           .05 2        (.03)        (.03)       .23
Net realized and unrealized gain (loss)              (1.12)           (1.13)           2.79          1.81         1.38       (.70)
                                                 ----------------------------------------------------------------------------------
Total from investment operations                     (1.07)            (.96)           2.84          1.78         1.35       (.47)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income                  (.17)            (.06)           (.02)           --         (.01)      (.32)
Distributions from net realized gain                    --             (.76)          (2.42)         (.24)          --         --
                                                 ----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                       (.17)            (.82)          (2.44)         (.24)        (.01)      (.32)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                   $    6.40      $      7.64      $     9.42     $    9.02     $   7.48   $   6.14
                                                 ==================================================================================

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3                  (14.03)%         (10.59)%         43.50%        24.42%       22.04%     (6.39)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)         $ 170,180      $   245,844      $  264,019     $ 110,728     $ 36,531   $ 18,115
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                $ 197,628      $   261,017      $  170,306     $  68,392     $ 25,746   $ 11,771
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss)                          2.30%            2.17%           0.57%        (0.62)%      (0.43)%     3.99%
Total expenses                                        2.28% 5,6        2.09% 5         2.11%         2.24%        2.40%      2.45%
Expenses after payments and waivers
and reduction to custodian expenses                   2.03%            2.08%           2.11%         2.24%        2.36%      2.45%
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                 32% 7            89% 7,8         94% 7         87%          61%        49%


1. The Fund changed its fiscal year end from August 31 to December 31.

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.

5. Expenses paid including all expenses of the wholly-owned subsidiary were as
follows:

     Four Months Ended December 31, 2006     2.52%
     Year Ended August 31, 2006              2.10%

6. Expenses including indirect expenses from affiliated fund were as follows:

     Four Months Ended December 31, 2006     2.28%

7. The portfolio turnover rate excludes purchase and sales of To Be Announced
(TBA) mortgage-related securities as follows:



                                           PURCHASE TRANSACTIONS      SALE TRANSACTIONS
     ----------------------------------------------------------------------------------

     Four Months Ended December 31, 2006         $   642,777,532        $   686,348,366
     Year Ended August 31, 2006                    4,236,251,723          4,418,930,664
     Year Ended August 31, 2005                    4,827,248,691          4,809,916,669


8. The portfolio turnover rate including the transfer of securities to RAF Fund
Ltd. would have been 119%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


              34 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND




                                               FOUR MONTHS                                                                   YEAR
                                                     ENDED                                                                  ENDED
                                                  DEC. 31,                                                               AUG. 31,
CLASS N                                             2006 1             2006            2005          2004         2003       2002
-----------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period             $    7.74      $      9.51      $     9.08     $    7.50     $   6.15   $   6.99
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                  .07 2            .21 2           .08 2          --          .07        .30
Net realized and unrealized gain (loss)              (1.14)           (1.15)           2.82          1.82         1.36       (.78)
                                                 ----------------------------------------------------------------------------------
Total from investment operations                     (1.07)            (.94)           2.90          1.82         1.43       (.48)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income                  (.21)            (.07)           (.05)           --         (.08)      (.36)
Distributions from net realized gain                    --             (.76)          (2.42)         (.24)          --         --
                                                 ----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                       (.21)            (.83)          (2.47)         (.24)        (.08)      (.36)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                   $    6.46      $      7.74      $     9.51     $    9.08     $   7.50   $   6.15
                                                 ==================================================================================

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3                  (13.89)%         (10.22)%         44.03%        24.90%       23.63%     (6.47)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)         $  19,428      $    24,106      $   25,586     $   8,206     $  1,578   $    314
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                $  20,724      $    24,867      $   14,654     $   4,516     $  1,001   $    146
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income (loss)                          2.83%            2.59%           1.03%        (0.17)%       0.27%      3.57%
Total expenses                                        1.85% 5,6        1.71% 5         1.68%         1.84%        1.83%      1.94%
Expenses after payments and waivers
and reduction to custodian expenses                   1.49%            1.66%           1.68%         1.80%        1.63%      1.94%
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                 32% 7            89% 7,8         94% 7         87%          61%        49%


1. The Fund changed its fiscal year end from August 31 to December 31.

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.

5. Expenses paid including all expenses of the wholly-owned subsidiary were as
follows:

     Four Months Ended December 31, 2006     2.09%
     Year Ended August 31, 2006              1.72%

6. Expenses including indirect expenses from affiliated fund were as follows:

     Four Months Ended December 31, 2006     1.85%

7. The portfolio turnover rate excludes purchase and sales of To Be Announced
(TBA) mortgage-related securities as follows:



                                           PURCHASE TRANSACTIONS      SALE TRANSACTIONS
     ----------------------------------------------------------------------------------

     Four Months Ended December 31, 2006         $   642,777,532        $   686,348,366
     Year Ended August 31, 2006                    4,236,251,723          4,418,930,664
     Year Ended August 31, 2005                    4,827,248,691          4,809,916,669


8. The portfolio turnover rate including the transfer of securities to RAF Fund
Ltd. would have been 119%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


              35 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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



                                               FOUR MONTHS                                                                   YEAR
                                                     ENDED                                                                  ENDED
                                                  DEC. 31,                                                               AUG. 31,
CLASS Y                                             2006 1             2006            2005          2004         2003       2002
-----------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period             $    7.88      $      9.63     $      9.15     $    7.52     $   6.15   $   6.94
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income                                  .09 2            .29 2           .15 2         .05          .06        .32
Net realized and unrealized gain (loss)              (1.15)           (1.18)           2.86          1.84         1.39       (.73)
                                                 ----------------------------------------------------------------------------------
Total from investment operations                     (1.06)            (.89)           3.01          1.89         1.45       (.41)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income                  (.27)            (.10)           (.11)         (.02)        (.08)      (.38)
Distributions from net realized gain                    --             (.76)          (2.42)         (.24)          --         --
                                                 ----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders                                       (.27)            (.86)          (2.53)         (.26)        (.08)      (.38)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                   $    6.55      $      7.88     $      9.63     $    9.15     $   7.52   $   6.15
                                                 ==================================================================================

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3                  (13.61)%          (9.54)%         45.42%        25.84%       23.69%     (5.36)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)         $ 264,593      $   327,949      $  151,078     $  47,387     $ 25,724   $  6,908
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                $ 272,831      $   255,428      $   83,836     $  31,449     $ 15,755   $  3,420
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income                                 3.67%            3.52%           1.83%         0.65%        0.83%      3.95%
Total expenses                                        0.89% 5,6        0.84% 5         0.88%         0.97%        1.08%      1.27%
Expenses after payments and waivers
and reduction to custodian expenses                   0.65%            0.83%           0.88%         0.97%        1.08%      1.26%
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                 32% 7            89% 7,8         94% 7         87%          61%        49%


1. The Fund changed its fiscal year end from August 31 to December 31.

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.

5. Expenses paid including all expenses of the wholly-owned subsidiary were as
follows:

     Four Months Ended December 31, 2006     1.13%
     Year Ended August 31, 2006              0.85%

6. Expenses including indirect expenses from affiliated fund were as follows:

     Four Months Ended December 31, 2006     0.89%

7. The portfolio turnover rate excludes purchase and sales of To Be Announced
(TBA) mortgage-related securities as follows:



                                           PURCHASE TRANSACTIONS     SALE TRANSACTIONS
     ---------------------------------------------------------------------------------

     Four Months Ended December 31, 2006         $   642,777,532       $   686,348,366
     Year Ended August 31, 2006                    4,236,251,723         4,418,930,664
     Year Ended August 31, 2005                    4,827,248,691         4,809,916,669


8. The portfolio turnover rate including the transfer of securities to RAF Fund
Ltd. would have been 119%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


              36 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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

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

Oppenheimer Commodity Strategy Total Return Fund (the Fund), formerly
Oppenheimer Real Asset Fund, is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company. On December 18,
2006, the Board of Trustees elected to change the fiscal year end of the Fund
from August 31 to December 31. Accordingly, these financial statements include
information for the four month period from September 1, 2006 to December 31,
2006. The Fund's investment objective is to seek total return. Total return
refers to the change in value of an investment in shares of the Fund over time
resulting from changes in value of the Fund's investments and income on those
investments. The Fund's investment advisor is OppenheimerFunds, Inc. (the
Advisor). The Sub-Advisor is Oppenheimer Real Asset Management, Inc. (the
Manager), a wholly-owned subsidiary of the Advisor.

      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.

--------------------------------------------------------------------------------
INVESTMENT IN RAF FUND LTD. The Fund may invest up to 25% of its total assets in
RAF Fund Ltd., a wholly-owned and controlled Cayman Islands subsidiary (the
"Subsidiary"), which is expected to invest primarily in commodity and financial
futures and option contracts, as well as fixed income securities and other
investments intended to serve as margin or collateral for the Subsidiary's
derivatives positions. The Fund wholly owns and controls the Subsidiary, and the
Fund and Subsidiary are both managed by the Advisor and the Manager.

      The Fund does not consolidate the assets, liabilities, capital or
operations of the Subsidiary into its financial statements. Rather, the
Subsidiary is separately presented as


              37 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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

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

an investment in the Fund's Statement of Investments. Gains or losses on
withdrawals of capital from the Subsidiary by the Fund are recognized on a cost
recovery basis. Unrealized appreciation or depreciation on the Fund's investment
in the Subsidiary is recorded in the Fund's Statement of Assets and Liabilities
and the Fund's Statement of Operations. Distributions received from the
Subsidiary are recorded as income on the ex-dividend date.

      For tax purposes, the Subsidiary is an exempted Cayman investment company.
The Subsidiary has received an undertaking from the Government of the Cayman
Islands exempting it from all local income, profits and capital gains taxes
through May of 2036. No such taxes are levied in the Cayman Islands at the
present time. For U.S. income tax purposes, the Subsidiary is a Controlled
Foreign Corporation and as such is not subject to U.S. income tax. However, as a
wholly-owned Controlled Foreign Corporation, the Subsidiary's net income and
capital gain, to the extent of its earnings and profits, will be included each
year in the Fund's investment company taxable income. For the period from August
31, 2006 through December 31, 2006, the Subsidiary has a deficit of $63,295,836
in its taxable earnings and profits. In addition, any in-kind capital
contributions made by the Fund to the Subsidiary will result in the Fund
recognizing taxable gain to the extent of unrealized gain, if any, on securities
transferred to the Subsidiary while any unrealized losses on securities so
transferred will not be recognized at the time of transfer.

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


              38 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


valued. Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded. 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. Investments in open-end registered investment companies (including
affiliated funds) are valued at that fund's net asset value. Short-term "money
market type" debt securities with remaining maturities of sixty days or less are
valued at amortized cost (which approximates market value).

      The net asset value of the Subsidiary is determined as of the close of the
Exchange, on each day the Exchange is open for business. The net asset value per
share is determined by dividing the value of the Subsidiary's net assets by the
number of shares that are outstanding. The Subsidiary values its investments
according to the Fund's methodologies disclosed above.

--------------------------------------------------------------------------------
STRUCTURED SECURITIES. The Fund invests in structured securities whose market
values, interest rates and/or redemption prices are linked to the performance of
underlying foreign currencies, interest rate spreads, stock market indices,
prices of individual securities, commodities or other financial instruments or
the occurrence of other specific events. The structured securities are often
leveraged, increasing the volatility of each note's market value relative to the
change in the underlying linked financial element or event. Fluctuations in
value of these securities are recorded as unrealized gains and losses in the
accompanying Statement of Operations. The Fund records a realized gain or loss
when a structured security is sold or matures.

--------------------------------------------------------------------------------
AFFILIATED FUNDS. The Fund is permitted to invest daily available cash balances
in affiliated money market funds. Each day, the Fund invests the available cash
in Class E shares of Oppenheimer Institutional Money Market Fund ("IMMF") which
seeks current income and stability of principal. IMMF is a registered open-end
management investment company, regulated as a money market fund under the
Investment Company Act of 1940, as amended. The Manager is also the investment
advisor of IMMF. The Fund's investment in IMMF is included in the Statement of
Investments. As a shareholder, the Fund is subject to its proportional share of
IMMF's Class E expenses, including its management fee. The Manager will waive
fees and/or reimburse Fund expenses in an amount equal to the indirect
management fees incurred through the Fund's investment in IMMF.

--------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment take place generally at least ten days or more after the
trade date. Normally the settlement date occurs within six months after the
trade date; however, the Fund may, from time to time, purchase securities whose
settlement date extends six months or more


              39 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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

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

beyond trade date. During this period, such securities do not earn interest, are
subject to market fluctuation and may increase or decrease in value prior to
their delivery. The Fund maintains internally designated assets with a market
value equal to or greater than the amount of its purchase commitments. The
purchase of securities on a when-issued basis or forward commitment may increase
the volatility of the Fund's net asset value to the extent the Fund executes
such transactions while remaining substantially fully invested. The Fund may
also sell securities that it purchased on a when-issued basis or forward
commitment prior to settlement of the original purchase. As of December 31,
2006, the Fund had purchased $125,156,139 of securities issued on a when-issued
basis or forward commitment.

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

--------------------------------------------------------------------------------
INVESTMENTS WITH OFF BALANCE SHEET RISK. The Fund enters into financial
instrument transactions (such as swaps, futures, options and other derivatives)
that may have off-balance sheet market risk. Off-balance sheet market risk
exists when the maximum potential


              40 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


loss on a particular financial instrument is greater than the value of such
financial instrument, as reflected in the Fund's Statement of Assets and
Liabilities.

--------------------------------------------------------------------------------
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
                                                                  DEPRECIATION
                                                              BASED ON COST OF
                                                                SECURITIES AND
  UNDISTRIBUTED    UNDISTRIBUTED              ACCUMULATED    OTHER INVESTMENTS
  NET INVESTMENT       LONG-TERM                     LOSS   FOR FEDERAL INCOME
  INCOME                    GAIN   CARRYFORWARD 1,2,3,4,5         TAX PURPOSES
  ----------------------------------------------------------------------------
  $14,339,890                $--             $152,095,372         $199,353,786

1. As of December 31, 2006, the Fund had $138,147,730 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of December 31, 2006,
details of the capital loss carryforwards were as follows:

                        EXPIRING
                        -------------------------------
                        2013              $ 105,781,986
                        2014                 32,365,744
                                          -------------
                        TOTAL             $ 138,147,730
                                          =============

2. As of December 31, 2006, the Fund had $13,947,642 of post-October losses
available to offset future realized capital gains, if any. Such losses, if
unutilized, will expire in 2015.

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

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

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


              41 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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

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

Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for December 31, 2006. Net assets of
the Fund were unaffected by the reclassifications.

                                                INCREASE TO
                INCREASE TO                 ACCUMULATED NET
                ACCUMULATED NET               REALIZED LOSS
                INVESTMENT INCOME            ON INVESTMENTS
                -------------------------------------------
                $130,782                           $130,782

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

                           FOUR MONTHS ENDED        YEAR ENDED        YEAR ENDED
                           DECEMBER 31, 2006   AUGUST 31, 2006   AUGUST 31, 2005
--------------------------------------------------------------------------------
Distributions paid from:
Ordinary income                 $ 43,309,097      $ 76,933,870     $ 128,279,617
Long-term capital gain                    --        89,627,391       129,417,508
                                ------------------------------------------------
Total                           $ 43,309,097      $166,561,261     $ 257,697,125
                                ================================================

The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of December 31, 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           $ 1,577,285,750
           Federal tax cost of other investments       (709,634,308)
                                                    ---------------
           Total federal tax cost                   $   867,651,442
                                                    ===============

           Gross unrealized appreciation            $     2,568,409
           Gross unrealized depreciation               (201,922,195)
                                                    ---------------
           Net unrealized depreciation              $  (199,353,786)
                                                    ===============

--------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Board of Trustees has adopted a compensation
deferral plan for independent trustees that enables trustees to elect to defer
receipt of all or a portion of the annual compensation they are entitled to
receive from the 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


              42 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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.


              43 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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

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

The Fund has authorized an unlimited number of $0.001 par value shares of
beneficial interest of each class. Transactions in shares of beneficial interest
were as follows:



                                    FOUR MONTHS ENDED                         YEAR ENDED                         YEAR ENDED
                                  DECEMBER 31, 2006 1                    AUGUST 31, 2006                    AUGUST 31, 2005
                            SHARES             AMOUNT           SHARES            AMOUNT           SHARES            AMOUNT
------------------------------------------------------------------------------------------------------------------------------

CLASS A
Sold                    10,502,774     $   72,510,410       63,685,467    $  521,423,410       94,212,026    $  777,455,272
Dividends and/or
distributions
reinvested               3,335,334         22,546,857       11,365,248        92,403,268       24,089,571       160,454,202
Redeemed               (32,038,149)      (222,246,257) 2   (74,934,452)     (611,910,548) 3   (58,238,089)     (485,274,261) 4
                       -------------------------------------------------------------------------------------------------------
Net increase
(decrease)             (18,200,041)    $ (127,188,990)         116,263    $    1,916,130       60,063,508    $  452,635,213
                       =======================================================================================================

------------------------------------------------------------------------------------------------------------------------------
CLASS B
Sold                       471,212     $    3,196,501        4,763,761    $   38,833,006        9,282,558    $   76,207,355
Dividends and/or
distributions
reinvested                 284,347          1,896,594        1,323,447        10,603,972        2,820,081        18,521,469
Redeemed                (2,532,948)       (17,400,208) 2    (6,678,110)      (53,895,431) 3    (5,135,305)      (42,970,603) 4
                       -------------------------------------------------------------------------------------------------------
Net increase
(decrease)              (1,777,389)    $  (12,307,113)        (590,902)   $   (4,458,453)       6,967,334    $   51,758,221
                       =======================================================================================================

------------------------------------------------------------------------------------------------------------------------------
CLASS C
Sold                     1,294,478     $    8,723,511       13,237,294    $  106,741,087       18,790,237    $  152,585,965
Dividends and/or
distributions
reinvested                 540,826          3,585,681        2,353,406        18,757,878        4,162,996        27,230,330
Redeemed                (7,429,153)       (50,414,816) 2   (11,423,674)      (90,293,231) 3    (7,202,060)      (59,316,577) 4
                       -------------------------------------------------------------------------------------------------------
Net increase
(decrease)              (5,593,849)    $  (38,105,624)       4,167,026    $   35,205,734       15,751,173    $  120,499,718
                       =======================================================================================================

------------------------------------------------------------------------------------------------------------------------------
CLASS N
Sold                       426,319     $    2,937,548        2,062,983    $   16,822,497        2,265,268    $   18,313,212
Dividends and/or
distributions
reinvested                  83,058            555,660          269,724         2,173,165          403,003         2,665,360
Redeemed                  (617,242)        (4,247,240) 2    (1,907,535)      (15,369,383) 3      (882,773)       (7,135,965) 4
                       -------------------------------------------------------------------------------------------------------
Net increase
(decrease)                (107,865)    $     (754,032)         425,172    $    3,626,279        1,785,498    $   13,842,607
                       =======================================================================================================

------------------------------------------------------------------------------------------------------------------------------
CLASS Y
Sold                    10,512,819     $   72,211,466       36,833,033    $  295,975,516       16,487,939    $  131,638,201
Dividends and/or
distributions
reinvested               1,227,816          8,324,595        1,579,904        12,809,636        1,252,352         8,401,675
Redeemed               (12,958,379)       (90,439,891) 2   (12,486,664)     (100,754,695) 3    (7,222,356)      (58,408,429) 4
                       -------------------------------------------------------------------------------------------------------
Net increase
(decrease)              (1,217,744)    $   (9,903,830)      25,926,273    $  208,030,457       10,517,935    $   81,631,447
                       =======================================================================================================



              44 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


1. The Fund changed its fiscal year end from August 31 to December 31.

2. Net of redemption fees of $962, $109, $228, $24 and $314 for Class A, Class
B, Class C, Class N and Class Y, respectively.

3. Net of redemption fees of $62,156, $7,128, $14,220, $1,355 and $13,916 for
Class A, Class B, Class C, Class N and Class Y, respectively.

4. Net of redemption fees of $92,832, $11,304, $18,724, $1,611 and $9,217 for
Class A, Class B, Class C, Class N and Class Y, respectively.

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

The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations and money market funds, for the period ended
December 31, 2006, were as follows:

                                               PURCHASES           SALES
          --------------------------------------------------------------
          Investment securities            $ 448,352,508   $ 331,353,630
          U.S. government and
          government agency obligations        5,338,476       8,133,157
          To Be Announced (TBA)
          mortgage-related securities        642,777,532     686,348,366

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

MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of average net assets as shown in the following table:

          FEE SCHEDULE
          -----------------------------------------------
          Up to $200 million                        1.00%
          Next $200 million                         0.90
          Next $200 million                         0.85
          Next $200 million                         0.80
          Over $800 million                         0.75

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

--------------------------------------------------------------------------------
SUB-ADVISOR FEES. The Advisor retains the Manager to provide the day-to-day
portfolio management of the Fund. Under the Sub-Advisory Agreement, the Advisor
pays the Manager an annual fee in monthly installments, based on the average
daily net assets of the Fund at an average annual rate as shown in the following
table:

          FEE SCHEDULE FOR SUB-ADVISOR
          -----------------------------------------------
          Up to $200 million                       0.500%
          Next $200 million                        0.450
          Next $200 million                        0.425
          Next $200 million                        0.400
          Over $800 million                        0.375

--------------------------------------------------------------------------------
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 period ended December 31, 2006, the Fund paid
$1,257,323 to OFS for services to the Fund.


              45 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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

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

      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 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 up to 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 determines its
uncompensated expenses under the plan at calendar quarter ends. The
Distributor's aggregate uncompensated expenses under the plan at December 31,
2006 for Class B, Class C and Class N shares were $3,612,714, $3,355,819 and
$309,878, 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.


              46 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND




                                          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
FOUR MONTHS ENDED     DISTRIBUTOR     DISTRIBUTOR     DISTRIBUTOR     DISTRIBUTOR    DISTRIBUTOR
------------------------------------------------------------------------------------------------

December 31, 2006         $61,247         $19,422        $100,496         $34,873         $1,275


--------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. The Subsidiary has entered into a
separate contract with the Advisor for the management of the Subsidiary's
portfolio. The Advisor has contractually agreed to waive the management fee it
receives from the Fund in an amount equal to the management fee paid to the
Advisor by the Subsidiary. This undertaking will continue in effect for so long
as the Fund invests in the Subsidiary, and may not be terminated by the Advisor
unless the Advisor first obtains the prior approval of the Fund's Board of
Trustees for such termination. During the period ended December 31, 2006, the
Advisor waived $1,157,822.

      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 period ended December 31, 2006, OFS waived $37,091, $4,735 and $7,622
for Class B, Class C and Class N shares, respectively. This undertaking may be
amended or withdrawn at any time.

      The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's investment in
IMMF. During the period ended December 31, 2006, the Manager waived $7,445 for
IMMF management fees.

--------------------------------------------------------------------------------
5. FUTURES CONTRACTS

A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a negotiated price on a stipulated future
date. Futures contracts are traded on a commodity exchange. The Fund may buy and
sell futures contracts that relate to broadly based securities indices
(financial futures), debt securities (interest rate futures) and various
commodities (commodity futures). The Fund may also buy or write put or call
options on these futures contracts.

      The Fund generally sells futures contracts to hedge against increases in
interest rates and the resulting negative effect on the value of fixed rate
portfolio securities, decreases in market value of portfolio securities, or
decreases in commodity prices. The Fund may also purchase futures contracts
without owning the underlying fixed-income security as an efficient or cost
effective means to gain exposure to changes in interest rates, commodity prices
or market indices.

      Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or expires.


              47 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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

--------------------------------------------------------------------------------
5. FUTURES CONTRACTS Continued

      Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflects a receivable or
payable for the daily mark to market for variation margin. Realized gains and
losses are reported in the Statement of Operations as the closing and expiration
of futures contracts.

      Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.

As of December 31, 2006, the Fund had outstanding futures contracts as follows:



                                                                             UNREALIZED
                              EXPIRATION   NUMBER OF   VALUATION AS OF     APPRECIATION
CONTRACT DESCRIPTION               DATES   CONTRACTS     DEC. 31, 2006   (DEPRECIATION)
----------------------------------------------------------------------------------------

CONTRACTS TO PURCHASE
Heating Oil                      1/31/07         482     $  33,366,161      $  (619,613)
                                                                            ------------

CONTRACTS TO SELL
U.S. Long Bonds                  3/21/07         135        15,044,063          307,453
U.S. Treasury Nts., 2 yr.        3/30/07       2,022       412,551,188        1,461,794
U.S. Treasury Nts., 5 yr.        3/30/07       1,391       146,141,938          871,840
U.S. Treasury Nts., 10 yr.       3/21/07       1,575       169,263,281        2,317,654
                                                                            ------------
                                                                              4,958,741
                                                                            ------------
                                                                            $ 4,339,128
                                                                            ============


--------------------------------------------------------------------------------
6. ILLIQUID SECURITIES

As of December 31, 2006, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily available
market or if its valuation has not changed for a certain period of time. The
Fund will not invest more than 10% of its net assets (determined at the time of
purchase and reviewed periodically) in illiquid securities. Securities that are
illiquid are marked with the applicable footnote on the Statement of
Investments.

--------------------------------------------------------------------------------
7. SECURITIES LENDING

The Fund lends portfolio securities from time to time in order to earn
additional income. In return, the Fund receives collateral in the form of
securities, letters of credit or cash, against the loaned securities and
maintains collateral in an amount not less than 100% of the market value of the
loaned securities during the period of the loan. The market value of the loaned
securities is determined at the close of business each day. If the Fund is
undercollateralized at the close of business due to an increase in market value
of securities on loan, additional collateral is requested from the borrowing
counterparty and is delivered to the Fund on the next business day. Cash
collateral may be invested in approved investments and the Fund bears the risk
of any loss in value of these investments.


              48 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


The Fund retains a portion of the interest earned from the collateral. If the
borrower defaults on its obligation to return the securities loaned because of
insolvency or other reasons, the Fund could experience delays and cost in
recovering the securities loaned or in gaining access to the collateral. The
Fund continues to receive the economic benefit of interest or dividends paid on
the securities loaned in the form of a substitute payment received from the
borrower. As of December 31, 2006, the Fund had on loan securities valued at
$982,564, which are included in the Statement of Assets and Liabilities as
"Investments, at value" and, when applicable, as "Receivable for Investments
sold." Collateral of $1,014,714 was received for the loans, all of which was
received in cash and subsequently invested in approved investments or held as
cash.

--------------------------------------------------------------------------------
8. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the 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
December 31, 2006, the Manager has evaluated the implications of FIN 48 and does
not currently anticipate a material impact to the Fund's financial statements.
The Manager will continue to monitor the Fund's tax positions prospectively for
potential future impacts.

      In September 2006, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS. This standard establishes a
single authoritative definition of fair value, sets out a framework for
measuring fair value and expands disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements already required or permitted by
existing standards. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. As of December 31, 2006, the Manager does not believe the
adoption of SFAS No. 157 will materially impact the financial statement amounts;
however, additional disclosures may be required about the inputs used to develop
the measurements and the effect of certain of the measurements on changes in net
assets for the period.

--------------------------------------------------------------------------------
9. 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


              49 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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

--------------------------------------------------------------------------------
9. LITIGATION Continued

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.


              50 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND



RAF FUND LTD. (THE "SUBSIDIARY")
INDEPENDENT AUDITORS' REPORT
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
TO THE SHAREHOLDER AND BOARD OF DIRECTORS OF
RAF FUND LTD.

We have audited the accompanying statement of assets and liabilities of RAF Fund
Ltd. (the "Fund"), including the statement of investments as of December 31,
2006, and the related statement of operations for the four-month period then
ended, and the statements of changes in net assets and financial highlights for
the period from August 31, 2006 to December 31, 2006 and the period from August
15, 2006 (commencement of operations) to August 31, 2006. 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 auditing standards generally
accepted in the United States of America. 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 consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Fund's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

      In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Fund as of December 31, 2006, the results of its operations for the four-month
period then ended, and the changes in its net assets and financial highlights
for the period from August 31, 2006 to December 31, 2006 and for the period from
August 15, 2006 (commencement of operations) to August 31, 2006, in conformity
with accounting principles generally accepted in the United States of America.


DELOITTE & TOUCHE LLP

Denver, Colorado
February 16, 2007


              85 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND




RAF FUND LTD. (THE "SUBSIDIARY")
STATEMENT OF INVESTMENTS  December 31, 2006
--------------------------------------------------------------------------------



                                                                                   PRINCIPAL           VALUE
                                                                                      AMOUNT      SEE NOTE 1
-------------------------------------------------------------------------------------------------------------

ASSET-BACKED SECURITIES--4.2%
-------------------------------------------------------------------------------------------------------------
Argent Securities Trust 2006-M3, Asset-Backed Pass-Through
Certificates, Series 2006-M3, Cl. A2B, 5.42%, 9/25/36 1,2                      $     630,000   $     630,403
-------------------------------------------------------------------------------------------------------------
Citigroup Mortgage Loan Trust 2006-WFH3, Asset-Backed
Pass-Through Certificates, Series 2006-WFH3, Cl. A2, 5.45%, 10/31/36 2               670,000         670,000
-------------------------------------------------------------------------------------------------------------
First Franklin Mortgage Loan Trust 2006-FF10, Mtg. Pass-Through
Certificates, Series 2006-FF10, Cl. A3, 5.41%, 7/25/36 2                           2,030,000       2,031,297
-------------------------------------------------------------------------------------------------------------
First Franklin Mortgage Loan Trust 2006-FF9, Mtg. Pass-Through
Certificates, Series 2006-FF9, Cl. 2A2, 5.43%, 7/7/36 2                            1,060,000       1,060,678
-------------------------------------------------------------------------------------------------------------
Lehman XS Trust, Mtg. Pass-Through Certificates, Series 2005-2,
Cl. 2A1B, 5.18%, 8/25/35 2                                                         1,258,361       1,255,607
-------------------------------------------------------------------------------------------------------------
Mastr Asset Backed Securities Trust 2006-WMC3, Mtg. Pass-Through
Certificates, Series 2006-WMC3, Cl. A3, 5.42%, 8/25/36 1,2                         1,570,000       1,571,003
-------------------------------------------------------------------------------------------------------------
NC Finance Trust, CMO Pass-Through Certificates, Series 1999-I,
Cl. ECFD, 1.762%, 1/25/29 1                                                          239,840          50,366
-------------------------------------------------------------------------------------------------------------
RAMP Series 2004-RS7 Trust, Mtg. Asset-Backed Pass-Through Certificates,
Series 2004-RS7, Cl. AI32, 4.45%, 7/25/28                                          1,145,311       1,137,325
-------------------------------------------------------------------------------------------------------------
RAMP Series 2006-RS4 Trust, Mtg. Asset-Backed Pass-Through Certificates,
Series 2006-RS4, Cl. A1, 5.43%, 7/25/36 2                                          1,097,750       1,098,526
-------------------------------------------------------------------------------------------------------------
Wells Fargo Home Equity Asset-Backed Securities 2006-2 Trust, Home
Equity Asset-Backed Certificates, Series 2006-2, Cl. A2, 5.59%, 7/25/36 2          2,080,000       2,081,329
                                                                                               --------------
Total Asset-Backed Securities (Cost $11,580,892)                                                  11,586,534

-------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--56.6%
-------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--46.6%
-------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--46.6%
Fannie Mae Whole Loan, CMO Pass-Through Certificates,
Trust 2004-W9, Cl. 2A2, 7%, 2/25/44                                                  127,043         130,994
-------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
4.50%, 9/1/18-10/1/18                                                                841,970         813,791
6%, 7/1/17                                                                           783,726         795,147
6.50%, 4/1/21-8/1/32                                                               3,973,535       4,069,657
7%, 11/1/22-12/1/34                                                                2,975,535       3,060,787
8%, 4/1/16                                                                            52,847          55,913
9%, 8/1/22                                                                             8,823           9,436
-------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., CMO Gtd. Real Estate
Mtg. Investment Conduit Multiclass Pass-Through Certificates:
Series 2080, Cl. C, 6.50%, 8/15/28                                                   686,118         700,857
Series 2080, Cl. Z, 6.50%, 8/15/28                                                   509,581         517,815
Series 2116, Cl. ZA, 6%, 1/15/29                                                   3,974,577       4,027,738
Series 2191, Cl. TZ, 7%, 10/15/29                                                  1,799,455       1,861,990
Series 2341, Cl. FP, 6.25%, 7/15/31 2                                                363,235         372,342
Series 2427, Cl. ZM, 6.50%, 3/15/32                                                1,615,511       1,654,889
Series 2436, Cl. MC, 7%, 4/15/32                                                     969,438       1,003,191
Series 2461, Cl. PZ, 6.50%, 6/15/32                                                1,062,940       1,107,513
Series 3153, Cl. FJ, 5.73%, 5/15/36 2                                              1,273,228       1,278,597



              64 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND




                                                                                   PRINCIPAL           VALUE
                                                                                      AMOUNT      SEE NOTE 1
-------------------------------------------------------------------------------------------------------------

FHLMC/FNMA/SPONSORED Continued
Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security, Series 177, Cl. IO, 5.962%, 7/1/26 3                     $     391,164   $      89,453
-------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
4.50%, 9/1/18-5/1/19                                                               5,927,375       5,732,268
5%, 10/1/17-3/1/34                                                                30,452,315      29,759,518
5%, 1/1/22-1/1/37 4                                                                2,566,000       2,482,274
5.50%, 1/1/22 4                                                                    9,555,000       9,555,000
6%, 6/1/30-11/1/32                                                                 6,183,076       6,252,946
6%, 1/1/22 4                                                                      16,310,000      16,539,351
6.50%, 12/1/28                                                                       495,851         509,105
6.50%, 1/1/37 4                                                                    8,560,000       8,723,171
6.50%, 6/1/17 5                                                                    6,603,765       6,767,151
7%, 11/1/17                                                                        1,647,639       1,696,178
8.50%, 7/1/32                                                                          8,097           8,719
-------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., CMO Gtd. Real Estate Mtg.
Investment Conduit Pass-Through Certificates:
Trust 1993-215, Cl. ZQ, 6.50%, 11/25/23                                            1,382,576       1,414,192
Trust 1999-64, Cl. TH, 7.50%, 12/25/29                                             4,794,955       5,038,850
Trust 2002-9, Cl. PC, 6%, 3/25/17                                                  2,955,181       2,995,380
Trust 2003-84, Cl. PW, 3%, 6/25/22                                                 2,481,024       2,438,682
Trust 2006-44, Cl. OA, 5.50%, 12/25/26                                             5,530,000       5,543,913
-------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security:
Trust 2005-83, Cl. SL, 7.334%, 10/25/35 3                                         16,433,671         877,706
Trust 294, Cl. 2, 7.147%, 2/1/28 3                                                   309,379          69,239
Trust 321, Cl. 2, 6.988%, 4/1/32 3                                                 1,401,480         322,251
Trust 340, Cl. 2, 6.846%, 9/1/33 3                                                 1,978,864         477,245
-------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Principal-Only Stripped
Mtg.-Backed Security, Trust 340, Cl. 1, 5.306%, 9/1/33 6                           1,978,864       1,446,165
                                                                                               --------------
                                                                                                 130,199,414

-------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--0.0%
Government National Mortgage Assn., 8.50%, 12/15/17                                    9,123           9,727
-------------------------------------------------------------------------------------------------------------
NON-AGENCY--10.0%
-------------------------------------------------------------------------------------------------------------
COMMERCIAL--8.3%
Banc of America Commercial Mortgage, Inc., Commercial Mtg.
Pass-Through Certificates, Series 2006-5, Cl. A2, 5.348%, 10/10/11                 1,835,000       1,838,942
-------------------------------------------------------------------------------------------------------------
Banc of America Funding Corp., CMO Pass-Through Certificates,
Series 2004-2, Cl. 2A1, 6.50%, 7/20/32                                               888,452         900,548
-------------------------------------------------------------------------------------------------------------
Bear Stearns Commercial Mortgage Securities, Inc., Commercial
Mtg. Obligations, Series 2003-T10, Cl. A1, 4%, 3/13/40                               388,805         376,659



              65 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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



                                                                                   PRINCIPAL           VALUE
                                                                                      AMOUNT      SEE NOTE 1
-------------------------------------------------------------------------------------------------------------

COMMERCIAL Continued
Deutsche Alt-A Securities Mortgage Loan Trust, Mtg.
Pass-Through Certificates:
Series 2006-AB2, Cl. A7, 5.961%, 6/25/36                                       $   2,511,031   $   2,506,460
Series 2006-AB3, Cl. A7, 6.36%, 4/25/08                                            1,018,892       1,019,178
Series 2006-AB4, Cl. A1A, 6.005%, 10/25/36                                         1,938,837       1,938,988
-------------------------------------------------------------------------------------------------------------
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations:
Series 2003-C1, Cl. A2, 4.093%, 1/10/38                                              400,000         390,428
Series 2004-C3, Cl. A2, 4.433%, 7/10/39                                              750,000         736,458
Series 2005-C3, Cl. A2, 4.853%, 7/10/45                                            1,590,000       1,572,224
-------------------------------------------------------------------------------------------------------------
GS Mortgage Securities Corp. II, Commercial Mtg. Obligations,
Series 2006-GG8, Cl. A2, 5.479%, 11/10/39 2                                        1,808,000       1,823,621
-------------------------------------------------------------------------------------------------------------
JPMorgan Chase Commercial Mortgage Securities Corp.,
Commercial Mtg. Pass-Through Certificates:
Series 2005-LDP2, Cl. A2, 4.575%, 7/15/42                                            550,000         538,850
Series 2005-LDP4, Cl. A2, 4.79%, 10/15/42                                            730,000         719,383
-------------------------------------------------------------------------------------------------------------
LB-UBS Commercial Mortgage Trust, Commercial Mtg.
Pass-Through Certificates, Series 2005-C5, Cl. A2, 4.885%, 9/15/30                 1,920,000       1,902,694
-------------------------------------------------------------------------------------------------------------
RALI, Series 2006-QS13 Trust, Mtg. Asset-Backed Pass-Through
Certificates, Series 2006-QS13, Cl. 1A8, 6%, 9/25/36                               2,144,874       2,142,965
-------------------------------------------------------------------------------------------------------------
Residential Asset Securitization Trust 2006-A9CB, CMO
Pass-Through Certificates, Series 2006-A9CB, Cl. A5, 6%, 9/25/36                   4,261,283       4,254,675
-------------------------------------------------------------------------------------------------------------
Wachovia Bank Commercial Mortgage Trust 2006-C29, Commercial
Asset-Backed Securities, Series 2006-C29, Cl. A2, 5.272%, 11/15/48                   391,000         390,683
                                                                                               --------------
                                                                                                  23,052,756

-------------------------------------------------------------------------------------------------------------
RESIDENTIAL--1.7%
Countrywide Alternative Loan Trust, CMO:
Series 2005-J1, Cl. 3A1, 6.50%, 8/25/32                                            4,446,218       4,494,851
Series 2005-J3, Cl. 3A1, 6.50%, 9/25/34                                              314,238         319,597
                                                                                               --------------
                                                                                                   4,814,448
                                                                                               --------------
Total Mortgage-Backed Obligations (Cost $158,001,014)                                            158,076,345

-------------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT OBLIGATIONS--0.5%
-------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. Unsec. Nts.:
4%, 8/17/07                                                                          570,000         565,719
5%, 9/16/08                                                                          825,000         824,550
                                                                                               --------------
Total U.S. Government Obligations (Cost $1,389,414)                                                1,390,269

-------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--45.4%
-------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--10.1%
-------------------------------------------------------------------------------------------------------------
AUTOMOBILES--1.5%
DaimlerChrysler North America Holding Corp., 7.30% Nts., 1/15/12                   1,495,000       1,588,650



              66 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND




                                                                                   PRINCIPAL           VALUE
                                                                                      AMOUNT      SEE NOTE 1
-------------------------------------------------------------------------------------------------------------

AUTOMOBILES Continued
Residential Capital LLC, 6.375% Sr. Unsec. Nts., 6/30/10                       $   2,415,000   $   2,444,997
                                                                                               --------------
                                                                                                   4,033,647

-------------------------------------------------------------------------------------------------------------
DIVERSIFIED CONSUMER SERVICES--1.0%
Block Financial Corp., 8.50% Sr. Unsec. Unsub. Nts., 4/15/07 5                     2,880,000       2,902,277
-------------------------------------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--0.6%
P&O Princess/Carnival plc, 7.30% Nts., 6/1/07                                        540,000         543,844
-------------------------------------------------------------------------------------------------------------
Yum! Brands, Inc., 7.70% Sr. Nts., 7/1/12                                          1,100,000       1,203,847
                                                                                               --------------
                                                                                                   1,747,691

-------------------------------------------------------------------------------------------------------------
HOUSEHOLD DURABLES--1.6%
Black & Decker Holdings, Inc., 6.55% Sr. Unsec. Nts., 7/1/07 7                     1,640,000       1,642,519
-------------------------------------------------------------------------------------------------------------
Centex Corp., 8.75% Sub. Debs., 3/1/07                                             1,400,000       1,406,010
-------------------------------------------------------------------------------------------------------------
D.R. Horton, Inc., 7.50% Sr. Unsec. Nts., 12/1/07                                  1,258,000       1,280,302
                                                                                               --------------
                                                                                                   4,328,831

-------------------------------------------------------------------------------------------------------------
MEDIA--4.9%
British Sky Broadcasting Group plc, 8.20% Sr. Unsec. Nts., 7/15/09                 1,145,000       1,219,892
-------------------------------------------------------------------------------------------------------------
CBS Corp., 5.625% Sr. Unsec. Nts., 5/1/07                                          1,140,000       1,140,679
-------------------------------------------------------------------------------------------------------------
Chancellor Media CCU, 8% Sr. Unsec. Nts., 11/1/08                                    300,000         312,029
-------------------------------------------------------------------------------------------------------------
Clear Channel Communications, Inc., 6.25% Nts., 3/15/11                            2,230,000       2,169,112
-------------------------------------------------------------------------------------------------------------
Comcast Corp., 5.85% Sr. Unsec. Unsub. Nts., 1/15/10                               3,630,000       3,683,180
-------------------------------------------------------------------------------------------------------------
Gannett Co., Inc., 5.50% Unsec. Nts., 4/1/07                                         730,000         729,308
-------------------------------------------------------------------------------------------------------------
News America, Inc., 6.625% Sr. Nts., 1/9/08                                          160,000         161,781
-------------------------------------------------------------------------------------------------------------
Reed Elsevier Capital, Inc., 4.625% Nts., 6/15/12                                    370,000         353,810
-------------------------------------------------------------------------------------------------------------
Time Warner, Inc.:
5.50% Nts., 11/15/11                                                               1,440,000       1,437,830
6.75% Sr. Unsec. Unsub. Nts., 4/15/11                                              2,390,000       2,504,187
                                                                                               --------------
                                                                                                  13,711,808

-------------------------------------------------------------------------------------------------------------
MULTILINE RETAIL--0.5%
May Department Stores Co., 7.90% Unsec. Debs., 10/15/07                            1,450,000       1,471,940
-------------------------------------------------------------------------------------------------------------
CONSUMER STAPLES--3.3%
-------------------------------------------------------------------------------------------------------------
FOOD & STAPLES RETAILING--2.1%
CVS Corp., 4% Sr. Unsec. Nts., 9/15/09                                               910,000         880,330
-------------------------------------------------------------------------------------------------------------
Kroger Co. (The), 5.50% Unsec. Unsub. Nts., 2/1/13                                 2,190,000       2,169,114
-------------------------------------------------------------------------------------------------------------
Safeway, Inc., 6.50% Sr. Unsec. Nts., 3/1/11                                       2,820,000       2,920,107
                                                                                               --------------
                                                                                                   5,969,551



              67 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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



                                                                                   PRINCIPAL           VALUE
                                                                                      AMOUNT      SEE NOTE 1
-------------------------------------------------------------------------------------------------------------

FOOD PRODUCTS--0.6%
Bunge Ltd. Finance Corp., 4.375% Unsec. Nts., 12/15/08                         $     490,000   $     479,893
-------------------------------------------------------------------------------------------------------------
Earthgrains Co. (The), 6.50% Nts., 4/15/09                                         1,165,000       1,185,454
                                                                                               --------------
                                                                                                   1,665,347

-------------------------------------------------------------------------------------------------------------
TOBACCO--0.6%
Philip Morris Cos., 7.20% Unsec. Nts., 2/1/07                                      1,700,000       1,701,384
-------------------------------------------------------------------------------------------------------------
ENERGY--5.0%
-------------------------------------------------------------------------------------------------------------
OIL & GAS--5.0%
Energy Transfer Partners LP, 5.65% Sr. Unsec. Unsub. Nts., 8/1/12                    320,000         319,030
-------------------------------------------------------------------------------------------------------------
Enterprise Products Operating LP, 7.50% Sr. Unsec. Unsub. Nts., 2/1/11             1,430,000       1,526,346
-------------------------------------------------------------------------------------------------------------
Kaneb Pipe Line Operating Partnership LP:
5.875% Sr. Unsec. Nts., 6/1/13                                                       275,000         276,169
7.75% Sr. Unsec. Nts., 2/15/12                                                       180,000         196,384
-------------------------------------------------------------------------------------------------------------
Kinder Morgan Energy Partners LP, 7.50% Sr. Unsec. Nts., 11/1/10                   1,475,000       1,574,043
-------------------------------------------------------------------------------------------------------------
Ocean Energy, Inc., 4.375% Sr. Unsec. Nts., 10/1/07                                  920,000         912,941
-------------------------------------------------------------------------------------------------------------
ONEOK Partners LP, 7.10% Sr. Unsec. Nts., 3/15/11                                    450,000         473,518
-------------------------------------------------------------------------------------------------------------
Pemex Project Funding Master Trust, 7.875% Unsec. Unsub. Nts., 2/1/09              1,570,000       1,649,285
-------------------------------------------------------------------------------------------------------------
Petroleum Export Ltd. Cayman SPV, 4.623% Sr. Nts., Cl. A1, 6/15/10 7               3,290,000       3,239,837
-------------------------------------------------------------------------------------------------------------
Talisman Energy, Inc., 7.125% Unsec. Unsub. Debs., 6/1/07                          1,695,000       1,706,033
-------------------------------------------------------------------------------------------------------------
TEPPCO Partners LP:
6.125% Nts., 2/1/13                                                                  755,000         756,020
7.625% Sr. Unsec. Nts., 2/15/12                                                      245,000         263,710
-------------------------------------------------------------------------------------------------------------
Valero Logistics Operations LP, 6.05% Nts., 3/15/13                                1,165,000       1,175,089
                                                                                               --------------
                                                                                                  14,068,405

-------------------------------------------------------------------------------------------------------------
FINANCIALS--9.6%
-------------------------------------------------------------------------------------------------------------
CAPITAL MARKETS--1.3%
Amvescap plc, 5.90% Sr. Unsec. Nts., 1/15/07                                       3,340,000       3,340,341
-------------------------------------------------------------------------------------------------------------
Bank of New York Co., Inc. (The), 3.75% Unsec. Unsub. Nts., 2/15/08 5                170,000         167,057
                                                                                               --------------
                                                                                                   3,507,398

-------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS--1.2%
ABN Amro Bank NV (Chicago Branch), 7.125% Unsec. Sub. Nts., 6/18/07 5              2,580,000       2,600,274
-------------------------------------------------------------------------------------------------------------
Regions Financial Corp., 4.50% Bonds, 8/8/08                                         800,000         790,238
                                                                                               --------------
                                                                                                   3,390,512

-------------------------------------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--0.4%
Bank of America Corp., 3.875% Nts., 1/15/08 5                                        180,000         177,329
-------------------------------------------------------------------------------------------------------------
Citigroup, Inc., 6% Nts., 2/21/12                                                    280,000         289,019
-------------------------------------------------------------------------------------------------------------
FleetBoston Financial Corp., 4.20% Nts., 11/30/07                                    160,000         158,408



              68 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND




                                                                                   PRINCIPAL           VALUE
                                                                                      AMOUNT      SEE NOTE 1
-------------------------------------------------------------------------------------------------------------

DIVERSIFIED FINANCIAL SERVICES Continued
JPMorgan Chase & Co., 4% Nts., 2/1/08                                          $     290,000   $     286,227
-------------------------------------------------------------------------------------------------------------
MBNA Corp., 5.625% Nts., 11/30/07                                                    180,000         180,367
                                                                                               --------------
                                                                                                   1,091,350

-------------------------------------------------------------------------------------------------------------
INSURANCE--1.3%
Allstate Financial Global Funding, 5.25% Nts., 2/1/07 7                              110,000         109,993
-------------------------------------------------------------------------------------------------------------
John Hancock Global Funding II, 5% Nts., 7/27/07 7                                   890,000         887,304
-------------------------------------------------------------------------------------------------------------
Lincoln National Corp., 5.25% Sr. Unsec. Nts., 6/15/07                             1,310,000       1,307,651
-------------------------------------------------------------------------------------------------------------
Marsh & McLennan Cos., Inc., 3.625% Nts., 2/15/08                                    410,000         401,246
-------------------------------------------------------------------------------------------------------------
Pricoa Global Funding I, 3.90% Nts., 12/15/08 7                                      660,000         641,686
-------------------------------------------------------------------------------------------------------------
Prudential Insurance Co. of America, 7.65% Surplus Nts., 7/1/07 7                    370,000         374,321
                                                                                               --------------
                                                                                                   3,722,201

-------------------------------------------------------------------------------------------------------------
REAL ESTATE--2.4%
EOP Operating LP, 8.10% Unsec. Nts., 8/1/10                                        3,130,000       3,451,523
-------------------------------------------------------------------------------------------------------------
iStar Financial, Inc., 5.15% Sr. Unsec. Nts., 3/1/12                               1,720,000       1,674,626
-------------------------------------------------------------------------------------------------------------
Vornado Realty LP, 5.625% Sr. Unsec. Unsub. Nts., 6/15/07 5                        1,555,000       1,554,139
                                                                                               --------------
                                                                                                   6,680,288

-------------------------------------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--3.0%
Countrywide Home Loans, Inc.:
5.50% Nts., Series K, 2/1/07 5                                                       230,000         230,015
5.625% Nts., Series K, 5/15/07                                                     1,830,000       1,831,561
-------------------------------------------------------------------------------------------------------------
MGIC Investment Corp., 6% Sr. Unsec. Nts., 3/15/07                                 1,870,000       1,871,573
-------------------------------------------------------------------------------------------------------------
Washington Mutual, Inc., 5.625% Sr. Unsec. Nts., 1/15/07 5                         4,550,000       4,550,264
                                                                                               --------------
                                                                                                   8,483,413

-------------------------------------------------------------------------------------------------------------
HEALTH CARE--1.5%
-------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--1.5%
CIGNA Corp.:
7% Sr. Unsec. Nts., 1/15/11                                                        1,100,000       1,156,962
7.40% Unsec. Nts., 5/15/07                                                         2,190,000       2,204,531
-------------------------------------------------------------------------------------------------------------
UnitedHealth Group, Inc., 5.20% Sr. Unsec. Nts., 1/17/07 5                           760,000         759,928
                                                                                               --------------
                                                                                                   4,121,421

-------------------------------------------------------------------------------------------------------------
INDUSTRIALS--2.8%
-------------------------------------------------------------------------------------------------------------
AEROSPACE & DEFENSE--1.3%
BAE Systems Holdings, Inc., 4.75% Nts., 8/15/10 5,7                                3,480,000       3,389,207
-------------------------------------------------------------------------------------------------------------
Boeing Capital Corp., 5.75% Sr. Nts., 2/15/07                                        250,000         250,192
                                                                                               --------------
                                                                                                   3,639,399



              69 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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



                                                                                   PRINCIPAL           VALUE
                                                                                      AMOUNT      SEE NOTE 1
-------------------------------------------------------------------------------------------------------------

COMMERCIAL SERVICES & SUPPLIES--0.2%
Waste Management, Inc., 7.125% Sr. Unsec. Nts., 10/1/07                        $     495,000   $     499,688
-------------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--0.6%
Textron Financial Corp., 5.875% Unsec. Unsub. Nts., 6/1/07                         1,510,000       1,513,268
-------------------------------------------------------------------------------------------------------------
ROAD & RAIL--0.7%
Erac USA Finance Co., 6.75% Nts., 5/15/07 7                                        2,010,000       2,018,092
-------------------------------------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--0.6%
-------------------------------------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--0.1%
NCR Corp., 7.125% Sr. Unsec. Unsub. Nts., 6/15/09                                    155,000         159,052
-------------------------------------------------------------------------------------------------------------
OFFICE ELECTRONICS--0.5%
Xerox Corp., 9.75% Sr. Unsec. Nts., 1/15/09                                        1,475,000       1,600,375
-------------------------------------------------------------------------------------------------------------
MATERIALS--1.4%
-------------------------------------------------------------------------------------------------------------
CHEMICALS--0.7%
Praxair, Inc., 4.75% Unsec. Nts., 7/15/07                                          2,030,000       2,025,187
-------------------------------------------------------------------------------------------------------------
METALS & MINING--0.7%
Barrick Gold Finance Co., 7.50% Unsec. Debs., 5/1/07                               1,830,000       1,842,596
-------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--2.4%
-------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--2.4%
Telecom Italia Capital SpA:
4% Sr. Unsec. Nts., 11/15/08                                                         975,000         949,926
4% Unsec. Unsub. Nts., 1/15/10                                                       835,000         797,893
-------------------------------------------------------------------------------------------------------------
Telefonos de Mexico SA de CV, 4.50% Nts., 11/19/08                                 1,620,000       1,598,880
-------------------------------------------------------------------------------------------------------------
Telus Corp., 8% Nts., 6/1/11                                                       1,475,000       1,614,472
-------------------------------------------------------------------------------------------------------------
Verizon Global Funding Corp., 6.125% Nts., 6/15/07 5                               1,650,000       1,654,348
                                                                                               --------------
                                                                                                   6,615,519

-------------------------------------------------------------------------------------------------------------
UTILITIES--8.7%
-------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--2.5%
FPL Group Capital, Inc., 4.086% Nts., Series A, 2/16/07 5                          2,900,000       2,895,354
-------------------------------------------------------------------------------------------------------------
MidAmerican Energy Holdings Co., 4.625% Sr. Nts., 10/1/07                            330,000         327,913
-------------------------------------------------------------------------------------------------------------
Pepco Holdings, Inc., 5.50% Unsec. Unsub. Nts., 8/15/07                            1,700,000       1,698,890
-------------------------------------------------------------------------------------------------------------
Southern Co. Capital Funding, Inc., 5.30% Sr. Unsec.
Unsub. Nts., Series A, 2/1/07                                                        730,000         729,717
-------------------------------------------------------------------------------------------------------------
Westar Energy, Inc., 7.125% Sr. Unsec. Nts., 8/1/09                                1,350,000       1,402,128
                                                                                               --------------
                                                                                                   7,054,002

-------------------------------------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--6.2%
CenterPoint Energy, Inc., 7.25% Sr. Nts., Series B, 9/1/10                         2,295,000       2,420,004
-------------------------------------------------------------------------------------------------------------
Niagara Mohawk Power Corp., 8.875% Sr. Nts., 5/15/07                               1,620,000       1,638,884
-------------------------------------------------------------------------------------------------------------
NiSource Finance Corp., 7.875% Sr. Unsec. Nts., 11/15/10 5                         4,005,000       4,324,447
-------------------------------------------------------------------------------------------------------------
Panhandle Eastern Pipe Line Co., 2.75% Sr. Unsec. Nts., Series B, 3/15/07          1,720,000       1,709,921
-------------------------------------------------------------------------------------------------------------
PSEG Funding Trust I, 5.381% Nts., 11/16/07                                        1,005,000       1,003,104



              70 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND




                                                                                   PRINCIPAL           VALUE
                                                                                      AMOUNT      SEE NOTE 1
-------------------------------------------------------------------------------------------------------------

MULTI-UTILITIES & UNREGULATED POWER Continued
Public Service Co. of New Mexico, 4.40% Sr. Unsec. Nts., 9/15/08               $     415,000   $     407,560
-------------------------------------------------------------------------------------------------------------
Sempra Energy, 7.95% Sr. Unsec. Unsub. Nts., 3/1/10                                1,755,000       1,884,164
-------------------------------------------------------------------------------------------------------------
Texas Eastern Transmission Corp., 5.25% Sr. Unsec. Unsub. Nts., 7/15/07 5          3,880,000       3,869,920
                                                                                               --------------
                                                                                                  17,258,004
                                                                                               --------------
Total Corporate Bonds and Notes (Cost $126,634,541)                                              126,822,646

-------------------------------------------------------------------------------------------------------------
STRUCTURED NOTES--1.1%
-------------------------------------------------------------------------------------------------------------
Core Investment Grade Bond Trust I, Pass-Through
Certificates, Series 2002-1, 4.642%, 11/30/07 2 (Cost $3,121,240)                  3,140,000       3,113,514

-------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--3.9%
-------------------------------------------------------------------------------------------------------------
Undivided interest of 23.54% in joint repurchase agreement (Principal
Amount/Value $46,644,000, with a maturity value of $46,677,687)
with UBS Warburg LLC, 5.20%, dated 12/29/06, to be repurchased
at $10,986,929 on 1/3/07, collateralized by Federal National
Mortgage Assn., 6%, 6/1/36, with a value
of $47,638,849 (Cost $10,979,000)                                                 10,979,000      10,979,000
-------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $311,706,101)                                        111.7%    311,968,308
-------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS                                                  (11.7)    (32,680,065)
                                                                               ------------------------------
NET ASSETS                                                                             100.0%  $ 279,288,243
                                                                               ==============================



              71 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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

FOOTNOTES TO STATEMENT OF INVESTMENTS

1. Illiquid security. The aggregate value of illiquid securities as of December
31, 2006 was $2,251,772, which represents 0.81% of the Fund's net assets. See
Note 6 of accompanying Notes.

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

3. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows. These securities amount to $1,835,894 or 0.66% of the Fund's net assets
as of December 31, 2006.

4. When-issued security or forward commitment to be delivered and settled after
December 31, 2006. See Note 1 of accompanying Notes.

5. All or a portion of the security is held in collateralized accounts to cover
initial margin requirements on open futures contracts. The aggregate market
value of such securities is $34,487,460. See Note 4 of accompanying Notes.

6. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
These securities amount to $1,446,165 or 0.52% of the Fund's net assets as of
December 31, 2006.

7. 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 $12,302,959 or 4.41% of the Fund's net
assets as of December 31, 2006.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


              72 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


RAF FUND LTD. (THE "SUBSIDIARY")
STATEMENT OF ASSETS AND LIABILITIES  December 31, 2006
--------------------------------------------------------------------------------



-------------------------------------------------------------------------------------------------------------
ASSETS
-------------------------------------------------------------------------------------------------------------
Investments, at value (cost $311,706,101)--see accompanying statement of investments           $ 311,968,308
-------------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest and principal paydowns                                                                    2,883,618
Futures margins                                                                                    2,146,073
Investments sold                                                                                     708,855
Other                                                                                                  8,524
                                                                                               --------------
Total assets                                                                                     317,715,378

-------------------------------------------------------------------------------------------------------------
LIABILITIES
-------------------------------------------------------------------------------------------------------------
Bank overdraft                                                                                       275,510
-------------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $37,446,679 purchased on a
when-issued basis or forward commitment)                                                          38,143,315
Other                                                                                                  8,310
                                                                                               --------------
Total liabilities                                                                                 38,427,135

-------------------------------------------------------------------------------------------------------------
NET ASSETS                                                                                     $ 279,288,243
                                                                                               ==============

-------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
-------------------------------------------------------------------------------------------------------------
Par value of participating shares                                                              $      40,000
-------------------------------------------------------------------------------------------------------------
Additional paid-in capital                                                                       354,790,539
-------------------------------------------------------------------------------------------------------------
Accumulated net investment income                                                                  5,868,214
-------------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments                                                     (74,737,114)
-------------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments and future contracts                                   (6,673,396)
                                                                                               --------------
NET ASSETS--applicable to 4,000,000 shares of capital shares                                   $ 279,288,243
                                                                                               ==============

------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, REDEMPTION PRICE PER SHARE AND OFFERING PRICE PER SHARE                       $       69.82


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


              73 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


RAF FUND LTD. (THE "SUBSIDIARY")
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------



                                                                         FOUR MONTHS ENDED      PERIOD ENDED
                                                                           DEC. 31, 2006 1   AUG. 31, 2006 2
-------------------------------------------------------------------------------------------------------------

INVESTMENT INCOME
-------------------------------------------------------------------------------------------------------------
Interest (net of foreign withholding taxes of $3,238 for the period
ending August 31, 2006)                                                     $    6,576,440     $     572,838

-------------------------------------------------------------------------------------------------------------
EXPENSES
-------------------------------------------------------------------------------------------------------------
Management fees                                                                  1,157,822            90,762
-------------------------------------------------------------------------------------------------------------
Custodian fees and expenses                                                          3,558                --
-------------------------------------------------------------------------------------------------------------
Other                                                                               28,922                --
                                                                            ---------------------------------
Total expenses                                                                   1,190,302            90,762

-------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME                                                            5,386,138           482,076

-------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
-------------------------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments                                                                        730,082         2,163,518
Closing and expiration of option contracts written                                  73,644                --
Closing and expiration of futures contracts                                    (75,430,704)       (2,273,654)
                                                                            ---------------------------------
Net realized loss                                                              (74,626,978)         (110,136)
-------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments                                                                         54,159           208,049
Futures contracts                                                                4,713,143       (11,648,747)
                                                                            ---------------------------------
Net change in unrealized depreciation                                            4,767,302       (11,440,698)

-------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS                        $  (64,473,538)    $ (11,068,758)
                                                                            =================================


1. The Fund changed its fiscal year end from August 31 to December 31.

2. For the period from August 15, 2006 (commencement of operations) to August
31, 2006.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


              74 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


RAF FUND LTD. (THE "SUBSIDIARY")
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------



                                                                         FOUR MONTHS ENDED      PERIOD ENDED
                                                                           DEC. 31, 2006 1   AUG. 31, 2006 2
-------------------------------------------------------------------------------------------------------------

OPERATIONS
-------------------------------------------------------------------------------------------------------------
Net investment income                                                       $    5,386,138     $     482,076
-------------------------------------------------------------------------------------------------------------
Net realized loss                                                              (74,626,978)         (110,136)
-------------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation                                            4,767,302       (11,440,698)
                                                                            ---------------------------------
Net decrease in net assets resulting from operations                           (64,473,538)      (11,068,758)

-------------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS
-------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from capital
transactions                                                                   (92,000,000)      446,830,539

-------------------------------------------------------------------------------------------------------------
NET ASSETS
-------------------------------------------------------------------------------------------------------------
Total increase (decrease)                                                     (156,473,538)      435,761,781
-------------------------------------------------------------------------------------------------------------
Beginning of period                                                            435,761,781                --
                                                                            ---------------------------------
End of period (including accumulated net investment income
of $5,868,214 and $482,076, respectively)                                   $  279,288,243     $ 435,761,781
                                                                            =================================


1. The Fund changed its fiscal year end from August 31 to December 31.

2. For the period from August 15, 2006 (commencement of operations) to August
31, 2006.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


              75 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


RAF FUND LTD. (THE "SUBSIDIARY")
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

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

RAF Fund Ltd. (the "Fund") is organized as a Cayman Islands Company Limited by
Shares. The Board of Directors elected to change the fiscal year end of the Fund
from August 31 to December 31. Accordingly, these financial statements include
information for the four month period from September 1, 2006 to December 31,
2006. The Fund intends to carry on the business of an investment company and to
acquire, invest in and hold by way of investment, sell and deal in commodities
and interests therein including futures contracts, options and forward
contracts, shares, stocks, call options, put options, debenture stock, bonds,
obligations, certificates of deposit, bills of exchange and securities of all
kinds. The Fund's investment manager is OppenheimerFunds, Inc. (OFI or
Investment Manager). The Sub-Advisor is Oppenheimer Real Asset Management, Inc.
(ORAMI or the Subadvisor), a wholly-owned subsidiary of the Investment Manager.
As of December 31, 2006, 100% of the Fund was owned by Oppenheimer Commodity
Strategy Total Return Fund (OCSTRF). OFI is also the investment advisor of
OCSTRF and ORAMI is also the Subadvisor of OCSTRF.

      The beneficial interest of each investor in the Fund is represented by
units of participating shares. The Fund's directors may further designate
classes of participating shares and series within each class. As of August 31,
2006, the directors have not designated classes or series of outstanding
participating shares. During the period from August 31, 2006 through December
31, 2006, all income, profits, losses and expenses, if any, of the Fund were
allocated pro rata to all participating shares of the Fund. Issuance of
additional participating shares is at the discretion of the Fund's directors.

      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 Directors. 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
will be valued at the mean between the "bid" and "asked" prices. Futures
contracts traded


              76 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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. Options are valued daily based upon
the last sale price on the principal exchange on which the option is traded.
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 Investment
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 Directors. Investments in open-end
registered investment companies (including affiliated funds) are valued at that
fund's net asset value. Short-term "money market type" debt securities with
remaining maturities of sixty days or less are valued at amortized cost (which
approximates market value).

--------------------------------------------------------------------------------
STRUCTURED NOTES. The Fund invests in structured notes whose market values,
interest rates and/or redemption prices are linked to the performance of
underlying foreign currencies, interest rate spreads, stock market indices,
prices of individual securities, commodities or other financial instruments or
the occurrence of other specific events. The structured notes are often
leveraged, increasing the volatility of each note's market value relative to the
change in the underlying linked financial element or event. Fluctuations in
value of these securities are recorded as unrealized gains and losses in the
accompanying Statements of Operations and Changes in Net Assets. The Fund
records a realized gain or loss when a structured note is sold or matures.

--------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment take place generally at least ten days or more after the
trade date. Normally the settlement date occurs within six months after the
trade date; however, the Fund may, from time to time, purchase securities whose
settlement date extends six months or more beyond trade date. During this
period, such securities do not earn interest, are subject to market fluctuation
and may increase or decrease in value prior to their delivery. The Fund
maintains internally designated assets with a market value equal to or greater
than the amount of its purchase commitments. The purchase of securities on a
when-issued basis or forward commitment may increase the volatility of the
Fund's net asset value to the extent the Fund executes such transactions while
remaining substantially fully invested. The Fund may also sell securities that
it purchased on a when-issued basis or forward commitment prior to settlement of
the original purchase. As of December 31, 2006, the Fund had purchased
$37,446,679 of securities issued on a when-issued basis or forward.

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


              77 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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

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

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
Directors.

      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.

--------------------------------------------------------------------------------
CONCENTRATION OF RISKS. The Fund from time to time may have elements of
concentration risk due to the value of certain securities held compared to the
overall net investments value of the Fund. Such concentrations may subject the
Fund to additional risks.

--------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS. The Fund, along with other affiliated funds advised
by OFI, 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.

--------------------------------------------------------------------------------
INCOME TAXES. The Fund has received an undertaking from the Government of the
Cayman Islands exempting it from all local income, profits and capital gains
taxes through May of 2036. No such taxes are levied in the Cayman Islands at the
present time. The Fund is a Controlled Foreign Corporation under U.S. tax laws
and as such is not subject to U.S. income tax. Therefore, the Fund is not
required to record a tax provision.

--------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, if any, are declared and paid annually from the Fund's tax basis
earnings and profits. Distributions are recorded on ex-dividend date.

--------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
exdividend 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


              78 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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.

--------------------------------------------------------------------------------
INVESTMENTS WITH OFF-BALANCE SHEET MARKET RISK. The Fund enters into financial
instrument transactions that may have off-balance sheet market risk. Off-balance
sheet market risk exists when the maximum potential loss on a particular
financial instrument is greater than the value of such financial instrument, as
reflected in the Fund's Statement of Assets and Liabilities.

--------------------------------------------------------------------------------
INDEMNIFICATIONS. The Fund's organizational documents provide the directors 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 are considered remote.

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

--------------------------------------------------------------------------------
2. CAPITAL TRANSACTIONS

The Fund has authorized 5,000,000 participating shares of $.01 par value per
share. The Fund issued 4,000,000 participating shares for $500,000 on August 15,
2006 in conjunction with OCSTRF's initial capitalization of the Fund. All
subsequent capital contributions and withdrawals did not have participating
shares associated with the transaction.


              79 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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

--------------------------------------------------------------------------------
2. CAPITAL TRANSACTIONS Continued

Capital transactions were as follows:

                                         PERIOD ENDED        PERIOD ENDED
                                  DECEMBER 31, 2006 1   AUGUST 31, 2006 2
                                               AMOUNT              AMOUNT
        -----------------------------------------------------------------
        Contributions                   $          --       $ 449,073,902
        Withdrawals                       (92,000,000)         (2,243,363)
                                        ---------------------------------
        Net increase (decrease)         $ (92,000,000)      $ 446,830,539
                                        =================================

1. The Fund changed its fiscal year end from August 31 to December 31.

2. For the period from August 15, 2006 (commencement of operations) to August
31, 2006.

--------------------------------------------------------------------------------
3. EXPENSES

INVESTMENT MANAGEMENT FEES. Investment management fees paid to the Investment
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
        ----------------------------------------------
        Up to $200 million                       1.00%
        Next $200 million                        0.90
        Next $200 million                        0.85
        Next $200 million                        0.80
        Over $800 million                        0.75

--------------------------------------------------------------------------------
SUB-ADVISOR FEES. The Investment Manager retains the Subadvisor to provide the
day-to-day portfolio management of the Fund. Under the Sub-Advisory Agreement,
the Investment Manager pays the Subadvisor an annual fee in monthly
installments, based on the average daily net assets of the Fund at an average
annual rate as shown in the following table:

        FEE SCHEDULE FOR SUB-ADVISOR
        ----------------------------------------------
        Up to $200 million                      0.500%
        Next $200 million                       0.450
        Next $200 million                       0.425
        Next $200 million                       0.400
        Over $800 million                       0.375

The Fund shall bear all fees and expenses related to the business and affairs of
the Fund, including among others, directors' fees, audit fees, custodian fees
and expenses in connection with the purchase and sale of securities and other
Fund assets.

--------------------------------------------------------------------------------
4. FUTURES CONTRACTS

A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a negotiated price on a stipulated future
date. Futures contracts are traded on a commodity exchange. The Fund may buy and
sell futures contracts that relate to broadly based securities indices
(financial futures), debt securities (interest rate futures) and various
commodities (commodities futures) in order to gain exposure to or


              80 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


protection from changes in market value of stock and bonds or interest rates.
The Fund may also buy or write put or call options on these futures contracts.

      The Fund generally sells futures contracts to hedge against increases in
interest rates and the resulting negative effect on the value of fixed rate
portfolio securities, decreases in market value of portfolio securities, or
decreases in commodity prices. The Fund may also purchase futures contracts
without owning the underlying fixed-income security as an efficient or cost
effective means to gain exposure to changes in interest rates, commodity prices
or market indices.

      Upon entering into a futures contract, the Fund is required to deposit
either cash or securities (initial margin) in an amount equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Fund each day. The variation margin payments are equal
to the daily changes in the contract value and are recorded as unrealized gains
and losses. The Fund recognizes a realized gain or loss when the contract is
closed or has expired.

      Securities held in collateralized accounts to cover initial margin
requirements on open futures contracts are noted in the Statement of
Investments. The Statement of Assets and Liabilities reflect a receivable and/or
payable for the daily mark to market for variation margin. Realized gains and
losses are reported in the Statements of Operations and Changes in Net Assets as
closing and expiration of futures contracts. The net change in unrealized
appreciation and depreciation is reported in the Statements of Operations and
Changes in Net Assets.

      Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market and that a change in the value
of the contract or option may not correlate with changes in the value of the
underlying securities.

As of December 31, 2006, information regarding the futures contracts was as
follows:

                             UNREALIZED      PERCENT
                           APPRECIATION      OF FUND
CONTRACT DESCRIPTION     (DEPRECIATION)   NET ASSETS
------------------------------------------------------
CONTRACTS TO PURCHASE
Agriculture                 $   718,024         0.26%
Energy                       (7,989,743)       (2.86)
Industrial Metals              (219,999)       (0.08)
Livestock                       (99,374)       (0.04)
Precious Metals                 114,787         0.04
Softs                           (30,401)       (0.01)
                            --------------------------
                             (7,506,706)       (2.69)
                            --------------------------
CONTRACTS TO SELL
Agriculture                     193,671         0.07
Livestock                       377,432         0.14
                            --------------------------
                                571,103         0.21
                            --------------------------
                            $(6,935,603)       (2.48)%
                            ==========================


              81 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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

--------------------------------------------------------------------------------
5. OPTION ACTIVITY

The Fund may buy and sell put and call options, or write put and covered call
options on portfolio securities in order to produce incremental earnings or
protect against changes in the value of portfolio securities.

      The Fund generally purchases put options or writes covered call options to
hedge against adverse movements in the value of portfolio holdings. When an
option is written, the Fund receives a premium and becomes obligated to sell or
purchase the underlying security at a fixed price, upon exercise of the option.

      Options are valued daily based upon the last sale price on the principal
exchange on which the option is traded and unrealized appreciation or
depreciation is recorded. The Fund will realize a gain or loss upon the
expiration or closing of the option transaction. When an option is exercised,
the proceeds on sales for a written call option, the purchase cost for a written
put option, or the cost of the security for a purchased put or call option is
adjusted by the amount of premium received or paid.

      Securities designated to cover outstanding call and put options are noted
in the Statement of Investments where applicable. Contracts subject to call,
put, expiration date, exercise price, premium received and market value are
detailed in a note to the Statement of Investments. Options written are reported
as a liability in the Statement of Assets and Liabilities. Realized gains and
losses are reported in the Statements of Operations and Changes in Net Assets.

      The risk in writing a call option is that the Fund gives up the
opportunity for profit if the market price of the security or commodity
increases and the option is exercised. The risk in writing a put option is that
the Fund may incur a loss if the market price of the security or commodity
decreases and the option is exercised. The risk in buying an option is that the
Fund pays a premium whether or not the option is exercised. The Fund also has
the additional risk of not being able to enter into a closing transaction if a
liquid secondary market does not exist.

Written option activity for the period ended December 31, 2006 was as follows:

                                            PUT OPTIONS
                               ------------------------
                               NUMBER OF      AMOUNT OF
                               CONTRACTS       PREMIUMS
-------------------------------------------------------
Options outstanding as of
August 31, 2006                       --     $       --
Options written                      102         73,644
Options closed or expired           (102)       (73,644)
                               ------------------------
Options outstanding as of
December 31, 2006                     --     $       --
                               ========================

--------------------------------------------------------------------------------
6. ILLIQUID SECURITIES

As of December 31, 2006, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily available
market or if its valuation


              82 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


has not changed for a certain period of time. Securities that are illiquid are
marked with the applicable footnote on the Statement of Investments.

--------------------------------------------------------------------------------
7. FINANCIAL HIGHLIGHTS

The following represents the total return of the Fund for the period from August
31, 2006 through December 31, 2006. Total return was calculated based upon the
daily returns of the Fund during this period. The calculation has not been
annualized for reporting purposes:

         Total Return             (15.18)%

The following represents certain financial ratios of the Fund for the periods
noted. The computation of the net investment income and total expense ratios was
based upon the daily net assets of the Fund during these periods. The
calculations have been annualized for reporting purposes:

                                      FOUR MONTHS ENDED         PERIOD ENDED
                                    DECEMBER 31, 2006 1    AUGUST 31, 2006 2
    -------------------------------------------------------------------------
    RATIOS TO AVERAGE NET ASSETS:
    Net investment income                          4.47%               4.45%
    Total expenses                                 0.99%               0.84%

1. The Fund changed its fiscal year end from August 31 to December 31.

2. For the period from August 15, 2006 (commencement of operations) through
August 31, 2006.

--------------------------------------------------------------------------------
8. RECENT ACCOUNTING PRONOUNCEMENTS

In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the 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
December 31, 2006, the Investment Manager has evaluated the implications of FIN
48 and does not currently anticipate a material impact to the Fund's financial
statements. The Investment Manager will continue to monitor the Fund's tax
positions prospectively for potential future impacts.

      In September 2006, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS. This standard establishes a
single authoritative definition of fair value, sets out a framework for
measuring fair value and expands disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements already required or permitted by
existing standards. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. As of December 31, 2006, the Investment Manager does not
believe the adoption of SFAS No. 157 will materially impact the financial
statement amounts; however, additional disclosures may be required about the
inputs used to


              83 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


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

--------------------------------------------------------------------------------
8. RECENT ACCOUNTING PRONOUNCEMENTS Continued

develop the measurements and the effect of certain of the measurements on
changes in net assets for the period.

--------------------------------------------------------------------------------
9. LITIGATION

A consolidated amended complaint was filed as a putative class action against
the Investment Manager and the Transfer Agent and other defendants (including 51
of the Oppenheimer funds excluding 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 Investment 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 Investment 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 Investment 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 Investment 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.


              84 | OPPENHEIMER COMMODITY STRATEGY TOTAL RETURN FUND


                                   Appendix A

                               RATINGS DEFINITIONS

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

Moody's Investors Service, Inc. ("Moody's")

LONG-TERM RATINGS: BONDS AND PREFERRED STOCK ISSUER RATINGS

Aaa: Bonds and preferred stock rated "Aaa" are judged to be the best quality.
They carry the smallest degree of investment risk.  Interest payments are
protected by a large or by an exceptionally stable margin and principal is
secure.  While the various protective elements are likely to change, the
changes that can be expected are most unlikely to impair the fundamentally
strong position of such issues.

Aa: Bonds and preferred stock rated "Aa" are judged to be of high quality by
all standards. Together with the "Aaa" group, they comprise what are generally
known as high-grade bonds.  They are rated lower than the best bonds because
margins of protection may not be as large as with "Aaa" securities or
fluctuation of protective elements may be of greater amplitude or there may be
other elements present which make the long-term risk appear somewhat larger
than that of "Aaa" securities.

A: Bonds and preferred stock rated "A" possess many favorable investment
attributes and are to be considered as upper-medium grade obligations.  Factors
giving security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment some time in the
future.

Baa: Bonds and preferred stock rated "Baa" are considered medium-grade
obligations; that is, they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and have speculative characteristics as well.

Ba: Bonds and preferred stock rated "Ba" are judged to have speculative
elements. Their future cannot be considered well-assured.  Often the protection
of interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future.  Uncertainty of
position characterizes bonds in this class.

B: Bonds and preferred stock rated "B" generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.

Caa: Bonds and preferred stock rated "Caa" are of poor standing. Such issues
may be in default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds and preferred stock rated "Ca" represent obligations which are
speculative in a high degree. Such issues are often in default or have other
marked shortcomings.

C:  Bonds and preferred stock rated "C" are the lowest class of rated bonds and
can be regarded as having extremely poor prospects of ever attaining any real
investment standing.

Moody's applies numerical modifiers 1, 2, and 3 in each generic rating
classification from "Aa" through "Caa." The modifier "1" indicates that the
obligation ranks in the higher end of its generic rating category; the modifier
"2" indicates a mid-range ranking; and the modifier "3" indicates a ranking in
the lower end of that generic rating category. Advanced refunded issues that
are secured by certain assets are identified with a # symbol.

PRIME RATING SYSTEM (SHORT-TERM RATINGS - TAXABLE DEBT)
These ratings are opinions of the ability of issuers to honor senior financial
obligations and contracts. Such obligations generally have an original maturity
not exceeding one year, unless explicitly noted.

Prime-1: Issuer has a superior ability for repayment of senior short-term debt
obligations.

Prime-2: Issuer has a strong ability for repayment of senior short-term debt
obligations. Earnings trends and coverage ratios, while sound, may be more
subject to variation. Capitalization characteristics, while appropriate, may be
more affected by external conditions. Ample alternate liquidity is maintained.

Prime-3: Issuer has an acceptable ability for repayment of senior short-term
obligations. The effect of industry characteristics and market compositions may
be more pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require relatively
high financial leverage. Adequate alternate liquidity is maintained.

Not Prime: Issuer does not fall within any Prime rating category.

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

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

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

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

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

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

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

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

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

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

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

C: Subordinated debt or preferred stock obligations rated "C" are currently
highly vulnerable to nonpayment. The "C" rating may be used to cover a
situation where a bankruptcy petition has been filed or similar action taken,
but payments on this obligation are being continued. A "C" also will be
assigned to a preferred stock issue in arrears on dividends or sinking fund
payments, but that is currently paying.

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

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

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


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

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

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

N.R. Not rated.

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

Bond Investment Quality Standards

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

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

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

A-2: A short-term obligation rated "A-2" is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to
meet its financial commitment on the obligation is satisfactory.

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


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

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

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

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

SP-1: Strong capacity to pay principal and interest. An issue with a very
strong capacity to pay debt service is given a (+) designation.

SP-2: Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over the term of the
notes.

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

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

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

Investment Grade:

AAA: Highest Credit Quality. "AAA" ratings denote the lowest expectation of
credit risk. They are assigned only in the case of exceptionally strong
capacity for timely payment of financial commitments. This capacity is highly
unlikely to be adversely affected by foreseeable events.

AA: Very High Credit Quality. "AA" ratings denote a very low expectation of
credit risk. They indicate a very strong capacity for timely payment of
financial commitments. This capacity is not significantly vulnerable to
foreseeable events.

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

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

Speculative Grade:

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


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

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

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

Entities rated in this category have defaulted on some or all of their
obligations. Entities rated "DDD" have the highest prospect for resumption of
performance or continued operation with or without a formal reorganization
process. Entities rated "DD" and "D" are generally undergoing a formal
reorganization or liquidation process; those rated "DD" are likely to satisfy a
higher portion of their outstanding obligations, while entities rated "D" have
a poor prospect for repaying all obligations.

Plus (+) and minus (-) signs may be appended to a rating symbol to denote
relative status within the major rating categories.  Plus and minus signs are
not added to the "AAA" category or to categories below "CCC," nor to short-term
ratings other than "F1" (see below).

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


F1: Highest credit quality. Strongest capacity for timely payment of financial
commitments. May have an added "+" to denote any exceptionally strong credit
feature.

F2: Good credit quality. A satisfactory capacity for timely payment of
financial commitments, but the margin of safety is not as great as in the case
of higher ratings.

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

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

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

D: Default. Denotes actual or imminent payment default.


                                   Appendix B

                             Industry Classification
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



                                   Appendix C

         OppenheimerFunds Special Sales Charge Arrangements and Waivers

In certain cases, the initial sales charge that applies to purchases of Class A
shares(2) of the Oppenheimer funds or the contingent deferred sales charge that
may apply to Class A, Class B or Class C shares may be waived.(3)  That is
because of the economies of sales efforts realized by OppenheimerFunds
Distributor, Inc., (referred to in this document as the "Distributor"), or by
dealers or other financial institutions that offer those shares to certain
classes of investors. Not all waivers apply to all funds.

For 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
         6) Individual Retirement Accounts ("IRAs"), including traditional
            IRAs, Roth IRAs, SEP-IRAs, SARSEPs or SIMPLE plans

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

Waivers that apply at the time shares are redeemed must be requested by the
shareholder and/or dealer in the redemption request.
I.  Applicability of Class A Contingent Deferred Sales Charges in Certain Cases
---------------------------------------------------------------------------------

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

      There is no initial sales charge on purchases of Class A shares of any of
the Oppenheimer funds in the cases listed below. However, these purchases may
be subject to the Class A contingent deferred sales charge if redeemed within
18 months (24 months in the case of Oppenheimer Rochester National Municipals
and Rochester Fund Municipals) of the beginning of the calendar month of their
purchase, as described in the Prospectus (unless a waiver described elsewhere
in this Appendix applies to the redemption). Additionally, on shares purchased
under these waivers that are subject to the Class A contingent deferred sales
charge, the Distributor will pay the applicable concession described in the
Prospectus under "Class A Contingent Deferred Sales Charge."(6) This waiver
provision applies to:
|_|   Purchases of Class A shares aggregating $1 million or more.
|_|   Purchases of Class A shares, prior to March 1, 2007, by a Retirement Plan
         that was permitted to purchase such shares at net asset value but
         subject to a contingent deferred sales charge prior to March 1, 2001.
         That included plans (other than IRA or 403(b)(7) Custodial Plans)
         that: 1) bought shares costing $500,000 or more, 2) had at the time of
         purchase 100 or more eligible employees or total plan assets of
         $500,000 or more, or 3) certified to the Distributor that it projects
         to have annual plan purchases of $200,000 or more.
|_|   Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the purchases
         are made:
         1) through a broker, dealer, bank or registered investment adviser
            that has made special arrangements with the Distributor for those
            purchases, or
         2) by a direct rollover of a distribution from a qualified Retirement
            Plan if the administrator of that Plan has made special
            arrangements with the Distributor for those purchases.
|_|   Purchases of Class A shares by Retirement Plans that have any of the
         following record-keeping arrangements:
         1) The record keeping is performed by Merrill Lynch Pierce Fenner &
            Smith, Inc. ("Merrill Lynch") on a daily valuation basis for the
            Retirement Plan. On the date the plan sponsor signs the
            record-keeping service agreement with Merrill Lynch, the Plan must
            have $3 million or more of its assets invested in (a) mutual funds,
            other than those advised or managed by Merrill Lynch Investment
            Management, L.P. ("MLIM"), that are made available under a Service
            Agreement between Merrill Lynch and the mutual fund's principal
            underwriter or distributor, and  (b)  funds advised or managed by
            MLIM (the funds described in (a) and (b) are referred to as
            "Applicable Investments").
         2) The record keeping for the Retirement Plan is performed on a daily
            valuation basis by a record keeper whose services are provided
            under a contract or arrangement between the Retirement Plan and
            Merrill Lynch. On the date the plan sponsor signs the record
            keeping service agreement with Merrill Lynch, the Plan must have $5
            million or more of its assets (excluding assets invested in money
            market funds) invested in Applicable Investments.
         3) The record keeping for a Retirement Plan is handled under a service
            agreement with Merrill Lynch and on the date the plan sponsor signs
            that agreement, the Plan has 500 or more eligible employees (as
            determined by the Merrill Lynch plan conversion manager).
II. Waivers of Class A Sales Charges of Oppenheimer Funds
---------------------------------------------------------------------------------

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

Class A shares purchased by the following investors are not subject to any
Class A sales charges (and no concessions are paid by the Distributor on such
purchases):
|_|   The Manager or its affiliates.
|_|   Present or former officers, directors, trustees and employees (and their
         "immediate families") of the Fund, the Manager and its affiliates, and
         retirement plans established by them for their employees. The term
         "immediate family" refers to one's spouse, children, grandchildren,
         grandparents, parents, parents-in-law, brothers and sisters, sons- and
         daughters-in-law, a sibling's spouse, a spouse's siblings, aunts,
         uncles, nieces and nephews; relatives by virtue of a remarriage
         (step-children, step-parents, etc.) are included.
|_|   Registered management investment companies, or separate accounts of
         insurance companies having an agreement with the Manager or the
         Distributor for that purpose.
|_|   Dealers or brokers that have a sales agreement with the Distributor, if
         they purchase shares for their own accounts or for retirement plans
         for their employees.
|_|   Employees and registered representatives (and their spouses) of dealers
         or brokers described above or financial institutions that have entered
         into sales arrangements with such dealers or brokers (and which are
         identified as such to the Distributor) or with the Distributor. The
         purchaser must certify to the Distributor at the time of purchase that
         the purchase is for the purchaser's own account (or for the benefit of
         such employee's spouse or minor children).
|_|   Dealers, brokers, banks or registered investment advisors that have
         entered into an agreement with the Distributor providing specifically
         for the use of shares of the Fund in particular investment products
         made available to their clients. Those clients may be charged a
         transaction fee by their dealer, broker, bank or advisor for the
         purchase or sale of Fund shares.
|_|   Investment advisors and financial planners who have entered into an
         agreement for this purpose with the Distributor and who charge an
         advisory, consulting or other fee for their services and buy shares
         for their own accounts or the accounts of their clients.
|_|   "Rabbi trusts" that buy shares for their own accounts, if the purchases
         are made through a broker or agent or other financial intermediary
         that has made special arrangements with the Distributor for those
         purchases.
|_|   Clients of investment advisors or financial planners (that have entered
         into an agreement for this purpose with the Distributor) who buy
         shares for their own accounts may also purchase shares without sales
         charge but only if their accounts are linked to a master account of
         their investment advisor or financial planner on the books and records
         of the broker, agent or financial intermediary with which the
         Distributor has made such special arrangements . Each of these
         investors may be charged a fee by the broker, agent or financial
         intermediary for purchasing shares.
|_|   Directors, trustees, officers or full-time employees of OpCap Advisors or
         its affiliates, their relatives or any trust, pension, profit sharing
         or other benefit plan which beneficially owns shares for those
         persons.
|_|   Accounts for which Oppenheimer Capital (or its successor) is the
         investment advisor (the Distributor must be advised of this
         arrangement) and persons who are directors or trustees of the company
         or trust which is the beneficial owner of such accounts.
|_|   A unit investment trust that has entered into an appropriate agreement
         with the Distributor.
|_|   Dealers, brokers, banks, or registered investment advisers that have
         entered into an agreement with the Distributor to sell shares to
         defined contribution employee retirement plans for which the dealer,
         broker or investment adviser provides administration services.
|_|   Retirement Plans and deferred compensation plans and trusts used to fund
         those plans (including, for example, plans qualified or created under
         sections 401(a), 401(k), 403(b) or 457 of the Internal Revenue Code),
         in each case if those purchases are made through a broker, agent or
         other financial intermediary that has made special arrangements with
         the Distributor for those purchases.
|_|   A TRAC-2000 401(k) plan (sponsored by the former Quest for Value
         Advisors) whose Class B or Class C shares of a Former Quest for Value
         Fund were exchanged for Class A shares of that Fund due to the
         termination of the Class B and Class C TRAC-2000 program on November
         24, 1995.
|_|   A qualified Retirement Plan that had agreed with the former Quest for
         Value Advisors to purchase shares of any of the Former Quest for Value
         Funds at net asset value, with such shares to be held through
         DCXchange, a sub-transfer agency mutual fund clearinghouse, if that
         arrangement was consummated and share purchases commenced by December
         31, 1996.
|_|   Effective March 1, 2007, purchases of Class A shares by a Retirement Plan
         that was permitted to purchase such shares at net asset value but
         subject to a contingent deferred sales charge prior to March 1, 2001.
         That included plans (other than IRA or 403(b)(7) Custodial Plans)
         that: 1) bought shares costing $500,000 or more, 2) had at the time of
         purchase 100 or more eligible employees or total plan assets of
         $500,000 or more, or 3) certified to the Distributor that it projects
         to have annual plan purchases of $200,000 or more.
|_|   Effective October 1, 2005, taxable accounts established with the proceeds
         of Required Minimum Distributions from Retirement Plans.

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

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):
|_|   Retirement Plans that have $5 million or more in plan assets.
|_|   Retirement Plans with a single plan sponsor that have $5 million or more
         in aggregate assets invested in Oppenheimer funds.

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

The Class A contingent deferred sales charge is also waived if shares that
would otherwise be subject to the contingent deferred sales charge are redeemed
in the following cases:
|_|   To make Automatic Withdrawal Plan payments that are limited annually to
         no more than 12% of the account value adjusted annually.
|_|   Involuntary redemptions of shares by operation of law or involuntary
         redemptions of small accounts (please refer to "Shareholder Account
         Rules and Policies," in the applicable fund Prospectus).
|_|   For distributions from Retirement Plans, deferred compensation plans or
         other employee benefit plans for any of the following purposes:
         1) Following the death or disability (as defined in the Internal
            Revenue Code) of the participant or beneficiary. The death or
            disability must occur after the participant's account was
            established.
         2) To return excess contributions.
         3) To return contributions made due to a mistake of fact.
4)    Hardship withdrawals, as defined in the plan.(7)
         5) Under a Qualified Domestic Relations Order, as defined in the
            Internal Revenue Code, or, in the case of an IRA, a divorce or
            separation agreement described in Section 71(b) of the Internal
            Revenue Code.
         6) To meet the minimum distribution requirements of the Internal
            Revenue Code.
         7) To make "substantially equal periodic payments" as described in
            Section 72(t) of the Internal Revenue Code.
         8) For loans to participants or beneficiaries.
         9) Separation from service.(8)
         10)      Participant-directed redemptions to purchase shares of a
            mutual fund (other than a fund managed by the Manager or a
            subsidiary of the Manager) if the plan has made special
            arrangements with the Distributor.
         11)      Plan termination or "in-service distributions," if the
            redemption proceeds are rolled over directly to an
            OppenheimerFunds-sponsored IRA.
|_|   For distributions from 401(k) plans sponsored by broker-dealers that have
         entered into a special agreement with the Distributor allowing this
         waiver.
|_|   For distributions from retirement plans that have $10 million or more in
         plan assets and that have entered into a special agreement with the
         Distributor.
|_|   For distributions from retirement plans which are part of a retirement
         plan product or platform offered by certain banks, broker-dealers,
         financial advisors, insurance companies or record keepers which have
         entered into a special agreement with the Distributor.
|_|   At the sole discretion of the Distributor, the contingent deferred sales
         charge may be waived for redemptions of shares requested by the
         shareholder of record within 60 days following the termination by the
         Distributor of the selling agreement between the Distributor and the
         shareholder of record's broker-dealer of record for the account.
III.  Waivers of Class B, Class C and Class N Sales Charges of Oppenheimer Funds
---------------------------------------------------------------------------------

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

A. Waivers for Redemptions in Certain Cases.

The Class B, Class C and Class N contingent deferred sales charges will be
waived for redemptions of shares in the following cases:
|_|   Shares redeemed involuntarily, as described in "Shareholder Account Rules
         and Policies," in the applicable Prospectus.
|_|   Redemptions from accounts other than Retirement Plans following the death
         or disability of the last surviving shareholder. The death or
         disability must have occurred after the account was established, and
         for disability you must provide evidence of a determination of
         disability by the Social Security Administration.

|_|   The contingent deferred sales charges are generally not waived following
         the death or disability of a grantor or trustee for a trust account.
         The contingent deferred sales charges will only be waived in the
         limited case of the death of the trustee of a grantor trust or
         revocable living trust for which the trustee is also the sole
         beneficiary. The death or disability must have occurred after the
         account was established, and for disability you must provide evidence
         of a determination of disability (as defined in the Internal Revenue
         Code).
|_|   Distributions from accounts for which the broker-dealer of record has
         entered into a special agreement with the Distributor allowing this
         waiver.
|_|   At the sole discretion of the Distributor, the contingent deferred sales
         charge may be waived for redemptions of shares requested by the
         shareholder of record within 60 days following the termination by the
         Distributor of the selling agreement between the Distributor and the
         shareholder of record's broker-dealer of record for the account.
|_|   Redemptions of Class B shares held by Retirement Plans whose records are
         maintained on a daily valuation basis by Merrill Lynch or an
         independent record keeper under a contract with Merrill Lynch.
|_|   Redemptions of Class C shares of Oppenheimer U.S. Government Trust from
         accounts of clients of financial institutions that have entered into a
         special arrangement with the Distributor for this purpose.
|_|   Redemptions of Class C shares of an Oppenheimer fund in amounts of $1
         million or more requested in writing by a Retirement Plan sponsor and
         submitted more than 12 months after the Retirement Plan's first
         purchase of Class C shares, if the redemption proceeds are invested to
         purchase Class N shares of one or more Oppenheimer funds.
|_|   Distributions(9) from Retirement Plans or other employee benefit plans
         for any of the following purposes:
         1) Following the death or disability (as defined in the Internal
            Revenue Code) of the participant or beneficiary. The death or
            disability must occur after the participant's account was
            established in an Oppenheimer fund.
         2) To return excess contributions made to a participant's account.
         3) To return contributions made due to a mistake of fact.
         4) To make hardship withdrawals, as defined in the plan.(10)
         5) To make distributions required under a Qualified Domestic Relations
            Order or, in the case of an IRA, a divorce or separation agreement
            described in Section 71(b) of the Internal Revenue Code.
         6) To meet the minimum distribution requirements of the Internal
            Revenue Code.
         7) To make "substantially equal periodic payments" as described in
            Section 72(t) of the Internal Revenue Code.
         8) For loans to participants or beneficiaries.(11)
         9) On account of the participant's separation from service.(12)
         10)      Participant-directed redemptions to purchase shares of a
            mutual fund (other than a fund managed by the Manager or a
            subsidiary of the Manager) offered as an investment option in a
            Retirement Plan if the plan has made special arrangements with the
            Distributor.
         11)      Distributions made on account of a plan termination or
            "in-service" distributions, if the redemption proceeds are rolled
            over directly to an OppenheimerFunds-sponsored IRA.
         12)      For distributions from a participant's account under an
            Automatic Withdrawal Plan after the participant reaches age 59 1/2, as
            long as the aggregate value of the distributions does not exceed
            10% of the account's value, adjusted annually.
         13)      Redemptions of Class B shares under an Automatic Withdrawal
            Plan for an account other than a Retirement Plan, if the aggregate
            value of the redeemed shares does not exceed 10% of the account's
            value, adjusted annually.
         14)      For distributions from 401(k) plans sponsored by
            broker-dealers that have entered into a special arrangement with
            the Distributor allowing this waiver.
|_|   Redemptions of Class B shares or Class C shares under an Automatic
         Withdrawal Plan from an account other than a Retirement Plan if the
         aggregate value of the redeemed shares does not exceed 10% of the
         account's value annually.

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

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

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

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

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

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

A. Reductions or Waivers of Class A Sales Charges.

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

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

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

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

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

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

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

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

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

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

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

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

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

      |X|   Class A Contingent Deferred Sales Charge. Certain shareholders of a
Fund and the other Former Connecticut Mutual Funds are entitled to continue to
make additional purchases of Class A shares at net asset value without a Class
A initial sales charge, but subject to the Class A contingent deferred sales
charge that was in effect prior to March 18, 1996 (the "prior Class A CDSC").
Under the prior Class



A CDSC, if any of those shares are redeemed within one year of purchase, they
will be assessed a 1% contingent deferred sales charge on an amount equal to
the current market value or the original purchase price of the shares sold,
whichever is smaller (in such redemptions, any shares not subject to the prior
Class A CDSC will be redeemed first).

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

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

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

      Additionally, Class A shares of a Fund may be purchased without a sales
charge by any holder of a variable annuity contract issued in New York State by
Connecticut Mutual Life Insurance Company


through the Panorama Separate Account which is beyond the applicable surrender
charge period and which was used to fund a qualified plan, if that holder
exchanges the variable annuity contract proceeds to buy Class A shares of the
Fund.

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

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

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

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


|_|   dealers, brokers, or registered investment advisors that had entered into
         an agreement with the Distributor or the prior distributor of the Fund
         specifically providing for the use of Class M shares of the Fund in
         specific investment products made available to their clients, and
|_|   dealers, brokers or registered investment advisors that had entered into
         an agreement with the Distributor or prior distributor of the Fund's
         shares to sell shares to defined contribution employee retirement
         plans for which the dealer, broker, or investment advisor provides
         administrative services.


                                   Appendix D

                          QUALIFYING HYBRID INSTRUMENTS

Section 2(f) of the Commodities Exchange Act (the "Act") ("Exclusion for
qualifying hybrid instruments")

   (1)   In general

      Nothing in this chapter (other than section 16(e)(2)(B) of this title)
      governs or is applicable to a hybrid instrument that is predominantly a
      security.

   (2)      Predominance.

      A hybrid instrument shall be considered to be predominantly a security if
-

         (A)
               the issuer of the hybrid instrument receives payment in full of
         the purchase price of the hybrid instrument, substantially
         contemporaneously with delivery of the hybrid instrument;

         (B)
               the purchaser or holder of the hybrid instrument is not required
         to make any payment to the issuer in addition to the purchase price
         paid under subparagraph (A), whether as margin, settlement payment, or
         otherwise, during the life of the hybrid instrument or at maturity;

         (C)
               the issuer of the hybrid instrument is not subject by the terms
         of the instrument to mark-to-market margining requirements; and

         (D)
               the hybrid instrument is not marketed as a contract of sale of a
         commodity for future delivery (or option on such a contract) subject
         to this chapter.

   (3)      Mark-to-market margining requirements.

         For the purposes of paragraph (2)(C), mark-to-market margining
   requirements do not include the obligation of an issuer of a secured debt
   instrument to increase the amount of collateral held in pledge for the
   benefit of the purchaser of the secured debt instrument to secure the
   repayment obligations of the issuer under the secured debt instrument.

CFTC Rule 34.3 Hybrid Instrument Exemption

(a) A hybrid instrument is exempt from all provisions of the Act and any person
or class of persons offering, entering into, rendering advice or rendering
other services with respect to such exempt hybrid instrument is exempt for such
activity from all provisions of the Act (except in each case Section
2(a)(1)(B)), provided the following terms and conditions are met:

   (1)  The instrument is:

        (i) An equity or debt security within the meaning of Section 2(l) of
        the Securities Act of 1933; or

        (ii) A demand deposit, time deposit or transaction account within the
        meaning of 12 CFR 204.2(b)(1), (c)(1) and (e), respectively, offered by
        an insured depository institution as defined in Section 3 of the
        Federal Deposit Insurance Act; an insured credit union as defined in
        Section 101 of the Federal Credit Union Act; or a Federal or State
        branch or agency of a foreign bank as defined in Section 1 of the
        International Banking Act;

   (2)  The sum of the commodity-dependent values of the commodity-dependent
        components is less than the commodity-independent value of the
        commodity-independent component;

   (3)  Provided that:

        (i) An issuer must receive full payment of the hybrid instrument's
        purchase price, and a purchaser or holder of a hybrid instrument may
        not be required to make additional out-of-pocket payments to the issuer
        during the life of the instrument or at maturity; and

        (ii) The instrument is not marketed as a futures contract or a
        commodity option, or, except to the extent necessary to describe the
        functioning of the instrument or to comply with applicable disclosure
        requirements, as having the characteristics of a futures contract or a
        commodity option; and

        (iii) The instrument does not provide for settlement in the form of a
        delivery instrument that is specified as such in the rules of a
        designated contract market;

   (4)  The instrument is initially issued or sold subject to applicable
        federal or state securities or banking laws to persons permitted
        thereunder to purchase or enter into the hybrid instrument.

                                   Appendix E

                          QUALIFYING SWAP TRANSACTIONS

Section 2(g) of the Act ("Excluded swap transactions")

      No provision of this chapter (other than section 7a (to the extent
provided in section 7a(g) of this title), 7a-1, 7a-3, or 16(e)(2) of this
title) shall apply to or govern any agreement, contract, or transaction in a
commodity other than an agricultural commodity if the agreement, contract, or
transaction is -

      (1) entered into only between persons that are eligible contract
participants at the time they enter into the agreement, contract, or
transaction;

      (2) subject to individual negotiation by the parties; and

      (3) not executed or traded on a trading facility.

CFTC Rule 35.2 Exemption

      A swap agreement is exempt from all provisions of the Act and any person
or class of persons offering, entering into, rendering advice, or rendering
other services with respect to such agreement, is exempt for such activity from
all provisions of the Act (except in each case the provisions of Sections
2(a)(1)(B), 4b, and 4o of the Act and Section 32.9 of this chapter as adopted
under Section 4c(b) of the Act, and the provisions of Sections 6(c) and 9(a)(2)
of the Act to the extent these provisions prohibit manipulation of the market
price of any commodity in interstate commerce or for future delivery on or
subject to the rules of any contract market), provided the following terms and
conditions are met:

      (a)   the swap agreement is entered into solely between eligible swap
participants at the time such persons enter into the swap agreement;

      (b)   the swap agreement is not part of a fungible class of agreements
that are standardized as to their material economic terms;

      (c)   the creditworthiness of any party having an actual or potential
obligation under the swap agreement would be a material consideration in
entering into or determining the terms of the swap agreement, including
pricing, cost, or credit enhancement terms of the swap agreement; and

      (d)   the swap agreement is not entered into and traded on or through a
multilateral transaction execution facility;

      Provided, however, That paragraphs (b) and (d) of Rule 35.2 shall not be
deemed to preclude arrangements or facilities between parties to swap
agreements, that provide for netting of payment obligations resulting from such
swap agreements nor shall these subsections be deemed to preclude arrangements
or facilities among parties to swap agreements, that provide for netting of
payments resulting from such swap agreements; Provided further, That any person
may apply to the Commission for exemption from any of the provisions of the Act
(except 2(a)(1)(B)) for other arrangements or facilities, on such terms and
conditions as the Commission deems appropriate, including but not limited
thereto, the applicability of other regulatory regimes.


Oppenheimer Commodity Strategy Total Return 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
   Deloitte & Touche LLP
   555 Seventeenth Street
   Denver, Colorado 80202

Counsel to the Funds
   Myer, Swanson, Adams & Wolf, P.C.
   1600 Broadway
   Denver, Colorado 80202

Counsel to the Independent Trustees
  Bell, Boyd & Lloyd LLC
  70 West Madison Street, Suite 3100
  Chicago, Illinois 60602

Special Counsel
   Kramer Levin Naftalis & Frankel LLP
   1177 Avenue of the Americas
   New York, New York 10036
1234
PX0735.001.0507



(1) In accordance with Rule 12b-1 of the Investment Company Act, the term
"Independent Trustees/Directors" 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 your separation from service in or after the year you
reached age 55.
(9) The distribution must be requested prior to Plan termination or the
elimination of the Oppenheimer funds as an investment option under the Plan.
(10) This provision does not apply to IRAs.
(11) This provision does not apply to loans from 403(b)(7) custodial plans and
loans from the OppenheimerFunds-sponsored Single K retirement plan.
(12) This provision does not apply to 403(b)(7) custodial plans if the
participant is less than age 55, nor to IRAs.