Oppenheimer Main Street Small Cap Fund^®

Supplement dated May 19, 2009 to the

Prospectus dated October 28, 2008

This supplement amends the Prospectus of Oppenheimer Main Street Small Cap Fund (the "Fund") dated October 28, 2008 and is in addition to the supplement dated May 15, 2009.

1. The second sentence of the first paragraph on the front cover page is deleted in its entirety and is replaced by the following:

It emphasizes investments in common stocks of companies with small market capitalizations based on analyses using fundamental research and quantitative models.

2. The first sentence in the section "The Fund's Main Investment Strategies," on page 3 of the Prospectus, is deleted in its entirety and is replaced by the following:

THE FUND'S MAIN INVESTMENT STRATEGIES. The Fund mainly invests in common stocks of small-capitalization U.S. companies based on fundamental analysis and quantitative models.

3. The section "How Do the Portfolio Managers Decide What Securities to Buy or Sell," on page 3 of the Prospectus, is deleted in its entirety and is replaced by the following:

HOW THE PORTFOLIO MANAGERS DECIDE WHAT SECURITIES TO BUY OR SELL.  The Fund's portfolio managers use fundamental research and quantitative models to select securities for the Fund's portfolio, which is comprised of both growth and value stocks. While the process may change over time or vary in particular cases, in general the selection process currently uses:

•   a fundamental approach in analyzing issuers on factors such as a company's financial performance and prospects, position in the industry, and strength of business model and management. The portfolio managers may also consider an industry's outlook, market trends and general economic conditions.

•   quantitative models to rank securities within each sector to identify potential buy and sell candidates.  A number of company-specific factors are analyzed in constructing the models, including valuation, fundamentals and momentum. 

The portfolio is constructed and regularly monitored based upon several analytical tools, including quantitative investment models.

The Fund aims to maintain a broadly diversified portfolio across all major economic sectors by applying investment parameters for both sector and position size. In addition, the portfolio managers use the following sell criteria:

•   the stock price is approaching its target

•   the company's competitive position deteriorates

•   poor execution by the company's management, or

•   more attractive alternative investment ideas have been identified.

4. The section "The Fund's Principal Investment Policies and Risks," under "About the Fund's Investments" on page 9 of the Prospectus, is deleted in its entirety and is replaced by the following:

THE FUND'S PRINCIPAL INVESTMENT POLICIES AND RISKS. The following strategies and types of investments are the ones that the Fund considers to be the most important in seeking to achieve its investment objective and the following risks are those the Fund expects its portfolio to be subject to as a whole.

COMMON STOCK.  Common stock represents an ownership interest in a company. It ranks below preferred stock and debt securities in claims for dividends and in claims for assets of the issuer in a liquidation or bankruptcy. Common stocks may be exchange-traded or over-the-counter securities. Over-the-counter securities may be less liquid than exchange-traded securities.

DIVERSIFICATION AND CONCENTRATION.  The Fund is a diversified fund. It attempts to reduce its exposure to the risks of individual stocks by diversifying its investments across a broad number of different companies. The Fund will not concentrate more than 25% of its total assets in issuers in any one industry.  At times, however, the Fund may emphasize investments in some industries more than others.

SMALL-CAP COMPANIES. The Fund invests mainly in the common stock of small cap companies. The small-cap companies in which the Fund invests may include companies that are developing new products or services with relatively favorable prospects, or that are expanding into new and growing markets. That may enable them to capture a dominant or important market position. Some small-cap companies may have a special area of expertise or the ability to take advantage of changes in market or demographic factors in a more profitable way than larger, more established companies.

5. The paragraphs entitled "Risks of Foreign Investing" and "Time Zone Arbitrage" under "Other Investment Strategies and Risks," beginning on page 10 of the Prospectus, are deleted in their entirety and replaced by the following:

Foreign Investing. The Fund can buy securities issued by companies or governments in any country, including in developing or emerging market countries. While there is no limit on the Fund's foreign investments, the Fund does not currently plan to invest a significant amount of its assets in securities of foreign issuers.

While foreign securities may offer special investment opportunities, there are also special risks. A change in the value of a foreign currency against the U.S. dollar will result in a change in the U.S. dollar value of the Fund's securities that are denominated in that foreign currency. Additionally, foreign issuers are usually not subject to the same accounting and disclosure requirements that U.S. companies are subject to. The value of foreign investments may be affected by exchange control regulations, expropriation or nationalization of a company's assets, foreign taxes, delays in settlement of transactions, changes in economic or monetary policy in the United States or abroad, or other political and economic factors.

If the Fund invests a significant amount of its assets in foreign securities, it may be exposed to "time-zone arbitrage" attempts by investors seeking to take advantage of differences in the values of foreign securities that might result from events that occur after the close of the foreign securities market on which a security is traded and before the close of the New York Stock Exchange (the "NYSE") that day, when the Fund's net asset value is calculated. If such time-zone arbitrage were successful, it might dilute the interests of other shareholders. However, the Fund's use of "fair value pricing" under certain circumstances, to adjust the closing market prices of foreign securities to reflect what the Manager and the Board believe to be their fair value, may help deter those activities.

The Fund may invest in securities of foreign issuers that are traded on U.S. or foreign exchanges. The Fund may purchase American Depository Shares ("ADS") as part of American Depository Receipt ("ADR") issuances, which are negotiable certificates issued by a U.S. bank representing a specified number of shares in a foreign stock traded on a U.S. exchange. They are subject to some of the special considerations and risks, discussed above, that apply to foreign securities traded and held abroad.

Master Limited Partnerships. The Fund may invest in publicly traded limited partnerships known as "master limited partnerships" or MLPs. MLPs issue units that are registered with the Securities and Exchange Commission and are freely tradable on a securities exchange or in the over-the-counter market. An MLP consists of one or more general partners, who conduct the business, and one or more limited partners, who contribute capital. The Fund, as a limited partner, normally would not be liable for the debts of the MLP beyond the amounts the Fund has contributed, but would not be shielded to the same extent that a shareholder of a corporation would be. In certain circumstances creditors of an MLP would have the right to seek return of capital distributed to a limited partner. This right of an MLP's creditors would continue after the Fund sold its investment in the MLP. MLPs are typically real estate, oil and gas and equipment leasing vehicles, but they also finance movies, research and development, and other projects.

Exchange-Traded Funds. The Fund can invest in exchange-traded funds (ETFs), 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 securities represented by the ETF's portfolio at times when the Fund may not be able to buy those securities directly. As a shareholder of an investment company, the Fund would be subject to its ratable share of that investment company's expenses, including its advisory and administration expenses. At the same time, the Fund would bear its own management fees and expenses. The Fund does not intend to invest in other ETFs unless the portfolio manager believes that the potential benefits of the investment justify the expenses. The Funds' investments in the securities of other investment companies are subject to the limits that apply to those types of investments under the Investment Company Act.

6. The section "How the Fund is Managed – Portfolio Managers," on page 15 of the Prospectus, is deleted in its entirety and is replaced by the following:

Portfolio Managers. The Fund's portfolio is managed by Matthew P. Ziehl and Raman Vardharaj, who are primarily responsible for the day-to-day management of the Fund's investments. Mr. Ziehl has been lead portfolio manager of the Fund and Mr. Vardharaj has been co-portfolio manager of the Fund since May 2009.

Mr. Ziehl has been a Vice President and portfolio manager of the Manager since May 2009. Prior to joining the Manager, Mr. Ziehl was a portfolio manager with RS Investment Management Co. LLC from October 2006 to May 2009 and served as a managing director at The Guardian Life Insurance Company of America from December 2001 to October 2006 when Guardian Life Insurance acquired an interest in RS Investment Management Co. LLC. From January 2001 to December 2001, he was a team leader and co-portfolio manager, from August 1999 to December 2000 co-portfolio manager, and from May 1998 to August 1999 a small-cap analyst with Salomon Brothers Asset Management, Inc. for small growth portfolios. Mr. Ziehl is a portfolio manager of other portfolios in the OppenheimerFunds complex.

Mr. Vardharaj, CFA, has been a Vice President and portfolio manager of the Manager since May 2009. Prior to joining the Manager, Mr. Vardharaj was sector manager and a senior quantitative analyst creating stock selection models, monitoring portfolio risks and analyzing portfolio performance across the RS Core Equity Team of RS Investment Management Co. LLC from October 2006 to May 2009. He served as quantitative analyst at The Guardian Life Insurance Company of America from 1998 to October 2006 when Guardian Life Insurance acquired an interest in RS Investment Management Co. LLC. Mr. Vardharaj is a portfolio manager of other portfolios in the OppenheimerFunds complex.

The Statement of Additional Information provides additional information about the portfolio managers' compensation, other accounts they manage and their ownership of Fund shares.

May 19, 2009     

PS0847.028

Oppenheimer Main Street Small Cap Fund^®

6803 South Tucson Way, Centennial, Colorado 80112-3924

1.800.CALL OPP (225.5677)

Statement of Additional Information dated October 28, 2008, revised May 19, 2009

This Statement of Additional Information is not a Prospectus. This document contains additional information about the Fund and supplements information in the Prospectus dated October 28, 2008. It should be read together with the Prospectus. You can obtain the Prospectus by writing to the Fund's Transfer Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217, or by calling the Transfer Agent at the toll-free number shown above, or by downloading it from the OppenheimerFunds Internet website at www.oppenheimerfunds.com.

Contents	Page
About the Fund
Additional Information about the Fund's Investment Policies and Risks	2
The Fund's Investment Policies	2
Other Investment Techniques and Strategies	7
Other Investment Restrictions	21
Disclosure of Portfolio Holdings	23
How the Fund is Managed	27
Organization and History	27
Board of Trustees and Oversight Committees	28
Trustees and Officers of the Fund	29
The Manager	38
Brokerage Policies of the Fund	44
Distribution and Service Plans	46
Payments to Fund Intermediaries	51
Performance of the Fund	56
About Your Account
How To Buy Shares	61
How To Sell Shares	71
How To Exchange Shares	76
Dividends, Capital Gains and Taxes	78
Additional Information About the Fund	83
Financial Information About the Fund
Report of Independent Registered Public Accounting Firm	84
Financial Statements	85
Appendix A: OppenheimerFunds Special Sales Charge Arrangements and Waivers	A-1

about The FUnd

Additional Information About the Fund's Investment Policies and Risks

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

The Fund's Investment Policies. The composition of the Fund's portfolio and the techniques and strategies that the Fund's Manager may use in selecting portfolio securities will vary over time. The Fund is not required to use all of the investment techniques and strategies described below at all times in seeking its goal. It may use some of the special investment techniques and strategies at some times or not at all.
 

n     Investments in Small-Cap Equity Securities. The Fund focuses its investments in equity securities of small market capitalization ("small cap") growth and/or undervalued U.S. companies. Equity securities include common stocks, preferred stocks, rights and warrants, and securities convertible into common stock. The Fund's investments primarily include stocks of companies having a market capitalization less than or equal to the largest company in the Russell 2000 and S&P 600 indices.

     The Fund can also hold a portion of its assets in securities of issuers having a larger market capitalization. Although under normal market conditions, the Fund will invest at least 80% of its net assets (including any borrowings for investment purposes) in equity securities having small market capitalization, at times, in the Manager's view, the market may favor or disfavor securities of issuers of a particular capitalization range.

      Current income is not a criterion used to select portfolio securities. However, certain debt securities may be selected for the Fund's portfolio for defensive purposes (including debt securities that the Manager believes may offer some opportunities for capital appreciation when stocks are disfavored). Other debt securities may be selected because they are convertible into common stock, as discussed below in "Convertible Securities."

·     Over-the-Counter Securities. Securities of small-cap issuers may be traded on securities exchanges or in the over-the-counter market. The over-the-counter markets, both in the U.S. and abroad, may have less liquidity than securities exchanges. That can affect the price the Fund is able to obtain when it wants to sell a security.

     Small-cap companies may offer greater opportunities for capital appreciation than securities of large, more established companies. However, these securities also involve greater risks than securities of larger companies. Securities of small-cap issuers may be subject to greater price volatility in general than securities of large-cap and mid-cap companies. Therefore, to the degree that the Fund has investments in smaller capitalization companies at times of market volatility, the Fund's share price may fluctuate more. As noted below, the Fund limits its investments in unseasoned small cap issuers.

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

(1)      whether, at the option of the investor, the convertible security can be exchanged for a fixed number of shares of common stock of the issuer,

(2)      whether the issuer of the convertible securities has restated its earnings per share of common stock on a fully diluted basis (considering the effect of conversion of the convertible securities), and

(3)      the extent to which the convertible security may be a defensive "equity substitute," providing the ability to participate in any appreciation in the price of the issuer's common stock.

Convertible securities rank senior to common stock in a corporation's capital structure and therefore are subject to less risk than common stock in case of the issuer's bankruptcy or liquidation.

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: 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.

     The Fund has no limitations on the ratings of the convertible debt securities that it can buy. They can include securities that are investment grade or below investment grade. Securities that are below investment grade (whether they are rated by a nationally-recognized rating organization or are unrated securities that the Manager deems to be below investment grade) have greater risks of default than investment grade securities. Additionally, debt securities are subject to interest rate risk. Their values tend to fall when interest rates rise. The Fund does not anticipate that it will invest a substantial amount of its assets in these types of securities.

·     Rights and Warrants. The Fund can invest up to 5% of its total assets in warrants or rights. That 5% limit does not apply to warrants and rights the Fund has acquired as part of units of securities or that are attached to other securities that the Fund buys. Warrants basically are options to purchase equity securities at specific prices valid for a specific period of time. Their prices do not necessarily move parallel to the prices of the underlying securities. Rights are similar to warrants, but normally have a short duration and are distributed directly by the issuer to its shareholders. Rights and warrants have no voting rights, receive no dividends and have no rights with respect to the assets of the issuer.

·     Preferred Stock. Preferred stock, unlike common stock, has a stated dividend rate payable from the corporation's earnings. Preferred stock dividends may be cumulative or non-cumulative. "Cumulative" dividend provisions require all or a portion of prior unpaid dividends to be paid before dividends can be paid on the issuer's common stock. Preferred stock may be "participating" stock, which means that it may be entitled to a dividend exceeding the stated dividend in certain cases.

If interest rates rise, the fixed dividend on preferred stocks may be less attractive, causing the price of preferred stocks to decline. Preferred stock may have mandatory sinking fund provisions, as well as provisions allowing calls or redemptions prior to maturity, which can also have a negative impact on prices when interest rates decline. Preferred stock generally has a preference over common stock on the distribution of a corporation's assets in the event of liquidation of the corporation. The rights of preferred stock on distribution of a corporation's assets in the event of a liquidation are generally subordinate to the rights associated with a corporation's debt securities.

• Publicly Traded Partnerships; Master Limited Partnerships. The Fund may invest in publicly traded limited partnerships such as master limited partnerships ("MLPs"). MLPs issue units that are registered with the Securities and Exchange Commission (the "SEC") and are freely tradable on a securities exchange or in the over-the-counter market. An MLP may have one or more general partners, who conduct the business, and one or more limited partners, who contribute capital. The general partner or partners are jointly and severally responsible for the liabilities of the MLP. The Fund invests as a limited partner, and normally would not be liable for the debts of an MLP beyond the amounts the Fund has contributed but it would not be shielded to the same extent that a shareholder of corporation would be. In certain circumstances, creditors of an MLP would have the right to seek a return of capital that had been distributed to a limited partner. This right of an MLP's creditors would continue even after the Fund had sold its investment in the partnership. MLPs typically invest in real estate, oil and gas and equipment leasing assets, but they also finance entertainment, research and development, and other projects.

     The Fund currently invests in MLPs that are taxed as corporations for United States federal tax purposes and that make distributions in additional shares rather than cash. Because these distributions of additional shares will be made proportionately to all owners of shares, the receipt of these additional shares will not be included in the gross income of an owner of shares for United States federal income tax purposes. When the Fund as an owner of the shares of such an MLP receives additional shares, it will be required to allocate its tax basis in its shares of the MLP equally between shares that the Fund already owns and the new additional shares received. Gain or loss recognized by the Fund as an owner of shares, on the sale or other disposition of a share will generally be taxable as capital gain or loss.

     As a regulated investment company, the Fund is required to derive at least 90% of its gross income for every taxable year from qualifying income. As an owner of shares of an MLP, the Fund will not report on its United States federal income tax return any of an MLP's items of income, gain, loss and deduction. Thus, ownership of shares by the Fund will not result in income which is not qualifying income to the fund that elects to qualify as a regulated investment company for federal tax purposes. Furthermore, any gain from the sale or other disposition of the shares of an MLP that the Fund owns, and the associated purchase rights, will qualify for purposes of that 90% test. Finally, shares, and the associated purchase rights, will constitute qualifying assets to mutual funds which also must own at least 50% qualifying assets at the end of each quarter.

n     Foreign Securities. Although the Fund intends to focus its investments in U.S. securities, it can purchase equity securities issued or guaranteed by foreign companies. "Foreign securities" include equity and debt securities of companies organized under the laws of countries other than the United States. They may be traded on foreign securities exchanges or in the foreign over-the-counter markets.

     Securities of foreign issuers that are represented by American Depository Receipts or that are listed on a U.S. securities exchange or traded in the U.S. over-the-counter markets are not considered "foreign securities" for the purpose of the Fund's investment allocations. That is because they are not subject to many of the special considerations and risks, discussed below, that apply to foreign securities traded and held abroad.
 

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

·     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:

·      reduction of income by foreign taxes;

·      fluctuation in value of foreign investments due to changes in currency rates or currency control regulations (for example, currency blockage);

·      transaction charges for currency exchange;

·      lack of public information about foreign issuers;

·      lack of uniform accounting, auditing and financial reporting standards in foreign countries comparable to those applicable to domestic issuers;

·      less volume on foreign exchanges than on U.S. exchanges;

·      greater volatility and less liquidity on foreign markets than in the U.S.;

·      less governmental regulation of foreign issuers, stock exchanges and brokers than in the U.S.;

·      greater difficulties in commencing lawsuits;

·      higher brokerage commission rates than in the U.S.;

·      increased risks of delays in settlement of portfolio transactions or loss of certificates for portfolio securities;

·      possibilities in some countries of expropriation, confiscatory taxation, political, financial or social instability or adverse diplomatic developments; and

·      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.
 

·     Special Risks of Emerging Markets. Emerging and developing markets abroad may also offer special opportunities for growth 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.

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

     Investing in PFICs involves the risks associated with investing in foreign securities, as

described above. There are also the risks that the Fund may not realize that a foreign corporation it

invests in is a PFIC for federal tax purposes. Federal tax laws impose severe tax penalties for

failure to properly report investment income from PFICs. Following industry standards, the Fund

makes every effort to ensure compliance with federal tax reporting of these investments. PFICs are

considered foreign securities for the purposes of the Fund's minimum percentage requirements or

limitations 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 PFIC's

(since nearly all of the income of a mutual fund is generally passive income). Investing in these

types of PFIC's may allow exposure to various countries because some foreign countries limit, or

prohibit, all direct foreign investment in the securities of companies domiciled therein.

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

n     Portfolio Turnover. "Portfolio turnover" describes the rate at which the Fund traded its portfolio securities during its last fiscal year. For example, if a fund sold all of its securities during the year, its portfolio turnover rate would have been 100% annually. The Fund's portfolio turnover rate will fluctuate from year to year, and the Fund can have a portfolio turnover rate of 100% or more.

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

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

n     Investing in Unseasoned Companies. The Fund can invest in securities of unseasoned companies. These are companies that have been in operation for less than three years, including the operations of any predecessors. Securities of these companies may be subject to volatility in their prices. They might have a limited trading market, which could adversely affect the Fund's ability to dispose of them and could reduce the price the Fund might be able to obtain for them. Other investors that own a security issued by an unseasoned issuer for which there is limited liquidity might trade the security when the Fund is attempting to dispose of its holdings of that security. In that case the Fund might receive a lower price for its holdings than might otherwise be obtained. The Fund currently does not intend to invest more than 20% of its net assets in those securities.

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

     The majority of these transactions run from day to day, 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 (the Board may increase that limit to 15%). There is no limit on the amount of the Fund's net assets that may be subject to repurchase agreements having maturities of seven days or less.
 
     Repurchase agreements, considered "loans" under the Investment Company Act, are collateralized by the underlying security. The Fund's repurchase agreements require that at all times while the repurchase agreement is in effect, the value of the collateral must equal or exceed the repurchase price to fully collateralize the repayment obligation. However, if the vendor fails to pay the resale price on the delivery date, the Fund may incur costs in disposing of the collateral and may experience losses if there is any delay in its ability to do so. The Manager will monitor the vendor's creditworthiness to confirm that the vendor is financially sound and will continuously monitor the collateral's value.

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

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

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

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

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

n     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 subject to its non fundamental investment policy on investing in other investment companies. For example, the Fund can invest in Exchange-Traded Funds, which are typically open-end funds or unit investment trusts, listed on a stock exchange. The Fund might do so as a way of gaining exposure to the segments of the equity or fixed-income markets represented by the Exchange-Traded Funds' portfolio, at times when the Fund may not be able to buy those portfolio securities directly.

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

n     Loans of Portfolio Securities. The Fund may lend its portfolio securities pursuant to a Securities Lending Agency Agreement (the "Securities Lending Agreement") with The Goldman Sachs Trust Company, doing business as Goldman Sachs Agency Lending ("Goldman Sachs"), subject to the restrictions stated in the Prospectus. The Fund will lend portfolio securities to attempt to increase its income. Goldman Sachs has agreed, in general, to guarantee the obligations of borrowers to return loaned securities and to be responsible for certain expenses relating to securities lending. Under the Securities Lending Agreement, the Fund's securities lending procedures and applicable regulatory requirements (which are subject to change), the Fund must receive collateral from the borrower consisting of cash, bank letters of credit or securities of the U.S. government (or its agencies or instrumentalities). On each business day, the amount of collateral that the Fund has received must at least equal the value of the loaned securities. If the Fund receives cash collateral from the borrower, the Fund may invest that cash in certain high quality, short-term investments specified in its securities lending procedures. The Fund will be responsible, for the risks associated with the investment of cash collateral, including the risk that the Fund may lose money on the investment or may fail to earn sufficient income to meet its obligations to the borrower.

     The terms of the Fund's portfolio loans must comply with all applicable regulations and with the Fund's Securities Lending Procedures adopted by the Board. The terms of the loans must permit the Fund to recall loaned securities on five business days' notice and the Fund will seek to recall loaned securities in time to vote on any matters that the Manager determines would have a material effect on the Fund's investment. The Securities Lending Agreement may be terminated by either Goldman Sachs or the Fund on 30 days' written notice.

n     Borrowing. The Fund has the ability to borrow from banks on an unsecured basis to invest the borrowed funds in portfolio securities. This speculative technique is known as "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.

     Currently, under the Investment Company Act, a mutual fund may borrow only from banks and the maximum amount it may borrow is up to one-third of its total assets (including the amount borrowed) less all liabilities and indebtedness other than borrowing, except that a fund may borrow up to 5% of its total assets for temporary purposes from any person. Under the Investment Company Act, there is a rebuttable presumption that a loan is temporary if it is repaid within 60 days and not extended or renewed.

Although the fund has obtained an exemptive order that also allows it to borrow from affiliated investment companies, it has no current plans to do so. As a matter of fundamental policy, the Fund is authorized to borrow up to 33 1/3% of its total assets. During periods of substantial borrowings, the value of the Fund's assets would be reduced due to the added expense of interest on borrowed monies. The Fund is authorized to borrow, and to pledge assets to secure such borrowings, up to the maximum extent permissible under the Investment Company Act (i.e., presently 50% of net assets). Any such borrowing will be made only pursuant to the requirements of the Investment Company Act and will be made only to the extent that the value of each 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 a Fund's assets, so computed, should fail to meet the 300% asset coverage requirement, the Fund is required, within three days thereafter (not including Sundays and holidays) to reduce its bank debt to the extent necessary to meet such requirement and may have to sell a portion of its investments at a time when independent investment judgment would not dictate such sale. Interest on money borrowed is an expense the Fund would not otherwise incur, so that it may have little or no net investment income during periods of substantial borrowings. If it does borrow, its expenses will be greater, other things being equal, than comparable funds that do not borrow. Since substantially all of a Fund's assets fluctuate in value, but borrowing obligations are fixed when the Fund has outstanding borrowings, the net asset value per share of a Fund correspondingly will tend to increase and decrease more when the Fund's assets increase or decrease in value than would otherwise be the case.

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

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

n     Hedging. The Fund can use 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, or to facilitate selling securities for investment reasons. To do so, the Fund could:

·      sell futures contracts,

·      buy puts on futures or on securities, or

·      write covered calls on securities or futures. Covered calls can also be used to increase the Fund's income, but the Manager does not expect to engage extensively in that practice.

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

·      buy futures, or

·      buy calls on such futures or on securities.

     The Fund is not obligated to use hedging instruments, even though it is permitted to use them in the Manager's discretion, as described below. The Fund's strategy of hedging with futures and options on futures will be incidental to the Fund's activities in the underlying cash market. The particular hedging instruments the Fund can use are described below. The Fund may employ new hedging instruments and strategies when they are developed, if those investment methods are consistent with the Fund's investment objective and are permissible under applicable regulations governing the Fund. The Fund cannot purchase securities on margin. However, the Fund can make margin deposits in connection with any of the hedging instruments permitted by any of its other policies.

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

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

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

     No money is paid or received by the Fund on the purchase or sale of a future. Upon entering into a futures transaction, the Fund will be required to deposit an initial margin payment with the futures commission merchant (the "futures broker"). Initial margin payments will be deposited with the Fund's custodian bank in an account registered in the futures broker's name. However, the futures broker can gain access to that account only under specified conditions. As the future is marked to market (that is, its value on the Fund's books is changed) to reflect changes in its market value, subsequent margin payments, called variation margin, will be paid to or by the futures broker daily. 

     At any time prior to expiration of the future, the Fund may elect to close out its position by taking an opposite position, at which time a final determination of variation margin is made and any additional cash must be paid by or released to the Fund. Any loss or gain on the future is then realized by the Fund for tax purposes. All futures transactions, except forward contracts, are effected through a clearinghouse associated with the exchange on which the contracts are traded.

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

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

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

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

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

     When the Fund writes an over-the-counter ("OTC") option, it will enter into an arrangement with a primary U.S. government securities dealer which will establish a formula price at which the Fund will have the absolute right to repurchase that OTC option. The formula price will generally be based on a multiple of the premium received for the option, plus the amount by which the option is exercisable below the market price of the underlying security (that is, the option is "in the money"). When the Fund writes an OTC option, it will treat as illiquid (for purposes of its restriction on holding illiquid securities) the mark-to-market value of any OTC option it holds, unless the option is subject to a buy-back agreement by the executing broker.

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

The Fund may also write calls on a futures contract without owning the futures contract or securities deliverable under the contract. To do so, at the time the call is written, the Fund must cover the call by segregating an equivalent dollar amount of liquid assets on its books. The Fund will identify additional liquid assets on its books to cover the call if the value of the identified 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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Fund's option activities could affect its portfolio turnover rate and brokerage commissions. The exercise of calls written by the Fund might cause the Fund to sell related portfolio securities, thus increasing its turnover rate. The exercise by the Fund of puts on securities will cause the sale of underlying investments, increasing portfolio turnover. Although the decision whether to exercise a put it holds is within the Fund's control, holding a put might cause the Fund to sell the related investments for reasons that would not exist in the absence of the put.

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

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

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

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

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

The ordinary spreads between prices in the cash and futures markets are subject to distortions, due to differences in the nature of those markets. First, all participants in the futures market are subject to margin deposit and maintenance requirements. Rather than meeting additional margin deposit requirements, investors may close futures contracts through offsetting transactions which could distort the normal relationship between the cash and futures markets. Second, the liquidity of the futures market depends on participants entering into offsetting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity in the futures market could be reduced, thus producing distortion. Third, from the point of view of speculators, the deposit requirements in the futures market are less onerous than margin requirements in the securities markets. Therefore, increased participation by speculators in the futures market may cause temporary price distortions.

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

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

The Fund could also use forward contracts to lock in the U.S. dollar value of portfolio positions. This is called a "position hedge." When the Fund believes that foreign currency might suffer a substantial decline against the U.S. dollar, it could enter into a forward contract to sell an amount of that foreign currency approximating the value of some or all of the Fund's portfolio securities denominated in that foreign currency. When the Fund believes that the U.S. dollar might suffer a substantial decline against a foreign currency, it could enter into a forward contract to buy that foreign currency for a fixed dollar amount.

Alternatively, the Fund could enter into a forward contract to sell a different foreign currency for a fixed U.S. dollar amount if the Fund believes that the U.S. dollar value of the foreign currency to be sold pursuant to its forward contract will fall whenever there is a decline in the U.S. dollar value of the currency in which portfolio securities of the Fund are denominated. That is referred to as a "cross hedge."

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

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

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

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

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

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

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

·      Regulatory Aspects of Hedging Instruments. The Commodities Futures Trading

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

Transactions in options by the Fund are subject to limitations established by the option exchanges. The exchanges limit the maximum number of options that may be written or held by a single investor or group of investors acting in concert. Those limits apply regardless of whether the options were written or purchased on the same or different exchanges or are held in one or more accounts or through one or more different exchanges or through one or more brokers. Thus, the number of options that the Fund may write or hold may be affected by options written or held by other entities, including other investment companies having the same 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.

Under the Investment Company Act, when the Fund purchases a future, it must maintain cash or readily marketable short-term debt instruments in an amount equal to the market value of the securities underlying the future, less the margin deposit applicable to it.

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

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

Under the Internal Revenue Code, the following gains or losses are treated as ordinary income or loss:

(1)      gains or losses attributable to fluctuations in exchange rates that occur between the time the Fund accrues interest or other receivables or accrues expenses or other liabilities denominated in a foreign currency and the time the Fund actually collects such receivables or pays such liabilities, and

(2)      gains or losses attributable to fluctuations in the value of a foreign currency between the date of acquisition of a debt security denominated in a foreign currency or foreign currency forward contracts and the date of disposition.

     Currency gains and losses are offset against market gains and losses on each trade before determining a net "Section 988" gain or loss under the Internal Revenue Code for that trade, which may increase or decrease the amount of the Fund's investment income available for distribution to its shareholders.

n     Temporary Defensive and Interim Investments. When market conditions are unstable, or the Manager believes it is otherwise appropriate to reduce holdings in stocks, the Fund can invest in a variety of debt securities for defensive purposes. The Fund can buy:

·      high-quality (rated in the top rating categories of nationally-recognized rating organizations or deemed by the Manager to be of comparable quality), short-term money market instruments, including those issued by the U. S. Treasury or other government agencies,

·      commercial paper (short-term, unsecured, promissory notes of domestic or foreign companies) rated in the top rating category of a nationally recognized rating organization,

·      debt obligations of corporate issuers, rated investment grade (rated at least Baa by Moody's Investors Service, Inc. or at least BBB by Standard & Poor's Corporation, or a comparable rating by another rating organization), or unrated securities judged by the Manager to have a comparable quality to rated securities in those categories,

·      preferred stocks,

·      certificates of deposit and bankers' acceptances of domestic and foreign banks and savings and loan associations, and

·      repurchase agreements.

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

Other Investment Restrictions

n     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:

o67% 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

omore 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.
 

n     Does the Fund Have Additional Fundamental Policies?

The following investment restrictions are fundamental policies of the Fund.

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

·     The Fund cannot make loans except (a) through lending of securities, (b) through the purchase of debt securities or similar evidences of indebtedness, (c) through an interfund-lending program with other affiliated funds, and (d) through repurchase agreements.

·     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 borrowing at all times in the manner set forth in the Investment Company Act.

·     The Fund cannot concentrate investments. That means it cannot invest 25% or more of its total assets in companies in any one industry. Obligations of the U.S. government, its agencies and instrumentalities are not considered to be part of an "industry" for the purposes of this restriction.

·     The Fund cannot invest in real estate or in interests in real estate. However, the Fund can purchase securities of companies holding real estate or interests in real estate.

·     The Fund cannot invest in physical commodities or physical commodity contracts or buy securities for speculative short-term purposes. However, the Fund can buy and sell any of the hedging instruments permitted by any of its other policies. It can also buy and sell options, futures, securities or other instruments backed by physical commodities or whose investment return is linked to changes in the price of physical commodities.

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

·     The Fund cannot issue "senior securities," but this does not prohibit certain investment activities for which assets of the Fund are designated as segregated, or margin, collateral or escrow arrangements are established, to cover the related obligations. Examples of those activities include borrowing money, reverse repurchase agreements, delayed-delivery and when-issued arrangements for portfolio securities transactions, and contracts to buy or sell derivatives, hedging instruments, options or futures.

n     Does the Fund Have Other Restrictions that are Not Fundamental Policies?

      The Fund has an additional restriction on its investment policies that are not fundamental, which means that it can be changed by the Board of Trustees, without obtaining shareholder approval.

·     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.

·     With respect to the Fund's non-fundamental policy to invest, under normal circumstances, at least 80% of its net assets (plus the amount of any borrowings used for investment purposes) in equity securities of "small-cap" issuers, the Fund will provide shareholders at least 60 days' prior notice of any change in such policy as required by the Investment Company Act.

     Unless the Prospectus or this Statement of Additional Information states that a percentage restriction applies on an on-going basis, it applies only at the time the Fund makes an investment (except in cases of borrowing and investments in illiquid securities). The Fund need not sell securities to meet the percentage limits if the value of the investment increases in proportion to the size of the Fund.

For purposes of the Fund's policy not to concentrate its investments as described above, the Fund has adopted industry classifications that are not a fundamental policy.

Disclosure of Portfolio Holdings. The Fund has adopted policies and procedures concerning the dissemination of information about its portfolio holdings by employees, officers and/or directors of the Manager, 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.
 

·      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 and its subsidiaries pursuant to agreements approved by the Fund's Board shall not be deemed to be "compensation" or "consideration" for these purposes. It is a violation of the Code of Ethics for any covered person to release holdings in contravention of portfolio holdings disclosure policies and procedures adopted by the Fund.
 
A list of the top 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:
 

·      The third-party recipient must first submit a request for release of Fund portfolio holdings, explaining the business reason for the request;

·      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

·      The third-party recipient must sign the Manager's portfolio holdings non-disclosure agreement before receiving the data, agreeing to keep information that is not publicly available regarding the Fund's holdings confidential and agreeing not to trade directly or indirectly based on the information.

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

·      Employees of the Fund's Manager, Distributor and Transfer Agent who need to have access to such information (as determined by senior officers of such entity),

·      The Fund's independent registered public accounting firm,

·      Members of the Fund's Board and the Board's legal counsel,

·      The Fund's custodian bank,

·      A proxy voting service designated by the Fund and its Board,

·      Rating/ranking organizations (such as Lipper and Morningstar),

·      Portfolio pricing services retained by the Manager to provide portfolio security prices, and

·      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:
 

·      Brokers and dealers in connection with portfolio transactions (purchases and sales)

·      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)

·      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:
 

·      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,

·      Response to regulatory requests for information (the SEC, Financial Industry Regulatory Authority ("FINRA"), state securities regulators, and/or foreign securities authorities, including without limitation requests for information in inspections or for position reporting purposes),

·      To potential sub-advisers of portfolios (pursuant to confidentiality agreements),

·      To consultants for retirement plans for plan sponsors/discussions at due diligence meetings (pursuant to confidentiality agreements),

·      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 then-current policy on approved methods for communicating confidential information.
 
The Chief Compliance Officer (the "CCO") of the Fund and the Manager, Distributor, and Transfer Agent shall oversee the compliance by the Manager, Distributor, Transfer Agent, and their personnel with these policies and procedures. At least annually, the CCO shall report to the Fund's Board on such compliance oversight and on the categories of entities and individuals to which disclosure of portfolio holdings of the Fund has been made during the preceding year pursuant to these policies. The CCO shall report to the Fund's Board any material violation of these policies and procedures 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	Oscar Gruss
ABN AMRO	Fox-Pitt, Kelton	OTA
AG Edwards	Friedman, Billing, Ramsey	Pacific Crest Securities
Allen & Co	Gabelli	Piper Jaffray Inc.
American Technology Research	Garp Research	Portales Partners
Auerbach Grayson	Gartner	Punk Ziegel & Co
Avondale	George K Baum & Co.	Raymond James
Banc of America Securities	Goldman Sachs	RBC
Barra	Howard Weil	Reuters
BB&T	HSBC	RiskMetrics/ISS
Belle Haven	ISI Group	Robert W. Baird
Bloomberg	ITG	Roosevelt & Cross
BMO Capital Markets	Janco	Russell
BNP Paribas	Janney Montgomery	Sandler O'Neil
Brean Murray	Jefferies	Sanford C. Bernstein
Brown Brothers	JMP Securities	Scotia Capital Markets
Buckingham Research Group	JNK Securities	Sidoti
Canaccord Adams	Johnson Rice & Co	Simmons
Caris & Co.	JP Morgan Securities	Sander Morris Harris
CIBC World Markets	Kaufman Brothers	Societe Generale
Citigroup Global Markets	Keefe, Bruyette & Woods	Soleil Securities Group
CJS Securities	Keijser Securities	Standard & Poors
Cleveland Research	Kempen & Co. USA Inc.	State Street Bank
Cogent	Kepler Equities/Julius Baer Sec	Stephens, Inc.
Collins Stewart	KeyBanc Capital Markets	Stifel Nicolaus
Cowen & Company	Lazard Freres & Co	Stone & Youngberg
Craig-Hallum Capital Group LLC	Leerink Swan	Strategas Research
Credit Agricole Cheuvreux N.A. Inc.	Loop Capital Markets	Sungard
Credit Suisse	Louise Yamada Tech Research	Suntrust Robinson Humphrey
Data Communique	MainFirst Bank AG	SWS Group
Daiwa Securities	Makinson Cowell US Ltd	Think Equity Partners
Davy	McAdmas Wright	Thomas Weisel Partners
Deutsche Bank Securities	Merrill Lynch	Thomson Financial
Dougherty Markets	Miller Tabak	UBS
Dowling	Mizuho Securities	Virtusa Corporation
Empirical Research	Moodys Research	Wachovia Securities
Enskilda Securities	Morgan Stanley	Wedbush
Exane BNP Paribas	Natexis Bleichroeder	Weeden
Factset	Ned Davis Research Group	William Blair
Fidelity Capital Markets	Needham & Co
First Albany	Nomura Securities
Fixed Income Securities	Oppenheimer & Co.

How the Fund is Managed

Organization and History. The Fund is an open-end, diversified management investment company with an unlimited number of authorized shares of beneficial interest. The Fund was organized as a Massachusetts business trust in May 1999.

n     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. Each class of shares:

·      has its own dividends and distributions,

·      pays certain expenses which may be different for the different classes,

·      will generally have a different net asset value,

·      will generally have separate voting rights on matters in which interests of one class are different from interests of another class, and

·      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.

n     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.

n     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 George C. Bowen (Chairman), Edward L. Cameron, Robert J. Malone and F. William Marshall, Jr. The Audit Committee held 4 meetings during the Fund's fiscal year ended June 30, 2008. 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), Jon S. Fossel and Beverly L. Hamilton. The Review Committee held 4 meetings during the Fund's fiscal year ended June 30, 2008. 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 adequacy of the Fund's Codes of Ethics, 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, Edward L. Cameron, Beverly L. Hamilton and F. William Marshall, Jr. The Governance Committee held 2 meetings during the Fund's fiscal year ended June 30, 2008. 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 Code 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 Capital Income Fund	Oppenheimer Principal Protected Trust
Oppenheimer Cash Reserves	Oppenheimer Principal Protected Trust II
Oppenheimer Champion Income Fund	Oppenheimer Principal Protected Trust III
Oppenheimer Commodity Strategy Total Return Fund	Oppenheimer Senior Floating Rate 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.
Oppenheimer Main Street Opportunity Fund
Oppenheimer Main Street Small Cap Fund	Centennial California Tax Exempt Trust
Oppenheimer Master Event-Linked Bond Fund, LLC	Centennial Government Trust
Oppenheimer Master Loan Fund, LLC	Centennial Money Market Trust
Oppenheimer Municipal Fund	Centennial New York Tax Exempt Trust
Oppenheimer Portfolio Series Fixed Income Active Allocation Fund	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. Present or former officers, directors, trustees and employees (and their eligible family members) of the Fund, the Manager and its affiliates, its parent company and the subsidiaries of its parent company, and retirement plans established for the benefit of such individuals, are also permitted to purchase Class Y shares of the Oppenheimer funds that offer Class Y shares.

Messrs. Murphy, Petersen, Szilagyi, Vandehey, Wixted, Zack and Mss. Bloomberg and Ives, who are officers of the Fund, hold the same offices with one or more of the other Board II Funds. As of October 3, 2008 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) with the Fund, Length of Service, Age	Principal Occupation(s) During the Past 5 Years; Other Trusteeships/Directorships Held; Number of Portfolios in the Fund Complex Currently Overseen	Dollar Range of Shares Beneficially Owned in the Fund		Aggregate Dollar Range of Shares Beneficially Owned in All Supervised Funds
		As of December 31, 2007
William L. Armstrong, Chairman of the Board of Trustees since 2003, Trustee since 1999 Age: 71	President, Colorado Christian University (since 2006); Chairman, Cherry Creek Mortgage Company (since 1991), Chairman, Centennial State Mortgage Company (since 1994), Chairman, The El Paso Mortgage Company (since 1993); Chairman, Ambassador Media Corporation (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 39 portfolios in the OppenheimerFunds complex.	None	Over $100,000
George C. Bowen, Trustee since 1999 Age: 72	Assistant Secretary and Director of Centennial Asset Management Corporation (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 39 portfolios in the OppenheimerFunds complex.	Over $100,000	Over $100,000
Edward L. Cameron, Trustee since 1999 Age: 70	Member of The Life Guard of Mount Vernon (George Washington historical site) (June 2000 – June 2006); Partner of 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 39 portfolios in the OppenheimerFunds complex.	$50,001-$100,000	Over $100,000
Jon S. Fossel, Trustee since 1999 Age: 66	Director of UNUMProvident (insurance company) (since June 2002); Director of Northwestern 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 February 2005-February 2007); 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 39 portfolios in the OppenheimerFunds complex.	None	Over $100,000
Sam Freedman, Trustee since 1999 Age: 68	Director of Colorado UpLIFT (charitable organization) (since September 1984). Mr. Freedman held several positions with the Manager and with subsidiary or affiliated companies of the Manager (until October 1994). Oversees 39 portfolios in the OppenheimerFunds complex.	$50,001-$100,000	Over $100,000
Beverly L. Hamilton, Trustee since 2002 Age: 62	Trustee of Monterey Institute for International Studies (educational 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 (2006-2007) 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 (2001-2006) 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 39 portfolios in the OppenheimerFunds complex.	None	None
Robert J. Malone, Trustee since 2002 Age: 64	Board of Directors of Opera Colorado Foundation (non-profit organization) (since March 2008); Director of Jones Knowledge, Inc. (since 2006); Director of Jones International University (educational organization) (since August 2005); Chairman, Chief Executive Officer and Director of Steele Street Bank & Trust (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 39 portfolios in the OppenheimerFunds complex.	$50,001-$100,000	Over $100,000
F. William Marshall, Jr., Trustee since 2000 Age: 66	Trustee of MassMutual Select Funds (formerly MassMutual Institutional Funds) (investment company) (since 1996) and MML Series Investment Fund (investment company) (since 1996); Trustee of Worcester 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 41 portfolios in the OppenheimerFunds complex.*	None	Over $100,000

*     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, 11^th 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. He serves as an officer for an indefinite term, which would end: (a) upon the request of the Board, (b) if he is no longer an officer of the Manager., (c) if a material change in his duties occurs that are inconsistent with a position as officer the Fund, or (d) upon his resignation, retirement, or death. 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 above) for which he is a director or trustee.

Interested Trustee and Officer
Name, Position(s) Held with the Fund, Length of Service, Age	Principal Occupation(s) During the Past 5 Years; Other Trusteeships/Directorships Held; Number of Portfolios in the Fund Complex Currently Overseen	Dollar Range of Shares Beneficially Owned in the Fund		Aggregate Dollar Range Of Shares Beneficially Owned in All Supervised Funds
		As of December 31, 2007
John V. Murphy, Trustee, President and Principal Executive Officer since 2001 Age: 59	Chairman, Chief Executive Officer and Director of the Manager (since June 2001); President of the Manager (September 2000-February 2007); President and director or trustee of other Oppenheimer funds; President and Director of Oppenheimer Acquisition Corp. (" OAC") (the Manager's parent holding company) and of Oppenheimer Partnership Holdings, Inc. (holding company subsidiary of the Manager) (since July 2001); Director of OppenheimerFunds Distributor, Inc. (subsidiary of the Manager) (November 2001-December 2006); 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); Chairman (since October 2007) and Member of the Investment Company Institute' s Board of Governors (since October 2003). Oversees 103 portfolios in the OppenheimerFunds complex.	$10,001-$50,000	Over $100,000

The addresses of the officers in the chart below are as follows: for Messrs. 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, which would end: (a) upon the request of the Board, (b) if he or she is no longer an officer of the Manager., (c) if a material change in his or her duties occurs that are inconsistent with a position as officer the Fund, or (d) upon his or her resignation, retirement, or death.

Other Officers of the Fund
Name, Position(s) Held with the Fund, Length of Service, Age	Principal Occupation(s) During Past 5 Years
Mark S. Vandehey, Vice President and Chief Compliance Officer since 2004 Age: 58	Senior Vice President and Chief Compliance Officer of the Manager (since March 2004); Chief Compliance Officer of OppenheimerFunds Distributor, Inc., Centennial Asset Management and Shareholder Services, Inc. (since March 2004); Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset Management Corporation and Shareholder Services, Inc. (since June 1983); Former Vice President and Director of Internal Audit of the Manager (1997-February 2004). An officer of 103 portfolios in the OppenheimerFunds complex.
Brian W. Wixted, Treasurer and Principal Financial & Accounting Officer since 1999 Age: 49	Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer of the following: HarbourView Asset Management Corporation, Shareholder Financial Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management, Inc. and Oppenheimer Partnership Holdings, Inc. (since March 1999), 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 (charitable trust program established by the Manager) (since June 2003); Treasurer and Chief Financial Officer of OFI Trust Company (trust company subsidiary of the Manager) (since May 2000); Assistant Treasurer of the following: OAC (since March 1999), Centennial Asset Management Corporation (March 1999-October 2003) and OppenheimerFunds Legacy Program (April 2000-June 2003). An officer of 103 portfolios in the OppenheimerFunds complex.
Brian S. Petersen, Assistant Treasurer since 1999 Age: 38	Vice President of the Manager (since February 2007); Assistant Vice President of the Manager (August 2002-February 2007); Manager/Financial Product Accounting of the Manager (November 1998-July 2002). An officer of 103 portfolios in the OppenheimerFunds complex
Brian C. Szilagyi, Assistant Treasurer since 2005 Age: 38	Assistant Vice President of the Manager (since July 2004); Director of Financial Reporting and Compliance of First Data Corporation (April 2003-July 2004); Manager of Compliance of Berger Financial Group LLC (May 2001-March 2003). An officer of 103 portfolios in the OppenheimerFunds complex.
Robert G. Zack, Vice President and Secretary since 2001 Age: 60	Executive Vice President (since January 2004) and General Counsel (since March 2002) of the Manager; General Counsel and Director of the Distributor (since December 2001); General Counsel of Centennial Asset Management Corporation (since December 2001); Senior Vice President and General Counsel of HarbourView Asset Management Corporation (since December 2001); Secretary and General Counsel of OAC (since November 2001); Assistant Secretary (since September 1997) and Director (since November 2001) of OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President and Director of Oppenheimer Partnership Holdings, Inc. (since December 2002); Director of Oppenheimer Real Asset Management, Inc. (since November 2001); Senior Vice President, General Counsel and Director of Shareholder Financial Services, Inc. and Shareholder Services, Inc. (since December 2001); Senior Vice President, General Counsel and Director of OFI Private Investments, Inc. and OFI Trust Company (since November 2001); Vice President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice President and General Counsel of OFI Institutional Asset Management, Inc. (since November 2001); Director of OppenheimerFunds (Asia) Limited (since December 2003); Senior Vice President (May 1985-December 2003). An officer of 103 portfolios in the OppenheimerFunds complex.
Lisa I. Bloomberg, Assistant Secretary since 2004 Age: 40	Vice President (since 2004) and Deputy General Counsel (since May 2008); of the Manager; Associate Counsel of the Manager (May 2004-May 2008); First Vice President (April 2001-April 2004), Associate General Counsel (December 2000-April 2004) of UBS Financial Services, Inc. An officer of 103 portfolios in the OppenheimerFunds complex.
Kathleen T. Ives, Assistant Secretary since 2001 Age: 43	Senior Vice President (since May 2009), Vice President (since June 1998), Deputy General Counsel (since May 2008) and Assistant Secretary (since October 2003) of the Manager; Vice President (since 1999) and Assistant Secretary (since October 2003) of the Distributor; Assistant Secretary of Centennial Asset Management Corporation (since October 2003); Vice President and Assistant Secretary of Shareholder Services, Inc. (since 1999); Assistant Secretary of OppenheimerFunds Legacy Program and Shareholder Financial Services, Inc. (since December 2001); Senior Counsel of the Manager (October 2003-May 2008). An officer of 103 portfolios in the OppenheimerFunds complex.

n     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 June 30, 2008. The total compensation 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, 2007.

Name of Trustee and Other Fund Position(s) (as applicable)	Aggregate Compensation From the Fund (1) Fiscal year ended June 30, 2008	Total Compensation From the Fund and Fund Complex(2) Year ended December 31, 2007
William L. Armstrong Chairman of the Board and Governance Committee Member	$16,019	$228,062
George C. Bowen Audit Committee Member	$11,837	$158,000
Edward L. Cameron Audit Committee Chairman	$11,658	$189,600
Jon S. Fossel Review Committee Member	$10,525	$161,423
Sam Freedman Review Committee Chairman	$12,281	$178,277
Beverly Hamilton Review Committee Member and Governance Committee Member	$10,680 (3)	$158,000
Robert J. Malone Governance Committee Chairman and Audit Committee Member	$12,281	$181,700
F. William Marshall, Jr. Audit Committee Member and Governance Committee Member	$10,680	$239,664(4)

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 $10,680 deferred by Ms. Hamilton under the "Compensation Deferral Plan" described below.

4.      Includes $81,664 compensation paid to Mr. Marshall for serving as a Trustee for MassMutual Select Funds and MML Series Investment Fund.

n      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.

n     Major Shareholders. As of October 3, 2008, the only persons or entities who owned of record or were known by the Fund to own beneficially 5% or more of any class of the Fund's outstanding shares were:

Charles Schwab & Co Inc, Special Custody Acct for the Exclusive Benefit of Customers, Attn: Mutual Funds, 101 Montgomery Street, San Francisco, CA 94104-4122, which owned 14,623,477.620 Class A shares (7.98% of the Class A shares then outstanding).
 

MLPF & S for the Sole Benefit of its Customers, Attn: Fund Admn, 4800 Deer Lake Dr E, Fl 3, Jacksonville FL, 32246-6484, which owned 13,965,681.412 Class A shares (7.62 of the Class A shares outstanding).

PIMSPrudential Retirement, as Nominee for the TteeCust. Pl, NC 401(K) Plan, NC Dept of State Treasurer, 325 N. Salisbury Street, Raleigh, NC 27603, which owned 10,713,413.323 Class A shares (5.85% of the Class A shares outstanding).

Citigroup Global Mkts Inc, Attn: Cindy Tempesta, 7^th Fl., 333 West 34^th Street, New York, NY 10001-2483, which owned 1,487,591.083 Class C shares (5.09% of the Class C shares outstanding).

MLPF & S for the Sole Benefit of its Customers, Attn: Fund Admn #, 4800 Deer Lake Dr E, Fl 3, Jacksonville, FL 32246-6484 which owned 2,998,810.130 Class C shares (10.26% of the Class C shares outstanding).

     
ING Life Insurance and Annuity Comp, FBO Aliac Trade Settlement, Attn: Fund Operations, 151 Farmington Ave # TN41, Hartford, CT 06156-0001 which owned 864,439.015 Class N shares (5.31% of the Class N shares outstanding).

Hartford Life Insurance Co., Separate Account 457, Attn: UIT Operations, PO Box 2999, Hartford, CT 06104-2999 which owned 1,578,192.785 Class N shares (9.70% of the Class N shares outstanding).

ING National Trust, Attn: Fund Operations, 151 Farmington Ave # TN41, Hartford, CT 06156-0001, which owned 891,461.575 Class N shares (5.48% of the Class N shares outstanding).

MLPF & S for the Sole Benefit of its Customers, Attn: Fund Admn, 4800 Deer Lake Dr E, Fl 3, Jacksonville, FL 32246-6484 which owned 1,452,799.213 Class N shares (8.93% of the Class N shares outstanding).

Oppenheimer Portfolio Series, Active Allocation, Attn: FPA Trade Settle (2-FA), 6803 S Tucson Way, Centennial CO 80112-3924 which owned 7,921,181.157 Class Y shares (11.85% of the Class Y shares outstanding).

Prudential Investment MNG SVCS, FBO Mutual Fund Clients, Attn: PruChoice Unit, 100 Mulberry Street, Mail Stop NY 05-11-20 which owned 8,670,648.255 Class Y shares (12.97% of the Class Y shares outstanding).
 

NFS LLC FEBO, Regions BK DBA Kenneburt CO, 250 Riverchase Pkwy E. FL 5, Birmingham, AL 35244-183, which owned 3,351,462.723 Class Y shares (5.01% of the Class Y shares outstanding).

Wells Fargo Bank NA, FBO WF Wealthbuilder Tactical, Eqiity Portfolio, 13357100, PO Box 1533, Minneapolis MN, 55480-1533, which owned 3,819,659.294 Class Y shares (5.71% of the Class Y shares outstanding).

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

n      Code of Ethics. The Fund, the Manager and the Distributor have a Code of Ethics. It is designed to detect and prevent improper personal trading by certain employees, including portfolio managers, that would compete with or take advantage of the Fund's portfolio transactions. Covered persons include persons with knowledge of the investments and investment intentions of the Fund and other funds advised by the Manager. The Code of Ethics does permit personnel subject to the Code to invest in securities, including securities that may be purchased or held by the Fund, subject to a number of restrictions and controls. Compliance with the Code of Ethics is carefully monitored and enforced by the Manager.

The Code of Ethics is an exhibit to the Fund's registration statement filed with the SEC and can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. You can obtain information about the hours of operation of the Public Reference Room by calling the SEC at 1.202.551.8090. 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.

n     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 held by the Fund ("portfolio proxies"). OppenheimerFunds, Inc. generally undertakes to vote portfolio proxies with a view to enhancing the value of the company's stock held by the Funds. The Fund has retained an independent, third party proxy voting 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 material conflicts of interest 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 procedures, as long as OFI determines that the course of action is consistent with the best interests of the Fund and its shareholders: (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; (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; and (3) 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:

·      The Fund evaluates director nominees on a case-by-case basis, examining the following factors, among others: composition of the board and key board committees, experience and qualifications, attendance at board meetings, corporate governance provisions and takeover activity, long-term company performance and the nominee's investment in the company.

·      The Fund generally supports proposals requiring the position of chairman to be filled by an independent director unless there are compelling reasons to recommend against the proposal such as a counterbalancing governance structure.

·      The Fund generally supports proposals asking that a majority of directors be independent. The Fund generally supports proposals asking that a board audit, compensation, and/or nominating committee be composed exclusively of independent directors.

·      The Fund generally supports shareholder proposals to reduce a super-majority vote requirement, and opposes management proposals to add a super-majority vote requirement.

·      The Fund generally supports proposals to allow shareholders the ability to call special meetings.

·      The Fund generally supports proposals to allow or make easier shareholder action by written consent.

·      The Fund generally votes against proposals to create a new class of stock with superior voting rights.

·      The Fund generally votes against proposals to classify a board.

·      The Fund generally supports proposals to eliminate cumulative voting.

·      The Fund generally opposes re-pricing of stock options without shareholder approval.

·      The Fund generally supports proposals to require majority voting for the election of directors.

·      The Fund generally supports proposals seeking additional disclosure of executive and director pay information.

·      The Fund generally supports proposals seeking disclosure regarding the company's, board's or committee's use of compensation consultants.

·      The Fund generally supports "pay-for-performance" proposals that align a significant portion of total compensation of senior executives to company performance.

·      The Fund generally supports having shareholder votes on poison pills.

·      The Fund generally supports proposals calling for companies to adopt a policy of not providing tax gross-up payments.

·      In the case of social, political and environmental responsibility issues, the Fund will generally abstain where there could be a detrimental impact on share value or where the perceived value if the proposal was adopted is unclear or unsubstantiated.  The Fund generally supports proposals that would clearly have a discernible positive impact on short- or long-term share value, or that would have a presently indiscernible impact on short- or long-term share value but promotes general long-term interests of the company and its shareholders.

     The Fund is required to file Form N-PX, with its complete proxy voting record for the 12 months ended June 30^th, no later than August 31^st 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.

n      The Investment Advisory Agreement. The Manager provides investment advisory and management services to the Fund under an investment advisory agreement between the Manager and the Fund. The Manager selects securities for the Fund's portfolio and handles its day-to-day business. The portfolio managers of the Fund are employed by the Manager and are the persons who are principally responsible for the day-to-day management of the Fund's portfolio. Other members of the Manager's Equity Portfolio Team provide the portfolio managers with counsel and support in managing the Fund's portfolio.

The agreement requires the Manager, at its expense, to provide the Fund with adequate office space, facilities and equipment. It also requires the Manager to provide and supervise the activities of all administrative and clerical personnel required to provide effective administration for the Fund. Those responsibilities include the compilation and maintenance of records with respect to its operations, the preparation and filing of specified reports, and composition of proxy materials and registration statements for continuous public sale of shares of the Fund.
 
The Fund pays expenses not expressly assumed by the Manager under the advisory agreement. The advisory agreement lists examples of expenses paid by the Fund. The major categories relate to interest, taxes, brokerage commissions, fees to certain Trustees, legal and audit expenses, custodian and transfer agent expenses, share issuance costs, certain printing and registration costs and non-recurring expenses, including litigation costs. The management fees paid by the Fund to the Manager are calculated at the rates described in the Prospectus, which are applied to the assets of the Fund as a whole. The fees are allocated to each class of shares based upon the relative proportion of the Fund's net assets represented by that class. The management fees paid by the Fund to the Manager during its last three fiscal years were:

Fiscal Year ended 6/30	Management Fees Paid to OppenheimerFunds, Inc.
2006	$22,260,586
2007	$30,918,366
2008	$34,222,387

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

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

Pending Litigation. During 2009, a number of complaints have been filed in federal courts against the Manager, the Distributor, and certain other mutual funds ("Defendant Funds") advised by the Manager and distributed by the Distributor. The complaints naming the Defendant Funds also name certain officers and trustees and former trustees of the respective Defendant Fund. The plaintiffs are seeking class action status on behalf of those who purchased shares of the respective Defendant Fund during a particular time period. The complaints against the Defendant Funds raise claims under federal securities laws to the effect that, among other things, the disclosure documents of the respective Defendant Fund contained misrepresentations and omissions, that such Defendant Fund's investment policies were not followed, and that such Defendant Fund and the other defendants violated federal securities laws and regulations. The plaintiffs seek unspecified damages, equitable relief and an award of attorneys' fees and litigation expenses.
 
     A complaint brought in state court against the Manager, the Distributor and another subsidiary of the Manager (but not against the Fund), on behalf of the Oregon College Savings Plan Trust alleges a variety of claims, including breach of contract, breach of fiduciary duty, negligence and violation of state securities laws. Plaintiffs seek compensatory damages, equitable relief and an award of attorneys' fees and litigation expenses.
 

Other complaints have been filed in state and federal courts, by investors who made investments through an affiliate of the Manager, against the Manager and certain of its affiliates, regarding the alleged investment fraud perpetrated by Bernard Madoff and his firm ("Madoff"). Those lawsuits, in 2008 and 2009, allege a variety of claims, including breach of fiduciary duty, fraud, negligent misrepresentation, unjust enrichment, and violation of federal and state securities laws and regulations, among others. They seek unspecified damages, equitable relief and an award of attorneys' fees and litigation expenses. None of the suits have named the Distributor, any of the Oppenheimer mutual funds or any of their independent Trustees or Directors. None of the Oppenheimer funds invested in any funds or accounts managed by Madoff.

The Manager believes that the lawsuits described above are without legal merit and intends to defend them vigorously. The Defendant Funds' Boards of Trustees have also engaged counsel to defend the suits vigorously on behalf of those Funds, their boards and the individual independent Trustees named in those suits. While it is premature to render any opinion as to the likelihood of an outcome in these lawsuits, or whether any costs that the Defendant Funds may bear in defending the suits might not be reimbursed by insurance, the Manager believes that these suits should not impair the ability of the Manager or the Distributor to perform their respective duties to the Fund, and that the outcome of all of the suits together should not have any material effect on the operations of any of the Oppenheimer Funds.

Portfolio Managers. The Fund's portfolio is managed by Matthew P. Ziehl, and Raman Vardharaj (each is referred to as a "Portfolio Manager" and collectively they are referred to as the "Portfolio Managers"). They are the persons who are responsible for the day-to-day management of the Fund's investments.

Other Accounts Managed. In addition to managing the Fund's investment portfolio, each Portfolio Manager also manages other investment portfolios and accounts on behalf of the Manager or its affiliates. The following table provides information, as of June 30, 2008, regarding the other portfolios managed by each Portfolio Manager. No account has a performance-based advisory fee:

Portfolio Manager	Registered Investment Companies Managed	Total Assets in Registered Investment Companies Managed1	Other Pooled Investment Vehicles Managed	Total Assets in Other Pooled Investment Vehicles Managed1	Other Accounts Managed	Total Assets in Other Accounts Managed2
Matthew P. Ziehl	N/A	N/A	N/A	N/A	N/A	N/A
Raman Vardharaj	N/A	N/A	N/A	N/A	N/A	N/A

1.     In millions.
2.      Does not include personal accounts of portfolio managers and their families, which are subject to the Code of Ethics.
3. Mssrs. Ziehl and Vardharaj did not become portfolio managers until May 2009/

As indicated above, some 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 fund or account are the same as, or different from, the Fund's investment objectives and strategies. For example, the Portfolio Manager may need to allocate investment opportunities between the Fund and another fund or account having similar objectives or strategies, or he may need to execute transactions for another fund or account that could have a negative impact on the value of securities held by the Fund. Not all funds and accounts advised by the Manager have the same management fee. If the management fee structure of another fund or account is more advantageous to the Manager than the fee structure of the Fund, the Manager could have an incentive to favor the other fund or account. However, the Manager's compliance procedures and Code of Ethics recognize the Manager's fiduciary obligations to treat all of its clients, including the Fund, fairly and equitably, and are designed to preclude the Portfolio Managers from favoring one client over another. It is possible, of course, that those compliance procedures and the Code of Ethics may not always be adequate to do so. At different times, one or more of 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, Fund performance is the most important element of compensation with half of annual cash compensation based on relative investment performance results of the funds or 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 June 30, 2008, the Portfolio Manager's compensation consisted of three elements: a base salary, an annual discretionary bonus and eligibility to participate in long-term awards of options and stock appreciation rights in regard to the common stock of the Manager's holding company parent. Senior portfolio managers may also be eligible to participate in the Manager's deferred compensation plan.

The base pay component of each portfolio manager is reviewed regularly to ensure that it reflects the performance of the individual, is commensurate with the requirements of the particular portfolio, reflects any specific competence or specialty of the individual manager, and is competitive with other comparable positions. The annual discretionary bonus is determined by senior management of the Manager and is based on a number of factors, including a fund's pre-tax performance for periods of up to five years, measured against an appropriate Lipper benchmark selected by management. The majority (80%) is based on three and five year data, with longer periods weighted more heavily. Below median performance in all three periods results in an extremely low, and in some cases no, performance based bonus. The Lipper benchmark used with respect to the Fund is Lipper Small Cap Core Funds. Other factors considered include management quality (such as style consistency, risk management, sector coverage, team leadership and coaching) and organizational development. The Portfolio Manager's compensation is not based on the total value of the Fund's portfolio assets, although the Fund's investment performance may increase those assets. The compensation structure is also intended to be internally equitable and serve to reduce potential conflicts of interest between the Fund and other funds and accounts managed by the Portfolio Manager. The compensation structure of the other funds and accounts currently managed by the Portfolio Managers is the same as the compensation structure of the Fund, described above.

Ownership of Fund Shares. As of June 30, 2008 each Portfolio Manager beneficially owned shares of the Fund as follows:

Portfolio Manager	Range of Shares Beneficially Owned in the Fund
Matthew P. Ziehl1	N/A
Raman Vardharaj1	N/A

1. Mssrs. Ziehl and Vardharaj did not become portfolio managers until May 2009.

Brokerage Policies of the Fund

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

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

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

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

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

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

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

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

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

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

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

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

During the fiscal years ended June 30, 2006, 2007 and 2008, the Fund paid the total brokerage commissions indicated in the chart below. During the fiscal year ended June 30, 2008, the Fund paid $4,947,289 in commissions to firms that provide brokerage and research services to the Fund with respect to $10,985,909,545 of aggregate portfolio transactions. All such transactions were on a "best execution" basis, as described above. The provision of research services was not necessarily a factor in the placement of all such transactions.

Fiscal Year Ended 6/30	Total Brokerage Commissions Paid by the Fund*
2006	$10,870,578
2007	$18,602,581
2008	$11,109,063

*     Amounts do not include spreads or commissions on principal transactions on a net trade basis.

Distribution and Service Plans

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

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

Fiscal Year Ended 6/30:	Aggregate Front-End Sales Charges on Class A Shares	Class A Front-End Sales Charges Retained by Distributor*
2006	$4,752,630	$1,220,212
2007	$4,337,358	$1,111,582
2008	$3,286,322	$819,765

*     Includes amounts retained by a broker-dealer that is an affiliate or a parent of the Distributor.

Fiscal Year Ended 6/30:	Concessions on Class A Shares Advanced by Distributor*	Concessions on Class B Shares Advanced by Distributor*	Concessions on Class C Shares Advanced by Distributor*	Concessions on Class N Shares Advanced by Distributor*
2006	$409, 261	$1,740,476	$1,159,423	$130,336
2007	$441,317	$1,213,697	$792,923	$47,021
2008	$335,227	$862,318	$502,060	$45,034

*     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 Year Ended 6/30:	Class A Contingent Deferred Sales Charges Retained by Distributor	Class B Contingent Deferred Sales Charges Retained by Distributor	Class C Contingent Deferred Sales Charges Retained by Distributor	Class N Contingent Deferred Sales Charges Retained by Distributor
2006	$2,897	$673,707	$51,076	$91,636
2007	$16,834	$584,975	$62,155	$5,649
2008	$79,495	$533,818	$63,346	$5,471

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 Trustees¹, 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.

n      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 June 30, 2008 payments under the Class A plan totaled $8,758,112, of which $22,496 was retained by the Distributor under the arrangement described above, regarding grandfathered retirement accounts, and included $304,018 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.

n      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 for which recipients receive service fees 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:

·      pays sales concessions to authorized brokers and dealers at the time of sale and pays service fees as described above,

·      may finance payment of sales concessions and/or the advance of the service fee payment to recipients under the plans, or may provide such financing from its own resources or from the resources of an affiliate,

·      employs personnel to support distribution of Class B, Class C and Class N shares,

·      bears the costs of sales literature, advertising and prospectuses (other than those furnished to current shareholders) and state "blue sky" registration fees and certain other distribution expenses,

·      may not be able to adequately compensate dealers that sell Class B, 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,

·      receives payments under the plans consistent with the service fees and asset-based sales charges paid by other non-proprietary funds that charge 12b-1 fees,

·      may use the payments under the plan to include the Fund in various third-party distribution programs that may increase sales of Fund shares,

·      may experience increased difficulty selling the Fund's shares if payments under the plan are discontinued because most competitor funds have plans that pay dealers for rendering distribution services as much or more than the amounts currently being paid by the Fund, and

·      may not be able to continue providing, at the same or at a lesser cost, the same quality distribution sales efforts and services, or to obtain such services from brokers and dealers, if the plan payments were to be discontinued.

     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 Fiscal Year Ended 6/30/08
Class:	Total Payments Under Plan	Amount Retained by Distributor	Distributor's Aggregate Unreimbursed Expenses Under Plan	Distributor's Unreimbursed Expenses as % of Net Assets of Class
Class B Plan	$3,585,437	$2,761,998	$0	N/A
Class C Plan	$6,033,053	$890,036	$9,241,280	1.83%
Class N Plan	$1,447,500	$239,250	$3,978,228	1.44%

1.      Includes $64,943 paid to an affiliate of the Distributor's parent company.

2.      Includes $189,365 paid to an affiliate of the Distributor's parent company.

3.      Includes $33,703 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 FINRA 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.

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

·      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);

·      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);

·      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.

·      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.

·      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;

·      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 FINRA. 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,

·      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;

·      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;

·      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, 2007, the following financial intermediaries and/or their respective affiliates offered shares of the Oppenheimer funds and received revenue sharing or similar distribution-related payments from the Manager or the Distributor for marketing or program support:

1st Global Capital Company	Legend Equities Corporation
Advantage Capital Corporation	Lincoln Benefit National Life
Aegon USA	Lincoln Financial Advisors Corporation
Aetna Life Insurance & Annuity Company	Lincoln Investment Planning, Inc.
AG Edwards & Sons, Inc.	Linsco Private Ledger Financial
AIG Financial Advisors	Massachusetts Mutual Life Insurance Company
AIG Life Variable Annuity	McDonald Investments, Inc.
Allianz Life Insurance Company	Merrill Lynch Pierce Fenner & Smith, Inc.
Allmerica Financial Life Insurance & Annuity Company	Merrill Lynch Insurance Group
Allstate Life Insurance Company	MetLife Investors Insurance Company
American Enterprise Life Insurance	MetLife Securities, Inc.
American General Annuity Insurance	Minnesota Life Insurance Company
American Portfolios Financial Services, Inc.	MML Investor Services, Inc.
Ameriprise Financial Services, Inc.	Mony Life Insurance Company
Ameritas Life Insurance Company	Morgan Stanley & Company, Inc.
Annuity Investors Life Insurance Company	Multi-Financial Securities Corporation
Associated Securities Corporation	Mutual Service Corporation
AXA Advisors LLC	NFP Securities, Inc.
AXA Equitable Life Insurance Company	Nathan & Lewis Securities, Inc.
Banc One Securities Corporation	National Planning Corporation
Cadaret Grant & Company, Inc.	Nationwide Financial Services, Inc.
CCO Investment Services Corporation	New England Securities Corporation
Charles Schwab & Company, Inc.	New York Life Insurance & Annuity Company
Chase Investment Services Corporation	Oppenheimer & Company
Citicorp Investment Services, Inc.	PFS Investments, Inc.
Citigroup Global Markets Inc.	Park Avenue Securities LLC
CitiStreet Advisors LLC	Phoenix Life Insurance Company
Citizen's Bank of Rhode Island	Plan Member Securities
Columbus Life Insurance Company	Prime Capital Services, Inc.
Commonwealth Financial Network	Primevest Financial Services, Inc.
Compass Group Investment Advisors	Protective Life Insurance Company
CUNA Brokerage Services, Inc.	Prudential Investment Management Services LLC
CUSO Financial Services, LLP	Raymond James & Associates, Inc.
E*TRADE Clearing LLC	Raymond James Financial Services, Inc.
Edward Jones	RBC Dain Rauscher Inc.
Essex National Securities, Inc.	Royal Alliance Associates, Inc.
Federal Kemper Life Assurance Company	Securities America, Inc.
Financial Network	Security Benefit Life Insurance Company
Financial Services Corporation	Security First-Metlife Investors Insurance Company
GE Financial Assurance	SII Investments, Inc.
GE Life & Annuity	Signator Investors, Inc.
Genworth Financial, Inc.	Sorrento Pacific Financial LLC
GlenBrook Life & Annuity Company	Sun Life Assurance Company of Canada
Great West Life & Annuity Company	Sun Life Insurance & Annuity Company of New York
GWFS Equities, Inc.	Sun Life Annuity Company Ltd.
Hartford Life Insurance Company	SunTrust Bank
HD Vest Investment Services, Inc.	SunTrust Securities, Inc.
Hewitt Associates LLC	Thrivent Financial Services, Inc.
IFMG Securities, Inc.	Towers Square Securities, Inc.
ING Financial Advisers LLC	Travelers Life & Annuity Company
ING Financial Partners, Inc.	UBS Financial Services, Inc.
Invest Financial Corporation	Union Central Life Insurance Company
Investment Centers of America, Inc.	United Planners Financial Services of America
Jefferson Pilot Life Insurance Company	Wachovia Securities, Inc.
Jefferson Pilot Securities Corporation	Walnut Street Securities, Inc.
John Hancock Life Insurance Company	Waterstone Financial Group
JP Morgan Securities, Inc.	Wells Fargo Investments
Kemper Investors Life Insurance Company	Wescom Financial Services

For the year ended December 31, 2007, the following firms, which in some cases are broker-dealers, received payments from the Manager or the Distributor for administrative or other services provided (other than revenue sharing arrangements), as described above:

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

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:

·      Total returns measure the performance of a hypothetical account in the Fund over various periods and do not show the performance of each shareholder's account. Your account's performance will vary from the model performance data if your dividends are received in cash, or you buy or sell shares during the period, or you bought your shares at a different time and price than the shares used in the model.

·      The Fund's performance returns may not reflect the effect of taxes on dividends and capital gains distributions.

·      An investment in the Fund is not insured by the FDIC or any other government agency.

·      The principal value of the Fund's shares, and total returns are not guaranteed and normally will fluctuate on a daily basis.

·      When an investor's shares are redeemed, they may be worth more or less than their original cost.

·      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.

n      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.

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

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

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

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

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

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

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

ERV - P	= Total Return
P

·      Total Returns at Net Asset Value. From time to time the Fund may also quote a cumulative or an average annual total return "at net asset value" (without deducting sales charges) for Class A, Class B, 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 6/30/08
Class of Shares	Cumulative Total Returns (10 years or life-of-class)		Average Annual Total Returns
			1-Year		5-Years		10-Years (or life of class if less)
	After Sales Charge	Without Sales Charge	After Sales Charge	Without Sales Charge	After Sales Charge	Without Sales Charge	After Sales Charge	Without Sales Charge
Class A1	148.90%1	164.08%1	-23.33%	-18.66%	9.68%	10.98%	10.78%1	11.51%1
Class B2	152.27%2	152.27%2	-22.88%	-19.25%	9.86%	10.13%	10.94%2	10.94%2
Class C3	147.77%3	147.77%3	-19.94%	-19.21%	10.20%	10.20%	10.72%3	10.72%3
Class N4	80.03%4	80.03%4	-19.60%	-18.87%	10.63%	10.63%	8.35%4	8.35%4
Class Y5	174.94%5	174.94%5	-18.28%	-18.28%	11.51%	11.51%	12.02%5	12.02%5

1.      Inception of Class A:      8/2/99

2.      Inception of Class B:      8/2/99

3.      Inception of Class C:      8/2/99

4.      Inception of Class N:      3/1/01

5.      Inception of Class Y:      8/2/99

Average Annual Total Returns for Class A1 Shares (After Sales Charge) For the Periods Ended 6/30/08
	1-Year	5-Years	10-Years (or life of class if less)
After Taxes on Distributions	-24.65%	8.42%	9.79%
After Taxes on Distributions and Redemption of Fund Shares	-13.72%	8.23%	9.28%

1.     Inception of Class A: 8/2/99

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.

n     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 the small cap blend 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™ 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,

·      information about the performance of certain securities or commodities markets or segments of those markets,

·      information about the performance of the economies of particular countries or regions,

·      the earnings of companies included in segments of particular industries, sectors, securities markets, countries or regions,

·      the availability of different types of securities or offerings of securities,

·      information relating to the gross national or gross domestic product of the United States or other countries or regions,

·      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 A 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 A 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 New Jersey Municipal Fund
Oppenheimer AMT-Free New York Municipals	Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Balanced Fund	Oppenheimer Portfolio Series:
Oppenheimer Baring China Fund	Active Allocation Fund
Oppenheimer Baring Japan Fund	Equity Investor Fund
Oppenheimer Baring SMA International Fund	Conservative Investor Fund
Oppenheimer Core Bond Fund	Moderate Investor Fund
Oppenheimer California Municipal Fund	Oppenheimer Portfolio Series Fixed Income Active Allocation Fund
Oppenheimer Capital Appreciation Fund	Oppenheimer Principal Protected Main Street Fund
Oppenheimer Capital Income Fund	Oppenheimer Principal Protected Main Street Fund II
Oppenheimer Champion Income Fund	Oppenheimer Principal Protected Main Street Fund III
Oppenheimer Commodity Strategy Total Return Fund	Oppenheimer Quest Balanced Fund
Oppenheimer Convertible Securities Fund	Oppenheimer Quest International Value Fund, Inc.
Oppenheimer Developing Markets Fund	Oppenheimer Quest Opportunity Value Fund
Oppenheimer Discovery Fund	Oppenheimer Real Estate Fund
Oppenheimer Dividend Growth Fund	Oppenheimer Rising Dividends Fund, Inc.
Oppenheimer Emerging Growth Fund	Oppenheimer Rochester Arizona Municipal Fund
Oppenheimer Equity Fund, Inc.	Oppenheimer Rochester Maryland Municipal Fund
Oppenheimer Equity Income Fund, Inc.	Oppenheimer Rochester Massachusetts Municipal Fund
Oppenheimer Global Fund	Oppenheimer Rochester Michigan Municipal Fund
Oppenheimer Global Opportunities Fund	Oppenheimer Rochester Minnesota Municipal Fund
Oppenheimer Global Value Fund	Oppenheimer Rochester National Municipals
Oppenheimer Gold & Special Minerals Fund	Oppenheimer Rochester North Carolina Municipal Fund
Oppenheimer International Bond Fund	Oppenheimer Rochester Ohio Municipal Fund
Oppenheimer International Diversified Fund	Oppenheimer Rochester Virginia Municipal Fund
Oppenheimer International Growth Fund	Oppenheimer Select Value Fund
Oppenheimer International Small Company Fund	Oppenheimer Senior Floating Rate Fund
Oppenheimer International Value Fund	Oppenheimer Small- & Mid- Cap Value Fund
Oppenheimer Limited Term California Municipal Fund	Oppenheimer SMA Core Bond Fund
Oppenheimer Limited-Term Government Fund	Oppenheimer SMA International Bond Fund
Oppenheimer Limited Term Municipal Fund	Oppenheimer Strategic Income Fund
Oppenheimer Main Street Fund	Oppenheimer U.S. Government Trust
Oppenheimer Main Street Opportunity Fund	Oppenheimer Value Fund
Oppenheimer Main Street Small Cap Fund	Limited-Term New York Municipal Fund
Oppenheimer MidCap Fund	Rochester Fund Municipals
LifeCycle Funds
Oppenheimer Transition 2010 Fund
Oppenheimer Transition 2015 Fund
Oppenheimer Transition 2020 Fund
Oppenheimer Transition 2025 Fund
Oppenheimer Transition 2030 Fund
Oppenheimer Transition 2040 Fund
Oppenheimer Transition 2050 Fund
And the following money market funds:
Oppenheimer Cash Reserves	Centennial Government Trust
Oppenheimer Institutional Money 3Market 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.

Letter of Intent. Under a Letter of Intent (a "Letter"), you may be able to 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 or Class A, Class B, Class C, Class G and Class H units purchased in advisor sold Section 529 plans, for which the Manager or the Distributor serves as the Program Manager or Program Distributor. A Letter is an investor's statement in writing to the Distributor of his or her intention to purchase a specified value of those shares or units during a 13-month period (the "Letter period"), which begins on the date of the investor's first share purchase following the establishment of the Letter. The sales charge on each purchase of Class A shares during the Letter period will be at the rate that would apply to a single lump-sum purchase of shares in the amount intended to be purchased. In submitting a Letter, the investor makes no commitment to purchase shares. However, if the investor does not fulfill the terms of the Letter within the Letter period, he or she agrees to pay the additional sales charges that would have been applicable to the purchases that were made. The investor agrees that shares equal in value to 2% of the intended purchase amount will be held in escrow by the Transfer Agent for that purpose, as described in "Terms of Escrow" below. It is the responsibility of the dealer of record and/or the investor to advise the Distributor about the Letter when placing purchase orders during the Letter period. The investor must also notify the Distributor or his or her financial intermediary of any qualifying 529 plan holdings.
 
     To determine whether an investor has fulfilled the terms of a Letter, the Transfer Agent will count purchases of "qualified" Class A, Class B and Class C shares and Class A, Class B, Class C, Class G and Class H units during the Letter period. Purchases of Class N or Class Y shares, purchases made by reinvestment of dividends or capital gains distributions from the Fund or other Oppenheimer funds, purchases of Class A shares with redemption proceeds under the Reinvestment Privilege, and purchases of Class A shares of Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves on which a sales charge has not been paid do not count as "qualified" shares for satisfying the terms of a Letter. An investor will also be considered to have fulfilled the Letter if the value of the investor's total holdings of qualified shares on the last day of the Letter period, calculated at the net asset value on that day, equals or exceeds the intended purchase amount.
 

If the terms of the Letter are not fulfilled within the Letter period, 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 on the first business day following the expiration of the Letter period to reflect the sales charge rates that are applicable to the actual total purchases.

If total eligible purchases during the Letter period exceed the intended purchase amount and also exceed the amount needed to qualify for the next sales charge rate reduction (stated in the Prospectus), the sales charges paid may be adjusted to that lower rate. That adjustment will only be made if and when the dealer returns to the Distributor the amount of the excess concessions allowed or paid to the dealer over the amount of concessions that are applicable to the actual amount of purchases. The reduced sales charge adjustment will be made by adding to the investors account the number of additional shares that would have been purchased if the lower sales charge rate had been used. Those additional shares will be determined using the net asset value per share in effect on the date of such adjustment.

By establishing a Letter, the investor agrees to be bound by the terms of the Prospectus, this SAI and the application used for a Letter, and if those terms are amended to be bound by the amended terms and that any amendments by the Fund will apply automatically to existing Letters. Group retirement plans qualified under section 401(a) of the Internal Revenue Code may not establish a Letter, however defined benefit plans and Single K sole proprietor plans may do so.

n      Terms of Escrow That Apply to Letters of Intent.

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

     2.     If the Letter applies to more than one fund account, the investor can designate the fund from which shares will be escrowed. If no fund is selected, the Transfer Agent will escrow shares in the fund account that has the highest dollar balance on the date of the first purchase under the Letter. If there are not sufficient shares to cover the escrow amount, the Transfer Agent will escrow shares in the fund account(s) with the next highest balance(s). If there are not sufficient shares in the accounts to which the Letter applies, the Transfer Agent may escrow shares in other accounts that are linked for Right of Accumulation purposes. Additionally, if there are not sufficient shares available for escrow at the time of the first purchase under the Letter, the Transfer Agent will escrow future purchases until the escrow amount is met.

     3.     If, during the Letter period, an investor exchanges shares of the Fund for shares of another fund (as described in the Prospectus section titled "How to Exchange Shares"), the Fund shares held in escrow will automatically be exchanged for shares of the other fund and the escrow obligations will also be transferred to that fund.

     4.     If the total purchases under the Letter are less than the intended purchases specified, on the first business day after the end of the Letter period the Distributor will redeem escrowed shares equal in value to the difference between the dollar amount of the sales charges actually paid and the amount of the sales charges that would have been paid if the total purchases had been made at a single time. Any shares remaining after such redemption will be released from escrow.

     5.     If the terms of the Letter are fulfilled, the escrowed shares will be promptly released to the investor at the end of the Letter period.

     6.     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.
 

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.

n     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 A 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.

n     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:

·      to all rollover IRAs (including SEP IRAs and SIMPLE IRAs),

·      to all rollover contributions made to Individual 401(k) plans, Profit-Sharing Plans and Money Purchase Pension Plans,

·      to all direct rollovers from OppenheimerFunds-sponsored Pinnacle and Ascender retirement plans,

·      to all trustee-to-trustee IRA transfers,

·      to all 90-24 type 403(b) transfers,

·      to Group Retirement Plans (as defined in Appendix A to this SAI) which have entered into a special agreement with the Distributor for that purpose,

·      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,

·      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,

·      to Retirement Plans with at least 100 eligible employees or $500,000 or more in plan assets,

·      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

·      to certain customers of broker-dealers and financial advisors that are identified in a special agreement between the broker-dealer or financial advisor and the Distributor for that purpose.

The sales concession and the advance of the service fee, as described in the Prospectus, will not be paid to dealers of record on sales of Class N shares on:

·      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),

·      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

·      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:

·      A fund account whose shares were acquired after September 30^th of the prior year;

·      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;

·      Accounts of shareholders who elect to access their account documents electronically via eDoc Direct;

·      A fund account that has only certificated shares and, has a balance below $500 and is being escheated;

·      Accounts of shareholders that are held by broker-dealers under the NSCC Fund/SERV system in Networking level 1 and 3 accounts;

·      Accounts held under the Oppenheimer Legacy Program and/or holding certain Oppenheimer Variable Account Funds;

·      Omnibus accounts holding shares pursuant to the Pinnacle, Ascender, Custom Plus, Record(k)eeper Pro and Pension Alliance Retirement Plan programs; and

·      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.

·      Accounts held in the Portfolio Builder Program which is offered through certain broker/dealers to qualifying shareholders.

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.

n     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:

·      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.

·      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.

·      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.

·      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.

·      The following securities are valued at cost, adjusted for amortization of premiums and accretion of discounts:

(1)      money market debt securities held by a non-money market fund that had a maturity of less than 397 days when issued that have a remaining maturity of 60 days or less, and

(2)      debt instruments held by a money market fund that have a remaining maturity of 397 days or less.

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

In the case of 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:

·      Class A shares purchased subject to an initial sales charge or Class A shares on which a contingent deferred sales charge was paid, or

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

Payments "In Kind." The Prospectus states that payment for shares tendered for redemption is ordinarily made in cash. However, under certain circumstances, the Board of Trustees of the Fund may determine that it would be detrimental to the best interests of the remaining shareholders of the Fund to make payment of a redemption order wholly or partly in cash. In that case, the Fund may pay the redemption proceeds in whole or in part by a distribution "in kind" of liquid securities from the portfolio of the Fund, in lieu of cash.
 
     The Fund has elected to be governed by Rule 18f-1 under the Investment Company Act. Under that rule, the Fund is obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of the net assets of the Fund during any 90-day period for any one shareholder. If shares are redeemed in kind, the redeeming shareholder might incur brokerage or other costs in selling the securities for cash. The Fund will value securities used to pay redemptions in kind using the same method the Fund uses to value its portfolio securities described above under "Determination of Net Asset Values Per Share." That valuation will be made as of the time the redemption price is determined.
 

Involuntary Redemptions. The Fund's Board of Trustees has the right to cause the involuntary redemption of the shares held in any account if the aggregate net asset value of those shares is less than $500 or such lesser amount as the Board may fix. The Board will not cause the involuntary redemption of shares in an account if the aggregate net asset value of such shares has fallen below the stated minimum solely as a result of market fluctuations. If the Board exercises this right, it may also fix the requirements for any notice to be given to the shareholders in question (not less than 30 days). The Board may alternatively set requirements for the shareholder to increase the investment, or set other terms and conditions so that the shares would not be involuntarily redeemed.
 

Transfers of Shares. A transfer of shares to a different registration is not an event that triggers the payment of sales charges. Therefore, shares are not subject to the payment of a contingent deferred sales charge of any class at the time of transfer to the name of another person or entity. It does not matter whether the transfer occurs by absolute assignment, gift or bequest, as long as it does not involve, directly or indirectly, a public sale of the shares. When shares subject to a contingent deferred sales charge are transferred, the transferred shares will remain subject to the contingent deferred sales charge. It will be calculated as if the transferee shareholder had acquired the transferred shares in the same manner and at the same time as the transferring shareholder.
 
     If less than all shares held in an account are transferred, and some but not all shares in the account would be subject to a contingent deferred sales charge if redeemed at the time of transfer, the priorities described in the Prospectus under "How to Buy Shares" for the imposition of the Class B, Class C and Class N contingent deferred sales charge will be followed in determining the order in which shares are transferred.

Distributions From Retirement Plans. Requests for distributions from OppenheimerFunds-sponsored IRAs, SEP-IRAs, SIMPLE IRAs, 403(b)(7) custodial plans, 401(k) plans or pension or profit-sharing plans should be addressed to "Trustee, OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address listed in "How To Sell Shares" in the Prospectus or on the back cover of this SAI. The request must:

(1)      state the reason for the distribution;

(2)      state the owner's awareness of tax penalties if the distribution is premature; and

(3)      conform to the requirements of the plan and the Fund's other redemption requirements.

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

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

Special Arrangements for Repurchase of Shares from Dealers and Brokers. The Distributor is the Fund's agent to repurchase its shares from authorized dealers or brokers on behalf of their customers. Shareholders should contact their broker or dealer to arrange this type of redemption. The repurchase price per share will be the net asset value next computed after the Distributor receives an order placed by the dealer or broker. However, if the Distributor receives a repurchase order from a dealer or broker after the close of the NYSE on a regular business day, it will be processed at that day's net asset value if the order was received by the dealer or broker from its customers prior to the time the NYSE closes. Normally, the NYSE closes at 4:00 p.m., but may do so earlier on some days.
 
     Ordinarily, for accounts redeemed by a broker-dealer under this procedure, payment will be made within three business days after the shares have been redeemed upon the Distributor's receipt of the required redemption documents in proper form. The signature(s) of the registered owners on the redemption documents must be guaranteed as described in the Prospectus.
 

Automatic Withdrawal and Exchange Plans. Investors 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 A 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.

n     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. 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. The prospectus of each of the Oppenheimer funds indicates which share class or classes that fund offers and provides information about limitations on the purchase of particular share classes, as applicable for the particular fund. You can also obtain a current list showing which funds offer which classes of shares by calling the Distributor at the telephone number indicated on the front cover of this SAI.

The Fund may amend, suspend or terminate the exchange privilege at any time. Although the Fund may impose those changes at any time, it will provide you with notice of the 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, except 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:

·      When Class A shares of any Oppenheimer fund 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. Except, however, with respect to Class A shares of Oppenheimer Rochester National Municipals and Rochester Fund Municipals acquired prior to October 22, 2007, in which case the Class A contingent deferred sales charge is imposed on the acquired shares if they are redeemed within 24 months measured from the beginning of the calendar month of the initial purchase of the exchanged Class A shares.

·      When Class A shares of Oppenheimer Rochester National Municipals and Rochester Fund Municipals acquired prior to October 22, 2007 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.

·      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.

·      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.

·      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.

·      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.

·      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.

·      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.

·      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.

·      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.

n     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.
 
     If a dividend check or a check representing an automatic withdrawal payment is returned to the Transfer Agent by the Postal Service as undeliverable, it will be reinvested in shares of the Fund. Returned checks for the proceeds of other redemptions 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. 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 advisors 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.

n     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 including net income derived from an interest in a qualified publicly traded partnership.

     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 or in the securities of one or more qualified publicly traded partnerships. 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.

n     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.

n     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.
 

n     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.

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

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

If the ordinary income dividends from the Fund are effectively connected with the conduct of a U.S. trade or business, then the foreign person may claim an exemption from the U.S. tax described above provided the Fund obtains a properly completed and signed Certificate of Foreign Status. If the foreign person fails to provide a certification of his/her foreign status, the Fund will be required to withhold U.S. tax at a rate of 28% on ordinary income dividends, capital gains distributions and the proceeds of the redemption of shares, paid to any foreign person. Any tax withheld by the Fund is remitted by the Fund to the U.S. Treasury and all income and any tax withheld is identified in reports mailed to shareholders in January of each year with a copy sent to the IRS.

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

Dividend Reinvestment in Another Fund. Shareholders of the Fund may elect to reinvest all dividends and/or capital gains distributions in shares of the same class of any of the other Oppenheimer funds into which you may exchange shares. Reinvestment will be made without sales charge at the net asset value per share in effect at the close of business on the payable date of the dividend or distribution. To elect this option, the shareholder must notify the Transfer Agent or his or her financial intermediary 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. At a meeting held on August 20, 2008, the Board of Trustees of the Fund appointed KPMG LLP as the independent registered public accounting firm to the Fund for fiscal year 2009, replacing the firm of Deloitte & Touche LLP, effective at the conclusion of the fiscal 2008 audit. During the two most recent fiscal years the audit reports of Deloitte & Touche LLP contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. Further, there were no disagreements between the Fund and Deloitte & Touche LLP on accounting principles, financial statement disclosure or audit scope, which if not resolved to the satisfaction of Deloitte & Touche LLP would have caused it to make reference to the disagreements in connection with its reports.

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

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Trustees and Shareholders of
Oppenheimer Main Street Small Cap Fund:

We have audited the accompanying statement of assets and liabilities of Oppenheimer Main Street Small Cap Fund (the “Fund”), including the statement of investments, as of June 30, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. 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 June 30, 2008, 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 June 30, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Denver, Colorado
August 8, 2008

STATEMENT OF INVESTMENTS June 30, 2008

	Shares		Value
Common Stocks—99.6%
Consumer Discretionary—13.6%
Auto Components—1.0%
American Axle & Manufacturing Holdings, Inc.1		605,600	$	4,838,744
Amerigon, Inc.1,2		17,300		123,003
ArvinMeritor, Inc.1		129,900		1,621,152
ATC Technology Corp.1,2		99,500		2,316,360
Autoliv, Inc.		162,000		7,552,440
Borg-Warner Automotive, Inc.		14,400		639,072
Cooper Tire & Rubber Co.1		212,820		1,668,509
Drew Industries, Inc.1,2		111,200		1,773,640
Exide Technologies1,2		252,700		4,235,252
Fuel Systems Solutions, Inc.1,2		58,600		2,256,100
Gentex Corp.		382,500		5,523,300
Lear Corp.1,2		622,000		8,819,960
Shiloh Industries, Inc.		16,900		158,691
Stoneridge, Inc.2		177,900		3,034,974
Tenneco, Inc.1,2		314,900		4,260,597
TRW Automotive Holdings Corp.2		184,200		3,402,174
WABCO Holdings, Inc.		10,700		497,122
				52,721,090
Automobiles—0.2%
Thor Industries, Inc.1		375,000		7,972,500
Distributors—0.1%
Core-Mark Holding Co., Inc.1,2		19,600		513,520
LKQ Corp.1,2		277,400		5,012,618
				5,526,138
Diversified Consumer Services—0.7%
Capella Education Co.1,2		59,030		3,521,140
Coinstar, Inc.1,2		175,400		5,737,334
DeVry, Inc.		204,800		10,981,376
Hillenbrand, Inc.		12,000		256,800
K12, Inc.1,2		6,510		139,509
Learning Tree International, Inc.1,2		5,000		85,500
Matthews International Corp., Cl. A1		91,700		4,150,342
Noah Education Holdings Ltd., ADR2		133,220		719,388
Regis Corp.		178,900		4,714,015
Service Corp. International		378,000		3,727,080
Steiner Leisure Ltd.2		52,989		1,502,238
Stewart Enterprises, Inc.1		430,500		3,099,600
Strayer Education, Inc.		4,200		878,094
				39,512,416
Hotels, Restaurants & Leisure—1.4%
Ambassadors Group, Inc.1		9,200		137,264
Bally Technologies, Inc.2		106,700		3,606,460
Bob Evans Farms, Inc.1		471,100		13,473,460
Brinker International, Inc.1		490,800		9,276,120
CBRL Group, Inc.1		278,026		6,814,417
CEC Entertainment, Inc.1,2		182,300		5,106,223
Churchill Downs, Inc.1		16,800		585,816
Denny’s Corp.1,2		913,500		2,594,340
International Speedway Corp.		92,400		3,606,372
Jack in the Box, Inc.1,2		311,700		6,985,197
Krispy Kreme Doughnuts, Inc.2		129,600		646,704
Marcus Corp. (The)		63,600		950,820
Papa John’s International, Inc.1,2		149,757		3,982,039

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Hotels, Restaurants & Leisure Continued
Riviera Holdings Corp.2		4,600	$	46,690
Speedway Motorsports, Inc.1		66,500		1,355,270
WMS Industries, Inc.1,2		332,300		9,892,571
Wyndham Worldwide Corp.		334,200		5,985,522
				75,045,285
Household Durables—1.2%
American Greetings Corp., Cl. A1		694,200		8,566,428
Blyth, Inc.1		336,400		4,046,892
Cavco Industries, Inc.1,2		21,500		703,695
Centex Corp.		12,500		167,125
Champion Enterprises, Inc.1,2		1,003,200		5,868,720
CSS Industries, Inc.1		72,392		1,753,334
Ethan Allen Interiors, Inc.1		96,700		2,378,820
Furniture Brands International, Inc.1		300,100		4,009,336
Helen of Troy Ltd.1,2		176,600		2,846,792
Hooker Furniture Corp.1		143,000		2,476,760
La-Z-Boy, Inc.1		214,000		1,637,100
Lennar Corp., Cl. A1		478,500		5,904,690
National Presto Industries, Inc.1		29,700		1,906,146
NVR, Inc.1,2		17,500		8,751,400
Ryland Group, Inc. (The)		401,700		8,761,077
Snap-On, Inc.		114,300		5,944,743
Universal Electronics, Inc.1,2		11,400		238,260
				65,961,318
Internet & Catalog Retail—0.8%
1-800-FLOWERS.com, Inc.1,2		377,600		2,435,520
FTD Group, Inc.		63,100		841,123
Gaiam, Inc.1,2		49,800		672,798
IAC/InterActiveCorp2		226,900		4,374,632
Liberty Media Corp.-Interactive, Series A2		476,000		7,025,760
NetFlix.com, Inc.1,2		516,700		13,470,369
Overstock.com, Inc.1,2		68,870		1,787,177
PetMed Express, Inc.1,2		120,600		1,477,350
Priceline.com, Inc.1,2		104,300		12,042,478
Stamps.com, Inc.2		72,900		909,792
				45,036,999
Leisure Equipment & Products—0.8%
Brunswick Corp.1		308,900		3,274,340
Callaway Golf Co.1		1,007,850		11,922,866
Hasbro, Inc.		112,700		4,025,644
JAKKS Pacific, Inc.1,2		303,700		6,635,845
Leapfrog Enterprises, Inc.1,2		214,800		1,787,136
Polaris Industries, Inc.1		333,500		13,466,730
Steinway Musical Instruments, Inc.1,2		7,210		190,344
				41,302,905
Media—1.2%
Belo Corp., Cl. A1		181,000		1,323,110
Cablevision Systems Corp. New York Group, Cl. A2		165,300		3,735,780
Charter Communications, Inc., Cl. A1,2		1,470,300		1,543,815
Cox Radio, Inc., Cl. A1,2		134,000		1,581,200
CTC Media, Inc.2		45,400		1,119,564
Cumulus Media, Inc., Cl. A2		155,200		611,488
DG Fastchannel, Inc.1,2		21,100		363,975
DreamWorks Animation SKG, Inc., Cl. A2		244,700		7,294,507

	Shares		Value
Media Continued
Entravision Communications Corp.2		820,000	$	3,296,400
Gannett Co., Inc.		144,200		3,124,814
Getty Images, Inc.2		205,300		6,965,829
Global Sources Ltd.1,2		320,386		4,863,459
Harte-Hanks, Inc.1		182,700		2,091,915
Lin TV Corp., Cl. A1,2		92,400		550,704
Marvel Entertainment, Inc.2		309,600		9,950,544
McClatchy Co., Cl. A1		110,200		747,156
Scholastic Corp.1,2		321,400		9,211,324
Sinclair Broadcast Group, Inc., Cl. A1		615,450		4,677,420
Warner Music Group Corp.1		73,500		524,790
				63,577,794
Multiline Retail—0.9%
99 Cents Only Stores1,2		145,300		958,980
Big Lots, Inc.1,2		855,600		26,728,944
Dollar Tree, Inc.2		399,400		13,056,386
Family Dollar Stores, Inc.		141,200		2,815,528
Fred’s, Inc.1		207,036		2,327,085
Macy’s, Inc.		209,900		4,076,258
				49,963,181
Specialty Retail—3.6%
Aaron Rents, Inc.1		52,600		1,174,558
Aeropostale, Inc.1,2		739,050		23,154,437
AnnTaylor Stores Corp.1,2		253,900		6,083,444
Asbury Automotive Group, Inc.1		215,100		2,764,035
AutoNation, Inc.1,2		519,200		5,202,384
AutoZone, Inc.2		23,900		2,892,139
bebe stores, inc.1		326,100		3,133,821
Blockbuster, Inc., Cl. A1,2		298,000		745,000
Books-A-Million, Inc.1		19,400		148,604
Brown Shoe Co., Inc.		418,400		5,669,320
Buckle, Inc. (The)1		385,975		17,650,637
Children’s Place Retail Stores, Inc.1,2		121,700		4,393,370
Conn’s, Inc.1,2		80,300		1,290,421
Dress Barn, Inc. (The)1,2		608,100		8,136,378
Finish Line, Inc. (The), Cl. A1		597,300		5,196,510
Foot Locker, Inc.		864,800		10,766,760
Group 1 Automotive, Inc.		120,600		2,396,322
Gymboree Corp.2		189,100		7,577,237
Haverty Furniture Cos., Inc.1		12,200		122,488
Hot Topic, Inc.1,2		82,800		447,948
Jo-Ann Stores, Inc.1,2		231,100		5,322,233
Limited Brands, Inc.		153,000		2,578,050
Lumber Liquidators, Inc.2		7,500		97,500
Monro Muffler Brake, Inc.1		22,800		353,172
New York & Co., Inc.1,2		291,000		2,656,830
Office Depot, Inc.2		450,800		4,931,752
OfficeMax, Inc.		478,300		6,648,370
Penske Automotive Group, Inc.1		624,100		9,199,234
Pier 1 Imports, Inc.1,2		398,400		1,370,496
RadioShack Corp.		1,003,200		12,309,264
Rent-A-Center, Inc.2		538,600		11,079,002
Ross Stores, Inc.		214,945		7,634,846
Sally Beauty Holdings, Inc.1,2		1,407,300		9,091,158
Sonic Automotive, Inc.1		14,400		185,616
Systemax, Inc.		97,500		1,720,875
Tractor Supply Co.1,2		271,100		7,872,744
Urban Outfitters, Inc.1,2		10,700		333,733
Wet Seal, Inc., Cl. A1,2		317,600		1,514,952
				193,845,640

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Textiles, Apparel & Luxury Goods—1.7%
Carter’s, Inc.1,2		260,300	$	3,597,346
Columbia Sportswear Co.1		49,400		1,815,450
Deckers Outdoor Corp.1,2		43,590		6,067,728
Fossil, Inc.1,2		151,400		4,401,198
Hanesbrands, Inc.2		188,400		5,113,176
Jones Apparel Group, Inc.		780,500		10,731,875
Liz Claiborne, Inc.		808,700		11,443,105
Maidenform Brands, Inc.1,2		81,000		1,093,500
Movado Group, Inc.1		27,000		534,600
Perry Ellis International, Inc.2		185,800		3,942,676
Polo Ralph Lauren Corp., Cl. A1		19,800		1,243,044
Skechers USA, Inc., Cl. A1,2		197,300		3,898,648
Timberland Co., Cl. A1,2		54,200		886,170
True Religion Apparel, Inc.2		143,700		3,829,605
UniFirst Corp.		14,900		665,434
Warnaco Group, Inc. (The)1,2		358,000		15,777,060
Wolverine World Wide, Inc.1		551,900		14,719,173
				89,759,788
Consumer Staples—3.4%
Beverages—0.1%
Boston Beer Co., Inc., Cl. A1,2		45,800		1,863,144
Coca-Cola Enterprises, Inc.		80,800		1,397,840
Pepsi Bottling Group, Inc. (The)		63,100		1,761,752
				5,022,736
Food & Staples Retailing—0.8%
Arden Group, Inc., Cl. A		8,788		1,113,791
BJ’s Wholesale Club, Inc.2		293,200		11,346,840
Casey’s General Stores, Inc.		466,800		10,815,756
China Nepstar Chain Drugstore Ltd., ADR		17,760		153,802
Ingles Markets, Inc., Cl. A1		55,400		1,292,482
Longs Drug Stores, Inc.1		241,200		10,156,932
Nash Finch Co.1		103,300		3,540,091
Spartan Stores, Inc.1		148,400		3,413,200
				41,832,894
Food Products—1.3%
Agria Corp., ADR2		50,500		216,140
Chiquita Brands International, Inc.1,2		646,820		9,812,259
Darling International, Inc.2		973,400		16,080,568
Del Monte Foods Co.		808,800		5,742,480
Diamond Foods, Inc.		77,300		1,780,992
Flowers Foods, Inc.1		427,250		12,108,265
Fresh Del Monte Produce, Inc.2		411,500		9,699,055
Green Mountain Coffee, Inc.1,2		90,770		3,410,229
J&J Snack Foods Corp.1		6,600		180,906
Omega Protein Corp.1,2		69,950		1,045,753
Reddy Ice Holdings, Inc.1		33,600		459,648
TreeHouse Foods, Inc.1,2		80,100		1,943,226
Tyson Foods, Inc., Cl. A		415,000		6,200,100
				68,679,621

	Shares		Value
Household Products—0.0%
Central Garden & Pet Co., Cl. A2		17,200	$	70,520
WD-40 Co.1		80,835		2,364,424
				2,434,944
Personal Products—0.9%
American Oriental Bioengineering, Inc.1,2		775,100		7,650,237
Chattem, Inc.1,2		201,500		13,107,575
Elizabeth Arden, Inc.1,2		93,300		1,416,294
Herbalife Ltd.		119,300		4,622,875
Inter Parfums, Inc.1		111,450		1,671,750
NBTY, Inc.2		336,630		10,792,358
Nu Skin Asia Pacific, Inc., Cl. A1		362,256		5,404,860
Prestige Brands Holdings, Inc.1,2		168,900		1,800,474
				46,466,423
Tobacco—0.3%
Universal Corp.1		353,100		15,967,182
Vector Group Ltd.1		118,055		1,904,227
				17,871,409
Energy—9.2%
Energy Equipment & Services—4.3%
Atwood Oceanics, Inc.1,2		42,800		5,321,752
Basic Energy Services, Inc.1,2		39,700		1,250,550
BJ Services Co.		161,000		5,142,340
Bristow Group, Inc.1,2		146,400		7,245,336
Complete Production Services, Inc.1,2		118,000		4,297,560
Dawson Geophysical Co.1,2		16,100		957,306
Dresser-Rand Group, Inc.2		45,400		1,775,140
Dril-Quip, Inc.2		134,700		8,486,100
ENGlobal Corp.1,2		29,200		415,808
ENSCO International, Inc.		187,230		15,116,950
FMC Technologies, Inc.2		182,600		14,047,418
Forbes Energy Services Ltd.2,3		575,300		4,507,843
Grey Wolf, Inc.1,2		2,025,600		18,291,168
Gulf Island Fabrication, Inc.1		121,700		5,954,781
Gulfmark Offshore, Inc.2		212,300		12,351,614
Hornbeck Offshore Services, Inc.1,2		148,700		8,403,037
ION Geophysical Corp.1,2		430,300		7,508,735
Lufkin Industries, Inc.		97,000		8,078,160
NATCO Group, Inc., Cl. A1,2		143,500		7,825,055
Natural Gas Services Group1,2		43,300		1,319,784
Newpark Resources, Inc.1,2		531,900		4,180,734
North American Energy Partners, Inc.2		71,300		1,545,784
Oil States International, Inc.1,2		343,200		21,772,608
Patterson-UTI Energy, Inc.1		347,900		12,538,316
Pioneer Drilling Co.1,2		342,800		6,448,068
Pride International, Inc.2		106,900		5,055,301
Rowan Cos., Inc.1		88,800		4,151,400
Seacor Holdings, Inc.2		143,920		12,882,279
T-3 Energy Services, Inc.2		80,500		6,397,335
Technicoil Corp.2		92,900		115,704
Technicoil Corp.2		870,300		1,083,928
Union Drilling, Inc.1,2		89,200		1,933,856
Unit Corp.2		131,800		10,935,446
Willbros Group, Inc.2		25,770		1,128,984
				228,466,180

STATEMENT OF INVESMENTS Continued

	Shares		Value
Oil, Gas & Consumable Fuels—4.9%
Alberta Clipper Energy, Inc.2		20,913	$	69,936
Alpha Natural Resources, Inc.1,2		141,300		14,736,177
Arena Resources, Inc.2		28,100		1,484,242
Arlington Tankers Ltd.1		33,600		780,192
Berry Petroleum Co., Cl. A1		212,695		12,523,482
Bill Barrett Corp.1,2		139,300		8,275,813
Bois d’Arc Energy, Inc.2		295,300		7,178,743
Brigham Exploration Co.1,2		170,640		2,701,231
Callon Petroleum Co.1,2		130,300		3,565,008
Celtic Exploration Ltd.2		18,100		350,924
Cimarex Energy Co.		146,300		10,192,721
Concho Resources, Inc.2		97,700		3,644,210
Continental Resources, Inc.1,2		8,400		582,288
Delphi Energy Corp.2		81,300		245,566
Delta Petroleum Corp.1,2		67,200		1,714,944
Denbury Resources, Inc.2		213,000		7,774,500
Energy Partners Ltd.2		193,400		2,885,528
Galleon Energy, Inc., Cl. A2		31,300		632,323
Galleon Energy, Inc., Subscription Receipts2		138,750		2,803,030
Gasco Energy, Inc.1,2		650,100		2,697,915
General Maritime Corp.		181,800		4,723,164
GMX Resources, Inc.1,2		3,790		280,839
Great Plains Exploration, Inc.2		327,641		305,246
Jura Energy Corp.2		750,700		368,098
Knightsbridge Tankers Ltd.1		89,000		2,866,690
Mariner Energy, Inc.1,2		550,900		20,366,773
Massey Energy Co.		268,400		25,162,500
Midnight Oil Exploration Ltd.2		539,550		1,090,000
Noble Energy, Inc.		18,000		1,810,080
Nordic American Tanker Shipping Ltd.		29,800		1,156,836
Overseas Shipholding Group, Inc.		78,000		6,202,560
Paramount Resources Ltd., Cl. A2		28,800		585,772
Petrohawk Energy Corp.1,2		335,500		15,537,005
PetroQuest Energy, Inc.1,2		306,900		8,255,610
Rosetta Resources, Inc.2		394,500		11,243,250
Stone Energy Corp.2		282,500		18,619,575
Swift Energy Co.1,2		316,900		20,934,414
Teekay Tankers Ltd., Cl. A		94,600		2,195,666
Tristar Oil & Gas Ltd.2		47,500		960,528
Tusk Energy Corp.2		536,315		1,530,525
Tusk Energy Corp.2,4		275,000		784,790
Tusk Energy Corp.2		397,100		1,133,236
VAALCO Energy, Inc.1,2		728,500		6,170,395
Venoco, Inc.1,2		43,900		1,018,919
VeraSun Energy Corp.1,2		359,760		1,485,809
Vero Energy, Inc.2		124,317		1,326,438
W&T Offshore, Inc.1		322,300		18,857,773
Warren Resources, Inc.1,2		168,600		2,475,048
Whiting Petroleum Corp.2		21,700		2,301,936
				264,588,248

	Shares		Value
Financials—12.9%
Capital Markets—0.8%
GAMCO Investors, Inc., Cl. A1		94,962	$	4,712,014
Invesco Ltd.		299,600		7,184,408
Knight Capital Group, Inc., Cl. A2		1,049,300		18,866,414
NGP Capital Resources Co.1		40,000		616,400
optionsXpress Holdings, Inc.1		244,200		5,455,428
Prospect Capital Corp.1		14,900		196,382
Stifel Financial Corp.2		36,150		1,243,199
SWS Group, Inc.1		97,800		1,624,458
TD Ameritrade Holding Corp.2		285,500		5,164,695
U.S. Global Investors, Inc., Cl. A1		38,250		640,688
Waddell & Reed Financial, Inc., Cl. A		2,100		73,521
				45,777,607
Commercial Banks—1.9%
BancFirst Corp.		17,100		731,880
Banco Latinoamericano de Exportaciones SA, Cl. E		59,320		960,391
Chemical Financial Corp.1		71,300		1,454,520
City Holding Co.1		115,200		4,696,704
Community Bank System, Inc.1		265,700		5,478,734
Community Trust Bancorp, Inc.		39,000		1,024,140
First Community Bancshares, Inc.1		23,900		673,980
First Financial Bancorp1		72,500		667,000
First Horizon National Corp.1		583,400		4,334,662
First Merchants Corp.1		82,300		1,493,745
First Security Group, Inc.		88,480		493,718
FirstMerit Corp.1		117,800		1,921,318
Frontier Financial Corp.1		149,100		1,270,332
Harleysville National Corp.1		5,000		55,800
IBERIABANK Corp.1		10,700		475,829
Independent Bank Corp., Massachusetts1		23,500		560,240
International Bancshares Corp.		113,400		2,423,358
Investors Bancorp, Inc.2		30,700		400,942
MainSource Financial Group, Inc.1		22,200		344,100
National Penn Bancshares, Inc.1		270,800		3,596,224
NBT Bancorp, Inc.1		166,500		3,431,565
Old National Bancorp1		437,000		6,231,620
Oriental Financial Group, Inc.1		178,100		2,539,706
Pacific Capital Bancorp1		544,000		7,496,320
Park National Corp.1		28,700		1,546,930
Popular, Inc.1		468,730		3,088,931
Porter Bancorp, Inc.		15,800		237,158
Renasant Corp.1		23,600		347,628
S&T Bancorp, Inc.1		16,000		464,960
Signature Bank2		11,700		301,392
Simmons First National Corp.		39,200		1,096,424
Southside Bancshares, Inc.1		43,200		796,608
Sterling Bancorp1		163,300		1,951,435
Susquehanna Bancshares, Inc.1		395,000		5,407,550
SVB Financial Group2		117,200		5,638,492
TCF Financial Corp.1		745,700		8,970,771
Tompkins Financial Corp.1		33,600		1,249,920
UMB Financial Corp.		28,000		1,435,560

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Commercial Banks Continued
Webster Financial Corp.1		422,300	$	7,854,780
WesBanco, Inc.1		134,900		2,313,535
Westamerica Bancorp1		124,800		6,563,232
Wilmington Trust Corp.1		28,500		753,540
Wintrust Financial Corp.1		58,300		1,390,455
				104,166,129
Consumer Finance—0.6%
Advanta Corp., Cl. B1		235,700		1,482,553
AmeriCredit Corp.1,2		172,500		1,486,950
Cash America International, Inc.1		316,700		9,817,700
Discover Financial Services		607,400		7,999,458
EZCORP, Inc., Cl. A1,2		334,400		4,263,600
World Acceptance Corp.1,2		166,500		5,606,055
				30,656,316
Diversified Financial Services—0.4%
Asset Acceptance Capital Corp.1		88,500		1,081,470
Encore Capital Group, Inc.2		6,900		60,927
Financial Federal Corp.1		170,500		3,744,180
Interactive Brokers Group, Inc., Cl. A1,2		8,700		279,531
Leucadia National Corp.		181,600		8,524,304
MarketAxess Holdings, Inc.1,2		74,665		564,467
PHH Corp.1,2		283,500		4,351,725
Portfolio Recovery Associates, Inc.1,2		57,200		2,145,000
				20,751,604
Insurance—6.4%
Alleghany Corp.2		5,808		1,928,546
Allied World Assurance Holdings Ltd.		197,100		7,809,102
American Equity Investment Life Holding Co.1		377,200		3,074,180
American Financial Group, Inc.		192,400		5,146,700
American National Insurance Co.		1,920		188,198
American Physicians Capital, Inc.1		121,550		5,887,882
Amerisafe, Inc.2		190,100		3,030,194
AmTrust Financial Services, Inc.1		422,200		5,319,720
Arch Capital Group Ltd.2		98,200		6,512,624
Argo Group International Holdings Ltd.2		44,147		1,481,573
Aspen Insurance Holdings Ltd.		741,500		17,551,305
Assurant, Inc.		209,200		13,798,832
Assured Guaranty Ltd.		107,500		1,933,925
Axis Capital Holdings Ltd.		264,800		7,893,688
Berkley (W.R.) Corp.		308,700		7,458,192
Brown & Brown, Inc.		189,400		3,293,666
Cincinnati Financial Corp.		188,900		4,798,060
CNA Financial Corp.1		220,400		5,543,060
CNA Surety Corp.1,2		149,500		1,889,680
Conseco, Inc.2		695,300		6,897,376
Darwin Professional Underwriters, Inc.1,2		45,400		1,398,320
Delphi Financial Group, Inc., Cl. A1		272,975		6,316,642
Donegal Group, Inc., Cl. A		6,600		104,742
eHealth, Inc.1,2		49,200		868,872

	Shares		Value
Insurance Continued
EMC Insurance Group, Inc.1		1,700	$	40,936
Employers Holdings, Inc.1		121,900		2,523,330
Endurance Specialty Holdings Ltd.1		302,800		9,323,212
Erie Indemnity Co., Cl. A		17,400		803,010
FBL Financial Group, Inc., Cl. A		169,900		3,377,612
Fidelity National Title Group, Inc., Cl. A1		421,200		5,307,120
First American Corp.1		74,000		1,953,600
FPIC Insurance Group, Inc.1,2		87,340		3,958,249
Genworth Financial, Inc., Cl. A		529,200		9,425,052
Hallmark Financial Services, Inc.2		49,000		473,830
Hanover Insurance Group, Inc.		92,100		3,914,250
Harleysville Group, Inc.1		166,700		5,639,461
HCC Insurance Holdings, Inc.		223,600		4,726,904
Hilb, Rogal & Hamilton Co.		22,500		977,850
Horace Mann Educators Corp.		18,570		260,351
Infinity Property & Casualty Corp.1		108,700		4,513,224
IPC Holdings Ltd.		492,200		13,067,910
Markel Corp.2		200		73,400
Max Capital Group Ltd.1		575,520		12,275,842
Montpelier Re Holdings Ltd.1		44,100		650,475
National Financial Partners Corp.		160,700		3,185,074
National Interstate Corp.1		59,400		1,091,772
National Western Life Insurance Co., Cl. A1		3,350		731,975
Nationwide Financial Services, Inc., Cl. A1		83,000		3,984,830
Navigators Group, Inc. (The)1,2		124,500		6,729,225
Odyssey Re Holdings Corp.1		154,800		5,495,400
OneBeacon Insurance Group Ltd.1		47,500		834,575
Partnerre Holdings Ltd.		100,000		6,913,000
Philadelphia Consolidated Holding Co.2		194,400		6,603,768
Phoenix Cos., Inc. (The)1		359,300		2,734,273
Platinum Underwriters Holdings Ltd.		535,400		17,459,394
Presidential Life Corp.1		14,300		220,506
ProAssurance Corp.1,2		277,900		13,369,769
ProCentury Corp.		73,300		1,161,072
Protective Life Corp.		161,100		6,129,855
Reinsurance Group of America, Inc.		44,800		1,949,696
RenaissanceRe Holdings Ltd.		115,900		5,177,253
RLI Corp.1		137,020		6,778,379
Safeco Corp.		187,000		12,558,920
Safety Insurance Group, Inc.1		43,100		1,536,515
Seabright Insurance Holdings, Inc.1,2		116,900		1,692,712
Selective Insurance Group, Inc.1		314,000		5,890,640
StanCorp Financial Group, Inc.		143,400		6,734,064
State Auto Financial Corp.		43,600		1,043,348
Torchmark Corp.		23,100		1,354,815

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Insurance Continued
Transatlantic Holdings, Inc.		40,400	$	2,281,388
United America Indemnity Ltd., Cl. A1,2		192,857		2,578,498
Unitrin, Inc.		58,700		1,618,359
UnumProvident Corp.		443,300		9,065,485
Wesco Financial Corp.1		800		305,600
White Mountains Insurance Group Ltd.		4,500		1,930,500
Zenith National Insurance Corp.		52,900		1,859,964
				344,411,321
Real Estate Investment Trusts—2.3%
Acadia Realty Trust1		14,600		337,990
Agree Realty Corp.1		54,800		1,208,340
Alexander’s, Inc.1,2		1,760		546,656
Alexandria Real Estate Equities, Inc.1		39,100		3,805,994
Arbor Realty Trust, Inc.1		42,300		379,431
Ashford Hospitality Trust1		288,300		1,331,946
Associated Estates Realty Corp.1		33,900		363,069
BioMed Realty Trust, Inc.1		8,500		208,505
Brandywine Realty Trust1		112,592		1,774,450
Capital Trust, Cl. A1		7,800		149,838
CBL & Associates Properties, Inc.1		113,800		2,599,192
Cedar Shopping Centers, Inc.		58,900		690,308
Corporate Office Properties Trust1		48,700		1,671,871
DCT Industrial Trust, Inc.		1,800		14,904
DiamondRock Hospitality Co.		259,200		2,822,688
Digital Realty Trust, Inc.1		173,400		7,093,794
EastGroup Properties, Inc.1		56,700		2,432,430
Entertainment Properties Trust1		67,500		3,337,200
Equity Lifestyle Properties, Inc.		48,400		2,129,600
Equity One, Inc.1		87,000		1,787,850
Extra Space Storage, Inc.1		71,800		1,102,848
FelCor Lodging Trust, Inc.1		273,300		2,869,650
First Industrial Realty Trust, Inc.1		206,000		5,658,820
Glimcher Realty Trust1		28,700		320,866
Gramercy Capital Corp.1		34,600		401,014
Hersha Hospitality Trust		61,300		462,815
Highwoods Properties, Inc.		134,500		4,225,990
Home Properties of New York, Inc.1		79,400		3,815,964
Inland Real Estate Corp.1		265,900		3,834,278
Kite Realty Group Trust1		57,200		715,000
LaSalle Hotel Properties1		68,600		1,723,918
Lexington Realty Trust1		140,400		1,913,652
LTC Properties, Inc.1		79,900		2,042,244
Medical Properties Trust, Inc.1		73,800		746,856
Mid-America Apartment Communities, Inc.1		61,200		3,123,647
National Health Investors, Inc.1		33,900		966,489
National Retail Properties, Inc.1		172,800		3,611,520
Nationwide Health Properties, Inc.1		337,900		10,640,471

	Shares		Value
Real Estate Investment Trusts Continued
Omega Healthcare Investors, Inc.1		198,500	$	3,305,025
Parkway Properties, Inc.1		52,900		1,784,317
Pennsylvania Real Estate Investment Trust1		140,100		3,241,914
PS Business Parks, Inc.		38,900		2,007,240
Ramco-Gershenson Properties Trust		44,500		914,030
Realty Income Corp.1		245,700		5,592,131
Saul Centers, Inc.1		25,800		1,212,342
Senior Housing Properties Trust1		286,100		5,587,533
Sovran Self Storage, Inc.1		33,800		1,404,728
Strategic Hotels & Resorts, Inc.1		152,500		1,428,925
Sunstone Hotel Investors, Inc.		140,300		2,328,980
Tanger Factory Outlet Centers, Inc.1		139,100		4,997,863
Taubman Centers, Inc.1		63,800		3,103,870
Washington Real Estate Investment Trust1		101,200		3,041,060
				122,812,056
Real Estate Management & Development—0.1%
Jones Lang LaSalle, Inc.1		39,900		2,401,581
Tejon Ranch Co.1,2		11,100		400,266
				2,801,847
Thrifts & Mortgage Finance—0.4%
Anchor BanCorp Wisconsin, Inc.1		35,500		248,855
Bank Mutual Corp.1		150,800		1,514,032
BankFinancial Corp.1		3,800		49,438
Brookline Bancorp, Inc.1		122,500		1,169,875
Dime Community Bancshares, Inc.1		202,900		3,349,879
Encore Bancshares, Inc.1,2		52,600		823,190
Federal Agricultural Mortgage Corp., Non-Vtg.1		37,400		926,772
First Place Financial Corp.1		18,900		177,660
Flushing Financial Corp.1		124,100		2,351,695
Hudson City Bancorp, Inc.		577,000		9,624,360
OceanFirst Financial Corp.1		10,300		185,915
Provident Financial Services, Inc.1		56,700		794,367
Provident New York Bancorp1		180,100		1,991,906
TierOne Corp.		49,200		225,828
WSFS Financial Corp.1		20,700		923,220
				24,356,992
Health Care—6.8%
Biotechnology—0.7%
Allos Therapeutics, Inc.2		36,000		248,760
Alnylam Pharmaceuticals, Inc.1,2		207,300		5,541,129
BioMarin Pharmaceutical, Inc.1,2		54,000		1,564,920
Cubist Pharmaceuticals, Inc.2		327,700		5,852,722
Emergent Biosolutions, Inc.1,2		131,200		1,302,816
Enzon Pharmaceuticals, Inc.1,2		357,300		2,543,976
Martek Biosciences Corp.1,2		464,600		15,661,666
Momenta Pharmaceuticals, Inc.2		49,700		611,310
Myriad Genetics, Inc.1,2		14,500		660,040
Rigel Pharmaceuticals, Inc.1,2		21,600		489,456

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Biotechnology Continued
RXi Pharmaceuticals Corp.1,2		23,700	$	189,600
Savient Pharmaceuticals, Inc.1,2		80,400		2,034,120
United Therapeutics Corp.2		14,600		1,427,150
				38,127,665
Health Care Equipment & Supplies—1.4%
Abaxis, Inc.1,2		75,600		1,824,228
American Medical Systems Holdings, Inc.1,2		64,200		959,790
Analogic Corp.		197,000		12,424,790
ConMed Corp.1,2		223,800		5,941,890
CryoLife, Inc.1,2		145,100		1,659,944
Cyberonics, Inc.2		65,200		1,414,840
Datascope Corp.1		84,711		3,981,417
Edwards Lifesciences Corp.1,2		66,300		4,113,252
Exactech, Inc.2		21,700		557,907
Hill-Rom Holdings, Inc.1		248,900		6,715,322
IRIS International, Inc.1,2		22,800		356,820
Kensey Nash Corp.2		95,500		3,060,775
Meridian Bioscience, Inc.1		126,726		3,411,464
Merit Medical Systems, Inc.2		157,200		2,310,840
Natus Medical, Inc.1,2		25,500		533,970
Neogen Corp.2		13,000		297,570
NuVasive, Inc.1,2		14,500		647,570
Quidel Corp.1,2		220,200		3,637,704
Sirona Dental Systems, Inc.1,2		70,400		1,824,768
Somanetics Corp.1,2		28,000		593,600
SonoSite, Inc.1,2		37,300		1,044,773
Steris Corp.1		435,100		12,513,476
Vital Signs, Inc.1		8,550		485,469
VNUS Medical Technologies, Inc.1,2		19,900		398,199
Zoll Medical Corp.2		163,800		5,515,146
				76,225,524
Health Care Providers & Services—2.6%
Air Methods Corp.1,2		2,699		67,475
Alliance Imaging, Inc.2		219,600		1,903,932
Amedisys, Inc.1,2		118,400		5,969,728
AMERIGROUP Corp.1,2		326,900		6,799,520
AMN Healthcare Services, Inc.1,2		84,400		1,428,048
AmSurg Corp.1,2		70,700		1,721,545
Apria Healthcare Group, Inc.1,2		284,300		5,512,577
Centene Corp.1,2		514,860		8,644,499
Chemed Corp.1		96,800		3,543,848
Chindex International, Inc.2		69,100		1,013,697
CorVel Corp.2		34,130		1,155,983
Cross Country Healthcare, Inc.1,2		38,000		547,580
Emergency Medical Services LP, Cl. A1,2		60,200		1,362,326
Gentiva Health Services, Inc.1,2		24,388		464,591
Hanger Orthopedic Group, Inc.1,2		149,200		2,460,308
Health Net, Inc.2		165,950		3,992,757
HealthExtras, Inc.1,2		33,200		1,000,648
Healthspring, Inc.1,2		752,500		12,702,200
HMS Holdings Corp.1,2		9,100		195,377
Kindred Healthcare, Inc.1,2		146,700		4,219,092
Landauer, Inc.1		69,800		3,925,552
LifePoint Hospitals, Inc.1,2		503,600		14,251,880
Lincare Holdings, Inc.2		575,200		16,335,680
Magellan Health Services, Inc.2		26,100		966,483

	Shares		Value
Health Care Providers & Services Continued
Molina Healthcare, Inc.1,2		212,900	$	5,181,986
Odyssey Healthcare, Inc.1,2		44,400		432,456
Owens & Minor, Inc.1		418,400		19,116,696
PharMerica Corp.1,2		143,900		3,250,701
Providence Service Corp.1,2		40,200		848,622
Psychiatric Solutions, Inc.1,2		18,000		681,120
RehabCare Group, Inc.1,2		161,400		2,587,242
Res-Care, Inc.1,2		94,000		1,671,320
Sun Healthcare Group, Inc.1,2		77,200		1,033,708
Universal American Corp.1,2		118,600		1,212,092
WellCare Health Plans, Inc.2		44,420		1,605,783
				137,807,052
Health Care Technology—0.1%
Eclipsys Corp.1,2		46,897		861,029
HLTH Corp.2		153,000		1,731,960
Phase Forward, Inc.1,2		164,200		2,950,674
Trizetto Group, Inc.2		38,600		825,268
				6,368,931
Life Sciences Tools & Services—1.0%
Albany Molecular Research, Inc.1,2		151,200		2,006,424
Dionex Corp.1,2		103,030		6,838,101
Enzo Biochem, Inc.2		25,600		287,232
eResearch Technology, Inc.1,2		390,200		6,805,088
Illumina, Inc.1,2		46,700		4,068,037
Invitrogen Corp.2		77,500		3,042,650
Luminex Corp.1,2		241,200		4,956,660
Parexel International Corp.1,2		346,900		9,126,939
PerkinElmer, Inc.		74,100		2,063,685
Pharmaceutical Product Development, Inc.		52,900		2,269,410
Varian, Inc.2		240,100		12,259,506
				53,723,732
Pharmaceuticals—1.0%
Adolor Corp.1,2		262,400		1,437,952
Alpharma, Inc., Cl. A1,2		251,700		5,670,801
Auxilium Pharmaceuticals, Inc.1,2		68,300		2,296,246
Bentley Pharmaceuticals, Inc.1,2		19,500		314,925
Durect Corp.2		53,700		197,079
Endo Pharmaceuticals Holdings, Inc.2		281,900		6,819,161
Forest Laboratories, Inc.2		85,980		2,986,945
King Pharmaceuticals, Inc.2		1,260,000		13,192,200
MiddleBrook Pharmaceuticals, Inc.1,2		123,400		417,092
Pain Therapeutics, Inc.1,2		91,400		722,060
Par Pharmaceutical Cos., Inc.1,2		82,100		1,332,483
Pozen, Inc.1,2		55,600		604,928
Sepracor, Inc.2		83,500		1,663,320
Valeant Pharmaceuticals International, Inc.1,2		227,906		3,899,472
Vivus, Inc.1,2		50,100		334,668
Warner Chilcott Ltd., Cl. A1,2		143,900		2,439,105
Watson Pharmaceuticals, Inc.2		228,400		6,205,628
Xenoport, Inc.1,2		80,800		3,153,624
				53,687,689

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Industrials—20.8%
Aerospace & Defense—1.7%
Aeroviroment, Inc.1,2		34,900	$	948,582
Argon ST, Inc.1,2		39,500		979,600
Astronics Corp., Cl. B1,2		7,700		116,270
BE Aerospace, Inc.2		150,700		3,509,803
Ceradyne, Inc.1,2		151,650		5,201,595
Cubic Corp.1		268,700		5,986,636
Curtiss-Wright Corp.1		66,300		2,966,262
DRS Technologies, Inc.		288,870		22,739,846
Ducommun, Inc.1,2		79,400		1,823,024
DynCorp International, Inc., Cl. A2		380,800		5,769,120
Esterline Technologies Corp.2		296,300		14,595,738
HEICO Corp.1		105,800		3,442,732
Stanley, Inc.1,2		124,800		4,183,296
Teledyne Technologies, Inc.2		162,500		7,928,375
TransDigm Group, Inc.1,2		71,500		2,401,685
Triumph Group, Inc.1		244,500		11,515,950
				94,108,514
Air Freight & Logistics—0.5%
Air Transport Services Group, Inc.2		76,664		76,664
Atlas Air Worldwide Holdings, Inc.1,2		163,613		8,092,299
Hub Group, Inc., Cl. A2		292,590		9,986,097
Pacer International, Inc.		359,200		7,726,392
				25,881,452
Airlines—0.2%
Allegiant Travel Co.1,2		6,200		115,258
Hawaiian Holdings, Inc.1,2		505,500		3,513,225
Republic Airways Holdings, Inc.1,2		253,300		2,193,578
SkyWest, Inc.		421,270		5,329,066
				11,151,127
Building Products—0.7%
Aaon, Inc.		63,350		1,220,121
American Woodmark Corp.1		17,400		367,662
Ameron International Corp.1		60,600		7,270,788
Apogee Enterprises, Inc.1		166,800		2,695,488
Gibraltar Industries, Inc.		36,400		581,308
Insteel Industries, Inc.1		97,300		1,781,563
Lennox International, Inc.		404,500		11,714,320
NCI Building Systems, Inc.1,2		201,300		7,393,749
Quanex Building Products Corp.1		359,573		5,343,255
Universal Forest Products, Inc.1		24,200		725,032
				39,093,286
Commercial Services & Supplies—5.2%
ABM Industries, Inc.1		144,100		3,206,225
Administaff, Inc.1		303,300		8,459,037
Advisory Board Co. (The)2		8,600		338,238
American Ecology Corp.1		169,500		5,005,335
American Reprographics Co.1,2		66,100		1,100,565
AMREP Corp.		7,000		333,130
Bowne & Co., Inc.1		248,900		3,173,475
Brink’s Co. (The)		85,900		5,619,578
CBIZ, Inc.1,2		460,100		3,657,795
CDI Corp.1		141,300		3,594,672
ChoicePoint, Inc.2		258,200		12,445,240
Clean Harbors, Inc.1,2		182,000		12,932,920
Comfort Systems USA, Inc.1		484,500		6,511,680
COMSYS IT Partners, Inc.2		58,900		537,168
Consolidated Graphics, Inc.2		127,300		6,272,071

	Shares		Value
Commercial Services & Supplies Continued
Copart, Inc.1,2		10,600	$	453,892
Cornell Corrections, Inc.1,2		144,100		3,474,251
CRA International, Inc.1,2		33,300		1,203,795
Deluxe Corp.		624,500		11,128,590
Ennis, Inc.1		123,900		1,939,035
Exponent, Inc.1,2		190,100		5,971,041
First Advantage Corp., Cl. A1,2		34,700		549,995
FTI Consulting, Inc.2		17,593		1,204,417
G&K Services, Inc., Cl. A		53,300		1,623,518
GeoEye, Inc.1,2		3,400		60,214
Hill International, Inc.1,2		165,800		2,725,752
HNI Corp.1		96,100		1,697,126
Hudson Highland Group, Inc.2		147,300		1,542,231
ICF International, Inc.1,2		136,200		2,263,644
Ikon Office Solutions, Inc.		517,553		5,837,998
Interface, Inc., Cl. A1		558,100		6,992,993
Kelly Services, Inc., Cl. A1		115,301		2,228,768
Kimball International, Inc., Cl. B1		120,330		996,332
Knoll, Inc.1		331,100		4,022,865
Korn-Ferry International1,2		488,100		7,677,813
Manpower, Inc.		124,380		7,243,891
McGrath Rentcorp1		33,300		818,847
Metalico, Inc.1,2		232,000		4,064,640
Miller (Herman), Inc.1		663,260		16,508,541
Mine Safety Appliances Co.1		181,500		7,258,185
MPS Group, Inc.1,2		936,400		9,953,932
Navigant Consulting, Inc.1,2		323,300		6,323,748
R.R. Donnelley & Sons Co.		273,500		8,120,215
Resources Connection, Inc.1		225,000		4,578,750
Robert Half International, Inc.		321,500		7,706,355
Rollins, Inc.		363,850		5,392,257
Schawk, Inc.1		59,500		713,405
School Specialty, Inc.1,2		109,500		3,255,435
Spherion Corp.2		234,100		1,081,542
Standard Parking Corp.1,2		28,700		522,340
Standard Register Co. (The)1		81,700		770,431
Steelcase, Inc., Cl. A		676,000		6,780,280
Sykes Enterprises, Inc.1,2		309,400		5,835,284
Team, Inc.1,2		103,300		3,545,256
TeleTech Holdings, Inc.1,2		323,107		6,449,216
Tetra Tech, Inc.1,2		46,367		1,048,822
TrueBlue, Inc.2		533,700		7,050,177
United Stationers, Inc.1,2		260,427		9,622,778
Viad Corp.1		289,200		7,458,468
Volt Information Sciences, Inc.1,2		5,300		63,123
Waste Connections, Inc.1,2		122,635		3,915,736
Watson Wyatt & Co. Holdings		138,800		7,341,132
				280,204,185
Construction & Engineering—1.2%
Aecom Technology Corp.2		200,700		6,528,771
Baker (Michael) Corp.2		57,600		1,260,288
Dycom Industries, Inc.1,2		174,500		2,533,740
EMCOR Group, Inc.1,2		581,500		16,590,195

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Construction & Engineering Continued
Furmanite Corp.1,2		24,800	$	197,904
Granite Construction, Inc.1		136,500		4,303,845
Insituform Technologies, Inc., Cl. A1,2		129,900		1,978,377
Integrated Electrical Services, Inc.1,2		66,900		1,150,680
KBR, Inc.		232,100		8,102,611
Layne Christensen Co.1,2		98,730		4,323,387
MasTec, Inc.1,2		296,400		3,159,624
Northwest Pipe Co.1,2		62,000		3,459,600
Perini Corp.2		221,200		7,310,660
Pike Electric Corp.1,2		76,100		1,264,021
				62,163,703
Electrical Equipment—2.6%
Acuity Brands, Inc.1		395,300		19,006,024
AZZ, Inc.1,2		104,600		4,173,540
Belden, Inc.1		400,720		13,576,394
Brady Corp., Cl. A1		160,000		5,524,800
Day4 Energy, Inc.2		522,900		2,158,879
Encore Wire Corp.1		160,200		3,394,638
GrafTech International Ltd.2		898,900		24,117,487
II-VI, Inc.1,2		94,500		3,299,940
LSI Industries, Inc.1		68,300		554,596
Powell Industries, Inc.2		99,300		5,005,713
Regal-Beloit Corp.1		308,560		13,036,660
Smith (A.O.) Corp.1		198,330		6,511,174
Superior Essex, Inc.2		109,800		4,900,374
Thomas & Betts Corp.2		262,400		9,931,840
Valence Technology, Inc.1,2		218,100		966,183
Vicor Corp.1		76,563		764,099
Woodward Governor Co.		599,802		21,388,939
				138,311,280
Industrial Conglomerates—0.2%
Otter Tail Corp.1		32,900		1,277,507
Raven Industries, Inc.1		68,700		2,251,986
Walter Industries, Inc.		86,100		9,365,097
				12,894,590
Machinery—5.5%
Actuant Corp., Cl. A1		493,900		15,483,765
Altra Holdings, Inc.1,2		98,800		1,660,828
Ampco-Pittsburgh Corp.1		113,500		5,048,480
Astec Industries, Inc.1,2		229,850		7,387,379
Axsys Technologies, Inc.2		87,500		4,553,500
Badger Meter, Inc.1		155,600		7,862,468
Barnes Group, Inc.1		523,600		12,089,924
Blount International, Inc.1,2		353,100		4,099,491
Cascade Corp.1		34,700		1,468,504
Chart Industries, Inc.2		259,888		12,640,952
CIRCOR International, Inc.1		163,300		8,000,067
Colfax Corp.2		126,610		3,176,645
Columbus McKinnon Corp.1,2		201,900		4,861,752
Commercial Vehicle Group, Inc.1,2		22,400		209,440
Crane Co.		95,500		3,679,615
Cummins, Inc.		180,900		11,852,568
Dover Corp.		32,200		1,557,514
EnPro Industries, Inc.1,2		247,280		9,233,435
ESCO Technologies, Inc.1,2		47,100		2,209,932
Federal Signal Corp.1		173,900		2,086,800
Gardner Denver, Inc.2		416,660		23,666,288
Gorman-Rupp Co. (The)1		137,513		5,478,518
Hurco Cos., Inc.1,2		39,600		1,223,244
IDEX Corp.		176,900		6,516,996
Ingersoll-Rand Co. Ltd., Cl. A		296,400		11,094,252

	Shares		Value
Machinery Continued
Joy Global, Inc.		14,600	$	1,107,118
Kadant, Inc.1,2		172,800		3,905,280
Kaydon Corp.1		41,600		2,138,656
L.B. Foster Co., Cl. A1,2		32,679		1,084,943
Lincoln Electric Holdings, Inc.		58,300		4,588,210
Lindsay Manufacturing Co.1		42,000		3,568,740
Lydall, Inc.2		26,900		337,595
McCoy Corp.3		315,600		1,432,998
Mueller Industries, Inc.1		429,600		13,833,120
Navistar International Corp.2		29,900		1,968,018
Nordson Corp.1		163,300		11,902,937
Oshkosh Corp.1		70,800		1,464,852
Pentair, Inc.		128,600		4,503,572
RBC Bearings, Inc.1,2		70,000		2,332,400
Robbins & Myers, Inc.1		337,280		16,820,154
Sun Hydraulics Corp.1		139,100		4,488,757
Tecumseh Products Co., Cl. A1,2		207,400		6,798,572
Tennant Co.1		88,308		2,655,422
Timken Co.		161,600		5,323,104
Titan International, Inc.1		91,000		3,241,420
Toro Co. (The)1		345,060		11,480,146
Twin Disc, Inc.1		3,500		73,255
Wabtec Corp.		353,800		17,201,756
Watts Water Technologies, Inc., Cl. A1		141,200		3,515,880
				292,909,262
Marine—0.5%
Alexander & Baldwin, Inc.		166,400		7,579,520
American Commercial Lines, Inc.1,2		212,300		2,320,439
Excel Maritime Carriers Ltd.1		180,900		7,100,325
Kirby Corp.2		14,500		696,000
Safe Bulkers, Inc.2		323,300		6,090,972
Star Bulk Carriers Corp.1		290,300		3,422,637
				27,209,893
Road & Rail—1.1%
Amerco2		8,200		390,976
Arkansas Best Corp.1		331,700		12,153,488
Avis Budget Group, Inc.2		602,900		5,046,273
Celadon Group, Inc.1,2		7,100		70,929
Genesee & Wyoming, Inc., Cl. A1,2		138,500		4,711,770
Heartland Express, Inc.		131,300		1,957,683
Hertz Global Holdings, Inc.2		409,600		3,932,160
Marten Transport Ltd.2		51,300		819,261
Old Dominion Freight Line, Inc.2		93,200		2,797,864
Ryder Systems, Inc.		137,300		9,457,224
Werner Enterprises, Inc.1		496,200		9,219,396
YRC Worldwide, Inc.1,2		524,100		7,793,367
				58,350,391
Trading Companies & Distributors—1.3%
Applied Industrial Technologies, Inc.1		512,000		12,375,040
Beacon Roofing Supply, Inc.1,2		50,100		531,561
GATX Corp.		312,400		13,848,692
Houston Wire & Cable Co.1		129,400		2,575,060
Kaman Corp.		9,900		225,324
MSC Industrial Direct Co., Inc., Cl. A		31,200		1,376,232
Rush Enterprises, Inc., Cl. A1,2		134,900		1,620,149

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Trading Companies & Distributors Continued
Textainer Group Holdings Ltd.1		20,900	$	408,177
United Rentals, Inc.2		779,400		15,284,034
Watsco, Inc.1		72,600		3,034,680
WESCO International, Inc.2		440,700		17,645,628
				68,924,577
Transportation Infrastructure—0.1%
CAI International, Inc.2		179,400		3,121,560
Information Technology—21.5%
Communications Equipment—2.5%
Acme Packet, Inc.2		74,800		580,448
ADTRAN, Inc.1		382,200		9,111,648
Avocent Corp.2		356,020		6,621,972
Bel Fuse, Inc., Cl. A1		36,200		1,013,600
Black Box Corp.1		60,970		1,657,774
Brocade Communications Systems, Inc.2		1,445,400		11,910,096
Comtech Telecommunications Corp.2		302,400		14,817,600
EchoStar Holding Corp.1,2		94,800		2,959,656
EMS Technologies, Inc.2		144,500		3,155,880
Emulex Corp.2		897,700		10,458,205
Extreme Networks, Inc.1,2		759,400		2,156,696
Foundry Networks, Inc.1,2		680,900		8,048,238
Harmonic, Inc.1,2		82,800		787,428
Harris Corp.		124,200		6,270,858
Ixia1,2		232,319		1,614,617
JDS Uniphase Corp.2		295,500		3,356,880
ParkerVision, Inc.1,2		22,100		219,453
Performance Technologies, Inc.2		20,200		102,212
Plantronics, Inc.1		685,400		15,298,128
Polycom, Inc.2		318,700		7,763,532
Powerwave Technologies, Inc.1,2		443,100		1,883,175
SeaChange International, Inc.1,2		74,000		529,840
ShoreTel, Inc.1,2		84,300		372,606
Sycamore Networks, Inc.2		125,100		402,822
Tekelec, Inc.1,2		609,600		8,967,216
Tellabs, Inc.2		1,564,500		7,274,925
UTStarcom, Inc.1,2		441,400		2,414,458
ViaSat, Inc.1,2		128,200		2,590,922
				132,340,885
Computers & Peripherals—1.7%
3PAR, Inc.1,2		70,000		548,800
Adaptec, Inc.1,2		120,500		385,600
Electronics for Imaging, Inc.1,2		211,200		3,083,520
Hypercom Corp.1,2		11,700		51,480
Imation Corp.1		184,400		4,226,448
Lexmark International, Inc., Cl. A2		273,700		9,149,791
NCR Corp.2		426,100		10,737,720
Netezza Corp.2		125,575		1,441,601
QLogic Corp.2		992,300		14,477,657
SanDisk Corp.2		57,500		1,075,250
Seagate Technology		563,900		10,787,407
STEC, Inc.1,2		412,700		4,238,429
Stratasys, Inc.2		45,300		836,238
Synaptics, Inc.1,2		327,400		12,352,802
Western Digital Corp.2		492,800		17,016,384
Xyratex Ltd.2		87,300		1,453,545
				91,862,672
Electronic Equipment & Instruments—3.6%
Acacia Research Corp.1,2		100,400		449,792
Amphenol Corp., Cl. A		153,000		6,866,640

	Shares		Value
Electronic Equipment & Instruments Continued
Arrow Electronics, Inc.2		302,300	$	9,286,656
Avnet, Inc.2		252,100		6,877,288
AVX Corp.1		193,393		2,187,275
Benchmark Electronics, Inc.2		606,840		9,915,766
Checkpoint Systems, Inc.1,2		301,600		6,297,408
Cogent, Inc.1,2		119,100		1,354,167
Cognex Corp.1		324,300		7,475,115
Coherent, Inc.1,2		58,000		1,733,620
CPI International, Inc.1,2		500		6,150
CTS Corp.1		311,400		3,129,570
DTS, Inc.1,2		126,000		3,946,320
Electro Scientific Industries, Inc.2		117,800		1,669,226
Excel Technology, Inc.2		21,500		479,880
FARO Technologies, Inc.2		12,900		324,693
FLIR Systems, Inc.1,2		154,800		6,280,236
Gerber Scientific, Inc.1,2		6,700		76,246
Ingram Micro, Inc., Cl. A2		87,100		1,546,025
Insight Enterprises, Inc.1,2		240,700		2,823,411
IPG Photonics Corp.1,2		90,100		1,694,781
Littlefuse, Inc.1,2		117,837		3,717,757
Measurement Specialties, Inc.1,2		6,800		119,612
Methode Electronics, Inc.		218,390		2,282,176
Molex, Inc.1		257,200		6,278,252
MTS Systems Corp.1		87,900		3,153,852
Multi-Fineline Electronix, Inc.1,2		211,297		5,846,588
NAM TAI Electronics, Inc.1		94,200		1,232,136
National Instruments Corp.		299,100		8,485,467
Newport Corp.2		41,000		466,990
OSI Systems, Inc.2		67,000		1,435,140
Park Electrochemical Corp.		106,000		2,576,860
PC Connection, Inc.2		44,083		410,413
Plexus Corp.1,2		563,300		15,592,144
Rofin-Sinar Technologies, Inc.1,2		460,100		13,895,020
Rogers Corp.2		106,200		3,992,058
Sanmina-SCI Corp.2		1,006,500		1,288,320
ScanSource, Inc.1,2		88,800		2,376,288
SYNNEX Corp.2		257,400		6,458,166
Tech Data Corp.2		358,900		12,163,121
Technitrol, Inc.1		340,920		5,792,231
Trimble Navigation Ltd.1,2		193,300		6,900,810
TTM Technologies, Inc.1,2		495,000		6,538,950
Vishay Intertechnology, Inc.2		898,100		7,966,147
				193,388,763
Internet Software & Services—1.5%
AsiaInfo Holdings, Inc.1,2		380,000		4,491,600
Bankrate, Inc.1,2		56,900		2,223,083
CMGI, Inc.1,2		207,344		2,197,846
Digital River, Inc.1,2		82,800		3,194,424
Equinix, Inc.1,2		29,000		2,587,380
Greenfield Online, Inc.2		167,200		2,494,624
Imergent, Inc.1		78,400		928,256
Interwoven, Inc.1,2		282,500		3,392,825
j2 Global Communications, Inc.1,2		631,768		14,530,664
Marchex, Inc., Cl. B1		67,200		827,904
National Information Consortium, Inc.		231,400		1,580,462

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Internet Software & Services Continued
NaviSite, Inc.1,2		72,500	$	275,500
Open Text Corp.1,2		384,000		12,326,400
RealNetworks, Inc.1,2		195,400		1,289,640
S1 Corp.2		554,700		4,199,079
Sohu.com, Inc.2		104,000		7,325,760
SonicWALL, Inc.2		271,700		1,752,465
SoundBite Communications, Inc.2		110,000		380,600
TheStreet.com, Inc.1		126,600		824,166
United Online, Inc.1		810,250		8,126,808
ValueClick, Inc.1,2		56,798		860,490
Vignette Corp.1,2		119,800		1,437,600
Vocus, Inc.1,2		66,100		2,126,437
Zix Corp.1,2		77,600		215,728
				79,589,741
IT Services—2.5%
Acxiom Corp.1		413,300		4,748,817
Affiliated Computer Services, Inc., Cl. A2		144,600		7,734,654
Broadridge Financial Solutions, Inc.		201,400		4,239,470
CACI International, Inc., Cl. A2		210,140		9,618,108
CIBER, Inc.1,2		470,200		2,919,942
Computer Sciences Corp.2		151,760		7,108,438
Convergys Corp.2		988,800		14,693,568
CSG Systems International, Inc.2		274,900		3,029,398
CyberSource Corp.1,2		538,544		9,009,841
Electronic Data Systems Corp.		86,300		2,126,432
Forrester Research, Inc.2		80,500		2,485,840
Gartner, Inc.1,2		442,600		9,170,672
Global Cash Access, Inc.1,2		119,100		817,026
Heartland Payment Systems, Inc.1		191,400		4,517,040
Hewitt Associates, Inc.2		300,700		11,525,831
infoGROUP, Inc.		10,100		44,339
Integral Systems, Inc.1		57,559		2,227,533
ManTech International Corp.1,2		326,200		15,696,744
Maximus, Inc.1		162,080		5,643,626
Metavante Technologies, Inc.		12,900		291,798
NCI, Inc., Cl. A1,2		65,000		1,487,200
Ness Technologies, Inc.1,2		1,400		14,168
Perot Systems Corp., Cl. A1,2		324,200		4,866,242
RightNow Technologies, Inc.1,2		126,800		1,733,356
SAIC, Inc.2		49,600		1,032,176
Sapient Corp.1,2		878,500		5,639,970
Syntel, Inc.1		44,700		1,507,284
TNS, Inc.1,2		2,600		62,296
Wright Express Corp.2		65,400		1,621,920
				135,613,729
Office Electronics—0.1%
Zebra Technologies Corp., Cl. A2		174,600		5,698,944
Semiconductors & Semiconductor Equipment—5.0%
Actel Corp.2		234,100		3,944,585
Advanced Energy Industries, Inc.1,2		236,900		3,245,530
Altera Corp.		385,500		7,979,850
Amkor Technology, Inc.1,2		1,498,610		15,600,530
Analog Devices, Inc.		215,800		6,855,966
Atmel Corp.2		2,622,600		9,126,648
ATMI, Inc.1,2		214,200		5,980,464
Brooks Automation, Inc.1,2		330,900		2,736,543
Cabot Microelectronics Corp.1,2		326,200		10,813,530
Cirrus Logic, Inc.1,2		100,800		560,448

	Shares		Value
Semiconductors & Semiconductor Equipment Continued
Cohu, Inc.1		117,700	$	1,727,836
Entegris, Inc.2		1,198,260		7,848,603
Fairchild Semiconductor International, Inc., Cl. A2		1,097,718		12,876,232
FEI Co.1,2		285,400		6,501,412
Integrated Device Technology, Inc.2		1,536,600		15,273,804
Intellon Corp.2		109,300		360,690
Intersil Corp., Cl. A		440,900		10,722,688
IXYS Corp.2		6,900		82,386
KLA-Tencor Corp.		251,900		10,254,849
Lattice Semiconductor Corp.2		665,800		2,083,954
LSI Corp.2		1,082,700		6,647,778
Marvell Technology Group Ltd.2		418,400		7,388,944
Mattson Technology, Inc.1,2		21,300		101,388
Micrel, Inc.		657,200		6,013,380
Microtune, Inc.1,2		96,000		332,160
MKS Instruments, Inc.2		686,800		15,040,920
Monolithic Power Systems, Inc.1,2		343,900		7,435,118
Netlogic Microsystems, Inc.1,2		57,700		1,915,640
NVIDIA Corp.2		31,358		587,022
OmniVision Technologies, Inc.2		51,700		625,053
Pericom Semiconductor Corp.1,2		379,600		5,633,264
Semtech Corp.1,2		845,320		11,893,652
Silicon Image, Inc.1,2		474,100		3,437,225
Silicon Laboratories, Inc.1,2		256,800		9,267,912
Silicon Storage Technology, Inc.1,2		216,700		600,259
Skyworks Solutions, Inc.1,2		1,533,280		15,133,474
Standard Microsystems Corp.1,2		176,100		4,781,115
Techwell, Inc.2		5,400		66,528
Teradyne, Inc.2		953,200		10,551,924
TriQuint Semiconductor, Inc.2		432,800		2,622,768
Ultra Clean Holdings, Inc.1,2		25,300		201,388
Ultratech, Inc.2		136,500		2,118,480
Veeco Instruments, Inc.1,2		295,800		4,756,464
Verigy Ltd.2		308,400		7,003,764
Volterra Semiconductor Corp.1,2		277,700		4,793,102
Zoran Corp.2		225,700		2,640,690
				266,165,960
Software—4.6%
Activision, Inc.2		456,900		15,566,583
Actuate Corp.2		110,700		432,837
Advent Software, Inc.1,2		107,290		3,871,023
Amdocs Ltd.2		193,900		5,704,538
Ansoft Corp.1,2		75,846		2,760,794
Ansys, Inc.1,2		254,260		11,980,731
ArcSight, Inc.1,2		12,500		110,000
Aspen Technology, Inc.2		685,690		9,119,677
Autodesk, Inc.2		37,500		1,267,875
Blackbaud, Inc.1		161,924		3,465,174
BMC Software, Inc.2		376,600		13,557,600
CA, Inc.		144,200		3,329,578
Cadence Design Systems, Inc.2		797,600		8,055,760
Check Point Software Technologies Ltd.2		329,600		7,801,632
Commvault Systems, Inc.1,2		88,560		1,473,638
Compuware Corp.1,2		1,428,000		13,623,120

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Software Continued
Concur Technologies, Inc.1,2		4,920	$	163,492
Double-Take Software, Inc.1,2		55,900		768,066
EPIQ Systems, Inc.1,2		174,450		2,477,190
Fair Isaac Corp.1		276,500		5,742,905
FalconStor Software, Inc.1,2		128,600		910,488
Henry (Jack) & Associates, Inc.1		57,200		1,237,808
Informatica Corp.1,2		634,300		9,539,872
Interactive Intelligence, Inc.1,2		87,100		1,013,844
Intervoice, Inc.1,2		72,500		413,250
JDA Software Group, Inc.2		273,200		4,944,920
Lawson Software, Inc.1,2		1,324,800		9,631,296
Manhattan Associates, Inc.1,2		185,600		4,404,288
Mentor Graphics Corp.1,2		351,400		5,552,120
MICROS Systems, Inc.2		64,500		1,966,605
MicroStrategy, Inc., Cl. A1,2		127,000		8,223,250
NAVTEQ Corp.2		41,800		3,218,600
Net 1 UEPS Technologies, Inc.2		383,700		9,323,910
NetScout Systems, Inc.2		152,800		1,631,904
Parametric Technology Corp.2		537,350		8,957,625
Phoenix Technologies Ltd.1,2		10,600		116,600
Progress Software Corp.1,2		231,100		5,909,227
PROS Holdings, Inc.1,2		42,225		474,187
Quest Software, Inc.1,2		644,100		9,539,121
Radiant Systems, Inc.1,2		221,900		2,380,987
Salesforce.com, Inc.2		26,900		1,835,387
SPSS, Inc.1,2		113,600		4,131,632
Sybase, Inc.2		314,400		9,249,648
Taleo Corp., Cl. A1,2		165,300		3,238,227
The9 Ltd., ADR1,2		15,657		353,535
TIBCO Software, Inc.1,2		1,935,200		14,804,280
Tyler Technologies, Inc.1,2		267,200		3,625,904
Ultimate Software Group, Inc. (The)1,2		98,600		3,513,118
Wind River Systems, Inc.1,2		481,134		5,239,549
				246,653,395
Materials—7.9%
Chemicals—4.2%
Arch Chemicals, Inc.1		267,400		8,864,310
Balchem Corp.		12,700		293,751
Calgon Carbon Corp.1,2		430,800		6,660,168
Celanese Corp., Series A		25,300		1,155,198
CF Industries Holdings, Inc.		144,700		22,110,160
Chemtura Corp.1		977,360		5,707,782
Cytec Industries, Inc.		57,800		3,153,568
Ferro Corp.		258,300		4,845,708
Fuller (H.B.) Co.1		353,300		7,928,052
GenTek, Inc.1,2		13,300		357,637
Hercules, Inc.		906,600		15,348,738
ICO, Inc.1,2		201,300		1,211,826
Innophos Holdings, Inc.1		172,400		5,508,180
Innospec, Inc.		156,105		2,937,896
Koppers Holdings, Inc.		263,700		11,041,119
Landec Corp.1,2		123,200		797,104
LSB Industries, Inc.1,2		12,500		247,500
Minerals Technologies, Inc.1		209,700		13,334,823
Nalco Holding Co.		223,100		4,718,565
NewMarket Corp.1		192,660		12,759,872
NOVA Chemicals Corp.		317,500		7,832,725

	Shares		Value
Chemicals Continued
Olin Corp.		664,600	$	17,399,228
OM Group, Inc.1,2		319,000		10,460,010
Penford Corp.1		9,400		139,872
PolyOne Corp.2		414,700		2,890,459
Quaker Chemical Corp.		47,200		1,258,352
Rockwood Holdings, Inc.1,2		7,100		247,080
RPM International, Inc.		217,500		4,480,500
Schulman (A.), Inc.		158,600		3,652,558
Scotts Miracle-Gro Co. (The), Cl. A		78,200		1,373,974
Sensient Technologies Corp.		383,490		10,799,078
ShengdaTech, Inc.1,2		93,400		927,462
Stepan Co.1		58,000		2,645,960
Terra Industries, Inc.1		339,254		16,742,185
Valhi, Inc.		14,500		395,125
Valspar Corp. (The)1		456,400		8,630,524
Westlake Chemical Corp.1		202,700		3,012,122
Zep, Inc.		191,575		2,850,636
				224,719,807
Containers & Packaging—1.0%
AptarGroup, Inc.		89,800		3,767,110
Crown Holdings, Inc.2		267,400		6,949,726
Greif, Inc., Cl. A1		135,700		8,688,871
Myers Industries, Inc.		115,600		942,140
Owens-Illinois, Inc.2		173,000		7,212,370
Rock-Tenn Co., Cl. A1		518,700		15,555,813
Sealed Air Corp.		285,100		5,419,751
Silgan Holdings, Inc.		21,600		1,095,984
Sonoco Products Co.		155,700		4,818,915
				54,450,680
Metals & Mining—2.6%
A. M. Castle & Co.1		101,700		2,909,637
AK Steel Holding Corp.		169,600		11,702,400
AMCOL International Corp.1		34,600		984,716
Amerigo Resources Ltd.		757,900		1,144,617
Century Aluminum Co.1,2		115,100		7,652,999
Compass Minerals International, Inc.		167,900		13,526,024
Esmark, Inc.1,2		7,900		151,048
Farallon Resources Ltd.2		1,036,200		792,621
Hecla Mining Co.1,2		1,676,500		15,524,390
Kaiser Aluminum Corp.1		56,700		3,035,151
Olympic Steel, Inc.1		67,700		5,139,784
Redcorp Ventures Ltd.2,3		4,502,900		861,102
Reliance Steel & Aluminum Co.		147,700		11,386,193
Schnitzer Steel Industries, Inc.		201,000		23,034,600
Sims Group Ltd., Sponsored ADR1		555,020		22,145,298
Universal Stainless & Alloy Products, Inc.1,2		8,200		303,728
Worthington Industries, Inc.1		790,600		16,207,300
Yamana Gold, Inc.		51,405		854,986
				137,356,594
Paper & Forest Products—0.1%
Buckeye Technologies, Inc.2		126,700		1,071,882
Deltic Timber Corp.1		27,100		1,450,121
Glatfelter1		276,600		3,736,866
Mercer International, Inc.1,2		28,200		210,936
Schweitzer-Mauduit International, Inc.1		51,800		872,830
Wausau Paper Corp.1		97,500		751,725
				8,094,360

STATEMENT OF INVESTMENTS Continued

	Shares		Value
Telecommunication Services—1.8%
Diversified Telecommunication Services—1.2%
Alaska Communications Systems Group, Inc.1		184,225	$	2,199,647
Atlantic Tele-Network, Inc.1		90,385		2,486,491
Cincinnati Bell, Inc.2		2,540,300		10,110,394
Embarq Corp.		188,900		8,929,303
Iowa Telecommunications Services, Inc.1		210,500		3,706,905
NTELOS Holdings Corp.1		471,000		11,949,270
Premiere Global Services, Inc.2		1,015,780		14,810,072
Windstream Corp.		625,600		7,719,904
				61,911,986
Wireless Telecommunication Services—0.6%
Centennial Communications Corp.1,2		764,300		5,342,457
iPCS, Inc.1,2		37,100		1,099,273
Rural Cellular Corp., Cl. A1,2		36,700		1,633,517
Syniverse Holdings, Inc.2		792,565		12,839,553
Telephone & Data Systems, Inc.		228,600		10,805,922
United States Cellular Corp.2		43,630		2,467,277
				34,187,999
Utilities—1.7%
Electric Utilities—0.2%
DPL, Inc.		98,000		2,585,240
El Paso Electric Co.2		142,700		2,825,460
Hawaiian Electric Industries, Inc.1		72,700		1,797,871
UIL Holdings Corp.1		69,800		2,052,818
UniSource Energy Corp.		98,500		3,054,485
				12,315,874
Energy Traders—0.4%
Canadian Hydro Developers, Inc.2		306,000		1,605,472
Mirant Corp.1,2		292,900		11,467,035
Reliant Energy, Inc.2		318,500		6,774,495
				19,847,002
Gas Utilities—0.8%
Laclede Group, Inc. (The)1		174,100		7,028,417
New Jersey Resources Corp.1		49,400		1,612,910
Northwest Natural Gas Co.1		227,100		10,505,646
Piedmont Natural Gas Co., Inc.		93,600		2,448,576
South Jersey Industries, Inc.		10,500		392,280
Southwest Gas Corp.1		44,600		1,325,958
WGL Holdings, Inc.1		526,000		18,273,240
				41,587,027
Multi-Utilities—0.2%
Alliant Energy Corp.		33,800		1,157,988
Avista Corp.		254,800		5,468,003
Integrys Energy Group, Inc.1		86,200		4,381,546
				11,007,537
Water Utilities—0.1%
Cascal NV2		289,300		3,558,390
SJW Corp.1		63,700		1,681,680
				5,240,070
Total Common Stocks (Cost $5,330,035,312)				5,343,618,819

	Units
Rights, Warrants and Certificates—0.0%
Redcorp Ventures Ltd. Wts., Strike Price 0.65 CAD, Exp. 7/5/092 (Cost $0)		2,251,450	55,199

	Shares		Value
Investment Companies—0.7%
Oppenheimer Institutional Money Market Fund, Cl. E, 2.69%5,6 (Cost $38,604,527)		38,604,527	$	38,604,527
Total Investments, at Value (excluding Investments Purchased with Cash Collateral from Securities Loaned) (Cost $5,368,639,839)				5,382,278,545

	Principal
	Amount
Investments Purchased with Cash Collateral from Securities Loaned—21.6%7
Asset-Backed Floating Note—1.1%
Carrington Mortgage Loan Trust, Series 2007-RFC1, Cl. A1, 2.53%, 7/25/08	$	15,154,570	$	14,780,176
Credit-Based Asset Servicing & Securitization LLC, 2.52%, 7/25/08		2,320,830		2,289,696
GSAA Home Equity Trust, Series 2005-15, Cl. 2A1, 2.57%, 7/25/08		2,333,267		2,308,178
Home Equity Asset Trust, Series 2006-6, Cl. 2A1, 2.54%, 7/25/08		2,822,397		2,779,369
Morgan Stanley ABS Capital I, Series 2007-NC2, Cl. A2A, 2.59%, 7/25/08		12,906,594		12,662,104
Morgan Stanley ABS Capital I, Series 2007-NC4, Cl. A2A, 2.56%, 7/25/08		17,385,228		14,701,540
Option One Mortgage Loan Trust, Series 2007-2, Cl. SA1, 2.57%, 7/25/08		8,322,974		8,169,765
Specialty Underwriting & Residential Finance Trust, Series 2006 BC1, Cl. A2A, 2.56%, 7/25/08		44,704		44,655
				57,735,483
Bank Floating Rate Note—0.6%
Wachovia Bank NA, 2.11%, 7/1/08		31,000,000		30,742,328
Domestic Floating Certificate of Deposit—2.5%
Comerica, 2.46%, 7/1/08		70,000,000		69,988,170
Manufactures & Traders, 2.72%, 7/15/08		64,909,460		64,944,815
				134,932,985
Funding Agreement/Guaranteed Investment Contract—0.6%
Protective Life Insurance Co., 3.06%, 7/28/08		15,000,000		15,000,000
Protective Life Insurance Co., 3.06%, 7/29/08		19,000,000		19,000,000
				34,000,000
Repurchase Agreements—8.0%
Repurchase agreement (Principal Amount/Value $20,000,000 with a maturity value of $20,001,278) with BNP Paribas Securities Corp., 2.30%, dated 6/30/08, to be repurchased at $20,001,278 on 7/1/08, collateralized by U.S. Agency Mortgages, 5%-6.50%, 9/1/36-5/1/38, with a value of $20,400,000		20,000,000		20,000,000

STATEMENT OF INVESTMENTS Continued

	Principal
	Amount			Value
Repurchase Agreements Continued
Repurchase agreement (Principal Amount/Value $409,303,748 with a maturity value of $409,334,446) with Barclays Capital, 2.70%, dated 6/30/08, to be repurchased at $409,334,446 on 7/1/08, collateralized by various securities, 0%-7.325%, 12/15/10-11/20/56, with a value of $427,149,823	$	409,303,748		$	409,303,748
					429,303,748
Medium-Term Floating Note—8.8%
AIG Match Funding Corp., 2.11%, 7/1/08		40,000,000			39,742,411
American General Finance Corp., 2.73%, 7/9/08		13,000,000			12,771,564
American Honda Finance Corp., 2.69%, 9/9/08		13,504,840			13,481,195
American Honda Finance Corp., 2.77%, 9/16/08		49,008,302			48,990,935
Beta Finance, Inc., 2.13%, 7/1/08		24,993,299			24,690,875
CC USA, Inc., 2.13%, 7/1/08		25,493,156			25,203,920
Fifth Third Bancorp, 2.49%, 7/23/08		2,000,000			1,998,166
Goldman Sachs Group, Inc., 2.16%, 7/1/08		25,000,000			24,763,825
HBOS Treasury Services plc, 2.12%, 7/1/08		3,000,000			2,999,826
HSBC Finance Corp., 2.47%, 7/7/08		3,000,000			2,998,431
Jackson National Life Global Fund, 2.71%, 9/2/08		25,000,000			24,849,775
LINKS Finance LLC, 2.12%, 7/1/08		44,988,796			44,586,474
MBIA Global Funding LLC, 2.12%, 7/1/08		18,000,000			16,942,140
MBIA Global Funding LLC, 2.12%, 7/1/08		8,000,000			6,971,072
Merrill Lynch & Co., 2.16%, 7/1/08		30,000,000			29,358,270
Merrill Lynch & Co., 2.17%, 7/1/08		40,000,000			39,008,760
Metropolitan Life Global Funding, 2.48%, 7/22/08		38,500,000			38,491,492
Nationwide Global Fund I, 2.78%, 9/15/08		54,018,143			53,998,163
PACCAR Financial Corp., 2.65%, 8/28/08		7,501,825			7,493,790
Pricoa Global Funding I, 2.78%, 9/12/08		14,000,485			13,996,584
					473,337,668
Total Investments Purchased with Cash Collateral from Securities Loaned (Cost $1,169,518,660)					1,160,052,212
Total Investments, at Value (Cost $6,538,158,499)		121.9	%		6,542,330,757
Liabilities in Excess of Other Assets		(21.9	)		(1,174,707,784	)
Net Assets		100.0	%	$	5,367,622,973

Industry classifications are unaudited.

Footnotes to Statement of Investments

Strike price is reported in U.S. Dollars, except for those denoted in the following currency:

CAD Canadian Dollar

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

2. Non-income producing security.

3. Represents securities sold under Rule 144A, which are exempt from registration under the Securities Act of 1933, as amended. These securities have been determined to be liquid under guidelines established by the Board of Trustees. These securities amount to $6,801,943 or 0.13% of the Fund’s net assets as of June 30, 2008.

4. Illiquid or restricted security. The aggregate value of illiquid or restricted securities as of June 30, 2008 was $784,790, which represents 0.01% of the Fund’s net assets, all of which is considered restricted. See Note 6 of accompanying Notes. Information concerning restricted securities is as follows:

	Acquisition						Unrealized
Security	Date		Cost		Value		Appreciation
Tusk Energy Corp.		11/15/04	$	492,524	$	784,790	$	292,266

5. Rate shown is the 7-day yield as of June 30, 2008.

6. Is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended June 30, 2008, by virtue of the Fund owning at least 5% of the voting securities of the issuer or as a result of the Fund and the issuer having the same investment adviser. Transactions during the period in which the issuer was an affiliate are as follows:

	Shares		Gross		Gross		Shares
	June 30, 2007		Additions		Reductions		June 30, 2008
Oppenheimer Institutional Money Market Fund, Cl. E		59,435,689		1,611,846,325		1,632,677,487		38,604,527

			Dividend
	Value		Income
Oppenheimer Institutional Money Market Fund, Cl. E	$	38,604,527	$	2,098,237

7. 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.

STATEMENT OF ASSETS AND LIABILITIES June 30, 2008

Assets
Investments, at value—see accompanying statement of investments:
Unaffiliated companies (cost $6,499,553,972)	$	6,503,726,230
Affiliated companies (cost $38,604,527)		38,604,527
		6,542,330,757
Cash		4,122,083
Receivables and other assets:
Investments sold		116,074,208
Shares of beneficial interest sold		21,044,343
Interest and dividends		3,665,175
Other		831,936
Total assets		6,688,068,502
Liabilities
Return of collateral for securities loaned		1,171,705,346
Payables and other liabilities:
Investments purchased		124,649,549
Shares of beneficial interest redeemed		19,102,643
Distribution and service plan fees		2,776,892
Transfer and shareholder servicing agent fees		1,476,521
Shareholder communications		585,055
Trustees’ compensation		42,894
Other		106,629
Total liabilities		1,320,445,529
Net Assets	$	5,367,622,973
Composition of Net Assets
Par value of shares of beneficial interest	$	301,774
Additional paid-in capital		5,786,530,747
Accumulated net investment loss		(254,076	)
Accumulated net realized loss on investments and foreign currency transactions		(423,127,722	)
Net unrealized appreciation on investments and translation of assets and liabilities denominated in foreign currencies		4,172,250
Net Assets	$	5,367,622,973

Net Asset Value Per Share
Class A Shares:
Net asset value and redemption price per share (based on net assets of $3,304,734,805 and 184,887,396 shares of beneficial interest outstanding)	$	17.87
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price)	$	18.96
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $261,085,468 and 15,930,989 shares of beneficial interest outstanding)	$	16.39
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $505,403,872 and 30,687,757 shares of beneficial interest outstanding)	$	16.47
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $275,975,238 and 15,841,838 shares of beneficial interest outstanding)	$	17.42
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets of $1,020,423,590 and 54,426,379 shares of beneficial interest outstanding)	$	18.75

STATEMENT OF OPERATIONS For the Year Ended June 30, 2008

Investment Income
Dividends:
Unaffiliated companies (net of foreign withholding taxes of $15,384)	$	43,956,653
Affiliated companies		2,098,237
Portfolio lending fees		10,263,500
Interest		140,879
Other income		62,079
Total investment income		56,521,348
Expenses
Management fees		34,222,387
Distribution and service plan fees:
Class A		8,758,112
Class B		3,585,437
Class C		6,033,053
Class N		1,447,500
Transfer and shareholder servicing agent fees:
Class A		10,814,413
Class B		953,344
Class C		1,449,354
Class N		1,216,778
Class Y		1,013,575
Shareholder communications:
Class A		734,151
Class B		116,489
Class C		120,586
Class N		20,823
Class Y		8,587
Trustees’ compensation		95,845
Custodian fees and expenses		30,244
Administration service fees		1,500
Other		184,569
Total expenses		70,806,747
Less reduction to custodian expenses		(12,155	)
Less waivers and reimbursements of expenses		(252,797	)
Net expenses		70,541,795
Net Investment Loss		(14,020,447	)

Realized and Unrealized Gain (Loss)
Net realized gain (loss) on:
Investments from unaffiliated companies	$	(261,494,100	)
Foreign currency transactions		1,704,072
Short positions		8,107
Net realized loss		(259,781,921	)
Net change in unrealized appreciation (depreciation) on:
Investments		(908,139,793	)
Translation of assets and liabilities denominated in foreign currencies		(778,628	)
Net change in unrealized appreciation		(908,918,421	)
Net Decrease in Net Assets Resulting from Operations	$	(1,182,720,789	)

STATEMENTS OF CHANGES IN NET ASSETS

Year Ended June 30,	2008			2007
Operations
Net investment income (loss)	$	(14,020,447	)	$	10,852,625
Net realized gain (loss)		(259,781,921	)		475,646,147
Net change in unrealized appreciation		(908,918,421	)		301,071,630
Net increase (decrease) in net assets resulting from operations		(1,182,720,789	)		787,570,402
Dividends and/or Distributions to Shareholders
Dividends from net investment income:
Class A		(8,491,179	)		—
Class B		—			—
Class C		—			—
Class N		—			—
Class Y		(4,176,920	)		—
		(12,668,099	)		—
Tax return of capital distribution from net investment income:
Class A		(42,889	)		—
Class B		—			—
Class C		—			—
Class N		—			—
Class Y		(21,097	)		—
		(63,986	)		—
Distributions from net realized gain:
Class A		(340,286,746	)		(198,184,565	)
Class B		(37,088,720	)		(34,084,425	)
Class C		(61,718,249	)		(45,157,710	)
Class N		(27,521,324	)		(16,187,088	)
Class Y		(59,781,758	)		(33,646,099	)
		(526,396,797	)		(327,259,887	)
Tax return of capital distribution from net realized gain:
Class A		(2,724,625	)		—
Class B		(296,964	)		—
Class C		(494,169	)		—
Class N		(220,359	)		—
Class Y		(478,664	)		—
		(4,214,781	)		—
Beneficial Interest Transactions
Net increase (decrease) in net assets resulting from beneficial interest transactions:
Class A		649,537,948			891,622,920
Class B		(94,267,351	)		(62,735,159	)
Class C		(9,343,656	)		59,556,302
Class N		64,382,658			85,583,224
Class Y		428,176,067			324,792,387
		1,038,485,666			1,298,819,674

Year Ended June 30,	2008			2007
Net Assets
Total increase (decrease)	$	(687,578,786	)	$	1,759,130,189
Beginning of period		6,055,201,759			4,296,071,570
End of period (including accumulated net investment income (loss) of $(254,076) and $12,539,689, respectively)	$	5,367,622,973		$	6,055,201,759

FINANCIAL HIGHLIGHTS

Class A      Year Ended June 30,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	24.25		$	22.27		$	20.17		$	19.52		$	14.78
Income (loss) from investment operations:
Net investment income (loss)		(.04	)1		.08	1		(.02	)1		(.04	)1		(.10	)
Net realized and unrealized gain (loss)		(4.28	)		3.45			3.59			2.65			4.84
Total from investment operations		(4.32	)		3.53			3.57			2.61			4.74
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.05	)		—			—			—			—
Distributions from net realized gain		(2.00	)		(1.55	)		(1.47	)		(1.96	)		—
Tax return of capital distribution from net investment income		—	2		—			—			—			—
Tax return of capital distribution from net realized gain		(.01	)		—			—			—			—
Total dividends and/or distributions to shareholders		(2.06	)		(1.55	)		(1.47	)		(1.96	)		—
Net asset value, end of period	$	17.87		$	24.25		$	22.27		$	20.17		$	19.52
Total Return, at Net Asset Value3		(18.66	)%		16.48	%		18.22	%		13.82	%		32.07	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	3,304,735		$	3,766,574		$	2,584,254		$	1,557,307		$	1,177,389
Average net assets (in thousands)	$	3,576,817		$	3,086,495		$	2,040,757		$	1,325,846		$	904,397
Ratios to average net assets:4
Net investment income (loss)		(0.17	)%		0.35	%		(0.07	)%		(0.20	)%		(0.42	)%
Total expenses		1.19	%5,6		1.12	%5,6		1.15	%6		1.19	%6,7		1.17	%6,7
Portfolio turnover rate		134	%		114	%		102	%		132	%		127	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Less than $0.005 per share.
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 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 less than one full year.
5.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended June 30, 2008	1.19	%
Year Ended June 30, 2007	1.12	%

6.	Reduction to custodian expenses less than 0.005%.
7.	Voluntary waiver of transfer agent fees less than 0.005%.

Class B      Year Ended June 30,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	22.53		$	20.94		$	19.19		$	18.79		$	14.35
Income (loss) from investment operations:
Net investment loss		(.17	)1		(.10	)1		(.18	)1		(.18	)1		(.20	)
Net realized and unrealized gain (loss)		(3.96	)		3.24			3.40			2.54			4.64
Total from investment operations		(4.13	)		3.14			3.22			2.36			4.44
Dividends and/or distributions to shareholders:
Dividends from net investment income		—			—			—			—			—
Distributions from net realized gain		(2.00	)		(1.55	)		(1.47	)		(1.96	)		—
Tax return of capital distribution from net investment income		—			—			—			—			—
Tax return of capital distribution from net realized gain		(.01	)		—			—			—			—
Total dividends and/or distributions to shareholders		(2.01	)		(1.55	)		(1.47	)		(1.96	)		—
Net asset value, end of period	$	16.39		$	22.53		$	20.94		$	19.19		$	18.79
Total Return, at Net Asset Value2		(19.25	)%		15.63	%		17.29	%		12.98	%		30.94	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	261,085		$	473,768		$	501,742		$	510,183		$	482,028
Average net assets (in thousands)	$	357,794		$	479,042		$	512,657		$	490,050		$	432,160
Ratios to average net assets:3
Net investment loss		(0.89	)%		(0.46	)%		(0.85	)%		(0.98	)%		(1.26	)%
Total expenses		1.92	%4,5		1.89	%4,5		1.92	%5		1.97	%5		2.01	%5,6
Portfolio turnover rate		134	%		114	%		102	%		132	%		127	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended June 30, 2008	1.92	%
Year Ended June 30, 2007	1.89	%

5.	Reduction to custodian expenses less than 0.005%.
6.	Voluntary waiver of transfer agent fees less than 0.005%.

FINANCIAL HIGHLIGHTS Continued

Class C     Year Ended June 30,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	22.62		$	21.01		$	19.24		$	18.82		$	14.36
Income (loss) from investment operations:
Net investment loss		(.16	)1		(.08	)1		(.16	)1		(.17	)1		(.17	)
Net realized and unrealized gain (loss)		(3.98	)		3.24			3.40			2.55			4.63
Total from investment operations		(4.14	)		3.16			3.24			2.38			4.46
Dividends and/or distributions to shareholders:
Dividends from net investment income		—			—			—			—			—
Distributions from net realized gain		(2.00	)		(1.55	)		(1.47	)		(1.96	)		—
Tax return of capital distribution from net investment income		—			—			—			—			—
Tax return of capital distribution from net realized gain		(.01	)		—			—			—			—
Total dividends and/or distributions to shareholders		(2.01	)		(1.55	)		(1.47	)		(1.96	)		—
Net asset value, end of period	$	16.47		$	22.62		$	21.01		$	19.24		$	18.82
Total Return, at Net Asset Value2		(19.21	)%		15.68	%		17.35	%		13.07	%		31.06	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	505,404		$	710,808		$	600,331		$	473,099		$	402,056
Average net assets (in thousands)	$	602,381		$	645,637		$	543,420		$	433,888		$	340,201
Ratios to average net assets:3
Net investment loss		(0.86	)%		(0.39	)%		(0.79	)%		(0.91	)%		(1.17	)%
Total expenses		1.88	%4,5		1.84	%4,5		1.87	%5		1.90	%5,6		1.91	%5,6
Portfolio turnover rate		134	%		114	%		102	%		132	%		127	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended June 30, 2008	1.88	%
Year Ended June 30, 2007	1.84	%

5.	Reduction to custodian expenses less than 0.005%.
6.	Voluntary waiver of transfer agent fees less than 0.005%.

Class N     Year Ended June 30,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	23.70		$	21.87		$	19.90		$	19.33		$	14.69
Income (loss) from investment operations:
Net investment income (loss)		(.09	)1		.01	1		(.09	)1		(.10	)1		(.14	)
Net realized and unrealized gain (loss)		(4.18	)		3.37			3.53			2.63			4.78
Total from investment operations		(4.27	)		3.38			3.44			2.53			4.64
Dividends and/or distributions to shareholders:
Dividends from net investment income		—			—			—			—			—
Distributions from net realized gain		(2.00	)		(1.55	)		(1.47	)		(1.96	)		—
Tax return of capital distribution from net investment income		—			—			—			—			—
Tax return of capital distribution from net realized gain		(.01	)		—			—			—			—
Total dividends and/or distributions to shareholders		(2.01	)		(1.55	)		(1.47	)		(1.96	)		—
Net asset value, end of period	$	17.42		$	23.70		$	21.87		$	19.90		$	19.33
Total Return, at Net Asset Value2		(18.87	)%		16.08	%		17.79	%		13.53	%		31.59	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	275,975		$	300,360		$	192,089		$	129,631		$	84,678
Average net assets (in thousands)	$	289,699		$	245,298		$	162,869		$	105,497		$	65,107
Ratios to average net assets:3
Net investment income (loss)		(0.47	)%		0.02	%		(0.40	)%		(0.50	)%		(0.77	)%
Total expenses		1.55	%4		1.45	%4		1.49	%		1.54	%		1.61	%
Expenses after payments, waivers and/or reimbursements and reduction to custodian expenses		1.48	%		1.45	%		1.48	%		1.50	%		1.52	%
Portfolio turnover rate		134	%		114	%		102	%		132	%		127	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Assumes an investment on the business day before the first day of the fiscal period, with all dividends and distributions reinvested in additional shares on the reinvestment date, and redemption at the net asset value calculated on the last business day of the fiscal period. Sales charges are not reflected in the total returns. Total returns are not annualized for periods less than one full year. Returns do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
3.	Annualized for periods less than one full year.
4.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended June 30, 2008	1.55	%
Year Ended June 30, 2007	1.45	%

FINANCIAL HIGHLIGHTS Continued

Class Y     Year Ended June 30,	2008			2007			2006			2005			2004
Per Share Operating Data
Net asset value, beginning of period	$	25.32		$	23.09		$	20.76		$	19.94		$	15.03
Income (loss) from investment operations:
Net investment income (loss)		.05	1		.20	1		.10	1		.08	1		(.03	)
Net realized and unrealized gain (loss)		(4.47	)		3.58			3.70			2.70			4.94
Total from investment operations		(4.42	)		3.78			3.80			2.78			4.91
Dividends and/or distributions to shareholders:
Dividends from net investment income		(.14	)		—			—			—			—
Distributions from net realized gain		(2.00	)		(1.55	)		(1.47	)		(1.96	)		—
Tax return of capital distribution from net investment income		—	2		—			—			—			—
Tax return of capital distribution from net realized gain		(.01	)		—			—			—			—
Total dividends and/or distributions to shareholders		(2.15	)		(1.55	)		(1.47	)		(1.96	)		—
Net asset value, end of period	$	18.75		$	25.32		$	23.09		$	20.76		$	19.94
Total Return, at Net Asset Value3		(18.28	)%		17.00	%		18.83	%		14.41	%		32.67	%
Ratios/Supplemental Data
Net assets, end of period (in thousands)	$	1,020,424		$	803,692		$	417,656		$	229,463		$	14,714
Average net assets (in thousands)	$	746,300		$	570,576		$	314,236		$	84,470		$	11,428
Ratios to average net assets:4
Net investment income		0.25	%		0.83	%		0.42	%		0.39	%		0.06	%
Total expenses		0.76	%5,6		0.66	%5,6		0.66	%6		0.69	%6		0.70	%6
Portfolio turnover rate		134	%		114	%		102	%		132	%		127	%

1.	Per share amounts calculated based on the average shares outstanding during the period.
2.	Less than $0.005 per share.
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 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 less than one full year.
5.	Total expenses including indirect expenses from affiliated fund were as follows:

Year Ended June 30, 2008	0.76	%
Year Ended June 30, 2007	0.66	%

6. Reduction to custodian expenses less than 0.005%.

NOTES TO FINANCIAL STATEMENTS

1. Significant Accounting Policies

Oppenheimer Main Street Small Cap Fund (the “Fund”) is an open-end management investment company registered under the Investment Company Act of 1940, as amended. The Fund’s investment objective is to seek capital appreciation. The Fund’s investment adviser is OppenheimerFunds, Inc. (the “Manager”).

     The Fund offers Class A, Class B, Class C, Class N and Class Y shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B, Class C and Class N shares are sold without a front-end sales charge but may be subject to a contingent deferred sales charge (“CDSC”). Class N shares are sold only through retirement plans. Retirement plans that offer Class N shares may impose charges on those accounts. Class Y shares are sold to certain institutional investors without either a front-end sales charge or a CDSC, however, the institutional investor may impose charges on those accounts. All classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. Class A, B, C and N have separate distribution and/or service plans. No such plan has been adopted for Class Y shares. Class B shares will automatically convert to Class A shares 72 months after the date of purchase.

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

Securities Valuation. The Fund calculates the net asset value of its shares as of the close of the New York Stock Exchange (the “Exchange”), normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. Securities may be valued primarily using dealer-supplied valuations or a portfolio pricing service authorized by the Board of Trustees. Securities traded on a registered U.S. securities exchange 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 whose principal exchange is NASDAQ^® are valued based on the closing price reported 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, collateralized mortgage obligations and other asset-backed securities will be valued at the mean between the “bid” and “asked” prices. Securities for which market quotations are not readily available are valued at their fair value. Securities whose values have been materially affected

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

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. Shares of a registered investment company that are not traded on an exchange are valued at the acquired investment company’s net asset value per share. “Money market-type” debt instruments with remaining maturities of sixty days or less are valued at cost adjusted by the amortization of discount or premium to maturity (amortized cost), which approximates market value.

Securities Sold Short. The Fund may short sell when-issued securities for future settlement. The value of the open short position is recorded as a liability, and the Fund records an unrealized gain or loss for the value of the open short position. The Fund records a realized gain or loss when the short position is closed out. Short positions are reported on a schedule following the Statements of Investments. The Fund had no open short positions at period end.

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 Exchange, normally 4:00 P.M. Eastern time, on each day the Exchange is open for trading. Foreign exchange rates may be valued primarily using a reliable bank, dealer or service authorized by the Board of Trustees.

     Reported net realized gains and losses from foreign currency transactions arise from sales of portfolio securities, sales and maturities of short-term securities, sales of foreign currencies, exchange rate fluctuations 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 appreciation and depreciation on the translation of assets and liabilities denominated in foreign currencies 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.

Investments in Oppenheimer Institutional Money Market Fund. The Fund is permitted to invest daily available cash balances in an affiliated money market fund. The Fund may invest the available cash in Class E shares of Oppenheimer Institutional Money Market Fund (“IMMF”) to seek current income while preserving liquidity. 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 adviser 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.

Repurchase Agreements. The Fund requires its custodian bank to take possession, to have legally segregated in the Federal Reserve Book Entry System or to have segregated within the custodian’s vault, all securities held as collateral for repurchase agreements. The market value of the collateral is required to be sufficient to cover payments of interest and principal. If the seller of the agreement defaults and the value of the collateral declines, or if the seller enters an insolvency proceeding, realization of the value of the collateral by the Fund may be delayed or limited.

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 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 Fund files income tax returns in U.S. federal and applicable state jurisdictions. The statute of limitations on the Fund’s tax return filings generally remain open for the three preceding fiscal reporting period ends.

The tax components of capital shown in the following table 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.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

					Net Unrealized
					Depreciation
					Based on Cost of
					Securities and
Undistributed	Undistributed		Accumulated		Other Investments
Net Investment	Long-Term		Loss		for Federal Income
Income	Gain		Carryforward1,2,3,4,5		Tax Purposes
$—	$	—	$	393,536,021	$	25,630,360

1.	As of June 30, 2008, the Fund had $393,419,654 of post-October losses available to offset future realized capital gains, if any. Such losses, if unutilized, will expire in 2017.
2.	The Fund had $42,425 of post-October foreign currency losses which were deferred.
3.	The Fund had $73,942 of post-October passive foreign investment company losses which were deferred.
4.	During the fiscal year ended June 30, 2008, the Fund did not utilize any capital loss carryforward.
5.	During the fiscal year ended June 30, 2007, the Fund did not utilize any capital loss carryforward.

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

Accordingly, the following amounts have been reclassified for June 30, 2008. Net assets of the Fund were unaffected by the reclassifications.

	Reduction to		Reduction to
	Accumulated		Accumulated Net
Reduction to	Net Investment		Realized Loss
Paid-in Capital	Loss		on Investments
$16,267,442	$	13,958,767	$	2,308,675

The tax character of distributions paid during the years ended June 30, 2008 and June 30, 2007 was as follows:

	Year Ended		Year Ended
	June 30, 2008		June 30, 2007
Distributions paid from:
Ordinary income	$	89,898,083	$	104,420,100
Long-term capital gain		449,166,813		222,839,787
Return of capital		4,278,767		—
Total	$	543,343,663	$	327,259,887

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 June 30, 2008 are noted in the following table. 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	$	6,567,955,067
Gross unrealized appreciation	$	561,703,238
Gross unrealized depreciation		(587,333,598	)
Net unrealized depreciation	$	(25,630,360	)

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 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 compensation deferral plan.

Dividends and Distributions to Shareholders. Dividends and distributions to shareholders, which are determined in accordance with income tax regulations and may differ from U.S. generally accepted accounting principles, are recorded on the ex-dividend date. Income and capital gain distributions, if any, are declared and paid annually or at other times as deemed necessary by the Manager.

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 is recognized on an accrual basis. Discount and premium, which are included in interest income on the Statement of Operations, are amortized or accreted daily.

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.

NOTES TO FINANCIAL STATEMENTS Continued

1. Significant Accounting Policies Continued

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

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 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 increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.

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:

	Year Ended June 30, 2008						Year Ended June 30, 2007
	Shares			Amount			Shares			Amount
Class A
Sold		74,829,572		$	1,550,589,036			60,720,498		$	1,383,194,872
Dividends and/or distributions reinvested		15,579,180			309,402,521			8,159,374			181,872,344
Redeemed		(60,830,053	)		(1,210,453,609	)		(29,599,467	)		(673,444,296	)
Net increase		29,578,699		$	649,537,948			39,280,405		$	891,622,920
Class B
Sold		1,965,438		$	38,140,367			2,210,418		$	46,913,865
Dividends and/or distributions reinvested		1,932,387			35,324,023			1,544,101			32,101,924
Redeemed		(8,998,234	)		(167,731,741	)		(6,678,679	)		(141,750,948	)
Net decrease		(5,100,409	)	$	(94,267,351	)		(2,924,160	)	$	(62,735,159	)
Class C
Sold		6,125,949		$	116,952,215			6,968,949		$	148,591,292
Dividends and/or distributions reinvested		2,924,696			53,726,666			1,882,487			39,287,502
Redeemed		(9,789,740	)		(180,022,537	)		(5,993,375	)		(128,322,492	)
Net increase (decrease)		(739,095	)	$	(9,343,656	)		2,858,061		$	59,556,302

	Year Ended June 30, 2008						Year Ended June 30, 2007
	Shares			Amount			Shares			Amount
Class N
Sold		7,050,097		$	141,485,935			6,416,366		$	142,597,904
Dividends and/or distributions reinvested		1,318,108			25,544,924			695,844			15,183,321
Redeemed		(5,197,414	)		(102,648,201	)		(3,223,643	)		(72,198,001	)
Net increase		3,170,791		$	64,382,658			3,888,567		$	85,583,224
Class Y
Sold		36,323,287		$	751,401,917			15,743,029		$	375,520,314
Dividends and/or distributions reinvested		2,893,650			60,130,048			1,425,840			33,093,751
Redeemed		(16,531,004	)		(383,355,898	)		(3,518,471	)		(83,821,678	)
Net increase		22,685,933		$	428,176,067			13,650,398		$	324,792,387

3. Purchases and Sales of Securities

The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations and investments in IMMF, for the year ended June 30, 2008, were as follows:

	Purchases		Sales
Investment securities	$	7,937,628,196	$	7,415,363,487

4. Fees and Other Transactions with Affiliates

Management Fees. Under the investment advisory agreement, the Fund pays the Manager a management fee based on the daily net assets of the Fund at an annual rate as shown in the following table:

Fee Schedule
Up to $200 million	0.75	%
Next $200 million	0.72
Next $200 million	0.69
Next $200 million	0.66
Next $4.2 billion	0.60
Over $5.0 billion	0.58

Administration Service Fees. The Fund pays the Manager a fee of $1,500 per year for preparing and filing the Fund’s tax returns.

Transfer Agent Fees. OppenheimerFunds Services (“OFS”), a division of the Manager, acts as the transfer and shareholder servicing agent for the Fund. The Fund pays OFS a per account fee. For the year ended June 30, 2008, the Fund paid $14,783,071 to OFS for services to the Fund.

     Additionally, Class Y shares are subject to minimum fees of $10,000 annually 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.

NOTES TO FINANCIAL STATEMENTS Continued

4. Fees and Other Transactions with Affiliates Continued

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 (the “Plan”) for Class A shares under Rule 12b-1 of the Investment Company Act of 1940. Under the Plan, the Fund 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 service 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 (the “Plans”) for Class B, Class C and Class N shares under Rule 12b-1 of the Investment Company Act of 1940 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 0.25% per year under each plan. If either the Class B, Class C or Class N plan is terminated by the Fund or by the shareholders of a class, the Board of Trustees and its independent trustees must determine whether the Distributor shall be entitled to payment from the Fund of all or a portion of the service fee and/or asset-based sales charge in respect to shares sold prior to the effective date of such termination. The Distributor’s aggregate uncompensated expenses under the Plans at June 30, 2008 for Class C and Class N shares were $9,241,280 and $3,978,228, respectively. Fees incurred by the Fund under the Plans are detailed in the Statement of Operations.

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

			Class A		Class B		Class C		Class N
	Class A		Contingent		Contingent		Contingent		Contingent
	Front-End		Deferred		Deferred		Deferred		Deferred
	Sales Charges		Sales Charges		Sales Charges		Sales Charges		Sales Charges
	Retained by		Retained by		Retained by		Retained by		Retained by
Year Ended	Distributor		Distributor		Distributor		Distributor		Distributor
June 30, 2008	$	819,765	$	79,495	$	533,818	$	63,346	$	5,471

Waivers and Reimbursements of Expenses. OFS has voluntarily agreed to limit transfer and shareholder servicing agent fees for all classes to 0.35% of average annual net assets per class. During the year ended June 30, 2008, OFS waived $202,830 for Class N shares. 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 year ended June 30, 2008, the Manager waived $49,967 for IMMF management fees.

5. Foreign Currency Exchange Contracts

The Fund may enter into foreign currency exchange contracts (“forward contracts”) for the purchase or sale of a foreign currency at a negotiated rate at a future date.

     Forward contracts are reported on a schedule following the Statement of Investments. Forward contracts will be valued daily based upon the closing prices of the forward currency rates determined at the close of the Exchange as provided by a bank, dealer or pricing service. The resulting unrealized appreciation (depreciation) is reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations within the change in unrealized appreciation (depreciation). At contract close, the difference between the original cost of the contract and the value at the close date is recorded as a realized gain (loss) in the Statement of Operations.

     Risks to the Fund include both market and credit risk. Market risk is the risk that the value of the forward contract will depreciate due to unfavorable changes in the exchange rates. 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 payments that the Fund has not yet received.

     As of June 30, 2008, the Fund had no outstanding forward contracts.

6. Illiquid or Restricted Securities

As of June 30, 2008, investments in securities included issues that are illiquid or restricted. Investments may be illiquid because they do not have an active trading market, making it difficult to value them or dispose of them promptly at an acceptable price. A restricted security may have a contractual restriction on its resale and is valued under methods approved by the Board of Trustees as reflecting fair value. The Fund will not invest more than 10% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid and restricted securities. Certain restricted securities, eligible for resale to qualified institutional purchasers, may not be subject to that limitation. Securities that are illiquid or restricted are marked with an applicable footnote on the Statement of Investments. Restricted securities are reported on a schedule following the Statement of Investments.

7. Securities Lending

The Fund lends portfolio securities from time to time in order to earn additional income in the form of fees or interest on securities received as collateral or the investment of any cash received as collateral. The loans are secured by collateral (either securities, letters of credit, or cash) 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 each business day and any additional required collateral is delivered to the Fund on the next business day. 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 and recognizes the gain or loss in the fair value of the securities loaned that may occur during the term of the loan. The Fund has the right under the lending agreement to recover the securities from the borrower on demand. As of June 30, 2008, the Fund had on loan securities valued at $1,128,721,865. Collateral of $1,171,705,346 was received for the loans, all of which was received in cash and subsequently invested in approved instruments or held as cash.

8. Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board (“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 June 30, 2008, 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.

     In March 2008, FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities. This standard requires enhanced disclosures about derivative and hedging activities, including qualitative disclosures about how and why the Fund uses derivative instruments, how these activities are accounted for, and their effect on the Fund’s financial position, financial performance and cash flows. SFAS No. 161 is effective for financial statements issued for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. At this time, management is evaluating the implications of SFAS No. 161 and its impact on the Fund’s financial statements and related disclosures.

Appendix A
 
OppenheimerFunds Special Sales Charge Arrangements and Waivers

In certain cases, the initial sales charge that applies to purchases of Class A shares² 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 plans⁴

4)     Group Retirement Plans⁵

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 shares of Oppenheimer Rochester National Municipals and Rochester Fund Municipals purchased prior to October 22, 2007) 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:

q      Purchases of Class A shares aggregating $1 million or more.

q      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.

q      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.

q      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):

q      The Manager or its affiliates.

q      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.

q      Registered management investment companies, or separate accounts of insurance companies having an agreement with the Manager or the Distributor for that purpose.

q      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.

q      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).

q      Dealers, brokers, banks or registered investment advisers 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.

q      Investment advisers 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.

q      "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.

q      Clients of investment advisers 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 adviser 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.

q      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.

q      Accounts for which Oppenheimer Capital (or its successor) is the investment adviser (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.

q      A unit investment trust that has entered into an appropriate agreement with the Distributor.

q      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.

q      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.

q      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.

q      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.

q      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.

q      Effective October 1, 2005, taxable accounts established with the proceeds of Required Minimum Distributions from Retirement Plans.

q      Purchases of Class A shares by former shareholders of Atlas Strategic Income Fund in any Oppenheimer fund into which shareholders of Oppenheimer Strategic Income Fund may exchange.

q      Purchases prior to June 15, 2008 by former shareholders of Oppenheimer Tremont Market Neutral Fund, LLC or Oppenheimer Tremont Opportunity Fund, LLC, directly from the proceeds from mandatory redemptions.

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):

q      Shares issued in plans of reorganization, such as mergers, asset acquisitions and exchange offers, to which the Fund is a party.

q      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.

q      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.

q      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.

q      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):

q      Retirement Plans that have $5 million or more in plan assets.

q      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:

q      To make Automatic Withdrawal Plan payments that are limited annually to no more than 12% of the account value adjusted annually.

q      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).

q      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.

q      For distributions from 401(k) plans sponsored by broker-dealers that have entered into a special agreement with the Distributor allowing this waiver.

q      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.

q      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.

q      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:

q      Shares redeemed involuntarily, as described in "Shareholder Account Rules and Policies," in the applicable Prospectus.

q      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.

q      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).

q      Distributions from accounts for which the broker-dealer of record has entered into a special agreement with the Distributor allowing this waiver.

q      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.

q      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.

q      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.

q      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.

q      Distributions⁹ 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 59½, 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.

q      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.

q      Redemptions of Class B shares by a Retirement Plan that is either created or qualified under Section 401(a) or 401(k) (excluding owner-only 401(k) plans) of the Internal Revenue Code or that is a non-qualified deferred compensation plan, either (1) purchased after June 30, 2008, or (2) beginning on July 1, 2011, held longer than three years.

q      Redemptions by owner-only 401(k) plans of Class B shares purchased after June 30, 2008.

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:

q      Shares sold to the Manager or its affiliates.

q      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.

q      Shares issued in plans of reorganization to which the Fund is a party.

q      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 adviser to those former Quest for Value Funds. Those funds include:

Oppenheimer Rising Dividends 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:

q      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

q      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.

n      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.
 

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

     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.
 

n      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:

·      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.

·      Shareholders who acquired shares of any Former Quest for Value Fund by merger of any of the portfolios of the Unified Funds.

n      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.
 

n      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:

·      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

·      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.

n      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:

·      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);

·      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

·      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 sales 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.

n      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.

n      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 current Class M shareholders, 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 a sales charge:

q      the Manager and its affiliates,

q      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 adviser of the Fund for their employees,

q      registered management investment companies or separate accounts of insurance companies that had an agreement with the Fund's prior investment adviser or distributor for that purpose,

q      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,

q      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,

q      dealers, brokers, or registered investment advisers 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

q      dealers, brokers or registered investment advisers 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 adviser provides administrative services.

1 In accordance with Rule 12b-1 of the Investment Company Act, the term "Independent Trustees" in this Statement of Additional Information refers to those Trustees who are not "interested persons" of the Fund and who do not have any direct or indirect financial interest in the operation of the distribution plan or any agreement under the plan.

2 Certain waivers also apply to Class M shares of Oppenheimer Convertible Securities Fund.

3 In the case of Oppenheimer Senior Floating Rate Fund, a continuously-offered closed-end fund, references to contingent deferred sales charges mean the Fund's Early Withdrawal Charges and references to "redemptions" mean "repurchases" of shares.

4 An "employee benefit plan" means any plan or arrangement, whether or not it is "qualified" under the Internal Revenue Code, under which Class N shares of an Oppenheimer fund or funds are purchased by a fiduciary or other administrator for the account of participants who are employees of a single employer or of affiliated employers. These may include, for example, medical savings accounts, payroll deduction plans or similar plans. The fund accounts must be registered in the name of the fiduciary or administrator purchasing the shares for the benefit of participants in the plan.

5 The term "Group Retirement Plan" means any qualified or non-qualified retirement plan for employees of a corporation or sole proprietorship, members and employees of a partnership or association or other organized group of persons (the members of which may include other groups), if the group has made special arrangements with the Distributor and all members of the group participating in (or who are eligible to participate in) the plan purchase shares of an Oppenheimer fund or funds through a single investment dealer, broker or other financial institution designated by the group. Such plans include 457 plans, SEP-IRAs, SARSEPs, SIMPLE plans and 403(b) plans other than plans for public school employees. The term "Group Retirement Plan" also includes qualified retirement plans and non-qualified deferred compensation plans and IRAs that purchase shares of an Oppenheimer fund or funds through a single investment dealer, broker or other financial institution that has made special arrangements with the Distributor.

6 However, that concession will not be paid on purchases of shares in amounts of $1 million or more (including any right of accumulation) by a Retirement Plan that pays for the purchase with the redemption proceeds of Class C shares of one or more Oppenheimer funds held by the Plan for more than one year.

7 This provision does not apply to IRAs.

8 This provision only applies to qualified retirement plans and 403(b)(7) custodial plans after your separation from service in or after the year you reached age 55.

9 The distribution must be requested prior to Plan termination or the elimination of the Oppenheimer funds as an investment option under the Plan.

10 This provision does not apply to IRAs.

11 This provision does not apply to loans from 403(b)(7) custodial plans and loans from the OppenheimerFunds-sponsored Single K retirement plan.

12 This provision does not apply to 403(b)(7) custodial plans if the participant is less than age 55, nor to IRAs.

Oppenheimer Main Street Small Cap Fund

Internet Website:

     www.oppenheimerfunds.com
 

Investment Advisor

OppenheimerFunds, Inc.

Two World Financial Center
225 Liberty Street, 11^th Floor
New York, New York 10281-1008

Distributor

OppenheimerFunds Distributor, Inc.

Two World Financial Center
225 Liberty Street, 11^th Floor
New York, New York 10281-1008

Transfer Agent

OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1.800.CALL OPP (225.5677)

Custodian Bank

JPMorgan Chase Bank
4 Chase Metro Tech Center
Brooklyn, New York 11245

Independent Registered Public Accounting Firm

KPMG LLP
707 Seventeenth Street
Denver, Colorado 80202

Counsel to the Independent Trustees

K&L Gates LLP

70 West Madison Street, Suite 3100
Chicago, Illinois 60602
 

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