Oppenheimer Total Return Bond Fund

497 1 sai_totalreturn.htm PSP SUPP SAI Oppenheimer Total Return Bond Fund

OPPENHEIMER TOTAL RETURN BOND FUND
Supplement dated November 23, 2005 to the
Prospectus dated August26, 2005

The Prospectus supplement dated September30, 2005 is deleted and replaced with the following:

1. Effective October 1, 2005, the section in the Prospectus titled "Special Sales Charge Arrangements and Waivers-Other Special
Sales Charge Arrangements and Waivers-Purchases by Certain Retirement Plans" on page 26 of the Prospectus was amended by deleting
that section in its entirety and replacing it with the following:

Purchases by Certain Retirement Plans. There is no initial sales charge on purchases of Class A shares of the Fund by
retirement plans that have $5million or more in plan assets. In that case the Distributor may pay from its own
resources, at the time of sale, concessions in an amount equal to 0.25% of the purchase price of Class A shares
purchased within the first six months of account establishment by those retirement plans to dealers of record, subject
to certain exceptions described in "Retirement Plans" in the Statement of Additional Information.
There is also no initial sales charge on purchases of Class A shares of the Fund by certain retirement plans that are
part of a retirement plan or platform offered by banks, broker-dealers, financial advisors, insurance companies or
recordkeepers. No contingent deferred sales charge is charged upon the redemption of such shares.

2. Effective October 1, 2005, the seventh paragraph in the section in the Prospectus titled "Distribution and Service
Plans-Distribution and Service Plans for Class B, Class C and Class N Shares" was amended by deleting that paragraph in its
entirety and replacing it with the following:

For certain group retirement plans held in omnibus accounts, the Distributor will pay the full ClassC or Class N
asset-based sales charge and the service fee to the dealer beginning in the first year after the purchase of such
shares in lieu of paying the dealer the sales concession and the advance of the first year's service fee at the time
of purchase. New group omnibus plans may not purchase Class B shares.

3. The following paragraphs are added to the end of the section captioned "How the Fund is Managed":

At a recent meeting, the Board of Trustees of the Fund determined that it is in the best interest of the Fund's
shareholders that the Fund reorganize with and into Oppenheimer Core Bond Fund ("Core Bond Fund"). The Board
unanimously approved an Agreement and Plan of Reorganization to be entered into between the Fund and Core Bond Fund,
whereby Core Bond Fund will acquire all of the assets and assume all of the liabilities of the Fund in exchange for
newly-issued shares of Core Bond Fund (the "Reorganization"). Following the Reorganization, the Fund will liquidate
and dissolve and terminate its registration as an investment company under the Investment Company Act of 1940.

The Reorganization is conditioned upon, among other things, approval by the Fund's shareholders. If all of the
requisite approvals are obtained, it is anticipated that the Reorganization will take place in the first calendar
quarter of 2006. Shareholders of record, as of a date to be determined by the Board, will be entitled to vote on the
Reorganization and will receive the proxy statement describing the Reorganization. The anticipated date for the
shareholder meeting is on or about March15, 2006, with the Reorganization to be effected shortly thereafter.

If the Reorganization takes place, Fund shareholders will receive shares of the class of Core Bond Fund, having the same management
fees, 12b-1 fees and sales charges (including contingent deferred sales charges), if any, as the shares of the Fund held by them
immediately prior to the Reorganization.

November23, 2005 PS0535.004

Oppenheimer Total Return Bond Fund
6803 South Tucson Way, Centennial, Colorado 80112-3924
1.800 CALL OPP (225.5677)

Statement of Additional Information dated August 26, 2005 revised November 23, 2005

This Statement of Additional Information is not a Prospectus. This document contains additional information
about the Fund and supplements information in the Prospectus dated August 26, 2005. It should be read together with
the Prospectus. You can obtain the Prospectus by writing to the Fund’s Transfer Agent, OppenheimerFunds Services, at
P.O. Box 5270, Denver, Colorado 80217, 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.............................................................. 12
Other Investment Restrictions........................................................................... 33
Disclosure of Portfolio Holdings........................................................................ 35
How the Fund is Managed...................................................................................... 39
Organization and History................................................................................ 39
Board of Trustees and Audit Committee................................................................... 40
Trustees and Officers of the Fund....................................................................... 41
The Manager............................................................................................. 47
Brokerage Policies of the Fund............................................................................... 51
Distribution and Service Plans............................................................................... 53
Performance of the Fund...................................................................................... 58

About Your Account
How To Buy Shares............................................................................................ 65
How To Sell Shares........................................................................................... 75
How To Exchange Shares....................................................................................... 80
Dividends, Capital Gains and Taxes........................................................................... 84
Additional Information About the Fund........................................................................ 88

Financial Information About the Fund
Report of Independent Registered Public Accounting Firm...................................................... 90
Financial Statements......................................................................................... 91

Appendix A: Ratings Definitions.............................................................................. A-1
Appendix B: Industry Classifications......................................................................... B-1
Appendix C: Special Sales Charge Arrangements and Waivers.................................................... C-1

ABOUT THE FUND

Additional Information About the Fund’s Investment Policies and Risks

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

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

In selecting securities for the Fund’s portfolio, the Manager evaluates the merits of particular securities
primarily through the exercise of its own investment analysis. In the case of non-governmental issues, that process
may include, among other things, evaluation of the issuer’s historical operations, prospects for the industry of
which the issuer is part, the issuer’s financial condition, its pending product developments and business (and those
of competitors), the effect of general market and economic conditions on the issuer’s business, and legislative
proposals that might affect the issuer. In the case of foreign issuers, the Manager may consider general economic
conditions, the conditions of a particular country’s economy in relation to the U.S. economy or other foreign
economies, general political conditions in a country or region, the effect of taxes, the efficiencies and costs of
particular markets (as well as their liquidity) and other factors.

|X| Debt Securities. The Fund can invest in a variety of debt securities to seek its objective. Foreign
debt securities are subject to the risks of foreign securities described below. In general, debt securities are also
subject to two additional types of risk: credit risk and interest rate risk.

o Credit Risk. Credit risk relates to the ability of the issuer to meet interest or principal payments
or both as they become due. In general, lower-grade, higher-yield bonds are subject to credit risk to a greater
extent than lower-yield, higher-quality bonds.

The Fund’s investments primarily are investment-grade debt securities and U.S. government securities. U.S.
government securities, although unrated, are generally considered to be equivalent to securities in the highest
rating categories. Investment-grade bonds are bonds rated at least “Baa” by Moody’s Investors Service, Inc.
(“Moody’s”), or at least “BBB” by Standard & Poor’s Rating Service (“S&P”) or Fitch, Inc.
“Fitch”), or that have comparable ratings by another nationally-recognized rating organization. The Fund can also buy
non-investment-gradedebt securities (commonly referred to as “junk bonds”).

In making investments in debt securities, the Manager may rely to some extent on the ratings of ratings
organizations or it may use its own research to evaluate a security’s credit-worthiness. If securities the Fund buys
are unrated, to be considered part of the Fund’s holdings of investment-grade securities, they must be judged by the
Manager to be of comparable quality to bonds rated as investment grade by a rating organization.

o Interest Rate Risk. Interest rate risk refers to the fluctuations in value of debt securities
resulting from the inverse relationship between price and yield. For example, an increase in general interest rates
will tend to reduce the market value of already-issued debt securities and a decline in general interest rates will
tend to increase their value. In addition, debt securities having longer maturities tend to offer higher yields, but
are subject to potentially greater fluctuations in value from changes in interest rates than obligations having
shorter maturities.

Fluctuations in the market value of debt securities after the Fund buys them will not affect the interest
income payable on those securities (unless the security pays interest at a variable rate pegged to interest rate
changes). However, those price fluctuations will be reflected in the valuations of the securities, and therefore the
Fund’s net asset values will be affected by those fluctuations.

o Special Risks of Lower-Grade Debt Securities. The Fund can invest in lower-grade debt securities.
Because lower-grade debt securities tend to offer higher yields than investment-grade securities, the Fund might
invest in lower-grade securities if the Manager is trying to achieve higher income.

“Lower-grade” debt securities are those rated below “investment grade,” which means they have a rating
lower than “Baa” by Moody’s or lower than “BBB” by S&P or Fitch, or similar ratings by other rating
organizations.If they are unrated, and are determined by the Manager to be of comparable quality to debt securities rated below
investment grade, they are considered part of the Fund’s portfolio of lower-grade securities.

Some of the special credit risks of lower-grade securities are discussed below. There is a greater risk
that the issuer may default on its obligation to pay interest or to repay principal than in the case of
investment-grade securities. The issuer’s low creditworthiness may increase the potential for its insolvency. An
overall decline in values in the high yield bond market is also more likely during a period of a general economic
downturn. An economic downturn or an increase in interest rates could severely disrupt the market for high yield
bonds, adversely affecting the values of outstanding bonds as well as the ability of issuers to pay interest or
repay principal. In the case of foreign high yield bonds, these risks are in addition to the special risks of
foreign investing discussed in the Prospectus and in this Statement of Additional Information.

To the extent they can be converted into stock, convertible securities may be less subject to some of the
risks of volatility than non-convertible high yield bonds, since stock may be more liquid and less affected by some
of these risk factors.

While securities rated “Baa” by Moody’s or “BBB” by S&P or Fitch are investment grade and are not regarded
as junk bonds, those securities may be subject to special risks and have some speculative characteristics.
Definitions of the debt security ratings categories of Moody’s, S&P, and Fitch are included in Appendix A to this
Statement of Additional Information.

|X| Duration of the Fund’s Portfolio. The Fund can invest in debt securities of any maturity or
duration but currently seeks to maintain a dollar-weighted average effective portfolio duration of three to six
years under normal market conditions. The goal is to try to manage the sensitivity of the Fund’s portfolio to
changes in interest rates, and in doing so to manage the volatility of the Fund’s share prices in response to those
changes. However, unanticipated events may change the effective duration of a security after the Fund buys it, and
there can be no assurance that the Fund will achieve its targeted duration at all times.

The Manager determines the effective duration of debt obligations purchased by the Fund considering various
factors that apply to a particular type of debt obligation, including those described below. Duration is a measure
of the expected life of a security on a current-value basis expressed in years, using calculations that consider the
security’s yield, coupon interest payments, final maturity and call features.

While a debt security’s maturity can be used to measure the sensitivity of the security’s price to changes
in interest rates, the term to maturity of a security does not take into account the pattern (or expected pattern)
of the security’s payments of interest or principal prior to maturity. Duration, on the other hand, measures the
length of the time interval from the present to the time when the interest and principal payments are scheduled to
be received (or, in the case of a mortgage-related security, when the interest payments are expected to be
received). Duration calculations weigh them by the present value of the cash to be received at each future point in
time. If the interest payments on a debt security occur prior to the repayment of principal, the duration of the
security is less than its stated maturity. For zero-coupon securities, duration and term to maturity are equal.

Absent other factors, the lower the stated or coupon rate of interest on a debt security or the longer the
maturity or the lower the yield-to-maturity of the debt security, the longer the duration of the security.
Conversely, the higher the stated or coupon rate of interest, the shorter the maturity or the higher the
yield-to-maturity of a debt security, the shorter the duration of the security.

Futures, options and options on futures in general have durations that are closely related to the duration
of the securities that underlie them. Holding long futures positions or call option positions (backed by liquid
assets) will tend to lengthen the portfolio’s duration.

In some cases the standard effective duration calculation does not properly reflect the interest rate
exposure of a security. For example, floating and variable rate securities often have final maturities of ten or
more years. However, their exposure to interest rate changes corresponds to the frequency of the times at which
their interest coupon rate is reset. In the case of mortgage pass-through securities, the stated final maturity of
the security is typically 30 years, but current rates or prepayments are more important to determine the security’s
interest rate exposure. In these and other similar situations, the Manager will use other analytical techniques that
consider the economic life of the security as well as relevant macroeconomic factors (such as historical prepayment
rates) in determining the Fund’s effective duration.

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

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

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

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

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

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

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

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

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

|X| U.S. Government Securities. These are securities issued or guaranteed by the U.S. Treasury or other
U.S. government agencies or federally-chartered corporate entities referred to as “instrumentalities.” The
obligations of U.S. government agencies or instrumentalities in which the Fund can invest may or may not be
guaranteed or supported by the “full faith and credit” of the United States. “Full faith and credit” means generally
that the taxing power of the U.S. government is pledged to the payment of interest and repayment of principal on a
security. If a security is not backed by the full faith and credit of the United States, the owner of the security
must look principally to the agency issuing the obligation for repayment. The owner might not be able to assert a
claim against the United States if the issuing agency or instrumentality does not meet its commitment.

o U.S. Treasury Obligations. These include Treasury bills (which have maturities of one year or less
when issued), Treasury notes (which have maturities of more than one year and up to ten years when issued), and
Treasury bonds (which have maturities of more than ten years when issued). Treasury securities are backed by the
full faith and credit of the United States as to timely payments of interest and repayments of principal. Other U.S.
Treasury obligations the Fund can buy include U.S. Treasury securities that have been “stripped” by a Federal
Reserve Bank, zero-coupon U.S. Treasury securities described below, and Treasury Inflation-Protection Securities
(“TIPS”).

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

o Obligations Issued or Guaranteed by U.S. Government Agencies or Instrumentalities. These include
direct obligations and mortgage-related securities that have different levels of credit support from the government.
Some are supported by the full faith and credit of the U.S. government, such as Ginnie Maes. Some are supported by
the right of the issuer to borrow from the U.S. Treasury under certain circumstances, such as Fannie Mae bonds.
Others are supported only by the credit of the entity that issued them, such as Freddie Mac obligations.

o Mortgage-Related U.S. Government Securities. These include interests in pools of residential or
commercial mortgages, in the form of collateralized mortgage obligations and other “pass-through” mortgage
securities. CMOs that are U.S. government securities have collateral to secure payment of interest and principal.
They may be issued in different series with different interest rates and maturities. The collateral is either in the
form of mortgage pass-through certificates issued or guaranteed by a U.S. agency or instrumentality or mortgage
loans insured by a U.S. government agency. The Fund can have significant amounts of its assets invested in
mortgage-related U.S. government securities.

The prices and yields of CMOs are determined, in part, by assumptions about the cash flows from the rate of
payments of the underlying mortgages. Changes in interest rates may cause the rate of expected prepayments of those
mortgages to change. In general, prepayments increase when general interest rates fall and decrease when interest
rates rise.

If prepayments of mortgages underlying a CMO occur faster than expected when interest rates fall, the
market value and yield of the CMO will be reduced. Additionally, the Fund may have to reinvest the prepayment
proceeds in other securities paying interest at lower rates, which could reduce the Fund’s yield.

When interest rates rise rapidly, if prepayments occur more slowly than expected, a short- or medium-term
CMO can in effect become a long-term security, subject to greater fluctuations in value. These are the prepayment
risks described above and can make the prices of CMOs very volatile when interest rates change. The prices of
longer-term debt securities tend to fluctuate more than those of shorter-term debt securities. That volatility will
affect the Fund’s share prices.

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

|X| Asset-Backed Securities. Asset-backed securities are fractional interests in pools of assets,
typically accounts receivable or consumer loans. They are issued by trusts or special-purpose corporations. These
securities are subject to prepayment risks and the risk of default by the issuer as well as by the borrowers of the
underlying loans in the pool. They are similar to mortgage-backed securities, described above, and are backed by a
pool of assets that consist of obligations of individual borrowers. The income from the pool is passed through to
the holders of participation interest in the pools. The pools may offer a credit enhancement, such as a bank letter
of credit, to try to reduce the risks that the underlying debtors will not pay their obligations when due. However,
the enhancement, if any, might not be for the full par value of the security. If the enhancement is exhausted and
any required payments of interest or repayments of principal are not made, the Fund could suffer losses on its
investment or delays in receiving payment.

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

|X| Participation Interests. The Fund can invest in participation interests, subject to the Fund’s
limitation on investments in illiquid investments. A participation interest is an undivided interest in a loan made
by the issuing financial institution in the proportion that the buyer’s participation interest bears to the total
principal amount of the loan. Not more than 5% of the Fund’s net assets can be invested in participation interests
of the same borrower. The issuing financial institution may have no obligation to the Fund other than to pay the
Fund the proportionate amount of the principal and interest payments it receives.

Participation interests are primarily dependent upon the creditworthiness of the borrowing corporation,
which is obligated to make payments of principal and interest on the loan. There is a risk that a borrower may have
difficulty making payments. If a borrower fails to pay scheduled interest or principal payments, the Fund could
experience a reduction in its income. The value of that participation interest might also decline, which could
affect the net asset value of the Fund’s shares. If the issuing financial institution fails to perform its
obligations under the participation agreement, the Fund might incur costs and delays in realizing payment and suffer
a loss of principal and/or interest.

|X| Foreign Securities. “Foreign securities” include debt securities issued or guaranteed by companies
organized under the laws of countries other than the United States and debt securities issued or guaranteed by
governments other than the U.S. government or by foreign supra-national entities, such as the World Bank. Those
securities may be traded on foreign securities exchanges or in the foreign over-the-counter markets. Securities
denominated in foreign currencies issued by U.S. companies are also considered to be “foreign securities.” The Fund
expects to have investments in foreign securities as part of its normal investment strategy.

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, because they are not subject to many of the special considerations
and risks, discussed below, that apply to foreign securities traded and held abroad.

American Depository Receipts (“ADR”) facilities may be either “sponsored” or “un-sponsored.”
While sponsored and un-sponsored ADR facilities are similar, distinctions exist between the rights and duties of ADR
holders and market practices. Sponsored facilities have the backing or participation of the underlying foreign
issuers. Un-sponsored facilities do not have the participation by or consent of the issuer of the deposited shares.
Un-sponsored facilities usually request a letter of non-objection from the issuer. Holders of un-sponsored ADRs
generally bear all the costs of such facility. The costs of the facility can include deposit and withdrawal fees,
currency conversion and other service fees. The depository of an un-sponsored facility may not have a duty to
distribute shareholder communications from the issuer or to pass through voting rights. Issuers of un-sponsored ADRs
do not have an obligation to disclose material information about the foreign issuers in the U.S. As a result, the
value of the un-sponsored ADR may not correlate with the value of the underlying security trading abroad or any
material information about the security or the issuer disseminated abroad. Sponsored facilities enter into an
agreement with the issuer that sets out rights and duties of the issuer, the depository and the ADR holder. The
sponsored agreement also allocates fees among the parties. Most sponsored agreements provide that the depository
will distribute shareholder notices, voting instructions and other communications.

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 income
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 securities markets that do not move in a
manner parallel to U.S. markets. The Fund will hold foreign currency only in connection with the purchase or sale of
foreign securities.

o Foreign Debt Obligations. The debt obligations of a foreign government and its agencies and
instrumentalities may or may not be supported by the full faith and credit of the foreign government. The Fund can
buy securities issued by certain “supra-national” entities, which include entities designated or supported by
governments to promote economic reconstruction or development, international banking organizations and related
government agencies. Examples are the International Bank for Reconstruction and Development (commonly called the
“World Bank”), the Asian Development bank and the Inter-American Development Bank.

The governmental members of these supra-national entities are “stockholders” that typically make capital
contributions and may be committed to make additional capital contributions if the entity is unable to repay its
borrowings. A supra-national entity’s lending activities may be limited to a percentage of its total capital,
reserves and net income. There can be no assurance that the constituent foreign governments will continue to be able
or willing to honor their capitalization commitments for those entities.

The Fund can invest in U.S. dollar-denominated “Brady Bonds.” These foreign debt obligations may be
fixed-rate par bonds or floating-rate discount bonds. They are generally collateralized in full as to repayment of
principal at maturity by U.S. Treasury zero-coupon obligations that have the same maturity as the Brady Bonds. Brady
Bonds can be viewed as having three or four valuation components: (i) the collateralized repayment of principal at
final maturity; (ii) the collateralized interest payments; (iii) the uncollateralized interest payments; and (iv)
any uncollateralized repayment of principal at maturity. Those uncollateralized amounts constitute what is called
the “residual risk.”

If there is a default on collateralized Brady Bonds resulting in acceleration of the payment obligations of
the issuer, the zero-coupon U.S. Treasury securities held as collateral for the payment of principal will not be
distributed to investors, nor will those obligations be sold to distribute the proceeds. The collateral will be held
by the collateral agent to the scheduled maturity of the defaulted Brady Bonds. The defaulted bonds will continue to
remain outstanding, and the face amount of the collateral will equal the principal payments which would have then
been due on the Brady Bonds in the normal course. Because of the residual risk of Brady Bonds and the history of
defaults with respect to commercial bank loans by public and private entities of countries issuing Brady Bonds,
Brady Bonds are considered speculative investments.

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

o Risks of Foreign Investing. Investments in foreign securities may offer special opportunities for
investing but also present special additional risks and considerations not typically associated with investments in
domestic securities. Some of these additional risks are:

o reduction of income by foreign taxes;
o fluctuation in value of foreign investments due to changes in currency rates or currency devaluation, or
currency control regulations (for example, currency blockage);
o transaction charges for currency exchange;
o lack of public information about foreign issuers;
o lack of uniform accounting, auditing and financial reporting standards in foreign countries comparable to
those applicable to domestic issuers;
o less volume on foreign exchanges than on U.S. exchanges;
o greater volatility and less liquidity on foreign markets than in the U.S.;
o less governmental regulation of foreign issuers, securities exchanges and brokers than in the U.S.;
o greater difficulties in commencing lawsuits;
o higher brokerage commission rates than in the U.S.;
o increased risks of delays in settlement of portfolio transactions or loss of certificates for portfolio
securities;
o foreign withholding taxes;
o possibilities in some countries of expropriation, confiscatory taxation, political, financial or social
instability or adverse diplomatic developments; and
o unfavorable differences between the U.S. economy and foreign economies.

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

o Special Risks of Emerging Markets. Emerging and developing markets abroad may also offer special
opportunities for investing but have greater risks than more developed foreign markets, such as those in Europe,
Canada, Australia, New Zealand and Japan. There may be even less liquidity in their securities markets, and
settlements of purchases and sales of securities may be subject to additional delays. They are subject to greater
risks of limitations on the repatriation of income and profits because of currency restrictions imposed by local
governments. Those countries may also be subject to the risk of greater political and economic instability, which
can greatly affect the volatility of prices of securities in those countries. The Manager will consider these
factors when evaluating securities in these markets, and the Fund currently does not expect to invest a substantial
portion of its assets in emerging markets.

o Passive Foreign Investment Companies. Some securities of corporations domiciled outside the U.S.
which the Fund may purchase, may be considered passive foreign investment companies (“PFICs”) under U.S. tax laws.
PFICs are those foreign corporations which generate primarily passive income. They tend to be growth companies or
“start-up” companies. For federal tax purposes, a corporation is deemed a PFIC if 75% or more of the foreign
corporation’s gross income for the income year is passive income or if 50% or more of its assets are assets that
produce or are held to produce passive income. Passive income is further defined as any income to be considered
foreign personal holding company income within the subpart F provisions defined by 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 PFICs (since nearly all of the income of a mutual fund is
generally passive income). Investing in these types of PFICs may allow exposure to various countries because some
foreign countries limit, or prohibit, all direct foreign investment in the securities of companies domiciled therein.

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

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

|X| Zero-Coupon Securities. The Fund can buy zero-coupon and delayed-interest securities, and “stripped”
securities. Stripped securities are debt securities whose interest coupons are separated from the security and sold
separately. The Fund can buy different types of zero-coupon or stripped securities, including, among others, foreign
debt securities and U.S. Treasury notes or bonds that have been stripped of their interest coupons, U.S. Treasury
bills issued without interest coupons, and certificates representing interests in stripped securities.

Zero-coupon securities do not make periodic interest payments and are sold at a deep discount from their
face value at maturity. The buyer recognizes a rate of return determined by the gradual appreciation of the
security, which is redeemed at face value on a specified maturity date. This discount depends on the time remaining
until maturity, as well as prevailing interest rates, the liquidity of the security and the credit quality of the
issuer. In the absence of threats to the issuer’s credit quality, the discount typically decreases as the maturity
date approaches. Some zero-coupon securities are convertible, in that they are zero-coupon securities until a
predetermined date, at which time they convert to a security with a specified coupon rate.

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

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

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

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

The yields to maturity of I/Os and P/Os are very sensitive to principal repayments (including prepayments)
on the underlying mortgages. If the underlying mortgages experience greater than anticipated prepayments of
principal, the Fund might not fully recoup its investment in an I/O based on those assets. If underlying mortgages
experience less than anticipated prepayments of principal, the yield on the P/Os based on them could decline
substantially. The market for some of these securities may be limited, making it difficult for the Fund to dispose
of its holdings at an acceptable price.

|X| Floating Rate and Variable Rate Obligations. Some securities the Fund can purchase have variable or
floating interest rates. Variable rates are adjusted at stated periodic intervals. Variable rate obligations may
have a demand feature that allows the Fund to tender the obligation to the issuer or a third party prior to its
maturity. The tender may be at par value plus accrued interest, according to the terms of the obligations.

The interest rate on a floating rate note is adjusted automatically according to a stated prevailing market
rate, such as a bank’s prime rate, the 91-day U.S. Treasury Bill rate, or some other standard. The instrument’s rate
is adjusted automatically each time the base rate is adjusted. The interest rate on a variable rate note is also
based on a stated prevailing market rate but is adjusted automatically at specified intervals. Generally, the
changes in the interest rate on such securities reduce the fluctuation in their market value. As interest rates
decrease or increase, the potential for capital appreciation or depreciation is less than that for fixed-rate
obligations of the same maturity. The Manager may determine that an unrated floating rate or variable rate
obligation meets the Fund’s quality standards by reason of being backed by a letter of credit or guarantee issued by
a bank that meets those quality standards.

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

Step-coupon bonds have a coupon interest rate that changes periodically during the life of the security on
predetermined dates that are set when the security is issued.

|X| “When-Issued” and “Delayed-Delivery” Transactions. The Fund may invest in securities on a “when-issued”
basis and may purchase or sell securities on a “delayed-delivery” basis. When-issued and delayed-delivery are terms
that refer to securities whose terms and indenture are available and for which a market exists, but which are not
available for immediate delivery.

When such transactions are negotiated, the price (which is generally expressed in yield terms) is fixed at
the time the commitment is made. Delivery and payment for the securities take place at a later date. The securities
are subject to change in value from market fluctuations during the period until settlement. The value at delivery
may be less than the purchase price. For example, changes in interest rates in a direction other than that expected
by the Manager before settlement will affect the value of such securities and may cause a loss to the Fund. During
the period between purchase and settlement, no payment is made by the Fund to the issuer and no interest accrues to
the Fund from the investment until it receives the security at settlement. There is a risk of loss to the Fund if
the value of the security changes prior to the settlement date, and there is the risk that the other party may not
perform.

The Fund may engage in when-issued transactions to secure what the Manager considers to be an advantageous
price and yield at the time the obligation is entered into. When the Fund enters into a when-issued or
delayed-delivery transaction, it relies on the other party to complete the transaction. Its failure to do so may
cause the Fund to lose the opportunity to obtain the security at a price and yield the Manager considers to be
advantageous.

When the Fund engages in when-issued and delayed-delivery transactions, it does so for the purpose of
acquiring or selling securities consistent with its investment objective and policies or for delivery pursuant to
options contracts it has entered into, and not for the purpose of investment leverage. Although the Fund will enter
into delayed-delivery or when-issued purchase transactions to acquire securities, it may dispose of a commitment
prior to settlement. If the Fund chooses to dispose of the right to acquire a when-issued security prior to its
acquisition or to dispose of its right to delivery or receive against a forward commitment, it may incur a gain or
loss.

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

When-issued and delayed-delivery transactions can be used by the Fund as a defensive technique to hedge
against anticipated changes in interest rates and prices. For instance, in periods of rising interest rates and
falling prices, the Fund might sell securities in its portfolio on a forward commitment basis to attempt to limit
its exposure to anticipated falling prices. In periods of falling interest rates and rising prices, the Fund might
sell portfolio securities and purchase the same or similar securities on a when-issued or delayed-delivery basis to
obtain the benefit of currently higher cash yields.

|X| Repurchase Agreements. The Fund can acquire securities subject to repurchase agreements. It might do so
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.

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, as described in the Prospectus. The Fund will not
enter into a repurchase agreement that causes more than 15% of its net assets to be subject to repurchase agreements
having a maturity beyond seven days. There is no limit on the amount of the Fund’s net assets that may be subject to
repurchase agreements having maturities of seven days or less for defensive purposes.

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

|X| 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. 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 in addition to its own fees and expenses. The Fund does not anticipate investing a
substantial amount of its net assets in shares of other investment companies.

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

The Fund may also acquire restricted securities through private placements. Those securities have
contractual restrictions on their public resale. Those restrictions may make it more difficult to value them, and
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.

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

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

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

|X| Convertible Securities. Convertible securities are debt securities that are convertible into an
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 the 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. In that case,
it will likely sell at a premium over its conversion value and its price will tend to fluctuate directly with the
price of the underlying security.

While some convertible securities are a form of debt security, in certain 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 might have less impact on the Manager’s investment decision with
respect to convertible securities than in the case of non-convertible fixed-income securities. Convertible debt
securities are subject to the credit risks and interest rate risks described above in “Debt Securities.”

To determine whether convertible securities should be regarded as “equity equivalents,” the Manager may
examine the following factors:

(1) whether, at the option of the investor, the convertible security can be exchanged for a fixed
number of shares of common stock of the issuer,
(2) whether the issuer of the convertible securities has restated its earnings per share of common
stock on a fully diluted basis (considering the effect of conversion of the convertible
securities), and
(3) the extent to which the convertible security may be a defensive “equity substitute,” providing
the ability to participate in any appreciation in the price of the issuer’s common stock.

|X| Borrowing for Leverage. 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.” Currently, under the
Investment Company Act, absent exemptive relief, 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. The fund may also borrow up to 5% of its total assets for temporary purposes from
any person. Under the Investment Company Act, there is a rebuttable presumption that a loan is temporary if it is
repaid within 60 days and not extended or renewed. If the value of the Fund’s assets fails to meet the 300% asset
coverage requirement, the Fund will reduce its bank debt within three days to meet the requirement. To do so, the
Fund might have to sell a portion of its investments at a disadvantageous time.

The Fund will pay interest on its borrowings, and that interest expense will raise the overall expenses of
the Fund and reduce its returns. If it does borrow, its expenses will be greater than comparable funds that do not
borrow for leverage. Additionally, the Fund’s net asset value per share might fluctuate more than that of funds that
do not borrow. Currently, the Fund does not contemplate using this technique, but if it does so, it will not likely
do so to a substantial degree.

|X| Loans of Portfolio Securities. To raise cash for income or liquidity purposes, the Fund can lend its
portfolio securities to brokers, dealers and other types of financial institutions approved by the Fund’s Board of
Trustees.

These loans are limited to not more than 25% of the value of the Fund’s total assets. The Fund currently
does not intend to engage in loans of securities, but if it does so, such loans will not likely exceed 5% of the
Fund’s total assets.

There are some risks in connection with securities lending. The Fund might experience a delay in receiving
additional collateral to secure a loan, or a delay in recovery of the loaned securities if the borrower defaults.
The Fund must receive collateral for a loan. Under current applicable regulatory requirements (which are subject to
change), on each business day the loan collateral must be at least equal to the value of the loaned securities. It
must consist of cash, bank letters of credit or securities of the U.S. government or its agencies or
instrumentalities, or other cash equivalents in which the Fund is permitted to invest. To be acceptable as
collateral, letters of credit must obligate a bank to pay amounts demanded by the Fund if the demand meets the terms
of the letter. The terms of the letter of credit and the issuing bank both must be satisfactory to the Fund.

When it lends securities, the Fund receives amounts equal to the dividends or interest on loaned
securities. It also receives one or more of (a) negotiated loan fees, (b) interest on securities used as collateral,
and (c) interest on any short-term debt securities purchased with such loan collateral. Either type of interest may
be shared with the borrower. The Fund may also pay reasonable finder’s, custodian and administrative fees in
connection with these loans. The terms of the Fund’s loans must meet applicable tests under the Internal Revenue
Code and must permit the Fund to reacquire loaned securities on five days’ notice or in time to vote on any
important matter.

|X| Money Market Instruments. The following is a brief description of the types of the U.S. dollar
denominated money market securities the Fund can invest in. Money market securities are high-quality, short-term
debt instruments that may be issued by the U.S. government, corporations, banks or other entities. They may have
fixed, variable or floating interest rates.

o U.S. Government Securities. These include obligations issued or guaranteed by the U.S. government or any
of its agencies or instrumentalities, described above.

o Bank Obligations. The Fund can buy time deposits, certificates of deposit and bankers’ acceptances. They
must be:

o obligations issued or guaranteed by a domestic bank (including a foreign branch of a domestic
bank) having total assets of at least U.S. $1 billion, or
o obligations of a foreign bank with total assets of at least U.S. $1 billion.

“Banks” include commercial banks, savings banks and savings and loan associations, which may or may not be
members of the Federal Deposit Insurance Corporation.

o Commercial Paper. The Fund can invest in commercial paper if it is rated within the top three rating
categories of S&P and Moody’s or other rating organizations.

If the paper is not rated, it may be purchased if the Manager determines that it is comparable to rated
commercial paper in the top three rating categories of national rating organizations.

The Fund can buy commercial paper, including U.S. dollar-denominated securities of foreign branches of U.S.
banks, issued by other entities if the commercial paper is guaranteed as to principal and interest by a bank,
government or corporation whose certificates of deposit or commercial paper may otherwise be purchased by the Fund.

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

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

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

|X| Derivatives. The Fund can invest in a variety of derivative investments to seek income or for hedging
purposes. Some derivative investments the Fund can use are the hedging instruments described below in this Statement
of Additional Information. Segregated accounts will be maintained for all derivative transactions, as required by
the Investment Company Act.

Among the derivative investments the Fund can invest in are “index-linked” or “currency-linked” notes.
Principal and/or interest payments on index-linked notes depend on the performance of an underlying index.
Currency-indexed securities are typically short-term or intermediate-term debt securities. Their value at maturity
or the rates at which they pay income are determined by the change in value of the U.S. dollar against one or more
foreign currencies or an index. In some cases, these securities may pay an amount at maturity based on a multiple of
the amount of the relative currency movements. This type of index security offers the potential for increased income
or principal payments but at a greater risk of loss than a typical debt security of the same maturity and credit
quality.

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

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

The Fund would take a short position in a credit default swap (the “unfunded swap”) against a long
portfolio position to decrease exposure to specific high yield issuers. If the short credit default swap is against
a corporate issue, the Fund must own that corporate issue. However, if the short credit default swap is against
sovereign debt, the Fund may own either: (i)the reference obligation, (ii) any sovereign debt of that foreign
country, or (iii) sovereign debt of any country that the Manager determines is closely correlated as an inexact bona
fide hedge.

If the Fund takes a short position in the credit default swap, if there is a credit event (including
bankruptcy, failure to timely pay interest or principal, or a restructuring), the Fund will deliver the defaulted
bonds and the swap counterparty will pay the par amount of the bonds. An associated risk is adverse pricing when
purchasing bonds to satisfy the delivery obligation. If the swap is on a basket of securities, the notional amount
of the swap is reduced by the par amount of the defaulted bond, and the fixed payments are then made on the reduced
notional amount.

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

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

The Fund will invest no more than 25 % of its total assets in “unfunded” credit default swaps.

The Fund will limit its investments in “funded” credit default swap notes to no more than 10% of its total
assets.

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

|X| Hedging. The Fund can use hedging instruments although it is not obligated to use them in seeking its
objective. To attempt to protect against declines in the market value of the Fund’s portfolio, to permit the Fund to
retain unrealized gains in the value of portfolio securities which have appreciated, or to facilitate selling
securities for investment reasons, the Fund could:
o sell futures contracts,
o buy puts on futures or on securities, or
o write covered calls on securities or futures. Covered calls may also be used to increase the Fund’s income,
but the Manager does not expect to engage extensively in that practice.

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

The Fund is not obligated to use hedging instruments, even though it is permitted to use them in the
Manager’s discretion, as described below. The Fund’s strategy of hedging with futures and options on futures will be
incidental to the Fund’s activities in the underlying cash market. The particular hedging instruments the Fund can
use are described below. The Fund may employ new hedging instruments and strategies when they are developed, if
those investment methods are consistent with the Fund’s investment objective and are permissible under applicable
regulations governing the Fund.

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

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

An interest rate future obligates the seller to deliver (and the purchaser to take) cash or a specified
type of debt security to settle the futures transaction. Either party could also enter into an offsetting contract
to close out the position.

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

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

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

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

o Put and Call Options. The Fund 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.

o Writing Covered Call Options. The Fund can write (that is, sell) covered calls. If the Fund
sells a call option, it must be covered. That means the Fund must own the security subject to the call while the
call is outstanding, or, for calls on futures and indices, the call may be covered by segregating liquid assets to
enable the Fund to satisfy its obligations if the call is exercised. Up to 50% of the Fund’s total assets may be
subject to calls the Fund writes.

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

When the Fund writes a call on an index, it receives cash (a premium). If the buyer of the call exercises
it, the Fund will pay an amount of cash equal to the difference between the closing price of the call and the
exercise price, multiplied by a specified multiple that determines the total value of the call for each point 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
identifying on it books an equivalent dollar amount of liquid assets. 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 asset coverage requirement, in no circumstances would the Fund’s receipt of an exercise
notice as to that future require the Fund to deliver a futures contract. It would simply put the Fund in a short
futures position, which is permitted by the Fund’s hedging policies.

o Writing Put Options. The Fund can sell put options on securities, broadly-based securities
indices, foreign currencies and futures. 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 segregated to
cover such put options.

If the Fund writes a put, the put must be covered by liquid assets identified on the Fund’s books. The
premium the Fund receives from writing a put represents a profit, as long as the price of the underlying investment
remains equal to or above the exercise price of the put. However, the Fund also assumes the obligation during the
option period to buy the underlying investment from the buyer of the put at the exercise price, even if the value of
the investment falls below the exercise price.

If a put the Fund has written expires unexercised, the Fund realizes a gain in the amount of the premium
less the transaction costs incurred. If the put is exercised, the Fund must fulfill its obligation to purchase the
underlying investment at the exercise price. That price will usually exceed the market value of the investment at
that time. In that case, the Fund may incur a loss if it sells the underlying investment. That loss will be equal to
the sum of the sale price of the underlying investment and the premium received minus the sum of the exercise price
and any transaction costs the Fund incurred.

When writing a put option on a security, to secure its obligation to pay for the underlying security the
Fund will deposit in escrow 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 segregated assets or writing calls against
those assets.

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

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

o Purchasing Calls and Puts. The Fund can purchase calls on securities, broadly-based securities
indices, foreign currencies and futures. It may do so 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 on securities, broadly-based securities indices, foreign currencies and futures,
whether or not it owns the underlying investment. 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 either to
resell the put or to buy the underlying investment and sell it at the exercise price. The resale price will vary
inversely to the price of the underlying investment. If the market price of the underlying investment is above the
exercise price and, as a result, the put is not exercised, the put will become worthless on its expiration date.

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

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

o Buying and Selling Options on Foreign Currencies. The Fund can buy and sell calls and puts on foreign
currencies. They include puts and calls that trade on a securities or commodities exchange or in the
over-the-counter markets or are quoted by major recognized dealers in such options.

The Fund could use these calls and puts to try to protect against declines in the dollar value of foreign
securities and increases in the dollar cost of foreign securities the Fund wants to acquire.

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

A call the Fund writes on a foreign currency is “covered” if the Fund owns the underlying foreign currency
covered by the call or has an absolute and immediate right to acquire that foreign currency without additional cash
consideration (or it can do so for additional cash consideration 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
liquid assets on its books having a value equal to its obligation under the option.

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

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

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

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

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

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

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

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

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

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

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

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

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

The Fund could also use forward contracts to lock in the U.S. dollar value of portfolio positions. This is
called a “position hedge.” When the Fund believes that foreign currency might suffer a substantial decline against
the U.S. dollar, it could enter into a forward contract to sell an amount of that foreign currency approximating the
value of some or all of the Fund’s portfolio securities denominated in that foreign currency. When the Fund believes
that the U.S. dollar might suffer a substantial decline against a foreign currency, it could enter into a forward
contract to buy that foreign currency for a fixed dollar amount. Alternatively, the Fund 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 to its custodian bank assets having a
value equal to the aggregate amount of the Fund’s commitment under forward contracts. The Fund will not enter into
forward contracts or maintain a net exposure to such contracts if the consummation of the contracts would obligate
the Fund to deliver an amount of foreign currency in excess of the value of the Fund’s portfolio securities or other
assets denominated in that currency or another currency that is the subject of the hedge.

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

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

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

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

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

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

o Interest Rate Swap Transactions. The Fund can enter into interest rate swap agreements. In an interest
rate swap, the Fund and another party exchange their right to receive or their obligation to pay interest on a
security. For example, they might swap the right to receive floating rate payments for fixed rate payments. The Fund
can enter into swaps only on securities that it owns. The Fund will not enter into swaps with respect to more than
25% of its total assets. Also, the Fund will identify on its books liquid assets (such as cash or U.S. government
securities) to cover any amounts it could owe under swaps that exceed the amounts it is entitled to receive, and it
will adjust that amount daily, as needed.

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

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

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

o 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 interpretations of the staff of the SEC regarding applicable provisions of the Investment Company
Act, when the Fund purchases a future, it must identify liquid assets on its books in an amount equal to the
purchase price of the future, less the margin deposit applicable to it.
o Tax Aspects of Certain Hedging Instruments. Certain foreign currency exchange contracts in which the Fund
may invest are treated as “Section 1256 contracts” under the Internal Revenue Code. In general, gains or losses
relating to Section 1256 contracts are characterized as 60% long-term and 40% short-term capital gains or losses
under the Code. However, foreign currency gains or losses arising from Section 1256 contracts that are forward
contracts generally are treated as ordinary income or loss. In addition, Section 1256 contracts held by the Fund at
the end of each taxable year are “marked-to-market,” and unrealized gains or losses are treated as though they were
realized. These contracts also may be marked-to-market for purposes of determining the excise tax applicable to
investment company distributions and for other purposes under rules prescribed pursuant to the Internal Revenue
Code. An election can be made by the Fund to exempt those transactions from this marked-to-market treatment.

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

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

(1) gains or losses attributable to fluctuations in exchange rates that occur between the time the
Fund accrues interest or other receivables or accrues expenses or other liabilities denominated in
a foreign currency and the time the Fund actually collects such receivables or pays such
liabilities, and
(2) gains or losses attributable to fluctuations in the value of a foreign currency between the date
of acquisition of a debt security denominated in a foreign currency or foreign currency forward
contracts and the date of disposition.

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

|X| Portfolio Turnover. “Portfolio turnover” describes the rate at which the Fund traded its portfolio
securities during its last fiscal year. For example, if a fund sold all of its securities during the year, its
portfolio turnover rate would have been 100%. The Fund’s portfolio turnover rate will fluctuate from year to year,
and the Fund may have a portfolio turnover rate of more than 100% annually.

Increased portfolio turnover may result in 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.

|X| Temporary Defensive and Interim Investments. In times of adverse or unstable market, economic or
political conditions, the Fund can invest up to 100% of its assets in temporary defensive investments that are
inconsistent with the Fund’s principal investment strategies. Generally, they would be cash equivalents (such as
commercial paper), money market instruments, short-term debt securities, U.S. Government securities, or repurchase
agreements. They could include other investment-grade debt securities. The Fund might also hold these types of
securities pending the investment of proceeds from the sale of Fund shares or portfolio securities or to meet
anticipated redemptions of Fund shares. To the extent the Fund invests defensively in these securities, it might not
achieve its investment objective.

Other Investment Restrictions

|X| What Are “Fundamental Policies?” Fundamental policies are those policies that the Fund has adopted to
govern its investments that can be changed only by the vote of a “majority” of the Fund’s outstanding voting
securities. Under the Investment Company Act, a “majority” vote is defined as the vote of the holders of the lesser
of:

o 67% or more of the shares present or represented by proxy at a shareholder meeting, if the holders of more
than 50% of the outstanding shares are present or represented by proxy, or
o more than 50% of the outstanding shares.

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

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

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

o The Fund cannot make loans, except to the extent permitted under the Investment Company Act, the rules
or regulations thereunder or any exemption therefrom that is applicable to the Fund, as such statute, rules or
regulations may be amended or interpreted from time to time.

o The Fund may not borrow money, except to the extent permitted under the Investment Company Act, the rules
or regulations thereunder or any exemption therefrom that is applicable to the Fund, as such statute, rules or
regulations may be amended or interpreted from time to time.

o The Fund cannot invest 25% or more of its total assets in any one industry. That limit does not apply
to securities issued or guaranteed by the U.S. government or its agencies and instrumentalities.

o The Fund cannot buy or sell real estate. However, the Fund can purchase and sell securities issued or
secured by companies that invest in or deal in real estate or interests in real estate.

o The Fund cannot buy or sell commodities or commodity contracts. However, the Fund can buy and sell
derivative instruments and other hedging instruments, such as futures contracts, options, swaps, and forward
contracts.

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

o 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.

Unless the Prospectus or this Statement of Additional Information states that a percentage restriction
applies on an ongoing basis, it applies only at the time the Fund makes an investment (except in the case of
borrowing and investments in illiquid securities). 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, the Fund has adopted the industry
classifications set forth in Appendix B to this Statement of Additional Information. That is not a fundamental
policy.

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.

The Fund currently has no intention of investing in commodity contracts. If the Fund’s intention changes,
the Prospectus and this Statement of Additional Information will be revised accordingly.

Disclosure of Portfolio Holdings. The Fund has adopted policies and procedures concerning the dissemination of
information about its portfolio holdings by employees, officers and/or directors of the Manager Distributor and
Transfer Agent. These policies are designed to assure that non-public information about portfolio securities is
distributed only for a legitimate business purpose, and is done in a manner that (a) conforms to applicable laws and
regulations and (b) is designed to prevent that information from being used in a way that could negatively affect
the Fund’s investment program or enable third parties to use that information in a manner that is harmful to the
Fund.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How the Fund is Managed

Organization and History. The Fund is an open-end, diversified management investment company with an unlimited
number of authorized shares of beneficial interest. The Fund was organized as a Massachusetts business trust in
November 2002.

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

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

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

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

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

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

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

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

Board of Trustees and Audit Committee. 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 comprised solely of Independent Trustees. The members of the
Audit Committee are Joseph M. Wikler (Chairman) and Peter I. Wold. The Audit Committee held four meetings during the
fiscal year ended April30, 2005. The Audit Committee furnishes the Board with recommendations regarding the
selection of the Fund’s independent auditors. Other main functions of the Audit Committee 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 registered public accounting firm regarding the Fund’s internal
accounting procedures and controls; (iii) reviewing reports from the Manager’s Internal Audit Department; (iv)
maintaining a separate line of communication between the Fund’s independent registered public accounting firm and
its Independent Trustees; (v) reviewing the independence of the Fund’s independent registered public accounting
firm; (vi) pre-approving the provision of any audit and non-audit services (including tax services) that are not
prohibited by the Sarbanes-Oxley Act by the Fund’s independent registered public accounting firm for the Fund, the
Manager and certain affiliates of the Manager; and (vii) exercising all other functions outlined in the Audit
Committee Charter.

The Audit Committee’s functions include selecting and nominating, to the full Board, nominees for election
as Trustees, and selecting and nominating Independent Trustees for election. The Audit Committee may, but need not,
consider the advice and recommendation of the Manager and its affiliates in selecting nominees. The full Board
elects new trustees except for those instances when a shareholder vote is required.

To date, the Audit Committee has been able to identify from its own resources an ample number of qualified
candidates. Nonetheless, shareholders may submit names of individuals for the Audit Committee’s consideration by
mailing such information, accompanied by complete and properly supported resumes, to the Audit Committee in care of
the Fund. The Audit Committee may consider such persons at such time as it meets to consider possible nominees. The
Audit Committee, however, reserves sole discretion to determine the candidates to present to the Board and/or
shareholders when it meets for the purpose of considering potential nominees.

Trustees and Officers of the Fund. Except for Mr. Murphy, each of the Trustees is an “Independent Trustee”
under the Investment Company Act. In addition to being a trustee or director of the Fund, Mr. Wikler and Mr. Wold
are also directors or trustees of 38 other portfolios in the OppenheimerFunds complex and Mr. Murphy is also a
director or trustee of 76 other portfolios in the OppenheimerFunds complex.

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

Messrs. Bomfim, Caan, Gillespie, Gord, Manioudakis, Moon, Murphy, Petersen, Vandehey, Vottiero, Wixted and
Zack and Mss. Bloomberg and Ives, who are officers of the Fund, hold the same offices with one or more other funds
in the Oppenheimer complex. As of October31, 2005 the Trustees and officers of the Fund, as a group, owned of
record or beneficially less than 1% of any class of shares of the Fund. The foregoing statement does not reflect
ownership of shares held of record by an employee benefit plan for employees of the Manager, other than the shares
beneficially owned under that plan by the officers of the Fund listed above. In addition, neither of the Independent
Trustees (nor any of their immediate family members) own securities of either the Manager or the Distributor of the
Fund or of any entity directly or indirectly controlling, controlled by or under common control with the Manager or
the Distributor.

Biographical Information. The Trustees and officers, their positions with the Fund, length of service in
such position(s) and principal occupations and business affiliations during the past five years are listed in the
charts below. The information for each Trustee also includes the dollar range of shares beneficially owned in the
Fund and the aggregate dollar range of shares beneficially owned in all funds in the Oppenheimer family of funds
that are overseen by the Trustee (“Supervised Funds”). The address of each Trustee in the chart below is 6803 S.
Tucson Way, Centennial, Colorado 80112-3924. Each Trustee serves for an indefinite term, until his or her
resignation, retirement, death or removal.

--------------------------------------------------------------------------------------------------------------------
Independent Trustees
--------------------------------------------------------------------------------------------------------------------
--------------------- --------------------------------------------------------- ----------------- ------------------
Name, Position(s) Principal Occupation(s) During the Past 5 Years; Other Dollar Range of Aggregate Dollar
Shares Range Of Shares
Held with the Fund, Beneficially Beneficially
Length of Service, Trusteeships/Directorships Held; Number of Portfolios Owned in Owned in
Age in the Fund Complex Currently Overseen the Fund Supervised Funds
--------------------- --------------------------------------------------------- ----------------- ------------------
--------------------- --------------------------------------------------------- ------------------------------------
As of December 31, 2004
--------------------- --------------------------------------------------------- ------------------------------------
--------------------- --------------------------------------------------------- ----------------- ------------------
Joseph M. Wikler, Director of the following medical device None $50,001-$100,000
Trustee since 2002 companies: Medintec (since 1992) and Cathco (since
Age: 64 1996); Director of Lakes Environmental Association
(since 1996); Member of the Investment Committee of the
Associated Jewish Charities of Baltimore (since 1994);
Director of Fortis/Hartford mutual funds (1994-December
2001). Oversees 39 portfolios in the OppenheimerFunds
complex.
--------------------- --------------------------------------------------------- ----------------- ------------------
--------------------- --------------------------------------------------------- ----------------- ------------------
Peter I. Wold, President of Wold Oil Properties, Inc. (oil $50,000-$100,000 Over $100,000
Trustee since 2002 and gas exploration and production company) (since
Age: 57 1994); Vice President, Secretary and Treasurer of Wold
Trona Company, Inc. (soda ash processing and
production) (since 1996); Vice President of Wold Talc
Company, Inc. (talc mining) (since 1999); Managing
Member of Hole-in-the-Wall Ranch (cattle ranching)
(since 1979); Director and Chairman of the Denver
Branch of the Federal Reserve Bank of Kansas City
(1993-1999); and Director of PacifiCorp. (electric
utility) (1995-1999). Oversees 39 portfolios in the
OppenheimerFunds complex.
--------------------- --------------------------------------------------------- ----------------- ------------------

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

--------------------------------------------------------------------------------------------------------------------
Interested Trustee and Officer
--------------------------------------------------------------------------------------------------------------------
------------------- --------------------------------------------------------- ------------------ -------------------
Name, Position(s) Principal Occupation(s) During the Past 5 Years; Other Dollar Range of Aggregate Dollar
Range Of Shares
Held with Fund, Shares Beneficially
Length of Trusteeships/Directorships Held; Number of Portfolios Beneficially Owned in
Service, Age in the Fund Complex Currently Overseen Owned in the Fund Supervised Funds
------------------- --------------------------------------------------------- ------------------ -------------------
------------------- --------------------------------------------------------- --------------------------------------
As of December 31, 2004
------------------- --------------------------------------------------------- --------------------------------------
------------------- --------------------------------------------------------- ------------------ -------------------
John V. Murphy, Chairman, Chief Executive Officer and Director (since None Over $100,000
President since June 2001) and President (since September 2000) of the
2004 and Trustee Manager; President and Director or Trustee of other
2002 Oppenheimer funds; President and Director of
Age: 56 Oppenheimer Acquisition Corp. (“OAC”) (the Manager’s
parent holding company) and of Oppenheimer Partnership
Holdings, Inc. (holding company subsidiary of the
Manager) (since July 2001); Director of
OppenheimerFunds Distributor, Inc. (subsidiary of the
Manager) (since November 2001); Chairman and Director
of Shareholder Services, Inc. and of Shareholder
Financial Services, Inc. (transfer agent subsidiaries
of the Manager) (since July 2001); President and
Director of OppenheimerFunds Legacy Program (charitable
trust program established by the Manager) (since July
2001); Director of the following investment advisory
subsidiaries of the Manager: OFI Institutional Asset
Management, Inc., Centennial Asset Management
Corporation, Trinity Investment Management Corporation
and Tremont Capital Management, Inc. (since November
2001), HarbourView Asset Management Corporation and OFI
Private Investments, Inc. (since July 2001); President
(since November 1, 2001) and Director (since July 2001)
of Oppenheimer Real Asset Management, Inc.; Executive
Vice President of Massachusetts Mutual Life Insurance
Company (OAC’s parent company) (since February 1997);
Director of DLB Acquisition Corporation (holding
company parent of Babson Capital Management LLC) (since
June 1995); Member of the Investment Company
Institute’s Board of Governors (since October3, 2003);
Chief Operating Officer of the Manager (September
2000-June 2001); President and Trustee of MML Series
Investment Fund and MassMutual Select Funds (open-end
investment companies) (November 1999-November 2001);
Director of C.M. Life Insurance Company (September
1999-August 2000); President, Chief Executive Officer
and Director of MML Bay State Life Insurance Company
(September 1999-August 2000); Director of Emerald Isle
Bancorp and Hibernia Savings Bank (wholly-owned
subsidiary of Emerald Isle Bancorp) (June 1989-June
1998). Oversees 87 portfolios as a Director or Trustee
and officer in the OppenheimerFunds complex.
------------------- --------------------------------------------------------- ------------------ -------------------

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

-------------------------------------------------------------------------------------------------------------------
Other Officers of the Fund
-------------------------------------------------------------------------------------------------------------------
-------------------------- ----------------------------------------------------------------------------------------
Name, Position(s) Held Principal Occupation(s) During Past 5 Years
with Fund, Length of
Service, Age
-------------------------- ----------------------------------------------------------------------------------------
-------------------------- ----------------------------------------------------------------------------------------
Antulio Bomfim, Vice President of the Manager since October 2003. He is also a portfolio manager of 11
Vice President and other portfolios in the OppenheimerFunds complex. Mr. Bomfim was a Senior Economist at
Portfolio Manager since the Board of Governors of the Federal Reserve System from June 1992 to October 2003.
2005
Age: 38
-------------------------- ----------------------------------------------------------------------------------------
-------------------------- ----------------------------------------------------------------------------------------
Geoffrey Caan, Vice President and Portfolio Manager of the Manager since August 2003; he is also a
Vice President and portfolio manager of 11 other portfolios in the OppenheimerFunds complex. Formerly
Portfolio Manager since Vice President of ABN AMRO NA, Inc. (June 2002 - August 2003); Vice President of
2005 Zurich Scudder Investments (January 1999 - June 2002).
Age: 36
-------------------------- ----------------------------------------------------------------------------------------
-------------------------- ----------------------------------------------------------------------------------------
Benjamin J. Gord, Vice President of the Manager (since April 2002), of HarbourView Asset Management
Vice President and Corporation (since April 2002) and of OFI Institutional Asset Management, Inc. (as of
Portfolio Manager since June 2002); a portfolio manager of 11 other portfolios in the OppenheimerFunds
2003 complex. Formerly an executive director and senior fixed income analyst at Miller
Age: 43 Anderson & Sherrerd, a division of Morgan Stanley Investment Management (April
1992-March 2002).
-------------------------- ----------------------------------------------------------------------------------------
-------------------------- ----------------------------------------------------------------------------------------
Angelo Manioudakis, Senior Vice President of the Manager (since April 2002), of HarbourView Asset
Vice President and Management Corporation (since April, 2002 and of OFI Institutional Asset Management,
Portfolio Manager since Inc. (since June 2002); an officer of 14 portfolios in the OppenheimerFunds complex.
2003 Formerly Executive Director and portfolio manager for Miller, Anderson & Sherrerd, a
Age: 39 division of Morgan Stanley Investment Management (August 1993-April 2002).
-------------------------- ----------------------------------------------------------------------------------------
-------------------------- ----------------------------------------------------------------------------------------
Charles Moon, Vice President of the Manager (since April 2002, of HarbourView Asset Management
Vice President and Corporation (since April 2002) and of OFI Institutional Asset Management, Inc. (since
Portfolio Manager since June 2002); a portfolio manager of 11 other portfolios in the OppenheimerFunds
2003 complex. Formerly executive director and portfolio manager at Miller Anderson &
Age: 38 Sherrerd, a division of Morgan Stanley Investment Management (June 1999-March 2002);
Vice President of Citicorp Securities Inc. (June 1993-May 1999).
-------------------------- ----------------------------------------------------------------------------------------
-------------------------- ----------------------------------------------------------------------------------------
Mark S. Vandehey, Senior Vice President and Chief Compliance Officer of the Manager (since March 2004);
Vice President and Chief Vice President of OppenheimerFunds Distributor, Inc., Centennial Asset Management
Compliance Officer since Corporation and Shareholder Services, Inc. (since June 1983). Former Vice President
2003 and Director of Internal Audit of the Manager (1997-February 2004). An officer of 87
Age: 55 portfolios in the OppenheimerFunds complex.
-------------------------- ----------------------------------------------------------------------------------------
-------------------------- ----------------------------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer of the Manager (since March 1999); Treasurer of
Treasurer since 2004 the following: HarbourView Asset Management Corporation, Shareholder Financial
Age: 46 Services, Inc., Shareholder Services, Inc., Oppenheimer Real Asset Management
Corporation, and Oppenheimer Partnership Holdings, Inc. (since March 1999), OFI
Private Investments, Inc. (since March 2000), OppenheimerFunds International Ltd.
(since May 2000), OppenheimerFunds plc (since May 2000), OFI Institutional Asset
Management, Inc. (since November 2000), and OppenheimerFunds Legacy Program
(charitable trust program established by the Manager) (since June 2003); Treasurer and
Chief Financial Officer of OFI Trust Company (trust company subsidiary of the Manager)
(since May 2000); Assistant Treasurer of the following: OAC (since March
1999),Centennial Asset Management Corporation (March 1999-October 2003) and
OppenheimerFunds Legacy Program (April 2000-June 2003); Principal and Chief Operating
Officer of Bankers Trust Company-Mutual Fund Services Division (March 1995-March
1999). An officer of 87 portfolios in the OppenheimerFunds complex.
-------------------------- ----------------------------------------------------------------------------------------
-------------------------- ----------------------------------------------------------------------------------------
Brian Petersen, Assistant Vice President of the Manager (since August 2002); Manager/Financial Product
Assistant Treasurer Accounting of the Manager (November 1998-July 2002). An officer of 87 portfolios in
since 2003 the OppenheimerFunds complex.
Age: 35
-------------------------- ----------------------------------------------------------------------------------------
-------------------------- ----------------------------------------------------------------------------------------
Philip F. Vottiero, Vice President/Fund Accounting of the Manager (since March 2002); Vice
Assistant Treasurer President/Corporate Accounting of the Manager (July 1999-March 2002); Chief Financial
since 2003 Officer of Sovlink Corporation (April 1996-June 1999). An officer of 87 portfolios in
Age: 42 the OppenheimerFunds complex.
-------------------------- ----------------------------------------------------------------------------------------
-------------------------- ----------------------------------------------------------------------------------------
Robert G. Zack, Executive Vice President (since January 2004) and General Counsel (since March 2002)
Secretary since 2003 of the Manager; General Counsel and Director of the Distributor (since December 2001);
Age: 57 General Counsel of Centennial Asset Management Corporation (since December 2001);
Senior Vice President and General Counsel of HarbourView Asset Management Corporation
(since December 2001); Secretary and General Counsel of OAC (since November 2001);
Assistant Secretary (since September 1997) and Director (since November 2001) of
OppenheimerFunds International Ltd. and OppenheimerFunds plc; Vice President and
Director of Oppenheimer Partnership Holdings, Inc. (since December 2002); Director of
Oppenheimer Real Asset Management, Inc. (since November 2001); Senior Vice President,
General Counsel and Director of Shareholder Financial Services, Inc. and Shareholder
Services, Inc. (since December 2001); Senior Vice President, General Counsel and
Director of OFI Private Investments, Inc. and OFI Trust Company (since November 2001);
Vice President of OppenheimerFunds Legacy Program (since June 2003); Senior Vice
President and General Counsel of OFI Institutional Asset Management, Inc. (since
November 2001); Director of OppenheimerFunds (Asia) Limited (since December 2003);
Senior Vice President (May 1985-December 2003), Acting General Counsel (November
2001-February 2002) and Associate General Counsel (May 1981-October 2001) of the
Manager; Assistant Secretary of the following: Shareholder Services, Inc. (May
1985-November 2001), Shareholder Financial Services, Inc. (November 1989-November
2001), and OppenheimerFunds International Ltd. (September 1997-November 2001). An
officer of 87 portfolios in the OppenheimerFunds complex.
-------------------------- ----------------------------------------------------------------------------------------
-------------------------- ----------------------------------------------------------------------------------------
Kathleen T. Ives, Vice President (since June 1998) and Senior Counsel and Assistant Secretary (since
Assistant Secretary October 2003) of the Manager; Vice President (since 1999) and Assistant Secretary
since 2004 (since October 2003) of the Distributor; Assistant Secretary of Centennial Asset
Age: 40 Management Corporation (since October 2003); Vice President and Assistant Secretary of
Shareholder Services, Inc. (since 1999); Assistant Secretary of OppenheimerFunds
Legacy Program and Shareholder Financial Services, Inc. (since December 2001);
Assistant Counsel of the Manager (August 1994-October 2003). An officer of 87
portfolios in the OppenheimerFunds complex.
-------------------------- ----------------------------------------------------------------------------------------
-------------------------- ----------------------------------------------------------------------------------------
Lisa I. Bloomberg, Vice President and Associate Counsel of the Manager (since May 2004); First Vice
Assistant Secretary President (April 2001-April 2004), Associate General Counsel (December 2000-April
since 2004 2004), Corporate Vice President (May 1999-April 2001) and Assistant General Counsel
Age: 37 (May 1999-December 2000) of UBS Financial Services Inc. (formerly, PaineWebber
Incorporated). An officer of 87 portfolios in the OppenheimerFunds complex.
-------------------------- ----------------------------------------------------------------------------------------
-------------------------- ----------------------------------------------------------------------------------------
Phillip S. Gillespie, Senior Vice President and Deputy General Counsel of the Manager (since September
Assistant Secretary 2004); Mr. Gillespie held the following positions at Merrill Lynch Investment
since 2004 Management: First Vice President (2001-September 2004); Director (2000-September 2004)
Age: 41 and Vice President (1998-2000). An officer of 87 portfolios in the OppenheimerFunds
complex.
-------------------------- ----------------------------------------------------------------------------------------

Remuneration of Trustees. The Trustees of the Fund who are affiliated with the Manager receive no salary or
fee from the Fund. The Independent Trustees received the compensation shown below from the Fund for serving as a
Trustee and member of a committee, with respect to the Fund’s fiscal year ended April30, 2005. The total
compensation from the Fund and fund complex represents compensation, including accrued retirement benefits, for
serving as a Trustee and member of a committee (if applicable) of the Boards of the Fund and other funds in the
OppenheimerFunds complex during the calendar year ended December31, 2004.

--------------------------------- -------------------- ---------------------- --------------------------
Name and Other Fund Position(s) Aggregate Estimated Annual Total Compensation From
Compensation From Benefits Upon
(as applicable) the Fund(1) Retirement(2) the Fund and Fund Complex
--------------------------------- -------------------- ---------------------- --------------------------
--------------------------------- -------------------- ---------------------- --------------------------
Ronald J. Abdow(3) $2,000 None $81,833(4)
--------------------------------- -------------------- ---------------------- --------------------------
--------------------------------- -------------------- ---------------------- --------------------------
Eustis Walcott(3) $1,800 None $18,500
--------------------------------- -------------------- ---------------------- --------------------------
--------------------------------- -------------------- ---------------------- --------------------------
Joseph M. Wikler $2,583 - $23,000
Audit Committee Member
--------------------------------- -------------------- ---------------------- --------------------------
--------------------------------- -------------------- ---------------------- --------------------------
Peter I. Wold $2,333 - $20,500
Governance Committee Member
--------------------------------- -------------------- ---------------------- --------------------------
1. “Aggregate Compensation From the Fund” includes fees and deferred compensation, if any.
2. “Estimated Annual Benefits Upon Retirement” represents retirement plan benefits from other funds in the
OppenheimerFunds complex and is based on a straight life payment plan election with the assumption that a
Trustee will retire at the age of 75 and is eligible (after 7 years of service). The Fund has not adopted a
retirement plan.
3. Mr. Abdow and Mr. Walcott retired as Trustees of the Fund as of October 1, 2005.
4. Includes $61,333 compensation paid to Mr. Abdow for serving as a trustee for two open-end investment
companies (MassMutual Institutional Funds and MML Series Investment Fund) the investment adviser for which is
the indirect parent company of the Fund’s Manager. The Manager also serves as the Sub-Advisor to the MassMutual
International Equity Fund, a series of MassMutual Institutional Funds. In accordance with SEC regulations, for
purposes of this section only, “Fund Complex” includes the Oppenheimer funds, MassMutual Institutional Funds
and MML Series Investment Fund. The Manager does not consider MassMutual Institutional Funds and MML Series
Investment Fund to be part of the OppenheimerFunds’ “Fund Complex” as that term may be otherwise interpreted.

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

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

Major Shareholders. As of October31, 2005, the only persons or entities who owned of record or were known
by the Fund to own beneficially 5% or more of any class of the Fund’s outstanding shares were:

OppenheimerFunds Inc., c/o Tim Abbuhl, Bldg. 2, 6803 South Tucson Way, Centennial, Colorado 80112-3924, which
owned 2,057,203.098 Class A shares or 49.66% of the Class A shares then outstanding.

RPSS TR Rollover IRA, FBO Lewis E Linville, P.O. Box 803, Smithville, Missouri 64089-0803, which owned 29,941.389
Class N shares or 9.40% of the Class N shares then outstanding.

NFSC LLC FEBO, Reading INT Medicine Inc. PSP, Joseph B. Taylor M.D., 20 Pond Meadow Drive, Suite 206, Reading,
Massachusetts 01867, which owned 21,637.224 Class N shares or 6.79% of the Class N shares then outstanding.

RPSS TR, Craig Funeral Home, 401(k) Plan, Attn.: Cherre Kidd, P.O. Box 99, St. Augustine, Florida 32084-0099,
which owned 18,816.924 Class N shares or 5.90% of the Class N shares then outstanding.

RPSS TR Hilec LLC, 401(k) Plan, Attn: Donald Hubert, 11 Railroad Avenue, Arcade, New York 14009-1407, which owned
18,077.641 Class N shares or 5.67% of the Class N shares then outstanding.

MG Trust Cust, Trinity Furniture Inc., 401(k), 700 17th Street Suite 300, Denver, Colorado 80202-3531, which
owned 17,909.269 Class N shares or 5.62% of the Class N shared then outstanding.

o Control Persons. As of October31 2005, the Manager beneficially owned 49.66% of the Class A shares, which
represent 35.718% of the outstanding voting securities of the Fund. In the event that any matter is submitted to a
vote of the Fund’s shareholders, the Manager has undertaken to vote such securities of the Fund, and to cause any
controlled companies to vote such securities of the Fund, in the same proportion as the shares of other Fund
shareholders are voted on such matter. A withdrawal of the Manager’s investment could adversely affect the expense
ratio for Class A shares and/or lead to an increase in the Fund’s portfolio turnover. The Manager is organized in
the State of Colorado.

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

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

The Code of Ethics is an exhibit to the Fund’s registration statement filed with the SEC and can be
reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. You can obtain information about the
hours of operation of the Public Reference Room by calling the SEC at 1.202.942.8090. The Code of Ethics can also be
viewed as part of the Fund’s registration statement on the SEC’s EDGAR database at the SEC’s Internet website at
www.sec.gov. Copies may be obtained, after paying a duplicating fee, by electronic request at the following E-mail
address: publicinfo@sec.gov, or by writing to the SEC’s Public Reference Section, Washington, D.C. 20549-0102.

Portfolio Proxy Voting. The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which the
Fund votes proxies relating to securities (“portfolio proxies”) held by the Fund. The Fund’s primary consideration
in voting portfolio proxies is the financial interests of the Fund and its shareholders. The Fund has retained an
unaffiliated third-party as its agent to vote portfolio proxies in accordance with the Fund’s Portfolio Proxy Voting
Guidelines and to maintain records of such portfolio proxy voting. The Proxy Voting Guidelines include provisions to
address conflicts of interest that may arise between the Fund and the Manager where a directly-controlled affiliate
of the Manager manages or administers the assets of a pension plan of a company soliciting the proxy. The Fund’s
Portfolio Proxy Voting Guidelines on routine and non-routine proxy proposals are summarized below.

o The Fund votes with the recommendation of the issuer’s management on routine matters, including election of
directors nominated by management and ratification of the independent registered public accounting
firm, unless circumstances indicate otherwise.
o In general, the Fund opposes "anti-takeover" proposals and supports the elimination of anti-takeover
proposals, absent unusual circumstances.
o The Fund supports shareholder proposals to reduce a super-majority vote requirement, and opposes management
proposals to add a super-majority vote requirement.
o The Fund opposes proposals to classify the board of directors.
o The Fund supports proposals to eliminate cumulative voting.
o The Fund opposes re-pricing of stock options.
o The Fund generally considers executive compensation questions such as stock option plans and bonus plans to
be ordinary business activity. The Fund analyzes stock option plans, paying particular attention to
their dilutive effect. While the Fund generally supports management proposals, the Fund opposes plans
it considers to be excessive.

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

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 Fixed Income 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 4/30: Management Fees Paid to OppenheimerFunds, Inc.
--------------------------------------- ----------------------------------------------------------------------------
--------------------------------------- ----------------------------------------------------------------------------
2003(1) $24,656
--------------------------------------- ----------------------------------------------------------------------------
--------------------------------------- ----------------------------------------------------------------------------
2004 $185,574
--------------------------------------- ----------------------------------------------------------------------------
--------------------------------------- ----------------------------------------------------------------------------
2005 $241,713
--------------------------------------- ----------------------------------------------------------------------------
1 For the fiscal period from February 21, 2003 (commencement of operations) to April 30, 2003.

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 for any investment, adoption of any
investment policy, or the purchase, sale or retention of any security.

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

Portfolio Manager. The Fund’s portfolio is managed by a team of investment professionals comprised of Angelo
Manioudakis, Benjamin J. Gord, Charles Moon, Geoffrey Caan and Antulio N. Bomfim (each is referred to as a
“portfolio manager” and collectively they are referred to as the “portfolio managers”) who are responsible for the
day-to-day management of the Fund’s investments.

Other Accounts Managed. In addition to managing the Portfolios’ investments, the portfolio managers
also manage other investment portfolios and accounts. The following table provides information regarding the other
portfolios and accounts managed by the portfolio managers as of April 30, 2005. No account has a performance-based
advisory fee:

-----------------------------------------------------------------------------------------------------------------
Portfolio Manager Registered Total Assets Other Pooled Total Assets in Other Total Assets
in Registered Other Pooled
Investment Investment Investment Investment in Other
Companies Companies Vehicles Vehicles Accounts Accounts
Managed Managed* Managed Managed* Managed Managed*
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Angelo Manioudakis 17 $12,011.7 6 $170.4 1 $39.1
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Benjamin J. Gord 14 $11,446.9 6 $170.4 1 $39.1
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Geoffrey Caan 14 $11,446.9 6 $170.4 1 $39.1
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Charles Moon 14 $11,446.9 6 $170.4 1 $39.1
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Antulio N. Bomfim 14 $11,446.9 6 $170.4 1 $39.1
-----------------------------------------------------------------------------------------------------------------
* In millions.

As indicated above, each of the Portfolio Managers also manage other funds and accounts. Potentially, at
times, those responsibilities could conflict with the interests of the Fund. That may occur whether the investment
strategies of the other funds or accounts are the same as, or different from, the Fund’s investment objectives and
strategies. For example the Portfolio Managers may need to allocate investment opportunities between the Fund and
another fund or account having similar objectives or strategies, or they may need to execute transactions for
another fund or account that could have a negative impact on the value of securities held by the Fund. Not all funds
and accounts advised by the Manager have the same management fee. If the management fee structure of another fund or
account is more advantageous to the Manager than the fee structure of the Fund, the Manager could have an incentive
to favor the other fund or account. However, the Manager's compliance procedures and Code of Ethics recognize the
Manager’s fiduciary obligations to treat all of its clients, including the Fund, fairly and equitably, and are
designed to preclude the Portfolio Managers from favoring one client over another. It is possible, of course, that
those compliance procedures and the Code of Ethics may not always be adequate to do so. At various times, the Fund’s
Portfolio Managers may manage other funds or accounts with investment objectives and strategies that are similar to
those of the Fund, or may manage funds or accounts with investment objectives and strategies that are different from
those of the Fund.

Compensation of the Portfolio Managers. The Fund’s Portfolio Managers are employed and compensated
by the Manager, not the Fund. Under the Manager’s compensation program for its portfolio managers and portfolio
analysts, their compensation is based primarily on the investment performance results of the funds and accounts they
manage, rather than on the financial success of the Manager. This is intended to align the portfolio managers and
analysts’ interests with the success of the funds and accounts and their shareholders. The Manager’s compensation
structure is designed to attract and retain highly qualified investment management professionals and to reward
individual and team contributions toward creating shareholder value. As of April 30, 2005, each Portfolio Managers’
compensation consisted of three elements: a base salary, an annual discretionary bonus and eligibility to
participate in long-term awards of options and appreciation rights in regard to the common stock of the Manager’s
holding company parent. Senior portfolio managers may also be eligible to participate in the Manager’s deferred
compensation plan.

To help the Manager attract and retain talent, the base pay component of each portfolio manager is reviewed
regularly to ensure that it reflects the performance of the individual, is commensurate with the requirements of the
particular portfolio, reflects any specific competence or specialty of the individual manager, and is competitive
with other comparable positions. The annual discretionary bonus is determined by senior management of the Manager
and is based on a number of factors, including a fund’s pre-tax performance for periods of up to five years,
measured against an appropriate Lipper benchmark selected by management. The Lipper benchmark with respect to the
Fund is Lipper - Intermediate Investment Grade Debt Funds. Other factors considered include management quality (such
as style consistency, risk management, sector coverage, team leadership and coaching) and organizational
development. The Portfolio Managers’ compensation is not based on the total value of the Fund’s portfolio assets,
although the Fund’s investment performance may increase those assets. The compensation structure is also intended to
be internally equitable and serve to reduce potential conflicts of interest between the Fund and other funds and
accounts managed by the Portfolio Managers. The compensation structure of the other funds and accounts managed by
the Portfolio Managers is the same as the compensation structure of the Fund, described above.

Ownership of Fund Shares. As of April 30, 2005, the Portfolio Managers did not beneficially own any
shares of the Fund.

Brokerage Policies of the Fund

Brokerage Provisions of the Investment Advisory Agreement. One of the duties of the Manager under the investment
advisory agreement is to 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. The Manager may employ broker-dealers 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. 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 brokerage and/or research services to the Fund
and/or the other accounts over which the Manager or its affiliates have investment discretion. The commissions paid
to those brokers may be higher than another qualified broker would charge, if the Manager makes a good faith
determination that the commission is fair and reasonable in relation to the services provided.

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

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

Brokerage Practices Followed by the Manager. The Manager allocates brokerage for the Fund subject to the provisions
of the investment advisory agreement and the procedures and rules described above. Generally, the Manager’s
portfolio traders allocate brokerage based upon recommendations from the Manager’s portfolio managers. In certain
instances, portfolio managers may directly place trades and allocate brokerage. In either case, the Manager’s
executive officers supervise the allocation of brokerage.

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

Other funds advised by the Manager have investment policies similar to those of the Fund. Those other funds
may purchase or sell the same securities as the Fund at the same time as the Fund, which could affect the supply and
price of the securities. If two or more funds 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.

In an option transaction, the Fund ordinarily uses the same broker for the purchase or sale of the option
and any transaction in the securities to which the option relates. When possible, the Manager tries to combine
concurrent orders to purchase or sell the same security by more than one of the accounts managed by the Manager or
its affiliates. The transactions under those combined orders are averaged as to price and allocated in accordance
with the purchase or sale orders actually placed for each account.

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

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

The Board of Trustees permits the Manager to use 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 permits 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 supplements 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.

--------------------------------------- -----------------------------------------------------------------------------
Fiscal Year Ended 4/30: Total Brokerage Commissions Paid by the Fund(1)
--------------------------------------- -----------------------------------------------------------------------------
--------------------------------------- -----------------------------------------------------------------------------
2003(2) $1,033
--------------------------------------- -----------------------------------------------------------------------------
--------------------------------------- -----------------------------------------------------------------------------
2004 $5,493
--------------------------------------- -----------------------------------------------------------------------------
--------------------------------------- -----------------------------------------------------------------------------
2005 $7,485(3)
--------------------------------------- -----------------------------------------------------------------------------
1. Amounts do not include spreads or commissions on principal transactions on a net trade basis.
2. For the fiscal period from February 21, 2003 (commencement of operations) to April 30, 2003.
3. In the fiscal year ended April 30, 2005, the amount of transactions directed to brokers for research
services was $0 and amount of the commissions paid to broker-dealers for those services was $0.

Distribution and Service Plans

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

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

--------------- ----------------------- -----------------------
Fiscal Year Aggregate Front-End Class A Front-End
Sales Charges
Ended 4/30: Sales Charges on Retained by
Class A Shares Distributor(1)
--------------- ----------------------- -----------------------
--------------- ----------------------- -----------------------
2003(2) $22,204 $9,189
--------------- ----------------------- -----------------------
--------------- ----------------------- -----------------------
2004 $104,718 $35,933
--------------- ----------------------- -----------------------
--------------- ----------------------- -----------------------
2005 $152,109 $58,309
--------------- ----------------------- -----------------------
1. Includes amounts retained by a broker-dealer that is an affiliate or a parent of the distributor.
2. For the fiscal period from February 21, 2003 (commencement of operations) to April 30, 2003.

--------------- ----------------------- ---------------------- ------------------------ ------------------------
Fiscal Year Concessions on Class Concessions on Class Concessions on Class C Concessions on Class N
Ended 4/30: A Shares Advanced by B Shares Advanced by Shares Advanced by Shares Advanced by
Distributor(1) Distributor(1) Distributor(1) Distributor(1)
--------------- ----------------------- ---------------------- ------------------------ ------------------------
--------------- ----------------------- ---------------------- ------------------------ ------------------------
2003(2) $10 $9,448 $2,528 $87
--------------- ----------------------- ---------------------- ------------------------ ------------------------
--------------- ----------------------- ---------------------- ------------------------ ------------------------
2004 $18,313 $1,128,383 $151,970 $34,972
--------------- ----------------------- ---------------------- ------------------------ ------------------------
--------------- ----------------------- ---------------------- ------------------------ ------------------------
2005 $3,021 $48,935 $29,456 $16,499
--------------- ----------------------- ---------------------- ------------------------ ------------------------
1. The Distributor advances concession payments to dealers 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.
2. For the fiscal period from February 21, 2003 (commencement of operations) to April 30, 2003.

--------------- ----------------------- ----------------------- ------------------------- -----------------------
Fiscal Year Class A Contingent Class B Contingent Class C Contingent Class N Contingent
Deferred Sales Deferred Sales Deferred Sales
Ended 4/30: Charges Retained by Charges Retained by Deferred Sales Charges Charges Retained by
Distributor Distributor Retained by Distributor Distributor
--------------- ----------------------- ----------------------- ------------------------- -----------------------
--------------- ----------------------- ----------------------- ------------------------- -----------------------
2003(1) $0 $0 $0 $0
--------------- ----------------------- ----------------------- ------------------------- -----------------------
--------------- ----------------------- ----------------------- ------------------------- -----------------------
2004 $493 $6,156 $928 $927
--------------- ----------------------- ----------------------- ------------------------- -----------------------
--------------- ----------------------- ----------------------- ------------------------- -----------------------
2005 $0 $15,271 $1,143 $1,551
--------------- ----------------------- ----------------------- ------------------------- -----------------------
1. For the fiscal period from February 21, 2003 (commencement of operations) to April 30, 2003.

Distribution and Service Plans. The Fund has adopted a Service Plan for Class A shares and Distribution and Service
Plans for Class B, Class C and Class N shares under Rule 12b-1 of the Investment Company Act. Under those plans the
Fund pays the Distributor for all or a portion of its costs incurred in connection with the distribution and/or
servicing of the shares of the particular class. Each plan has been approved by a vote of the Board of Trustees,
including a majority of the Independent Trustees(1), cast in person at a meeting called for the purpose of voting on
that plan.

Under the Plans, the Manager and the Distributor may make payments to affiliates. In their sole discretion,
they may also from time to time make substantial payments from their own resources, which include the profits the
Manager derives from the advisory fees it receives from the Fund, to compensate brokers, dealers, financial
institutions and other intermediaries for providing distribution assistance and/or administrative services or that
otherwise promote sales of the Fund’s shares. These payments, some of which may be referred to as “revenue sharing,”
may relate to the Fund’s inclusion on a financial intermediary’s preferred list of funds offered to its clients.

Financial intermediaries, brokers and dealers may receive other payments from the Distributor or the
Manager from their own resources in connection with the promotion and/or sale of shares of the Fund, including
payments to defray expenses incurred in connection with educational seminars and meetings. The Manager or
Distributor may share expenses incurred by financial intermediaries in conducting training and educational meetings
about aspects of the Fund for employees of the intermediaries or for hosting client seminars or meetings at which
the Fund is discussed. In their sole discretion, the Manager and/or the Distributor may increase or decrease the
amount of payments they make from their own resources for these purposes.

Unless a plan is terminated as described below, the plan continues in effect from year to year but only if
the Fund’s Board of Trustees and its Independent Trustees specifically vote annually to approve its continuance.
Approval must be by a vote cast in person at a meeting called for the purpose of voting on continuing the plan. A
plan may be terminated at any time by the vote of a majority of the Independent Trustees or by the vote of the
holders of a “majority” (as defined in the Investment Company Act) of the outstanding shares of that class.

The Board of Trustees and the Independent Trustees must approve all material amendments to a plan. An
amendment to increase materially the amount of payments to be made under a plan must be approved by shareholders of
the class affected by the amendment. Because Class B shares of the Fund automatically convert into Class A shares 72
months after purchase, the Fund must obtain the approval of both Class A and Class B shareholders for a proposed
material amendment to the Class A plan that would materially increase payments under the plan. That approval must be
by a majority of the shares of each class, voting separately by class.

While the plans are in effect, the Treasurer of the Fund shall provide separate written reports on the
plans to the Board of Trustees at least quarterly for its review. The reports shall detail the amount of all
payments made under a plan and the purpose for which the payments were made. Those reports are subject to the review
and approval of the Independent Trustees.

Each plan states that while it is in effect, the selection and nomination of those Trustees of the Fund who
are not “interested persons” of the Fund is committed to the discretion of the Independent Trustees. This does not
prevent the involvement of others in the selection and nomination process as long as the final decision as to
selection or nomination is approved by a majority of the Independent Trustees.

Under the plans for a class, no payment will be made to any recipient in any period in which the aggregate
net asset value of all Fund shares of that class held by the recipient for itself and its customers does not exceed
a minimum amount, if any, that may be set from time to time by a majority of the Independent Trustees.

|X| Class A Service Plan Fees. Under the Class A service plan, the Distributor currently uses the fees it
receives from the Fund to pay brokers, dealers and other financial institutions (they are referred to as
“recipients”) for personal services and account maintenance services they provide for their customers who hold Class
A shares. The services include, among others, answering customer inquiries about the Fund, assisting in establishing
and maintaining accounts in the Fund, making the Fund’s investment plans available and providing other services at
the request of the Fund or the Distributor. The Class A service plan permits reimbursements to the Distributor at a
rate of up to 0.25% of average annual net assets of Class A shares. The Board has set the rate at that level. The
Distributor does not receive or retain the service fee on Class A shares in accounts for which the Distributor has
been listed as the broker-dealer of record. While the plan permits the Board to authorize payments to the
Distributor to reimburse itself for services under the plan, the Board has not yet done so, except in the case of
the special arrangement described below, regarding grandfathered retirement accounts. The Distributor makes payments
to recipients periodically at an annual rate not to exceed 0.25% of the average annual net assets consisting of
Class A shares held in the accounts of the recipients or their customers.

With respect to purchases of Class A shares subject to a contingent deferred sales charge by certain
retirement plans that purchased such shares prior to March 1, 2001 (“grandfathered retirement accounts”), the
Distributor currently intends to pay the service fee to recipients in advance for the first year after the shares
are purchased. During the first year the shares are sold, the Distributor retains the service fee to reimburse
itself for the costs of distributing the shares. After the first year shares are outstanding, the Distributor makes
service fee payments to recipients periodically on those shares. The advance payment is based on the net asset value
of shares sold. Shares purchased by exchange do not qualify for the advance service fee payment. If Class A shares
purchased by grandfathered retirement accounts are redeemed during the first year after their purchase, the
recipient of the service fees on those shares will be obligated to repay the Distributor a pro rata portion of the
advance payment of the service fee made on those shares.

For the fiscal year ended April30, 2005 payments under the Class A plan totaled $31,747, of which $575 was
retained by the Distributor under the arrangement described above, regarding grandfathered retirement accounts, and
included $3,200 paid to an affiliate of the Distributor’s parent company. Any unreimbursed expenses the Distributor
incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent years. The Distributor
may not use payments received under the Class A plan to pay any of its interest expenses, carrying charges, or other
financial costs, or allocation of overhead.

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

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

The asset-based sales charge and service fees increase Class B and Class C expenses by 1.00% and the
asset-based sales charge and service fees increase Class N expenses by 0.50% of the net assets per year of the
respective classes.

The Distributor retains the asset-based sales charge on Class B and Class N shares. The Distributor retains
the asset-based sales charge on Class C shares during the first year the shares are outstanding. It pays the
asset-based sales charge as an ongoing concession to the recipient on Class C shares outstanding for a year or more.
If a dealer has a special agreement with the Distributor, the Distributor will pay the Class B, Class C or Class N
service fee and the asset-based sales charge to the dealer periodically in lieu of paying the sales concession and
service fee in advance at the time of purchase.

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

The Distributor’s actual expenses in selling Class B, Class C and Class N shares may be more than the
payments it receives from the contingent deferred sales charges collected on redeemed shares and from the Fund under
the plans. If either the Class B, Class C or Class N plan is terminated by the Fund, the Board of Trustees may allow
the Fund to continue payments of the asset-based sales charge to the Distributor for distributing shares before the
plan was terminated.

----------------------------------------------------------------------------------------------------------------------
Distribution and Service Fees Paid to the Distributor in the Fiscal Year Ended April30, 2005
----------------------------------------------------------------------------------------------------------------------
------------------------ ------------------ --------------------- -------------------------- -------------------------
Class: Total Payments Amount Retained by Distributor’s Aggregate Distributor’s
Unreimbursed Expenses
Unreimbursed Expenses as % of Net Assets of
Under Plan Distributor Under Plan Class
------------------------ ------------------ --------------------- -------------------------- -------------------------
------------------------ ------------------ --------------------- -------------------------- -------------------------
Class B Plan $35,992 $29,302(1) $106,487 2.51%
------------------------ ------------------ --------------------- -------------------------- -------------------------
------------------------ ------------------ --------------------- -------------------------- -------------------------
Class C Plan $46,234 $24,506(2) $79,904 1.18%
------------------------ ------------------ --------------------- -------------------------- -------------------------
------------------------ ------------------ --------------------- -------------------------- -------------------------
Class N Plan $8,964 $5,800(3) $59,930 2.13%
------------------------ ------------------ --------------------- -------------------------- -------------------------
1. Includes $277 paid to an affiliate of the Distributor’s parent company.
2. Includes $728 paid to an affiliate of the Distributor’s parent company.
3. Includes $71 paid to an affiliate of the Distributor’s parent company.

All payments under the plans are subject to the limitations imposed by the Conduct Rules of the National
Association of Securities Dealers, Inc. on payments of asset-based sales charges and service fees.

Performance of the Fund

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

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

Use of standardized performance calculations enables an investor to compare the Fund’s performance to the
performance of other funds for the same periods. However, a number of factors should be considered before using the
Fund’s performance information as a basis for comparison with other investments:
o Yields and total returns measure the performance of a hypothetical account in the Fund over various periods
and do not show the performance of each shareholder’s account. Your account’s performance will vary
from the model performance data if your dividends are received in cash, or you buy or sell shares
during the period, or you bought your shares at a different time and price than the shares used in the
model.
o The Fund’s performance returns may not reflect the effect of taxes on dividends and capital gains
distributions.
o An investment in the Fund is not insured by the FDIC or any other government agency.
o The principal value of the Fund’s shares, its yields and total returns are not guaranteed and normally will
fluctuate on a daily basis.
o When an investor’s shares are redeemed, they may be worth more or less than their original cost.
o Yields and total returns for any given past period represent historical performance information and are
not, and should not be considered, a prediction of future yields or returns.

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

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

o Standardized Yield. The “standardized yield” (sometimes referred to just as “yield”) is shown for a class
of shares for a stated 30-day period. It is not based on actual distributions paid by the Fund to shareholders in
the 30-day period, but is a hypothetical yield based upon the net investment income from the Fund’s portfolio
investments for that period. It may therefore differ from the "dividend yield" for the same class of shares,
described below.

Standardized yield is calculated using the following formula set forth in rules adopted by the SEC,
designed to assure uniformity in the way that all funds calculate their yields:

Standardized Yield = 2[( a - b +1)(6) -1 ]
--------
cd

The symbols above represent the following factors:
a = dividends and interest earned during the 30-day period.
b = expenses accrued for the period (net of any expense assumptions).
c = the average daily number of shares of that class outstanding during the 30-day period that were
entitled to receive dividends.
d = the maximum offering price per share of that class on the last day of the period, adjusted for
undistributed net investment income.

The standardized yield for a particular 30-day period may differ from the yield for other periods. The SEC
formula assumes that the standardized yield for a 30-day period occurs at a constant rate for a six-month period and
is annualized at the end of the six-month period. Additionally, because each class of shares is subject to different
expenses, it is likely that the standardized yields of the Fund’s classes of shares will differ for any 30-day
period.

o Dividend Yield. The Fund may quote a “dividend yield” for each class of its shares. Dividend yield is based
on the dividends paid on a class of shares during the actual dividend period. To calculate dividend yield, the
dividends of a class declared during a stated period are added together, and the sum is multiplied by 12 (to
annualize the yield) and divided by the maximum offering price on the last day of the dividend period. The formula
is shown below:

Dividend Yield = dividends paid x 12/maximum offering price (payment date)

The maximum offering price for Class A shares includes the current maximum initial sales charge. The
maximum offering price for Class B, Class C and Class N shares is the net asset value per share, without considering
the effect of contingent deferred sales charges. Class A dividend yield may also be quoted without deducting the
maximum initial sales charge.

---------------------------------------------------------------------------------------------------
The Fund’s Yields for the 30-Day Periods Ended April30, 2005
---------------------------------------------------------------------------------------------------
----------------- --------------------------------------- -----------------------------------------
Class of Shares Standardized Yield Dividend Yield
----------------- --------------------------------------- -----------------------------------------
----------------- ------------------- ------------------- --------------------- -------------------
Without After Without After
Sales Sales Sales Sales
Charge Charge Charge Charge
----------------- ------------------- ------------------- --------------------- -------------------
----------------- ------------------- ------------------- --------------------- -------------------
Class A 4.34% 4.13% 3.94% 3.76%
----------------- ------------------- ------------------- --------------------- -------------------
----------------- ------------------- ------------------- --------------------- -------------------
Class B 3.48% N/A 3.08% N/A
----------------- ------------------- ------------------- --------------------- -------------------
----------------- ------------------- ------------------- --------------------- -------------------
Class C 3.48% N/A 3.09% N/A
----------------- ------------------- ------------------- --------------------- -------------------
----------------- ------------------- ------------------- --------------------- -------------------
Class N 3.98% N/A 3.59% N/A
----------------- ------------------- ------------------- --------------------- -------------------

|X| Total Return Information. There are different types of “total returns” to measure the Fund’s
performance. Total return is the change in value of a hypothetical investment in the Fund over a given period,
assuming that all dividends and capital gains distributions are reinvested in additional shares and that the
investment is redeemed at the end of the period. Because of differences in expenses for each class of shares, the
total returns for each class are separately measured. The cumulative total return measures the change in value over
the entire period (for example, 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 4.75% (as a percentage
of the offering price) is deducted from the initial investment (“P” in the formula below) (unless the return is
shown without sales charge, as described below). For Class B shares, payment of the applicable contingent deferred
sales charge is applied, depending on the period for which the return is shown: 5.0% in the first year, 4.0% in the
second year, 3.0% in the third and fourth years, 2.0% in the fifth year, 1.0% in the sixth year and none thereafter.
For Class C shares, the 1.0% contingent deferred sales charge is deducted for returns for the one-year period. For
Class N shares, the 1.0% contingent deferred sales charge is deducted for returns for the one-year and life-of-class
periods, as applicable.

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

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

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

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

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

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

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

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

o Total Returns at Net Asset Value. From time to time the Fund may also quote a cumulative or an average
annual total return “at net asset value” (without deducting sales charges) for Class A, Class B, Class C or Class N
shares. 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 April30, 2005
--------------------------------------------------------------------------------------------------------------------
--------------- -------------------------------- -------------------------------------------------------------------
Class of Cumulative Total Returns (10
Shares Years or life-of-class if less) Average Annual Total Returns
--------------- -------------------------------- -------------------------------------------------------------------
--------------- -------------------------------- --------------------------------- ---------------------------------
1-Year 5-Year
(or life of class if less)
--------------- -------------------------------- --------------------------------- ---------------------------------
--------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------------
After Sales Without Sales After Sales Without Sales After Sales Without Sales
Charge Charge Charge Charge Charge Charge
--------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------------
--------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------------
Class A(1) 3.71% 8.89% -0.09% 4.89% 1.68% 3.96%
--------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------------
--------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------------
Class B(2) 3.79% 6.79% -1.00% 4.00% 1.71% 3.04%
--------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------------
--------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------------
Class C(3) 6.68% 6.68% 2.99% 3.99% 2.99% 2.99%
--------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------------
--------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------------
Class N(4) 7.97% 7.97% 3.51% 4.51% 3.56% 3.56%
--------------- --------------- ---------------- ---------------- ---------------- ---------------- ----------------
1. Inception of Class A: February21, 2003
2. Inception of Class B: February21, 2003
3. Inception of Class C: February21, 2003
4. Inception of Class N: February21, 2003

--------------------------------------------------------------------------------------
Average Annual Total Returns for Class A1 Shares (After Sales Charge)
For the Periods Ended April30, 2005
--------------------------------------------------------------------------------------
------------------------------------------ ------------------- -----------------------
1-Year 5-Year
(or life of class if
less)
------------------------------------------ ------------------- -----------------------
------------------------------------------ ------------------- -----------------------
After Taxes on Distributions -1.59% 0.41%
------------------------------------------ ------------------- -----------------------
------------------------------------------ ------------------- -----------------------
After Taxes on Distributions and -0.06% 0.71%
Redemption of Fund Shares
------------------------------------------ ------------------- -----------------------
1. Inception of Class A: February21, 2003

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

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

|X| Morningstar Ratings. From time to time the Fund may publish the star rating of the performance of its
classes of shares by Morningstar, Inc., an independent mutual fund monitoring service. Morningstar rates mutual
funds in their specialized market sector. The Fund is rated among the Intermediate-Term Bond 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,
o information about the performance of certain securities or commodities markets or segments of those
markets,
o information about the performance of the economies of particular countries or regions,
o the earnings of companies included in segments of particular industries, sectors, securities markets,
countries or regions,
o the availability of different types of securities or offerings of securities,
o information relating to the gross national or gross domestic product of the United States or other
countries or regions,
o comparisons of various market sectors or indices to demonstrate performance, risk, or other characteristics
of the Fund.

about YOUR ACCOUNT

How to Buy Shares

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

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

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

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

The Oppenheimer Funds. The Oppenheimer funds are those mutual funds for which the Distributor acts as the
distributor and currently include the following:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

If you make payments from your bank account to purchase shares of the Fund, your bank account will be
debited automatically. Normally the debit will be made two business days prior to the investment dates you selected
on your application. Neither the Distributor, the Transfer Agent nor the Fund shall be responsible for any delays in
purchasing shares that result from delays in ACH transmissions.

Before you establish Asset Builder payments, you should obtain a prospectus of the selected fund(s) from
your financial advisor (or the Distributor) and request an application from the Distributor. Complete the
application and return it. You may change the amount of your Asset Builder payment or you can terminate these
automatic investments at any time by writing to the Transfer Agent. The Transfer Agent requires a reasonable period
(approximately 10 days) after receipt of your instructions to implement them. The Fund reserves the right to amend,
suspend or discontinue offering Asset Builder plans at any time without prior notice.

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

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

Cancellation of Purchase Orders. Cancellation of purchase orders for the Fund’s shares (for example, when a purchase
check is returned to the Fund unpaid) causes a loss to be incurred when the net asset values of the Fund’s shares on
the cancellation date is less than on the purchase date. That loss is equal to the amount of the decline in the net
asset value per share multiplied by the number of shares in the purchase order. The investor is responsible for that
loss. If the investor fails to compensate the Fund for the loss, the Distributor will do so. The Fund may reimburse
the Distributor for that amount by redeeming shares from any account registered in that investor’s name, or the Fund
or the Distributor may seek other redress.

Classes of Shares. Each class of shares of the Fund represents an interest in the same portfolio of investments of
the Fund. However, each class has different shareholder privileges and features. The net income attributable to
Class B, Class C or Class N shares and the dividends payable on Class B, Class C or Class N shares will be reduced
by incremental expenses borne solely by that class. Those expenses include the asset-based sales charges to which
Class B, Class C and Class N shares are subject.

The availability of different classes of shares permits an investor to choose the method of purchasing
shares that is more appropriate for the investor. That may depend on the amount of the purchase, the length of time
the investor expects to hold shares, and other relevant circumstances. Class A shares normally are sold subject to
an initial sales charge. While Class B, Class C and Class N shares have no initial sales charge, the purpose of the
deferred sales charge and asset-based sales charge on Class B, Class C and Class N shares is the same as that of the
initial sales charge on Class A shares - to compensate the Distributor and brokers, dealers and financial
institutions that sell shares of the Fund. A salesperson who is entitled to receive compensation from his or her
firm for selling Fund shares may receive different levels of compensation for selling one class of shares rather
than another.

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

Class B, Class C or Class N shares may not be purchased by an investor directly from the Distributor without the
investor designating another registered broker-dealer.

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

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

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

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

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

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

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

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

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

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

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

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

Determination of Net Asset Values Per Share. The net asset values per share of each class of shares of the Fund are
determined as of the close of business of the NYSE on each day that the NYSE is open. The calculation is done by
dividing the value of the Fund’s net assets attributable to a class by the number of shares of that class that are
outstanding. The NYSE normally closes at 4:00 p.m., Eastern time, but may close earlier on some other days (for
example, in case of weather emergencies or on days falling before a U.S. holiday). All references to time in this
Statement of Additional Information mean “Eastern time.” The NYSE’s most recent annual announcement (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 European and Asian stock
exchanges and over-the-counter markets normally is completed before the close of the NYSE.

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

|X| Securities Valuation. The Fund’s Board of Trustees has established procedures for the valuation of the
Fund’s securities. In general those procedures are as follows:
o Equity securities traded on a U.S. securities exchange or on NASDAQ® 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 or on NASDAQ®, as applicable, on that day, or
(2) if last sale information is not available on a valuation date, they are valued at the last reported sale
price preceding the valuation date if it is within the spread of the closing “bid” and “asked”
prices on the valuation date or, if not, at the closing “bid” price on the valuation date.
o Equity securities traded on a foreign securities exchange generally are valued in one of the following ways:
(1) at the last sale price available to the pricing service approved by the Board of Trustees, or
(2) at the last sale price obtained by the Manager from the report of the principal exchange on which the
security is traded at its last trading session on or immediately before the valuation date, or
(3) at the mean between the “bid” and “asked” prices obtained from the principal exchange on which the security
is traded or, on the basis of reasonable inquiry, from two market makers in the security.
o Long-term debt securities having a remaining maturity in excess of 60 days are valued based on the mean
between the “bid” and “asked” prices determined by a portfolio pricing service approved by the Fund’s Board of
Trustees or obtained by the Manager from two active market makers in the security on the basis of reasonable
inquiry.
o The following securities are valued at the mean between the “bid” and “asked” prices determined by a
pricing service approved by the Fund’s Board of Trustees or obtained by the Manager from two active market makers in
the security on the basis of reasonable inquiry:
(1) debt instruments that have a maturity of more than 397 days when issued,
(2) debt instruments that had a maturity of 397 days or less when issued and have a remaining maturity of more
than 60 days, and
(3) non-money market debt instruments that had a maturity of 397 days or less when issued and which have a
remaining maturity of 60 days or less.
o The following securities are valued at cost, adjusted for amortization of premiums and accretion of
discounts:
(1) money market debt securities held by a non-money market fund that had a maturity of less than 397 days when
issued that have a remaining maturity of 60 days or less, and
(2) debt instruments held by a money market fund that have a remaining maturity of 397 days or less.
o Securities (including restricted securities) not having readily-available market quotations are valued at
fair value determined under the Board’s procedures. If the Manager is unable to locate two market makers willing to
give quotes, a security may be priced at the mean between the “bid” and “asked” prices provided by a single active
market maker (which in certain cases may be the “bid” price if no “asked” price is available).

In the case of U.S. government securities, mortgage-backed securities, corporate bonds and foreign
government securities, when last sale information is not generally available, the Manager may use pricing services
approved by the Board of Trustees. The pricing service may use “matrix” comparisons to the prices for comparable
instruments on the basis of quality, yield and maturity. Other special factors may be involved (such as the
tax-exempt status of the interest paid by municipal securities). The Manager will monitor the accuracy of the
pricing services. That monitoring may include comparing prices used for portfolio valuation to actual sales prices
of selected securities.

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

Puts, calls, and futures are valued at the last sale price on the principal exchange on which they are
traded or on NASDAQ®, as applicable, as determined by a pricing service approved by the Board of Trustees or by the
Manager. If there were no sales that day, they shall be valued at the last sale price on the preceding trading day
if it is within the spread of the closing “bid” and “asked” prices on the principal exchange or on NASDAQ® on the
valuation date. If not, the value shall be the closing bid price on the principal exchange or on NASDAQ® on the
valuation date. If the put, call or future is not traded on an exchange or on NASDAQ®, it shall be valued by the
mean between “bid” and “asked” prices obtained by the Manager from two active market makers. In certain cases that
may be at the “bid” price if no “asked” price is available.

When the Fund writes an option, an amount equal to the premium received is included in the Fund’s Statement
of Assets and Liabilities as an asset. An equivalent credit is included in the liability section. The credit is
adjusted (“marked-to-market”) to reflect the current market value of the option. In determining the Fund’s gain on
investments, if a call or put written by the Fund is exercised, the proceeds are increased by the premium received.
If a call or put written by the Fund expires, the Fund has a gain in the amount of the premium. If the Fund enters
into a closing purchase transaction, it will have a gain or loss, depending on whether the premium received was more
or less than the cost of the closing transaction. If the Fund exercises a put it holds, the amount the Fund receives
on its sale of the underlying investment is reduced by the amount of premium paid by the Fund.

How to Sell Shares

The information below supplements the terms and conditions for redeeming shares set forth in the Prospectus.

Checkwriting. When a check is presented to United Missouri Bank (the “Bank”) for clearance, the Bank will ask the
Fund to redeem a sufficient number of full and fractional shares in the shareholder’s account to cover the amount of
the check. This enables the shareholder to continue receiving dividends on those shares until the check is presented
to the Fund. Checks may not be presented for payment at the offices of the Bank or the Fund’s custodian bank. This
limitation does not affect the use of checks for the payment of bills or to obtain cash at other banks. The Fund
reserves the right to amend, suspend or discontinue offering checkwriting privileges at any time. The Fund will
provide you notice whenever it is required to do so by applicable law.

In choosing to take advantage of the Checkwriting privilege, by signing the account application or by
completing a Checkwriting card, each individual who signs:
(1) for individual accounts, represents that they are the registered owner(s) of the shares of the Fund in that
account;
(2) for accounts for corporations, partnerships, trusts and other entities, represents that they are an
officer, general partner, trustee or other fiduciary or agent, as applicable, duly authorized to act
on behalf of the registered owner(s);
(3) authorizes the Fund, its Transfer Agent and any bank through which the Fund’s drafts (checks) are payable
to pay all checks drawn on the Fund account of such person(s) and to redeem a sufficient amount of
shares from that account to cover payment of each check;
(4) specifically acknowledges that if they choose to permit checks to be honored if there is a single signature
on checks drawn against joint accounts, or accounts for corporations, partnerships, trusts or other
entities, the signature of any one signatory on a check will be sufficient to authorize payment of
that check and redemption from the account, even if that account is registered in the names of more
than one person or more than one authorized signature appears on the Checkwriting card or the
application, as applicable;
(5) understands that the Checkwriting privilege may be terminated or amended at any time by the Fund and/or the
Fund’s bank; and
(6) acknowledges and agrees that neither the Fund nor its bank shall incur any liability for that amendment or
termination of checkwriting privileges or for redeeming shares to pay checks reasonably believed by
them to be genuine, or for returning or not paying checks that have not been accepted for any reason.

Sending Redemption Proceeds by Federal Funds Wire. The Federal Funds wire of redemption proceeds may be delayed if
the Fund’s custodian bank is not open for business on a day when the Fund would normally authorize the wire to be
made, which is usually the Fund’s next regular business day following the redemption. In those circumstances, the
wire will not be transmitted until the next bank business day on which the Fund is open for business. No dividends
will be paid on the proceeds of redeemed shares awaiting transfer by Federal Funds wire.

Reinvestment Privilege. Within six months of a redemption, a shareholder may reinvest all or part of the redemption
proceeds of:
o Class A shares purchased subject to an initial sales charge or Class A shares on which a contingent
deferred sales charge was paid, or
o Class B shares that were subject to the Class B contingent deferred sales charge when redeemed.

The reinvestment may be made without sales charge only in Class A shares of the Fund or any of the other
Oppenheimer funds into which shares of the Fund are exchangeable as described in “How to Exchange Shares” below.
Reinvestment will be at the net asset value next computed after the Transfer Agent receives the reinvestment order.
The shareholder must ask the Transfer Agent or financial intermediary for that privilege at the time of
reinvestment. This privilege does not apply to Class C, and Class N shares. The Fund may amend, suspend or cease
offering this reinvestment privilege at any time as to shares redeemed after the date of such amendment, suspension
or cessation.

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

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

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

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

Transfers of Shares. A transfer of shares to a different registration is not an event that triggers the payment of
sales charges. Therefore, shares are not subject to the payment of a contingent deferred sales charge of any class
at the time of transfer to the name of another person or entity. It does not matter whether the transfer occurs by
absolute assignment, gift or bequest, as long as it does not involve, directly or indirectly, a public sale of the
shares. When shares subject to a contingent deferred sales charge are transferred, the transferred shares will
remain subject to the contingent deferred sales charge. It will be calculated as if the transferee shareholder had
acquired the transferred shares in the same manner and at the same time as the transferring shareholder.

If less than all shares held in an account are transferred, and some but not all shares in the account
would be subject to a contingent deferred sales charge if redeemed at the time of transfer, the priorities described
in the Prospectus under “How to Buy Shares” for the imposition of the Class B, Class C and Class N contingent
deferred sales charge will be followed in determining the order in which shares are transferred.

Distributions From Retirement Plans. Requests for distributions from OppenheimerFunds-sponsored IRAs, SEP-IRAs,
SIMPLE IRAs, 403(b)(7) custodial plans, 401(k) plans or pension or profit-sharing plans should be addressed to
“Trustee, OppenheimerFunds Retirement Plans,” c/o the Transfer Agent at its address listed in “How To Sell Shares” in
the Prospectus or on the back cover of this Statement of Additional Information. 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. Additionally, the order must have been transmitted to and received by the Distributor prior to its close of
business that day (normally 5:00 p.m.).

Ordinarily, for accounts redeemed by a broker-dealer under this procedure, payment will be made within
three business days after the shares have been redeemed upon the Distributor’s receipt of the required redemption
documents in proper form. The signature(s) of the registered owners on the redemption documents must be guaranteed
as described in the Prospectus.

Automatic Withdrawal and Exchange Plans. Investors owning shares of the Fund valued at $5,000 or more can authorize
the Transfer Agent to redeem shares (having a value of at least $50) automatically on a monthly, quarterly,
semi-annual or annual basis under an Automatic Withdrawal Plan. Shares will be redeemed three business days prior to
the date requested by the shareholder for receipt of the payment. Automatic withdrawals of up to $1,500 per month
may be requested by telephone if payments are to be made by check payable to all shareholders of record. Payments
must also be sent to the address of record for the account and the address must not have been changed within the
prior 30 days. Required minimum distributions from OppenheimerFunds-sponsored retirement plans may not be arranged
on this basis.

Payments are normally made by check, but shareholders having AccountLink privileges (see “How To Buy
Shares”) may arrange to have Automatic Withdrawal Plan payments transferred to the bank account designated on the
account application or by signature-guaranteed instructions sent to the Transfer Agent. Shares are normally redeemed
pursuant to an Automatic Withdrawal Plan three business days before the payment transmittal date you select in the
account application. If a contingent deferred sales charge applies to the redemption, the amount of the check or
payment will be reduced accordingly.

The Fund cannot guarantee receipt of a payment on the date requested. The Fund reserves the right to amend,
suspend or discontinue offering these plans at any time without prior notice. Because of the sales charge assessed
on Class A share purchases, shareholders should not make regular additional Class A share purchases while
participating in an Automatic Withdrawal Plan. Class B, Class C and Class N shareholders should not establish
automatic withdrawal plans, because of the potential imposition of the contingent deferred sales charge on such
withdrawals (except where the Class B, Class C or Class N contingent deferred sales charge is waived as described in
Appendix C to this Statement of Additional Information).

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

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

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

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

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

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

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

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

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

How to Exchange Shares

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

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

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

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

The following funds do not offer Class Y shares:
Limited Term New York Municipal Fund Oppenheimer Limited Term California Municipal Fund
Oppenheimer AMT-Free Municipals Oppenheimer Limited Term Municipal Fund
Oppenheimer AMT-Free New York Municipals Oppenheimer New Jersey Municipal Fund
Oppenheimer Balanced Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer California Municipal Fund Oppenheimer Principal Protected Main Street Fund
Oppenheimer Capital Income Fund Oppenheimer Principal Protected Main Street Fund II
Oppenheimer Cash Reserves Oppenheimer Principal Protected Main Street Fund III
Oppenheimer Champion Income Fund Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Convertible Securities Fund Oppenheimer Quest International Value Fund, Inc.
Oppenheimer Disciplined Allocation Fund Oppenheimer Rochester National Municipals
Oppenheimer Dividend Growth Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Total Return Bond Fund

o Oppenheimer Money Market Fund, Inc. only offers Class A and Class Y shares.
o Class Y shares of Oppenheimer Real Asset Fund may not be exchanged for shares of any other fund.
o Class B and Class C shares of Oppenheimer Cash Reserves are generally available only by exchange from the
same class of shares of other Oppenheimer funds or through OppenheimerFunds-sponsored 401(k) plans.
o Class M shares of Oppenheimer Convertible Securities Fund may be exchanged only for Class A shares of other
Oppenheimer funds. They may not be acquired by exchange of shares of any class of any other Oppenheimer
funds except Class A shares of Oppenheimer Money Market Fund or Oppenheimer Cash Reserves acquired by
exchange of Class M shares.
o Class A shares of Oppenheimer funds may be exchanged at net asset value for shares of any money market fund
offered by the Distributor. Shares of any money market fund purchased without a sales charge may be
exchanged for shares of Oppenheimer funds offered with a sales charge upon payment of the sales charge.
They may also be used to purchase shares of Oppenheimer funds subject to an early withdrawal charge or
contingent deferred sales charge.
o Shares of the Fund acquired by reinvestment of dividends or distributions from any of the other Oppenheimer
funds or from any unit investment trust for which reinvestment arrangements have been made with the
Distributor may be exchanged at net asset value for shares of any of the Oppenheimer funds.
o Shares of Oppenheimer Principal Protected Main Street Fund may be exchanged at net asset value for shares
of any of the Oppenheimer funds. However, shareholders are not permitted to exchange shares of other
Oppenheimer funds for shares of Oppenheimer Principal Protected Main Street Fund until after the expiration
of the warranty period (8/5/2010).
o Shares of Oppenheimer Principal Protected Main Street Fund II may be exchanged at net asset value for
shares of any of the Oppenheimer funds. However, shareholders are not permitted to exchange shares of other
Oppenheimer funds for shares of Oppenheimer Principal Protected Main Street Fund II until after the
expiration of the warranty period (3/3/2011).
o Shares of Oppenheimer Principal Protected Main Street Fund III may be exchanged at net asset value for
shares of any of the Oppenheimer funds. However, shareholders are not permitted to exchange shares of other
Oppenheimer funds for shares of Oppenheimer Principal Protected Main Street Fund III until after the
expiration of the warranty period (12/16/2011).

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

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

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

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

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

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

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

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

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

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

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

o When Class B, Class C or Class N shares are redeemed to effect an exchange, the priorities described in
“How To Buy Shares” in the Prospectus for the imposition of the Class B, Class C or Class N contingent deferred sales
charge will be followed in determining the order in which the shares are exchanged. Before exchanging shares,
shareholders should take into account how the exchange may affect any contingent deferred sales charge that might be
imposed in the subsequent redemption of remaining shares.

Shareholders owning shares of more than one class must specify which class of shares they wish to exchange.

|X| Limits on Multiple Exchange Orders. The Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf of more than one account.

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

Processing Exchange Requests. Shares to be exchanged are redeemed on the regular business day the Transfer
Agent receives an exchange request in proper form (the “Redemption Date”). Normally, shares of the fund to be
acquired are purchased on the Redemption Date, but such purchases may be delayed by either fund up to five business
days if it determines that it would be disadvantaged by an immediate transfer of the redemption proceeds. The Fund
reserves the right, in its discretion, to refuse any exchange request that may disadvantage it. For example, if the
receipt of multiple exchange requests from a dealer might require the disposition of portfolio securities at a time
or at a price that might be disadvantageous to the Fund, the Fund may refuse the request.

When you exchange some or all of your shares from one fund to another, any special account feature such as
an Asset Builder Plan or Automatic Withdrawal Plan, will be switched to the new fund account unless you tell the
Transfer Agent not to do so. However, special redemption and exchange features such as Automatic Exchange Plans and
Automatic Withdrawal Plans cannot be switched to an account in Oppenheimer Senior Floating Rate Fund.

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

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

Dividends, Capital Gains and Taxes

Dividends and Distributions. 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 shares. That is because of the effect of the asset-based sales charge on Class B,
Class C and Class N shares. Those dividends will also differ in amount as a consequence of any difference in the net
asset values of the different classes of shares.

Dividends, distributions and proceeds of the redemption of Fund shares represented by checks returned to
the Transfer Agent by the Postal Service as undeliverable will be invested in shares of Oppenheimer Money Market
Fund, Inc. Reinvestment will be made as promptly as possible after the return of such checks to the Transfer Agent,
to enable the investor to earn a return on otherwise idle funds. Unclaimed accounts may be subject to state
escheatment laws, and the Fund and the Transfer Agent will not be liable to shareholders or their representatives
for compliance with those laws in good faith.

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

The tax discussion in the Prospectus and this Statement of Additional Information is based on tax law in
effect on the date of the Prospectus and this Statement of Additional Information. Those laws and regulations may be
changed by legislative, judicial, or administrative action, sometimes with retroactive effect. State and local tax
treatment of ordinary income dividends and capital gain dividends from regulated investment companies may differ
from the treatment under the Internal Revenue Code described below. Potential purchasers of shares of the Fund are
urged to consult their tax advisers with specific reference to their own tax circumstances as well as the
consequences of federal, state and local tax rules affecting an investment in the Fund.

Qualification as a Regulated Investment Company. The Fund has elected to be taxed as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended. As a regulated investment company, the
Fund is not subject to federal income tax on the portion of its net investment income (that is, taxable interest,
dividends, and other taxable ordinary income, net of expenses) and capital gain net income (that is, the excess of
net long-term capital gains over net short-term capital losses) that it distributes to shareholders. That
qualification enables the Fund to “pass through” its income and realized capital gains to shareholders without
having to pay tax on them. This avoids a “double tax” on that income and capital gains, since shareholders normally
will be taxed on the dividends and capital gains they receive from the Fund (unless their Fund shares are held in a
retirement account or the shareholder is otherwise exempt from tax).

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

To qualify as a regulated investment company, the Fund must distribute at least 90% of its investment
company taxable income (in brief, net investment income and the excess of net short-term capital gain over net
long-term capital loss) for the taxable year. The Fund must also satisfy certain other requirements of the Internal
Revenue Code, some of which are described below. Distributions by the Fund made during the taxable year or, under
specified circumstances, within 12 months after the close of the taxable year, will be considered distributions of
income and gains for the taxable year and will therefore count toward satisfaction of the above-mentioned
requirement.

To qualify as a regulated investment company, the Fund must derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains from the sale or other disposition of
stock or securities or foreign currencies (to the extent such currency gains are directly related to the regulated
investment company’s principal business of investing in stock or securities) and certain other income.

In addition to satisfying the requirements described above, the Fund must satisfy an asset diversification
test in order to qualify as a regulated investment company. Under that test, at the close of each quarter of the
Fund’s taxable year, at least 50% of the value of the Fund’s assets must consist of cash and cash items (including
receivables), U.S. government securities, securities of other regulated investment companies, and securities of
other issuers. As to each of those issuers, the Fund must not have invested more than 5% of the value of the Fund’s
total assets in securities of each such issuer and the Fund must not hold more than 10% of the outstanding voting
securities of each such issuer. No more than 25% of the value of its total assets may be invested in the securities
of any one issuer (other than U.S. government securities and securities of other regulated investment companies), or
in two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses.
For purposes of this test, obligations issued or guaranteed by certain agencies or instrumentalities of the U.S.
government are treated as U.S. government securities.

Excise Tax on Regulated Investment Companies. Under the Internal Revenue Code, by December 31 each year,
the Fund must distribute 98% of its taxable investment income earned from January 1 through December 31 of that year
and 98% of its capital gains realized in the period from November 1 of the prior year through October 31 of the
current year. If it does not, the Fund must pay an excise tax on the amounts not distributed. It is presently
anticipated that the Fund will meet those requirements. To meet this requirement, in certain circumstances the Fund
might be required to liquidate portfolio investments to make sufficient distributions to avoid excise tax liability.
However, the Board of Trustees and the Manager might determine in a particular year that it would be in the best
interests of shareholders for the Fund not to make such distributions at the required levels and to pay the excise
tax on the undistributed amounts. That would reduce the amount of income or capital gains available for distribution
to shareholders.

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

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

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

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

Investment income that may be received by the Fund from sources within foreign countries may be subject to
foreign taxes withheld at the source. The United States has entered into tax treaties with many foreign countries
which entitle the Fund to a reduced rate of, or exemption from, taxes on such income.

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

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

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

Tax Effects of Redemptions of Shares. If a shareholder redeems all or a portion of his/her shares, the
shareholder will recognize a gain or loss on the redeemed shares in an amount equal to the difference between the
proceeds of the redeemed shares and the shareholder’s adjusted tax basis in the shares. All or a portion of any loss
recognized in that manner may be disallowed if the shareholder purchases other shares of the Fund within 30 days
before or after the redemption.

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

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

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

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

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

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

Additional Information About the Fund

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

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

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

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

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

--------------------------------------------------------------------------------
TO THE SHAREHOLDERS AND BOARD OF TRUSTEES OF OPPENHEIMER TOTAL RETURN BOND FUND

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Total Return Bond Fund (the "Fund"), including the statement of
investments, as of April 30, 2005, 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 periods
indicated therein. 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.
We were not engaged to perform an audit of the Fund's internal control over
financial reporting. Our audit 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 includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities owned
as of April 30, 2005, by correspondence with the custodian and others. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Total Return Bond Fund at April 30, 2005, 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 periods indicated therein in conformity with U.S. generally accepted
accounting principles.

/s/ Ernest &Young LLP

New York, New York
May 26, 2005

STATEMENT OF INVESTMENTS April 30, 2005
--------------------------------------------------------------------------------

PRINICIPAL VALUE
AMOUNT SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------

ASSET-BACKED SECURITIES--12.8%
-----------------------------------------------------------------------------------------------------------------------------
Aesop Funding II LLC, Automobile Asset-Backed Certificates,
Series 2005-1A, Cl. A2, 3.05%, 4/20/08 1,2 $ 70,000 $ 69,888
-----------------------------------------------------------------------------------------------------------------------------
Bank One Auto Securitization Trust, Automobile Receivable Certificates,
Series 2003-1, Cl. A2, 1.29%, 8/21/06 12,547 12,541
-----------------------------------------------------------------------------------------------------------------------------
BMW Vehicle Owner Trust, Automobile Loan Certificates:
Series 2004-A, Cl. A2, 1.88%, 10/25/06 112,202 111,917
Series 2005-A, Cl. A2, 3.65%, 12/26/07 270,000 269,875
-----------------------------------------------------------------------------------------------------------------------------
Capital Auto Receivables Asset Trust, Automobile Mtg.-Backed Nts.,
Series 2004-2, Cl. A3, 3.58%, 1/15/09 220,000 217,422
-----------------------------------------------------------------------------------------------------------------------------
Centex Home Equity Co. LLC, Home Equity Loan Asset-Backed Certificates:
Series 2004-A, Cl. AF1, 2.03%, 6/25/19 10,625 10,608
Series 2004-D, Cl. AF1, 2.98%, 4/25/20 1 80,510 80,085
Series 2005-B, Cl. AF1, 4.02%, 3/26/35 1 78,251 78,236
-----------------------------------------------------------------------------------------------------------------------------
Chase Funding Mortgage Loan Asset-Backed Certificates, Home Equity
Mtg. Obligations:
Series 2002-4, Cl. 1A3, 3.44%, 4/25/23 3,253 3,248
Series 2003-1, Cl. 1A3, 3.14%, 7/25/23 36,249 36,190
Series 2003-4, Cl. 1A2, 2.138%, 7/25/18 93,405 93,185
Series 2003-5, Cl. 1A2, 2.451%, 11/25/18 50,000 49,747
Series 2004-1, Cl. 1A2, 2.427%, 6/25/19 140,000 139,166
-----------------------------------------------------------------------------------------------------------------------------
Chase Manhattan Auto Owner Trust, Automobile Loan Pass-Through
Certificates, Series 2002-A, Cl. A4, 4.24%, 9/15/08 38,448 38,608
-----------------------------------------------------------------------------------------------------------------------------
CIT Equipment Collateral, Equipment Receivable-Backed Nts.,
Series 2004-DFS, Cl. A2, 2.66%, 11/20/06 1 170,000 169,013
-----------------------------------------------------------------------------------------------------------------------------
CIT Group Home Equity Loan Trust, Home Equity Loan Asset-Backed
Certificates, Series 2003-1, Cl. A2, 2.35%, 4/20/27 38,447 38,349
-----------------------------------------------------------------------------------------------------------------------------
Citibank Credit Card Issuance Trust, Credit Card Receivable Nts.:
Series 2001-A6, Cl. A6, 5.65%, 6/16/08 210,000 214,383
Series 2002-A3, Cl. A3, 4.40%, 5/15/07 160,000 160,185
Series 2003-C4, Cl. C4, 5%, 6/10/15 30,000 30,019
-----------------------------------------------------------------------------------------------------------------------------
CitiFinancial Mortgage Securities, Inc., Home Equity Collateralized Mtg.
Obligations, Series 2003-3, Cl. AF1, 3.14%, 8/25/33 2 18,840 18,851
-----------------------------------------------------------------------------------------------------------------------------
Citigroup Mortgage Loan Trust, Inc., Home Equity Mtg. Obligations,
Series 2004-OPT1, Cl. A1B, 2.388%, 9/1/34 1 28,411 28,376
-----------------------------------------------------------------------------------------------------------------------------
Countrywide Asset-Backed Certificates, Inc., Home Equity Asset-Backed
Certificates, Series 2002-4, Cl. A1, 3.39%, 2/25/33 2 21,136 21,400
-----------------------------------------------------------------------------------------------------------------------------
DaimlerChrysler Auto Trust, Automobile Loan Pass-Through Certificates:
Series 2001-D, Cl. A4, 3.78%, 2/6/07 36,892 36,948
Series 2002-A, Cl. A4, 4.49%, 10/6/08 82,626 83,004
Series 2003-B, Cl. A2, 1.61%, 7/10/06 67,996 67,973
Series 2004-B, Cl. A2, 2.48%, 2/8/07 1 75,709 75,548
Series 2004-C, Cl. A2, 2.62%, 6/8/07 310,000 308,907
Series 2005-A, Cl. A2, 3.17%, 9/8/07 1 270,000 269,374
-----------------------------------------------------------------------------------------------------------------------------
Equity One ABS, Inc., Home Equity Mtg. Pass-Through Certificates,
Series 2004-3, Cl. AF2, 3.80%, 7/25/34 40,000 39,705

19 | OPPENHEIMER TOTAL RETURN BOND FUND

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

PRINICIPAL VALUE
AMOUNT SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------

ASSET-BACKED SECURITIES Continued
-----------------------------------------------------------------------------------------------------------------------------
Ford Credit Auto Owner Trust, Automobile Loan Pass-Through Certificates:
Series 2004-A, Cl. A2, 2.13%, 10/15/06 $ 243,984 $ 243,185
Series 2005-A, Cl. A3, 3.48%, 11/17/08 160,000 159,006
Series 2005-B, Cl. A2, 3.77%, 9/15/07 240,000 240,199
-----------------------------------------------------------------------------------------------------------------------------
Harley-Davidson Motorcycle Trust, Motorcycle Receivable Nts.,
Series 2003-3, Cl. A1, 1.50%, 1/15/08 74,451 74,187
-----------------------------------------------------------------------------------------------------------------------------
Honda Auto Receivables Owner Trust, Automobile Receivable Obligations:
Series 2003-1, Cl. A3, 1.92%, 11/20/06 94,856 94,612
Series 2003-3, Cl. A2, 1.52%, 4/21/06 14,636 14,629
Series 2003-4, Cl. A2, 1.58%, 7/17/06 74,875 74,775
Series 2005-1, Cl. A2, 3.21%, 5/21/07 1 110,000 109,783
-----------------------------------------------------------------------------------------------------------------------------
Household Automotive Trust, Automobile Loan Certificates,
Series 2003-2, Cl. A2, 1.56%, 12/18/06 14,526 14,522
-----------------------------------------------------------------------------------------------------------------------------
M&I Auto Loan Trust, Automobile Loan Certificates:
Series 2002-1, Cl. A3, 2.49%, 10/22/07 35,565 35,544
Series 2003-1, Cl. A2, 1.60%, 7/20/06 721 721
-----------------------------------------------------------------------------------------------------------------------------
MBNA Credit Card Master Note Trust, Credit Card Receivables,
Series 2003-C7, Cl. C7, 4.304%, 3/15/16 2 310,000 328,973
-----------------------------------------------------------------------------------------------------------------------------
National City Auto Receivables Trust, Automobile Receivable
Obligations, Series 2004-A, Cl. A2, 1.50%, 2/15/07 68,560 68,385
-----------------------------------------------------------------------------------------------------------------------------
Nissan Auto Lease Trust, Automobile Lease Obligations, Series 2004-A,
Cl. A2, 2.55%, 1/15/07 150,000 149,404
-----------------------------------------------------------------------------------------------------------------------------
Nissan Auto Receivables Owner Trust, Automobile Receivable Nts.:
Series 2002-A, Cl. A4, 4.28%, 10/16/06 22,623 22,662
Series 2002-C, Cl. A3, 2.60%, 8/15/06 29,789 29,788
Series 2003-C, Cl. A2, 1.62%, 4/17/06 7,784 7,784
Series 2004-A, Cl. A2, 1.40%, 7/17/06 77,605 77,367
-----------------------------------------------------------------------------------------------------------------------------
Option One Mortgage Loan Trust, Home Equity Mtg. Obligations,
Series 2004-3, Cl. A2, 3.17%, 11/25/34 1,2 55,616 55,657
-----------------------------------------------------------------------------------------------------------------------------
Popular ABS Mortgage Pass-Through Trust, Home Equity
Pass-Through Certificates:
Series 2004-5, Cl. A F2, 3.735%, 11/10/34 1 60,000 59,494
Series 2005-1, Cl. A F2, 3.914%, 5/25/35 50,000 49,646
Series 2005-2, Cl. A F2, 4.415%, 4/25/35 1 80,000 80,000
-----------------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Collateralized Mtg. Obligations,
Mtg. Pass-Through Certificates, Series 2005-4XS, Cl. 3A1, 5.18%, 3/26/35 401,674 404,378
-----------------------------------------------------------------------------------------------------------------------------
Toyota Auto Receivables Owner Trust, Automobile Mtg.-Backed
Obligations, Series 2002-B, Cl. A4, 4.39%, 5/15/09 341,967 343,263
-----------------------------------------------------------------------------------------------------------------------------
USAA Auto Owner Trust, Automobile Loan Asset-Backed Nts.:
Series 2002-1, Cl. A3, 2.41%, 10/16/06 8,116 8,117
Series 2004-1, Cl. A2, 1.43%, 9/15/06 148,960 148,672
Series 2004-2, Cl. A2, 2.41%, 2/15/07 167,516 167,073
Series 2004-3, Cl. A2, 2.79%, 6/15/07 150,000 149,491

20 | OPPENHEIMER TOTAL RETURN BOND FUND

PRINICIPAL VALUE
AMOUNT SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------

Total Asset-Backed Securities (Cost $7,120,969) 7,099,931

-----------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--69.2%
-----------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--59.6%
-----------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--59.4%
Fannie Mae Whole Loan, Collateralized Mtg. Obligations Pass-Through
Certificates, Trust 2004-W9, Cl. 2A2, 7%, 2/25/44 325,506 344,426
-----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
6%, 9/1/34 1,722,185 1,769,308
6.50%, 4/1/18 3 132,173 137,701
6.50%, 7/1/28-4/1/34 216,081 225,298
7%, 7/1/21-3/1/33 1,424,035 1,503,753
7%, 5/1/35 3 480,000 506,550
-----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Collateralized Mtg. Obligations, Gtd.
Multiclass Mtg. Participation Certificates, Series 2046, Cl. G, 6.50%, 4/15/28 609,727 635,644
-----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment
Conduit Multiclass Pass-Through Certificates:
Series 1669, Cl. G, 6.50%, 2/15/23 28,320 28,443
Series 2034, Cl. Z, 6.50%, 2/15/28 76,541 79,960
Series 2053, Cl. Z, 6.50%, 4/15/28 86,439 90,024
Series 2055, Cl. ZM, 6.50%, 5/15/28 97,016 100,771
Series 2075, Cl. D, 6.50%, 8/15/28 236,104 245,832
Series 2080, Cl. Z, 6.50%, 8/15/28 65,389 67,812
Series 2387, Cl. PD, 6%, 4/15/30 113,566 115,369
Series 2466, Cl. PD, 6.50%, 4/15/30 1,631 1,631
Series 2498, Cl. PC, 5.50%, 10/15/14 12,021 12,092
Series 2500, Cl. FD, 3.454%, 3/15/32 2 35,509 35,625
Series 2526, Cl. FE, 3.354%, 6/15/29 2 33,991 34,260
Series 2550, Cl. QK, 4.50%, 4/15/22 46,021 46,076
Series 2551, Cl. FD, 3.354%, 1/15/33 2 27,975 28,194
Series 2583, Cl. KA, 5.50%, 3/15/22 303,243 306,083

21 | OPPENHEIMER TOTAL RETURN BOND FUND

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

PRINICIPAL VALUE
AMOUNT SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------

FHLMC/FNMA/SPONSORED Continued
Federal Home Loan Mortgage Corp., Interest-Only Stripped
Mtg.-Backed Security:
Series 176, Cl. IO, 7.283%, 6/1/26 4 $ 65,196 $ 13,004
Series 183, Cl. IO, 4.66%, 4/1/27 4 104,481 20,588
Series 184, Cl. IO, 9.55%, 12/1/26 4 108,725 21,318
Series 192, Cl. IO, 10.921%, 2/1/28 4 29,543 5,557
Series 200, Cl. IO, 10.315%, 1/1/29 4 35,606 7,053
Series 2130, Cl. SC, 13.484%, 3/15/29 4 78,778 6,474
Series 2796, Cl. SD, 20.553%, 7/15/26 4 114,049 11,582
Series 2920, Cl. S, 30.158%, 1/15/35 4 769,753 46,579
-----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Principal-Only Stripped
Mtg.-Backed Security, Series 176, Cl. PO, 5.626%, 6/1/26 5 32,026 27,712
-----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
5%, 6/1/18-3/1/34 1,590,353 1,590,583
5%, 5/1/20-5/1/35 3 4,856,000 4,853,643
5.50%, 5/1/20-5/12/35 3 6,601,000 6,688,820
5.50%, 3/1/33-1/1/34 1,334,725 1,349,695
6%, 5/1/20 3 728,000 754,390
6%, 3/1/23-8/1/24 1,319,918 1,354,529
6.50%, 10/1/30 40,572 42,335
6.50%, 5/14/31 3 4,699,000 4,886,960
7%, 5/1/20 330,000 347,325
7%, 5/1/31 3 1,636,000 1,727,515
7.50%, 3/1/30 75,690 81,216
8.50%, 7/1/32 6,160 6,705
-----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates:
Trust 1993-87, Cl. Z, 6.50%, 6/25/23 181,804 189,808
Trust 1996-35, Cl. Z, 7%, 7/25/26 284,507 298,542
Trust 1998-63, Cl. PG, 6%, 3/25/27 27,113 27,164
Trust 2001-50, Cl. NE, 6%, 8/25/30 63,744 64,529
Trust 2001-70, Cl. LR, 6%, 9/25/30 64,293 65,418
Trust 2001-72, Cl. NH, 6%, 4/25/30 47,943 48,623
Trust 2001-74, Cl. PD, 6%, 5/25/30 20,729 20,954
Trust 2002-77, Cl. WF, 3.37%, 12/18/32 2 43,244 43,528
Trust 2002-94, Cl. MA, 4.50%, 8/25/09 69,596 69,599
Trust 2002-T1, Cl. A2, 7%, 11/25/31 239,526 253,449
Trust 2003-10, Cl. HP, 5%, 2/25/18 300,000 302,820
Trust 2003-21, Cl. FK, 3.25%, 3/25/33 2 76,880 77,398
Trust 2003-81, Cl. PA, 5%, 2/25/12 15,708 15,707
Trust 2004-101, Cl. BG, 5%, 1/25/20 186,000 188,152
-----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Collateralized Mtg. Obligations,
Gtd. Real Estate Mtg. Investment Conduit Pass-Through Certificates,
Interest-Only Stripped Mtg.-Backed Security:
Trust 319, Cl. 2, 5.122%, 2/1/32 4 72,862 14,339
Trust 2002-38, Cl. SO, 16.272%, 4/25/32 4 145,425 10,293
Trust 2002-47, Cl. NS, 12.53%, 4/25/32 4 141,188 14,231
Trust 2002-51, Cl. S, 12.782%, 8/25/32 4 129,654 13,071
Trust 2002-77, Cl. IS, 14.451%, 12/18/32 4 247,761 26,098

22 | OPPENHEIMER TOTAL RETURN BOND FUND

PRINICIPAL VALUE
AMOUNT SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------

FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed Security:
Trust 222, Cl. 2, 5.18%, 6/1/23 4 $ 214,280 $ 43,293
Trust 240, Cl. 2, 8.33%, 9/1/23 4 327,992 64,801
Trust 247, Cl. 2, 6.999%, 10/1/23 4 391,859 89,177
Trust 252, Cl. 2, (1.03)%, 11/1/23 4 595,872 121,275
Trust 254, Cl. 2, 4.379%, 1/1/24 4 84,715 17,415
Trust 273, Cl. 2, 7.477%, 7/1/26 4 47,130 9,304
Trust 321, Cl. 2, (0.37)%, 3/1/32 4 740,506 148,830
Trust 329, Cl. 2, 8.72%, 1/1/33 4 331,251 69,205
Trust 331, Cl. 9, (14.513)%, 12/1/32 4 223,584 44,115
Trust 333, Cl. 2, 9.64%, 3/1/33 4 512,476 108,397
Trust 334, Cl. 17, (6.827)%, 2/1/33 4 124,990 24,483
Trust 2001-81, Cl. S, 17.012%, 1/25/32 4 79,626 8,079
Trust 2002-9, Cl. MS, 14.102%, 3/25/32 4 94,052 9,960
Trust 2002-52, Cl. SD, 8.349%, 9/25/32 4 166,842 16,223
Trust 2002-77, Cl. SH, 22.46%, 12/18/32 4 98,625 9,924
Trust 2004-54, Cl. DS, 17.68%, 11/25/30 4 147,743 11,992
Trust 2005-6, Cl. SE, 27.136%, 2/25/35 4 528,507 33,632
Trust 2005-19, Cl. SA, 26.97%, 3/25/35 4 2,077,902 127,503
Trust 2005-40, Cl. SA, 27.355%, 5/25/35 4 515,000 30,263
-----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed
Security, Trust 1993-184, Cl. M, 7.641%, 9/25/23 5 69,692 59,574
-------------

32,949,603

-----------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--0.2%
Government National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security:
Series 2001-21, Cl. SB, 9.217%, 1/16/27 4 256,562 24,656
Series 2002-15, Cl. SM, 5.223%, 2/16/32 4 257,438 23,933
Series 2002-76, Cl. SY, 6.698%, 12/16/26 4 304,222 31,290
Series 2004-11, Cl. SM, 4.425%, 1/17/30 4 117,291 9,863
-------------

89,742

-----------------------------------------------------------------------------------------------------------------------------
NON-AGENCY--9.6%
-----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL--9.1%
Banc of America Commercial Mortgage, Inc., Commercial Mtg.
Pass-Through Certificates, Series 2004-6, Cl. A3, 4.512%, 12/10/42 170,000 168,542
-----------------------------------------------------------------------------------------------------------------------------
Bank of America Mortgage Securities, Inc., Collateralized Mtg. Obligations
Pass-Through Certificates:
Series 2004-E, Cl. 2A9, 3.712%, 6/25/34 115,164 115,200
Series 2004-G, Cl. 2A1, 2.469%, 8/25/34 2 43,657 43,610
Series 2004-2, Cl. 2A1, 6.50%, 7/20/32 242,858 247,101
Series 2004-8, Cl. 5A1, 6.50%, 5/25/32 197,961 203,900
-----------------------------------------------------------------------------------------------------------------------------
Bear Stearns Commercial Mortgage Securities, Inc.,
Commercial Mtg. Obligations:
Series 2003-T10, Cl. A1, 4%, 3/13/40 239,813 235,649
Series 2005-PWR7, Cl. A2, 4.945%, 2/11/41 90,000 91,308

23 | OPPENHEIMER TOTAL RETURN BOND FUND

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

PRINICIPAL VALUE
AMOUNT SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------

COMMERCIAL Continued
Countrywide Alternative Loan Trust, Collateralized Mtg. Obligations,
Series 2004-J9, Cl. 1A1, 3.20%, 10/25/34 2 $ 162,122 $ 162,298
-----------------------------------------------------------------------------------------------------------------------------
First Union National Bank/Lehman Brothers/Bank of America Commercial
Mtg. Trust, Pass-Through Certificates, Series 1998-C2, Cl. A2, 6.56%, 11/18/35 110,000 116,098
-----------------------------------------------------------------------------------------------------------------------------
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations:
Series 2003-C1, Cl. A2, 4.093%, 1/10/38 215,000 212,437
Series 2004-C3, Cl. A2, 4.433%, 7/10/39 120,000 120,043
Series 2005-C1, Cl. A3, 4.578%, 6/10/48 80,000 79,699
-----------------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Securities, Inc., Commercial Mtg. Obligations,
Series 2004-C3, Cl. A4, 4.547%, 12/10/41 110,000 109,307
-----------------------------------------------------------------------------------------------------------------------------
GMAC Commercial Mortgage Securities, Inc., Commercial Mtg.
Pass-Through Certificates, Series 1997-C1, Cl. A3, 6.869%, 7/15/29 80,230 84,067
-----------------------------------------------------------------------------------------------------------------------------
Greenwich Capital Commercial Funding Corp., Commercial Mtg.
Pass-Through Certificates, Series 2005-GG3, Cl. A2, 4.305%, 8/10/42 150,000 149,119
-----------------------------------------------------------------------------------------------------------------------------
GS Mortgage Securities Corp. II, Commercial Mtg. Pass-Through Certificates:
Series 2004-C1, Cl. A1, 3.659%, 10/10/28 118,740 116,200
Series 2004-GG2, Cl. A3, 4.602%, 8/10/38 70,000 70,423
-----------------------------------------------------------------------------------------------------------------------------
GSR Mortgage Loan Trust, Collateralized Mtg. Obligations, Series 04-12,
Cl. 3A1, 4.504%, 12/25/34 1,2 220,459 220,078
-----------------------------------------------------------------------------------------------------------------------------
J.P. Morgan Chase Commercial Mortgage Securities Corp., Commercial
Mtg. Pass-Through Certificates, Series 2003-ML1A, Cl. A1, 3.972%, 3/12/39 148,949 146,334
-----------------------------------------------------------------------------------------------------------------------------
Mastr Alternative Loan Trust, Pass-Through Collateralized Mtg. Obligations,
Series 2004-6, Cl. 10A1, 6%, 7/25/34 300,339 308,631
-----------------------------------------------------------------------------------------------------------------------------
Mastr Asset Securitization Trust, Pass-Through Collateralized Mtg.
Obligations, Series 2004-9, Cl. A3, 4.70%, 8/25/34 2 251,558 251,869
-----------------------------------------------------------------------------------------------------------------------------
Nomura Asset Securities Corp., Commercial Mtg. Pass-Through Certificates,
Series 1998-D6, Cl. A1B, 6.59%, 3/15/30 130,000 138,084
-----------------------------------------------------------------------------------------------------------------------------
Prudential Mortgage Capital Co. II LLC, Commercial Mtg. Pass-Through
Certificates, Series PRU-HTG 2000-C1, Cl. A2, 7.306%, 10/6/15 182,000 206,436
-----------------------------------------------------------------------------------------------------------------------------
Wachovia Bank Commercial Mortgage Trust, Commercial Mtg. Obligations:
Series 2005-C16, Cl. A2, 4.38%, 10/15/41 230,000 229,073
Series 2005-C17, Cl. A2, 4.763%, 3/15/42 270,000 273,064
-----------------------------------------------------------------------------------------------------------------------------
Washington Mutual Mortgage Securities Corp., Collateralized Mtg.
Pass-Through Certificates, Series 2005-AR5, Cl. A1, 4.852%, 4/25/35 330,000 331,371
-----------------------------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage-Backed Securities Trust, Collateralized Mtg. Obligations:
Series 2004-DD, Cl. 2 A1, 4.544%, 1/25/35 2 324,917 326,267
Series 2004-N, Cl. A10, 3.803%, 8/25/34 1 214,437 214,836
Series 2004-W, Cl. A2, 4.616%, 11/25/34 2 108,537 108,424
-------------

5,079,468

-----------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL--0.5%
Countrywide Alternative Loan Trust, Collateralized Mtg. Obligations,
Series 2005-J1, Cl. 3A1, 6.50%, 8/25/32 279,573 284,049
-------------

Total Mortgage-Backed Obligations (Cost $38,338,926) 38,402,862

24 | OPPENHEIMER TOTAL RETURN BOND FUND

PRINICIPAL VALUE
AMOUNT SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------

U.S. GOVERNMENT OBLIGATIONS--18.6%
-----------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. Unsec. Nts.:
3.625%, 9/15/06 $ 370,000 $ 369,416
6.875%, 9/15/10 300,000 337,118
-----------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Unsec. Nts.:
3.75%, 5/17/07 530,000 527,835
4.25%, 7/15/07 6 365,000 367,742
7.25%, 1/15/10-5/15/30 430,000 513,269
-----------------------------------------------------------------------------------------------------------------------------
Tennessee Valley Authority Bonds:
7.125%, 5/1/30 60,000 78,972
Series A, 6.79%, 5/23/12 2,193,000 2,507,636
-----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds:
4.375%, 8/15/12 60,000 61,397
5.375%, 2/15/31 249,000 281,312
5.50%, 8/15/28 165,000 185,844
6.875%, 8/15/25 1,310,000 1,698,191
STRIPS, 1.65%, 2/15/11 7 555,000 442,088
STRIPS, 3.86%, 2/15/13 7 1,089,000 787,911
-----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts.:
2.50%, 9/30/06-10/31/06 1,310,000 1,291,380
3%, 2/15/08 870,000 853,620
-------------

Total U.S. Government Obligations (Cost $10,299,248) 10,303,731

-----------------------------------------------------------------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS--0.2%
-----------------------------------------------------------------------------------------------------------------------------
United Mexican States Nts., 7.50%, 1/14/12 (Cost $81,883) 75,000 83,438
-----------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--28.9%
-----------------------------------------------------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--8.0%
-----------------------------------------------------------------------------------------------------------------------------
AUTO COMPONENTS--0.5%
Delphi Corp., 6.55% Nts., 6/15/06 130,000 122,200
-----------------------------------------------------------------------------------------------------------------------------
Lear Corp., 8.11% Sr. Unsec. Nts., Series B, 5/15/09 165,000 166,818
-------------

289,018

-----------------------------------------------------------------------------------------------------------------------------
AUTOMOBILES--2.3%
American Honda Finance Corp., 3.85% Nts., 11/6/08 8 150,000 147,423
-----------------------------------------------------------------------------------------------------------------------------
DaimlerChrysler NA Holdings Corp., 7.20% Unsec. Nts., 9/1/09 230,000 243,982
-----------------------------------------------------------------------------------------------------------------------------
Ford Holdings, Inc., 9.30% Unsec. Unsub. Debs., 3/1/30 45,000 43,127
-----------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co.:
6.50% Unsec. Nts., 1/25/07 160,000 160,048
7.375% Nts., 10/28/09 45,000 43,330
-----------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp.:
7.25% Nts., 3/2/11 220,000 197,547
8% Bonds, 11/1/31 180,000 151,829
-----------------------------------------------------------------------------------------------------------------------------
Hertz Corp. (The), 6.35% Nts., 6/15/10 275,000 269,340
-------------

1,256,626

25 | OPPENHEIMER TOTAL RETURN BOND FUND

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

PRINICIPAL VALUE
AMOUNT SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------

HOTELS, RESTAURANTS &LEISURE--0.9%
Hilton Hotels Corp., 7.95% Sr. Nts., 4/15/07 $ 75,000 $ 80,024
-----------------------------------------------------------------------------------------------------------------------------
Starwood Hotels &Resorts Worldwide, Inc., 7.375% Nts., 5/1/07 175,000 182,000
-----------------------------------------------------------------------------------------------------------------------------
Yum! Brands, Inc., 8.50% Sr. Unsec. Nts., 4/15/06 195,000 203,215
-------------

465,239

-----------------------------------------------------------------------------------------------------------------------------
HOUSEHOLD DURABLES--0.7%
Beazer Homes USA, Inc., 8.625% Sr. Unsec. Nts., 5/15/11 90,000 95,850
-----------------------------------------------------------------------------------------------------------------------------
D.R. Horton, Inc., 6.125% Nts., 1/15/14 90,000 91,176
-----------------------------------------------------------------------------------------------------------------------------
Lennar Corp., 5.95% Sr. Unsec. Nts., 3/1/13 105,000 110,152
-----------------------------------------------------------------------------------------------------------------------------
Toll Corp., 8.25% Sr. Sub. Nts., 12/1/11 90,000 96,638
-------------

393,816

-----------------------------------------------------------------------------------------------------------------------------
MEDIA--2.3%
Chancellor Media CCU, 8% Sr. Unsec. Nts., 11/1/08 205,000 221,654
-----------------------------------------------------------------------------------------------------------------------------
Cox Communications, Inc., 7.875% Unsec. Nts., 8/15/09 25,000 27,874
-----------------------------------------------------------------------------------------------------------------------------
Cox Enterprises, Inc., 7.375% Unsec. Debs., 6/15/09 8 115,000 124,258
-----------------------------------------------------------------------------------------------------------------------------
Liberty Media Corp., 5.70% Sr. Unsec. Nts., 5/15/13 130,000 123,118
-----------------------------------------------------------------------------------------------------------------------------
TCI Communications, Inc., 9.80% Sr. Unsec. Debs., 2/1/12 220,000 280,666
-----------------------------------------------------------------------------------------------------------------------------
Time Warner Cos., Inc., 9.125% Debs., 1/15/13 150,000 188,588
-----------------------------------------------------------------------------------------------------------------------------
Univision Communications, Inc.:
2.875% Sr. Unsec. Nts., 10/15/06 29,000 28,494
3.50% Sr. Unsec. Nts., 10/15/07 155,000 152,028
-----------------------------------------------------------------------------------------------------------------------------
Walt Disney Co. (The), 5.375% Sr. Unsec. Nts., 6/1/07 125,000 127,805
-------------

1,274,485

-----------------------------------------------------------------------------------------------------------------------------
MULTILINE RETAIL--0.9%
Federated Department Stores, Inc., 6.625% Sr. Unsec. Nts., 9/1/08 150,000 159,377
-----------------------------------------------------------------------------------------------------------------------------
J. C. Penney Co., Inc., 7.40% Nts., 4/1/37 165,000 165,000
-----------------------------------------------------------------------------------------------------------------------------
May Department Stores Co.:
3.95% Nts., 7/15/07 95,000 94,133
7.90% Unsec. Debs., 10/15/07 90,000 96,638
-------------

515,148

-----------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL--0.4%
Gap, Inc. (The):
6.90% Nts., 9/15/07 1 185,000 192,730
10.05% Unsub. Nts., 12/15/08 2 23,000 26,599
-------------

219,329

26 | OPPENHEIMER TOTAL RETURN BOND FUND

PRINICIPAL VALUE
AMOUNT SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------

CONSUMER STAPLES--2.2%
-----------------------------------------------------------------------------------------------------------------------------
FOOD &STAPLES RETAILING--1.3%
Albertson's, Inc.:
8% Sr. Unsec. Debs., 5/1/31 $ 110,000 $ 128,633
8.70% Sr. Unsec. Debs., 5/1/30 56,000 70,018
-----------------------------------------------------------------------------------------------------------------------------
Delhaize America, Inc., 9% Unsub. Debs., 4/15/31 100,000 118,323
-----------------------------------------------------------------------------------------------------------------------------
Kroger Co. (The), 7.80% Sr. Nts., 8/15/07 135,000 144,640
-----------------------------------------------------------------------------------------------------------------------------
Safeway, Inc., 4.80% Sr. Unsec. Nts., 7/16/07 245,000 246,565
-------------

708,179

-----------------------------------------------------------------------------------------------------------------------------
FOOD PRODUCTS--0.9%
ConAgra Foods, Inc., 6% Nts., 9/15/06 110,000 112,715
-----------------------------------------------------------------------------------------------------------------------------
General Mills, Inc., 3.875% Nts., 11/30/07 170,000 168,533
-----------------------------------------------------------------------------------------------------------------------------
Kraft Foods, Inc., 5.25% Nts., 6/1/07 230,000 234,521
-------------

515,769

-----------------------------------------------------------------------------------------------------------------------------
ENERGY--0.6%
-----------------------------------------------------------------------------------------------------------------------------
OIL AS--0.6%
Chesapeake Energy Corp., 7.50% Sr. Nts., 6/15/14 105,000 110,513
-----------------------------------------------------------------------------------------------------------------------------
Kinder Morgan, Inc., 6.50% Sr. Unsec. Nts., 9/1/12 90,000 98,475
-----------------------------------------------------------------------------------------------------------------------------
Pemex Project Funding Master Trust, 7.875% Unsec. Unsub. Nts., 2/1/09 65,000 70,688
-----------------------------------------------------------------------------------------------------------------------------
PF Export Receivables Master Trust, 3.748% Sr. Nts., Series B, 6/1/13 8 60,515 58,003
-------------

337,679

-----------------------------------------------------------------------------------------------------------------------------
FINANCIALS--8.9%
-----------------------------------------------------------------------------------------------------------------------------
CAPITAL MARKETS--0.5%
Bankers Trust Corp., 7.375% Unsec. Sub. Nts., 5/1/08 15,000 16,344
-----------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston (USA), Inc., 5.50% Nts., 8/15/13 250,000 261,376
-------------

277,720

-----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL BANKS--0.7%
Bank of America Corp., 4.875% Sr. Unsec. Nts., 1/15/13 3,000 3,033
-----------------------------------------------------------------------------------------------------------------------------
Mellon Bank NA, 4.75% Unsec. Sub. Nts., 12/15/14 210,000 208,385
-----------------------------------------------------------------------------------------------------------------------------
National City Bank, 6.20% Sub. Nts., 12/15/11 15,000 16,291
-----------------------------------------------------------------------------------------------------------------------------
SunTrust Banks, Inc.:
4% Nts., 10/15/08 115,000 114,360
7.75% Unsec. Sub. Nts., 5/1/10 10,000 11,474
-------------

353,543

-----------------------------------------------------------------------------------------------------------------------------
CONSUMER FINANCE--0.5%
HSBC Finance Corp., 4.75% Sr. Unsec. Nts., 7/15/13 265,000 262,523

27 | OPPENHEIMER TOTAL RETURN BOND FUND

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

PRINICIPAL VALUE
AMOUNT SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------

DIVERSIFIED FINANCIAL SERVICES--3.3%
AIG SunAmerica Global Financing II, 7.60% Sr. Sec. Nts., 6/15/05 8 $ 80,000 $ 80,376
-----------------------------------------------------------------------------------------------------------------------------
American Express Centurion Bank, 4.375% Nts., 7/30/09 250,000 250,413
-----------------------------------------------------------------------------------------------------------------------------
CIT Group, Inc., 7.75% Sr. Unsec. Unsub. Nts., 4/2/12 175,000 204,341
-----------------------------------------------------------------------------------------------------------------------------
Citigroup, Inc., 6.625% Unsec. Sub. Nts., 6/15/32 230,000 265,326
-----------------------------------------------------------------------------------------------------------------------------
Franklin Resources, Inc., 3.70% Nts., 4/15/08 50,000 49,522
-----------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Group, Inc. (The), 5.70% Sr. Unsec. Nts., 9/1/12 245,000 257,241
-----------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Holdings, Inc., 7% Nts., 2/1/08 140,000 150,189
-----------------------------------------------------------------------------------------------------------------------------
Lehman Brothers, Inc., 6.625% Sr. Sub. Nts., 2/15/08 20,000 21,221
-----------------------------------------------------------------------------------------------------------------------------
MBNA Corp., 7.50% Sr. Nts., Series F, 3/15/12 200,000 227,854
-----------------------------------------------------------------------------------------------------------------------------
Merrill Lynch &Co., Inc., 5% Sr. Unsub. Nts., Series C, 2/3/14 260,000 261,720
-----------------------------------------------------------------------------------------------------------------------------
Morgan Stanley, 6.60% Nts., 4/1/12 70,000 76,764
-------------

1,844,967

-----------------------------------------------------------------------------------------------------------------------------
INSURANCE--2.2%
Allstate Financial Global Funding LLC, 4.25% Nts., 9/10/08 8 40,000 39,857
-----------------------------------------------------------------------------------------------------------------------------
Allstate Life Global Funding II, 3.50% Nts., 7/30/07 60,000 59,266
-----------------------------------------------------------------------------------------------------------------------------
AXA, 8.60% Unsec. Sub. Nts., 12/15/30 90,000 120,499
-----------------------------------------------------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The), 2.375% Nts., 6/1/06 50,000 49,017
-----------------------------------------------------------------------------------------------------------------------------
John Hancock Global Funding II, 7.90% Nts., 7/2/10 8 145,000 167,735
-----------------------------------------------------------------------------------------------------------------------------
Marsh &McLennan Cos., Inc., 5.375% Sr. Unsec. Nts., 3/15/07 150,000 152,689
-----------------------------------------------------------------------------------------------------------------------------
Nationwide Financial Services, Inc., 5.90% Nts., 7/1/12 110,000 117,757
-----------------------------------------------------------------------------------------------------------------------------
Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/23 8 105,000 136,615
-----------------------------------------------------------------------------------------------------------------------------
Prudential Insurance Co. of America, 8.30% Nts., 7/1/25 145,000 194,204
-----------------------------------------------------------------------------------------------------------------------------
Travelers Property Casualty Corp., 3.75% Sr. Unsec. Nts., 3/15/08 190,000 186,715
-------------

1,224,354

-----------------------------------------------------------------------------------------------------------------------------
REAL ESTATE--1.7%
EOP Operating LP:
6.763% Sr. Unsec. Nts., 6/15/07 98,000 102,667
8.10% Unsec. Nts., 8/1/10 95,000 109,138
-----------------------------------------------------------------------------------------------------------------------------
iStar Financial, Inc., 4.875% Sr. Unsec. Nts., Series B, 1/15/09 205,000 203,385
-----------------------------------------------------------------------------------------------------------------------------
Liberty Property Trust, 5.65% Sr. Nts., 8/15/14 115,000 118,764
-----------------------------------------------------------------------------------------------------------------------------
Simon Property Group LP:
5.45% Unsec. Nts., 3/15/13 102,000 104,240
5.625% Unsec. Unsub. Nts., 8/15/14 100,000 102,507
-----------------------------------------------------------------------------------------------------------------------------
Vornado Realty LP, 5.625% Sr. Unsec. Unsub. Nts., 6/15/07 195,000 200,615
-------------

941,316

28 | OPPENHEIMER TOTAL RETURN BOND FUND

PRINICIPAL VALUE
AMOUNT SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------

HEALTH CARE--1.5%
-----------------------------------------------------------------------------------------------------------------------------
HEALTH CARE PROVIDERS &SERVICES--1.1%
Aetna, Inc., 7.375% Sr. Unsec. Nts., 3/1/06 $ 190,000 $ 195,234
-----------------------------------------------------------------------------------------------------------------------------
CIGNA Corp., 7.40% Unsec. Nts., 5/15/07 225,000 238,064
-----------------------------------------------------------------------------------------------------------------------------
HCA Healthcare Corp., 6.91% Sr. Sub. Nts., 6/15/05 81,000 81,286
-----------------------------------------------------------------------------------------------------------------------------
HCA, Inc., 7.125% Sr. Unsec. Nts., 6/1/06 60,000 61,870
-----------------------------------------------------------------------------------------------------------------------------
UnitedHealth Group, Inc., 4.875% Bonds, 3/15/15 65,000 65,349
-------------

641,803

-----------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS--0.4%
Merck &Co., Inc., 4.726% Nts., 2/22/06 8 210,000 211,179
-----------------------------------------------------------------------------------------------------------------------------
INDUSTRIALS--2.2%
-----------------------------------------------------------------------------------------------------------------------------
AEROSPACE &DEFENSE--0.6%
Boeing Capital Corp., 5.75% Sr. Nts., 2/15/07 17,000 17,471
-----------------------------------------------------------------------------------------------------------------------------
Lockheed Martin Corp., 7.65% Unsec. Unsub. Debs., 5/1/16 82,000 99,774
-----------------------------------------------------------------------------------------------------------------------------
McDonnell Douglas Corp., 6.875% Unsec. Unsub. Nts., 11/1/06 26,000 27,008
-----------------------------------------------------------------------------------------------------------------------------
Northrop Grumman Corp., 7.125% Sr. Nts., 2/15/11 135,000 152,022
-----------------------------------------------------------------------------------------------------------------------------
Raytheon Co., 6.50% Unsec. Nts., 7/15/05 32,000 32,186
-------------

328,461

-----------------------------------------------------------------------------------------------------------------------------
AIR FREIGHT &LOGISTICS--0.4%
FedEx Corp., 2.65% Unsec. Nts., 4/1/07 215,000 209,048
-----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES &SUPPLIES--0.6%
Allied Waste North America, Inc., 8.875% Sr. Nts., Series B, 4/1/08 85,000 87,763
-----------------------------------------------------------------------------------------------------------------------------
Waste Management, Inc.:
7% Sr. Nts., 7/15/28 70,000 79,994
7.125% Sr. Unsec. Nts., 10/1/07 145,000 154,194
-------------

321,951

-----------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--0.3%
Tyco International Group SA:
6.375% Sr. Unsec. Unsub. Nts., 2/15/06 135,000 137,603
6.75% Sr. Unsub. Nts., 2/15/11 61,000 67,050
-------------

204,653

-----------------------------------------------------------------------------------------------------------------------------
ROAD &RAIL--0.3%
Canadian National Railway Co., 4.25% Nts., 8/1/09 29,000 28,897
-----------------------------------------------------------------------------------------------------------------------------
CSX Corp., 6.25% Unsec. Nts., 10/15/08 140,000 148,263
-------------

177,160

29 | OPPENHEIMER TOTAL RETURN BOND FUND

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

PRINICIPAL VALUE
AMOUNT SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------

TELECOMMUNICATION SERVICES--2.0%
-----------------------------------------------------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.6%
British Telecommunications plc, 8.625% Bonds, 12/15/30 $ 115,000 $ 157,512
-----------------------------------------------------------------------------------------------------------------------------
Citizens Communications Co., 9.25% Sr. Nts., 5/15/11 34,000 36,975
-----------------------------------------------------------------------------------------------------------------------------
Deutsche Telekom International Finance BV, 8.50% Unsub. Nts., 6/15/10 125,000 145,122
-----------------------------------------------------------------------------------------------------------------------------
France Telecom SA:
8% Sr. Unsec. Nts., 3/1/11 2 125,000 144,226
8.75% Sr. Unsec. Nts., 3/1/31 2 45,000 61,108
-----------------------------------------------------------------------------------------------------------------------------
Sprint Capital Corp.:
6% Sr. Unsec. Nts., 1/15/07 100,000 102,692
8.75% Nts., 3/15/32 80,000 107,906
-----------------------------------------------------------------------------------------------------------------------------
Telefonos de Mexico SA de CV, 4.75% Nts., 1/27/10 8 130,000 127,895
-------------

883,436

-----------------------------------------------------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--0.4%
AT&T Wireless Services, Inc., 8.125% Sr. Unsec. Nts., 5/1/12 180,000 213,103
-----------------------------------------------------------------------------------------------------------------------------
UTILITIES--3.5%
-----------------------------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES--3.0%
CenterPoint Energy, Inc.:
5.875% Sr. Nts., 6/1/08 105,000 108,748
8.125% Unsec. Nts., Series B, 7/15/05 50,000 50,472
-----------------------------------------------------------------------------------------------------------------------------
Conectiv, Inc., 5.30% Unsec. Unsub. Nts., Series B, 6/1/05 26,000 26,032
-----------------------------------------------------------------------------------------------------------------------------
Constellation Energy Group, Inc., 7% Unsec. Nts., 4/1/12 180,000 202,152
-----------------------------------------------------------------------------------------------------------------------------
Dominion Resources, Inc., 8.125% Sr. Unsub. Nts., 6/15/10 80,000 92,239
-----------------------------------------------------------------------------------------------------------------------------
DTE Energy Co., 6.45% Sr. Unsub. Nts., 6/1/06 100,000 102,546
-----------------------------------------------------------------------------------------------------------------------------
Duke Capital LLC, 5.668% Nts., 8/15/14 120,000 123,639
-----------------------------------------------------------------------------------------------------------------------------
FirstEnergy Corp.:
5.50% Sr. Unsub. Nts., Series A, 11/15/06 90,000 91,698
7.375% Sr. Unsub. Nts., Series C, 11/15/31 105,000 124,140
-----------------------------------------------------------------------------------------------------------------------------
IPALCO Enterprises, Inc., 8.375% Sr. Sec. Nts., 11/14/08 1,2 100,000 108,000
-----------------------------------------------------------------------------------------------------------------------------
MidAmerican Energy Holdings Co., 5.875% Sr. Unsec. Nts., 10/1/12 130,000 137,145
-----------------------------------------------------------------------------------------------------------------------------
Portland General Electric Co., 8.125% First Mortgage Nts., 2/1/10 8 120,000 133,636
-----------------------------------------------------------------------------------------------------------------------------
PSE&G Power LLC, 6.875% Sr. Unsec. Nts., 4/15/06 105,000 107,802
-----------------------------------------------------------------------------------------------------------------------------
PSE&G Energy Holdings LLC, 7.75% Unsec. Nts., 4/16/07 1 95,000 97,850
-----------------------------------------------------------------------------------------------------------------------------
TECO Energy, Inc., 10.50% Sr. Unsec. Nts., 12/1/07 65,000 73,450
-----------------------------------------------------------------------------------------------------------------------------
TXU Corp., 4.80% Nts., 11/15/09 8 95,000 93,216
-------------

1,672,765

30 | OPPENHEIMER TOTAL RETURN BOND FUND

PRINICIPAL VALUE
AMOUNT SEE NOTE 1
-----------------------------------------------------------------------------------------------------------------------------

GAS UTILITIES--0.5%
NiSource Finance Corp.:
3.20% Nts., 11/1/06 $ 30,000 $ 29,608
7.875% Sr. Unsec. Nts., 11/15/10 125,000 144,501
-----------------------------------------------------------------------------------------------------------------------------
Sempra Energy, 7.95% Sr. Unsec. Unsub. Nts., 3/1/10 103,000 117,191
-------------

291,300
-------------

Total Corporate Bonds and Notes (Cost $16,175,874) 16,034,570

-----------------------------------------------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--4.8%
-----------------------------------------------------------------------------------------------------------------------------
Undivided interest of 0.20% in joint repurchase agreement (Principal Amount/Value
$1,318,039,000, with a maturity value of $1,318,355,329) with UBS Warburg LLC, 2.88%,
dated 4/29/05, to be repurchased at $2,688,645 on 5/2/05, collateralized by Federal
National Mortgage Assn., 5%--6%, 3/1/34--8/1/34, with a value of
$1,345,611,059 (Cost $2,688,000) 2,688,000 2,688,000

-----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $74,704,900) 134.5% 74,612,532
-----------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (34.5) (19,151,429)
---------------------------------

NET ASSETS 100.0% $ 55,461,103
=================================

FOOTNOTES TO STATEMENT OF INVESTMENTS

1. Illiquid security. The aggregate value of illiquid securities as of April 30,
2005 was $1,908,948, which represents 3.44% of the Fund's net assets. See Note 6
of Notes to Financial Statements.

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

3. When-issued security or forward commitment to be delivered and settled after
April 30, 2005. See Note 1 of Notes to Financial Statements.

4. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows. These securities amount to $1,287,800 or 2.32% of the Fund's net assets
as of April 30, 2005.

5. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
These securities amount to $87,286 or 0.16% of the Fund's net assets as of April
30, 2005.

6. All or a portion of the security is held in collateralized accounts to cover
initial margin requirements on open futures sales contracts. The collateralized
portion has an aggregate market value of $302,254. See Note 5 of Notes to
Financial Statements.

7. Zero coupon bond reflects effective yield on the date of purchase.

8. 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 $1,320,193 or 2.38% of the Fund's net
assets as of April 30, 2005.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

31 | OPPENHEIMER TOTAL RETURN BOND FUND

STATEMENT OF ASSETS AND LIABILITIES April 30, 2005
--------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
ASSETS
---------------------------------------------------------------------------------------------------------
Investments, at value (cost $74,704,900)--see accompanying statement of investments $ 74,612,532
---------------------------------------------------------------------------------------------------------
Cash 200,744
---------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest, dividends and principal paydowns 536,230
Investments sold on a when-issued basis or forward commitment 333,415
Shares of beneficial interest sold 156,234
Futures margins 22,074
Other 3,637
-------------
Total assets 75,864,866

---------------------------------------------------------------------------------------------------------
LIABILITIES
---------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $19,785,237 purchased on a when-issued basis
or forward commitment) 20,222,925
Dividends 83,153
Shares of beneficial interest redeemed 46,411
Shareholder communications 18,588
Transfer and shareholder servicing agent fees 6,641
Distribution and service plan fees 5,800
Trustees' compensation 225
Other 20,020
-------------
Total liabilities 20,403,763

---------------------------------------------------------------------------------------------------------
NET ASSETS $ 55,461,103
=============

---------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
---------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 5,527
---------------------------------------------------------------------------------------------------------
Additional paid-in capital 55,519,994
---------------------------------------------------------------------------------------------------------
Accumulated net investment income 96,126
---------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (123,217)
---------------------------------------------------------------------------------------------------------
Net unrealized depreciation on investments (37,327)
-------------
NET ASSETS $ 55,461,103
=============

32 | OPPENHEIMER TOTAL RETURN BOND FUND

---------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
---------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $41,647,660 and
4,150,188 shares of beneficial interest outstanding) $10.04
Maximum offering price per share (net asset value plus sales charge of 4.75% of offering price) $10.54
---------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $4,244,435 and 422,922 shares of
beneficial interest outstanding) $10.04
---------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $6,757,125 and 673,574 shares of
beneficial interest outstanding) $10.03
---------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $2,811,883 and 280,171 shares of
beneficial interest outstanding) $10.04

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

33 | OPPENHEIMER TOTAL RETURN BOND FUND

STATEMENT OF OPERATIONS For the Year Ended April 30, 2005
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
INVESTMENT INCOME
--------------------------------------------------------------------------------
Interest $ 1,644,789
--------------------------------------------------------------------------------
Fee income 463,463
-------------
Total investment income 2,108,252

--------------------------------------------------------------------------------
EXPENSES
--------------------------------------------------------------------------------
Management fees 241,713
--------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 31,747
Class B 35,992
Class C 46,234
Class N 8,964
--------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 27,622
Class B 16,266
Class C 15,081
Class N 5,160
--------------------------------------------------------------------------------
Shareholder communications:
Class A 5,684
Class B 12,103
Class C 10,022
Class N 1,629
--------------------------------------------------------------------------------
Legal, auditing and other professional fees 37,326
--------------------------------------------------------------------------------
Trustees' compensation 8,360
--------------------------------------------------------------------------------
Custodian fees and expenses 2,032
--------------------------------------------------------------------------------
Other 14,811
-------------
Total expenses 520,746
Less reduction to custodian expenses (1,583)
Less waivers and reimbursements of expenses (58,795)
-------------
Net expenses 460,368

--------------------------------------------------------------------------------
NET INVESTMENT INCOME 1,647,884

34 | OPPENHEIMER TOTAL RETURN BOND FUND

--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
--------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments $ (45,736)
Closing of futures contracts 172,301
Swap contracts (2,677)
-------------
Net realized gain 123,888
--------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments 316,373
Futures contracts 90,170
Swap contracts 24,851
-------------
Net change in unrealized depreciation 431,394

--------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,203,166
=============

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

35 | OPPENHEIMER TOTAL RETURN BOND FUND

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

YEAR ENDED APRIL 30, 2005 2004
-------------------------------------------------------------------------------------------------------------------

OPERATIONS
-------------------------------------------------------------------------------------------------------------------
Net investment income $ 1,647,884 $ 995,619
-------------------------------------------------------------------------------------------------------------------
Net realized gain 123,888 526,743
-------------------------------------------------------------------------------------------------------------------
Net change in unrealized depreciation 431,394 (695,353)
---------------------------------
Net increase in net assets resulting from operations 2,203,166 827,009

-------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
-------------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (1,371,124) (937,199)
Class B (97,975) (49,017)
Class C (126,494) (34,611)
Class N (58,268) (9,716)
-------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (321,230) (179,397)
Class B (31,264) (14,472)
Class C (43,977) (10,826)
Class N (18,161) (2,729)

-------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
-------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A 5,992,710 8,253,430
Class B 1,339,849 2,136,318
Class C 3,818,993 2,587,144
Class N 1,982,293 821,065

-------------------------------------------------------------------------------------------------------------------
NET ASSETS
-------------------------------------------------------------------------------------------------------------------
Total increase 13,268,518 13,386,999
-------------------------------------------------------------------------------------------------------------------
Beginning of period 42,192,585 28,805,586
---------------------------------
End of period (including accumulated net investment income
of $96,126 and $7,543, respectively) $ 55,461,103 $ 42,192,585
=================================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

36 | OPPENHEIMER TOTAL RETURN BOND FUND

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

CLASS A YEAR ENDED APRIL 30, 2005 2004 2003 1
---------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00 $ 10.08 $ 10.00
---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .36 2 .28 .03
Net realized and unrealized gain (loss) .12 (.02) .08
-------------------------------------------------
Total from investment operations .48 .26 .11
---------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.36) (.29) (.03)
Distributions from net realized gain (.08) (.05) --
-------------------------------------------------
Total dividends and/or distributions to shareholders (.44) (.34) (.03)
---------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.04 $ 10.00 $ 10.08
=================================================

---------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 4.89% 2.64% 1.14%
---------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 41,648 $ 35,522 $ 27,598
---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 38,411 $ 32,578 $ 26,027
---------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 3.56% 2.78% 1.77%
Total expenses 0.80% 0.79% 1.29%
Expenses after payments and waivers and
reduction to custodian expenses 0.79% 0.73% 0.90%
---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 86% 5 131% 5 77%

1. For the period from February 21, 2003 (commencement of operations) to April
30, 2003.

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

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

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

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

PURCHASE TRANSACTIONS SALE TRANSACTIONS
----------------------------------------------------------------
April 30, 2005 $280,759,754 $281,155,514
April 30, 2004 198,777,129 189,672,219

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

37 | OPPENHEIMER TOTAL RETURN BOND FUND

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

CLASS B YEAR ENDED APRIL 30, 2005 2004 2003 1
---------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00 $ 10.08 $ 10.00
---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .27 2 .19 .02
Net realized and unrealized gain (loss) .12 (.02) .08
-------------------------------------------------
Total from investment operations .39 .17 .10
---------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.27) (.20) (.02)
Distributions from net realized gain (.08) (.05) --
-------------------------------------------------
Total dividends and/or distributions to shareholders (.35) (.25) (.02)
---------------------------------------------------------------------------------------------------------------

Net asset value, end of period $ 10.04 $ 10.00 $ 10.08
=================================================

---------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 4.00% 1.69% 0.97%
---------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 4,244 $ 2,896 $ 798
---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 3,610 $ 2,444 $ 340
---------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 2.70% 1.91% 0.85%
Total expenses 2.41% 2.20% 2.36%
Expenses after payments and waivers and reduction
to custodian expenses 1.65% 1.65% 1.65%
---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 86% 5 131% 5 77%

1. For the period from February 21, 2003 (commencement of operations) to April
30, 2003.

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

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

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

PURCHASE TRANSACTIONS SALE TRANSACTIONS
----------------------------------------------------------------
April 30, 2005 $280,759,754 $281,155,514
April 30, 2004 198,777,129 189,672,219

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

38 | OPPENHEIMER TOTAL RETURN BOND FUND

CLASS C YEAR ENDED APRIL 30, 2005 2004 2003 1
---------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.99 $ 10.08 $ 10.00
---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .27 2 .19 .02
Net realized and unrealized gain (loss) .12 (.03) .08
-------------------------------------------------
Total from investment operations .39 .16 .10
---------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.27) (.20) (.02)
Distributions from net realized gain (.08) (.05) --
-------------------------------------------------
Total dividends and/or distributions to shareholders (.35) (.25) (.02)
---------------------------------------------------------------------------------------------------------------

Net asset value, end of period $ 10.03 $ 9.99 $ 10.08
=================================================

---------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 3.99% 1.60% 0.96%
---------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 6,757 $ 2,943 $ 388
---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 4,641 $ 1,679 $ 126
---------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 2.71% 1.95% 0.59%
Total expenses 2.17% 2.12% 2.28%
Expenses after payments and waivers and reduction
to custodian expenses 1.65% 1.65% 1.65%
---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 86% 5 131% 5 77%

1. For the period from February 21, 2003 (commencement of operations) to April
30, 2003.

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

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

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

PURCHASE TRANSACTIONS SALE TRANSACTIONS
----------------------------------------------------------------
April 30, 2005 $280,759,754 $281,155,514
April 30, 2004 198,777,129 189,672,219

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

39 | OPPENHEIMER TOTAL RETURN BOND FUND

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

CLASS N YEAR ENDED APRIL 30, 2005 2004 2003 1
---------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00 $ 10.08 $ 10.00
---------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .32 2 .24 .03
Net realized and unrealized gain (loss) .12 (.02) .08
-------------------------------------------------
Total from investment operations .44 .22 .11
---------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.32) (.25) (.03)
Distributions from net realized gain (.08) (.05) --
-------------------------------------------------
Total dividends and/or distributions to shareholders (.40) (.30) (.03)
---------------------------------------------------------------------------------------------------------------

Net asset value, end of period $ 10.04 $ 10.00 $ 10.08
=================================================

---------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 4.51% 2.20% 1.08%
---------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 2,812 $ 831 $ 22
---------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 1,802 $ 386 $ 6
---------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income 3.22% 2.40% 1.50%
Total expenses 1.51% 1.34% 2.63%
Expenses after payments and waivers and reduction
to custodian expenses 1.15% 1.15% 1.15%
---------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 86% 5 131% 5 77%

1. For the period from February 21, 2003 (commencement of operations) to April
30, 2003.

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

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

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

PURCHASE TRANSACTIONS SALE TRANSACTIONS
----------------------------------------------------------------
April 30, 2005 $280,759,754 $281,155,514
April 30, 2004 198,777,129 189,672,219

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

40 | OPPENHEIMER TOTAL RETURN BOND FUND

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

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

Oppenheimer Total Return Bond Fund (the Fund) is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
The Fund's investment objective is to seek to maximize total return through both
capital appreciation and income. As a secondary objective, it emphasizes
preservation of capital. The Fund's investment advisor is OppenheimerFunds, Inc.
(the Manager).

The Fund offers Class A, Class B, Class C and Class N shares. Class A
shares are sold at their offering price, which is normally net asset value plus
a front-end sales charge. As of April 30, 2005, the Manager owned 45% of the
Fund's shares. 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. 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. Class B shares will
automatically convert to Class A shares six years after the date of purchase.

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

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

41 | OPPENHEIMER TOTAL RETURN BOND FUND

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

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

the close of their respective exchanges will be fair valued. Fair value is
determined in good faith using consistently applied procedures under the
supervision of the Board of Trustees. Short-term "money market type" debt
securities with remaining maturities of sixty days or less are valued at
amortized cost (which approximates market value).

--------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment can take place up to ten days or more after the trade date.
Normally the settlement date occurs within six months after the trade date;
however, the Fund may, from time to time, purchase securities whose settlement
date extends six months or more beyond trade date. During this period, such
securities do not earn interest, are subject to market fluctuation and may
increase or decrease in value prior to their delivery. The Fund maintains
internally designated assets with a market value equal to or greater than the
amount of its purchase commitments. The purchase of securities on a when-issued
basis or forward commitment may increase the volatility of the Fund's net asset
value to the extent the Fund executes such transactions while remaining
substantially fully invested. The Fund may also sell securities that it
purchased on a when-issued basis or forward commitment prior to settlement of
the original purchase. As of April 30, 2005, the Fund had purchased $19,785,237
of securities issued on a when-issued basis or forward commitment and sold
$333,415 of securities issued on a when-issued basis or forward commitment.

In connection with its ability to purchase or sell securities on a
when-issued basis, the Fund may enter into forward roll transactions with
respect to mortgage-related securities. Forward roll transactions require the
sale of securities for delivery in the current month, and a simultaneous
agreement with the same counterparty to repurchase similar (same type, coupon
and maturity) but not identical securities on a specified future date. The Fund
records the incremental difference between the forward purchase and sale of each
forward roll as realized gain (loss) on investments or as fee income in the case
of such transactions that have an associated fee in lieu of a difference in the
forward purchase and sale price.

Risks of entering into forward roll transactions include the potential
inability of the counterparty to meet the terms of the agreement; the potential
of the Fund to receive inferior securities at redelivery as compared to the
securities sold to the counterparty; counterparty credit risk; and the potential
pay down speed variance between the mortgage-related pools.

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

42 | OPPENHEIMER TOTAL RETURN BOND FUND

sufficient to cover payments of interest and principal. In the event of default
by the other party to the agreement, retention of the collateral may be subject
to legal proceedings.

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

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

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

NET UNREALIZED
DEPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3,4 TAX PURPOSES
------------------------------------------------------------------------------
$109,345 $ -- $81,399 $92,368

1. As of April 30, 2005, the Fund had $67,482 of post-October losses available
to offset future realized capital gains, if any. Such losses, if unutilized,
will expire in 2014.

2. The Fund had $13,917 of straddle losses which were deferred.

3. During the fiscal year ended April 30, 2005, the Fund did not utilize any
capital loss carryforward.

4. During the fiscal year ended April 30, 2004, the Fund did not utilize any
capital loss carryforward.

Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for April 30, 2005. Net assets of the
Fund were unaffected by the reclassifications.

INCREASE TO INCREASE TO
ACCUMULATED ACCUMULATED NET
NET INVESTMENT REALIZED LOSS
INCOME ON INVESTMENTS
---------------------------------------------
$94,560 $94,560

43 | OPPENHEIMER TOTAL RETURN BOND FUND

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

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

The tax character of distributions paid during the years ended April 30, 2005
and April 30, 2004 was as follows:

YEAR ENDED YEAR ENDED
APRIL 30, 2005 APRIL 30, 2004
-----------------------------------------------------------------
Distributions paid from:
Ordinary income $ 2,009,882 $ 1,099,958
Long-term capital gain 58,611 138,009
----------------------------------
Total $ 2,068,493 $ 1,237,967
==================================

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 April 30, 2005 are noted below. The
primary difference between book and tax appreciation or depreciation of
securities and other investments, if applicable, is attributable to the tax
deferral of losses or tax realization of financial statement unrealized gain or
loss.

Federal tax cost of securities $ 74,704,900
Federal tax cost of other investments (12,934,048)
-------------
Total federal tax cost $ 61,770,852
=============

Gross unrealized appreciation $ 469,710
Gross unrealized depreciation (562,078)
-------------
Net unrealized depreciation $ (92,368)
=============

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

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

--------------------------------------------------------------------------------
CUSTODIAN FEES. Custodian Fees and Expenses in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts 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.

44 | OPPENHEIMER TOTAL RETURN BOND FUND

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

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

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

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

YEAR ENDED APRIL 30, 2005 YEAR ENDED APRIL 30, 2004
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------------

CLASS A
Sold 1,066,067 $ 10,715,419 1,097,321 $ 11,099,906
Dividends and/or
distributions reinvested 54,023 543,541 23,011 231,801
Redeemed (523,711) (5,266,250) (304,660) (3,078,277)
-------------------------------------------------------------
Net increase 596,379 $ 5,992,710 815,672 $ 8,253,430
=============================================================

------------------------------------------------------------------------------------------------
CLASS B
Sold 248,698 $ 2,501,568 338,504 $ 3,425,891
Dividends and/or
distributions reinvested 11,443 115,136 5,465 55,025
Redeemed (126,951) (1,276,855) (133,432) (1,344,598)
-------------------------------------------------------------
Net increase 133,190 $ 1,339,849 210,537 $ 2,136,318
=============================================================

------------------------------------------------------------------------------------------------
CLASS C
Sold 458,302 $ 4,615,150 299,731 $ 3,028,348
Dividends and/or
distributions reinvested 16,060 161,543 4,441 44,736
Redeemed (95,285) (957,700) (48,158) (485,940)
-------------------------------------------------------------
Net increase 379,077 $ 3,818,993 256,014 $ 2,587,144
=============================================================

------------------------------------------------------------------------------------------------
CLASS N
Sold 218,611 $ 2,199,418 97,335 $ 983,787
Dividends and/or
distributions reinvested 7,583 76,293 1,242 12,515
Redeemed (29,185) (293,418) (17,548) (175,237)
-------------------------------------------------------------
Net increase 197,009 $ 1,982,293 81,029 $ 821,065
=============================================================

45 | OPPENHEIMER TOTAL RETURN BOND FUND

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

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

The aggregate cost of purchases and proceeds from sales of securities, other
than U.S. government obligations and short-term obligations, for the year ended
April 30, 2005, were $44,859,618 and $25,833,181, respectively. There were
purchases of $9,916,152 and sales of $10,466,880 of U.S. government and
government agency obligations for the year ended April 30, 2005. In addition,
there were purchases of $280,759,754 and sales of $281,155,514 of To Be
Announced (TBA) mortgage-related securities for the year ended April 30, 2005.

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

MANAGEMENT FEES. Management fees paid to the Manager were in accordance with the
investment advisory agreement with the Fund which provides for a fee at an
annual rate of 0.50% of the first $250 million of average annual net assets of
the Fund, 0.475% of the next $500 million, and 0.45% of average annual net
assets in excess of $750 million.

--------------------------------------------------------------------------------
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 April 30, 2005, the Fund paid $56,737
to OFS for services to the Fund.

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

--------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A
shares. It reimburses the Distributor for a portion of its costs incurred for
services provided to accounts that hold Class A shares. Reimbursement is made
quarterly at an annual rate of up to 0.25% 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 quarterly for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
years. Fees incurred by the Fund under the Plan are detailed in the Statement of
Operations.

--------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% on Class B and
Class C shares and 0.25% on Class N shares. The Distributor also receives a
service fee of 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

46 | OPPENHEIMER TOTAL RETURN BOND FUND

fee and/or asset-based sales charge in respect to shares sold prior to the
effective date of such termination. The Distributor's aggregate uncompensated
expenses under the plan at April 30, 2005 for Class B, Class C and Class N
shares were $106,487, $79,904 and $59,930, respectively. Fees incurred by the
Fund under the plans are detailed in the Statement of Operations.

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

CLASS A CLASS B CLASS C CLASS 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
--------------------------------------------------------------------------------------------------------------

April 30, 2005 $58,309 $-- $15,271 $1,143 $1,551
--------------------------------------------------------------------------------------------------------------

WAIVERS AND REIMBURSEMENTS OF EXPENSES. The Manager has voluntarily agreed to
waive management fees and/or reimburse expenses such that "Total Annual
Operating Expenses" will not exceed 0.90% for Class A shares, 1.65% for Class B
shares, 1.65% for Class C shares and 1.15% for Class N shares, respectively.
During the year ended April 30, 2005, the Manager reimbursed the Fund $1,130,
$23,935, $23,903 and $6,387 for Class A, Class B, Class C and Class N shares,
respectively. The voluntary waiver described above may be amended or withdrawn
at any time.

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 April 30, 2005, OFS waived $3,440 for Class B shares. This
undertaking may be amended or withdrawn at any time.

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

A futures contract is a commitment to buy or sell a specific amount of a
commodity or financial instrument at a negotiated price on a stipulated future
date. Futures contracts are traded on a commodity exchange. The Fund may buy and
sell futures contracts that relate to broadly based securities indices
(financial futures) or debt securities (interest rate futures) in order to gain
exposure to or protection from changes in market value of stocks and bonds or
interest rates. The Fund may also buy or write put or call options on these
futures contracts.

The Fund generally sells futures contracts as a hedge against increases in
interest rates and decreases in market value of portfolio securities. The Fund
may also purchase futures contracts to gain exposure to market changes as it may
be more efficient or cost effective than actually buying securities.

47 | OPPENHEIMER TOTAL RETURN BOND FUND

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

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

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

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

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

As of April 30, 2005, the Fund had outstanding futures contracts as follows:

UNREALIZED
EXPIRATION NUMBER OF VALUATION AS OF APPRECIATION
CONTRACT DESCRIPTION DATES CONTRACTS APRIL 30, 2005 (DEPRECIATION)
---------------------------------------------------------------------------------------

CONTRACTS TO PURCHASE
U.S. Long Bonds 6/21/05 37 $ 4,249,219 $ 80,302
U.S. Treasury Nts., 10 yr. 6/21/05 24 2,674,125 36,722
-----------
117,024
-----------
CONTRACTS TO SELL
U. S. Treasury Nts., 2 yr. 6/30/05 46 9,554,344 (12,463)
U. S. Treasury Nts., 5 yr. 6/21/05 95 10,303,047 (49,520)
-----------
(61,983)
-----------
$ 55,041
===========

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

As of April 30, 2005, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily available
market or if its valuation has not changed for a certain period of time. The
Fund will not invest more than 15% of its net assets (determined at the time of
purchase and reviewed periodically) in illiquid securities. Securities that are
illiquid are marked with the applicable footnote on the Statement of
Investments.

48 | OPPENHEIMER TOTAL RETURN BOND FUND

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

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

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

49 | OPPENHEIMER TOTAL RETURN BOND FUND

Appendix A

RATINGS DEFINITIONS

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

Moody’s Investors Service, Inc. (“Moody’s”)

Long-Term Ratings: Bonds and Preferred Stock Issuer Ratings

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

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

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

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

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

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

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

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

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

Prime Rating System (Short-Term Ratings - Taxable Debt)
These ratings are opinions of the ability of issuers to honor senior financial obligations and contracts. Such
obligations generally have an original maturity not exceeding one year, unless explicitly noted.

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

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

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

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

Standard & Poor’s Ratings Services (“Standard & Poor’s”), a division of The McGraw-Hill Companies, Inc.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

N.R. Not rated.

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

Bond Investment Quality Standards

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

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

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

A-2: A short-term obligation rated “A-2” is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than obligations in higher rating categories. However, the obligor’s capacity
to meet its financial commitment on the obligation is satisfactory.
A-3: A short-term obligation rated “A-3” exhibits adequate protection parameters. However, adverse economic
conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its
financial commitment on the obligation.

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

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

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

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

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

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

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

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

International Long-Term Credit Ratings
The following ratings scale applies to foreign currency and local currency ratings.

Investment Grade:

AAA: Highest Credit Quality. “AAA” ratings denote the lowest expectation of credit risk. They are assigned only in
the case of exceptionally strong capacity for timely payment of financial commitments. This capacity is highly
unlikely to be adversely affected by foreseeable events.
AA: Very High Credit Quality. “AA” ratings denote a very low expectation of credit risk. They indicate a very strong
capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable
events.

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

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

Speculative Grade:

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

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

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

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

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

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

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

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

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

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

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

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

D: Default. Denotes actual or imminent payment default.

B-1
Appendix B

Industry Classifications

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

Appendix C

OppenheimerFunds Special Sales Charge Arrangements and Waivers

In certain cases, the initial sales charge that applies to purchases of Class A shares(2) of the Oppenheimer funds
or the contingent deferred sales charge that may apply to Class A, Class B or Class C shares may be waived.(3) That
is because of the economies of sales efforts realized by OppenheimerFunds Distributor, Inc., (referred to in this
document as the “Distributor”), or by dealers or other financial institutions that offer those shares to certain
classes of investors.

Not all waivers apply to all funds. For example, waivers relating to Retirement Plans do not apply to Oppenheimer
municipal funds, because shares of those funds are not available for purchase by or on behalf of retirement plans.
Other waivers apply only to shareholders of certain funds.

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

The interpretation of these provisions as to the applicability of a special arrangement or waiver in a particular
case is in the sole discretion of the Distributor or the transfer agent (referred to in this document as the
“Transfer Agent”) of the particular Oppenheimer fund. These waivers and special arrangements may be amended or
terminated at any time by a particular fund, the Distributor, and/or OppenheimerFunds, Inc. (referred to in this
document as the “Manager”).

Waivers that apply at the time shares are redeemed must be requested by the shareholder and/or dealer in the
redemption request.
I. Applicability of Class A Contingent Deferred Sales Charges in Certain Cases
----------------------------------------------------------------------------------------------------------------------

Purchases of Class A Shares of Oppenheimer Funds That Are Not Subject to Initial Sales Charge but May Be Subject to
the Class A Contingent Deferred Sales Charge (unless a waiver applies).

There is no initial sales charge on purchases of Class A shares of any of the Oppenheimer funds in the
cases listed below. However, these purchases may be subject to the Class A contingent deferred sales charge if
redeemed within 18 months (24 months in the case of Oppenheimer Rochester National Municipals and Rochester Fund
Municipals) of the beginning of the calendar month of their purchase, as described in the Prospectus (unless a
waiver described elsewhere in this Appendix applies to the redemption). Additionally, on shares purchased under
these waivers that are subject to the Class A contingent deferred sales charge, the Distributor will pay the
applicable concession described in the Prospectus under “Class A Contingent Deferred Sales Charge.”(6) This waiver
provision applies to:
|_| Purchases of Class A shares aggregating $1 million or more.
|_| Purchases of Class A shares by a Retirement Plan that was permitted to purchase such shares at net asset
value but subject to a contingent deferred sales charge prior to March 1, 2001. That included plans
(other than IRA or 403(b)(7) Custodial Plans) that: 1) bought shares costing $500,000 or more, 2) had
at the time of purchase 100 or more eligible employees or total plan assets of $500,000 or more, or 3)
certified to the Distributor that it projects to have annual plan purchases of $200,000 or more.
|_| Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the purchases are made:
1) through a broker, dealer, bank or registered investment adviser that has made special arrangements
with the Distributor for those purchases, or
2) by a direct rollover of a distribution from a qualified Retirement Plan if the administrator of
that Plan has made special arrangements with the Distributor for those purchases.
|_| Purchases of Class A shares by Retirement Plans that have any of the following record-keeping arrangements:
1) The record keeping is performed by Merrill Lynch Pierce Fenner & Smith, Inc. (“Merrill Lynch”) on
a daily valuation basis for the Retirement Plan. On the date the plan sponsor signs the
record-keeping service agreement with Merrill Lynch, the Plan must have $3 million or more of its
assets invested in (a) mutual funds, other than those advised or managed by Merrill Lynch
Investment Management, L.P. (“MLIM”), that are made available under a Service Agreement between
Merrill Lynch and the mutual fund’s principal underwriter or distributor, and (b) funds advised or
managed by MLIM (the funds described in (a) and (b) are referred to as “Applicable Investments”).
2) The record keeping for the Retirement Plan is performed on a daily valuation basis by a record
keeper whose services are provided under a contract or arrangement between the Retirement Plan and
Merrill Lynch. On the date the plan sponsor signs the record keeping service agreement with
Merrill Lynch, the Plan must have $5 million or more of its assets (excluding assets invested in
money market funds) invested in Applicable Investments.
3) The record keeping for a Retirement Plan is handled under a service agreement with Merrill Lynch
and on the date the plan sponsor signs that agreement, the Plan has 500 or more eligible employees
(as determined by the Merrill Lynch plan conversion manager).
II. Waivers of Class A Sales Charges of Oppenheimer Funds
----------------------------------------------------------------------------------------------------------------------

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

Class A shares purchased by the following investors are not subject to any Class A sales charges (and no concessions
are paid by the Distributor on such purchases):
|_| The Manager or its affiliates.
|_| Present or former officers, directors, trustees and employees (and their “immediate families”) of the Fund,
the Manager and its affiliates, and retirement plans established by them for their employees. The term
“immediate family” refers to one’s spouse, children, grandchildren, grandparents, parents,
parents-in-law, brothers and sisters, sons- and daughters-in-law, a sibling’s spouse, a spouse’s
siblings, aunts, uncles, nieces and nephews; relatives by virtue of a remarriage (step-children,
step-parents, etc.) are included.
|_| Registered management investment companies, or separate accounts of insurance companies having an agreement
with the Manager or the Distributor for that purpose.
|_| Dealers or brokers that have a sales agreement with the Distributor, if they purchase shares for their own
accounts or for retirement plans for their employees.
|_| Employees and registered representatives (and their spouses) of dealers or brokers described above or
financial institutions that have entered into sales arrangements with such dealers or brokers (and
which are identified as such to the Distributor) or with the Distributor. The purchaser must certify
to the Distributor at the time of purchase that the purchase is for the purchaser’s own account (or
for the benefit of such employee’s spouse or minor children).
|_| Dealers, brokers, banks or registered investment advisors that have entered into an agreement with the
Distributor providing specifically for the use of shares of the Fund in particular investment products
made available to their clients. Those clients may be charged a transaction fee by their dealer,
broker, bank or advisor for the purchase or sale of Fund shares.
|_| Investment advisors and financial planners who have entered into an agreement for this purpose with the
Distributor and who charge an advisory, consulting or other fee for their services and buy shares for
their own accounts or the accounts of their clients.
|_| “Rabbi trusts” that buy shares for their own accounts, if the purchases are made through a broker or agent
or other financial intermediary that has made special arrangements with the Distributor for those
purchases.
|_| Clients of investment advisors or financial planners (that have entered into an agreement for this purpose
with the Distributor) who buy shares for their own accounts may also purchase shares without sales
charge but only if their accounts are linked to a master account of their investment advisor or
financial planner on the books and records of the broker, agent or financial intermediary with which
the Distributor has made such special arrangements . Each of these investors may be charged a fee by
the broker, agent or financial intermediary for purchasing shares.
|_| Directors, trustees, officers or full-time employees of OpCap Advisors or its affiliates, their relatives
or any trust, pension, profit sharing or other benefit plan which beneficially owns shares for those
persons.
|_| Accounts for which Oppenheimer Capital (or its successor) is the investment advisor (the Distributor must
be advised of this arrangement) and persons who are directors or trustees of the company or trust
which is the beneficial owner of such accounts.
|_| A unit investment trust that has entered into an appropriate agreement with the Distributor.
|_| Dealers, brokers, banks, or registered investment advisers that have entered into an agreement with the
Distributor to sell shares to defined contribution employee retirement plans for which the dealer,
broker or investment adviser provides administration services.
|_| Retirement Plans and deferred compensation plans and trusts used to fund those plans (including, for
example, plans qualified or created under sections 401(a), 401(k), 403(b) or 457 of the Internal
Revenue Code), in each case if those purchases are made through a broker, agent or other financial
intermediary that has made special arrangements with the Distributor for those purchases.
|_| A TRAC-2000 401(k) plan (sponsored by the former Quest for Value Advisors) whose Class B or Class C shares
of a Former Quest for Value Fund were exchanged for Class A shares of that Fund due to the termination
of the Class B and Class C TRAC-2000 program on November 24, 1995.
|_| A qualified Retirement Plan that had agreed with the former Quest for Value Advisors to purchase shares of
any of the Former Quest for Value Funds at net asset value, with such shares to be held through
DCXchange, a sub-transfer agency mutual fund clearinghouse, if that arrangement was consummated and
share purchases commenced by December 31, 1996.
|_| Effective October 1, 2005, taxable accounts established with the proceeds of Required Minimum Distributions
from Retirement Plans.
|_| Clients of Edward D. Jones & Co., L.P. who purchase Class A shares of the Fund between August19, 2005 and
November16, 2005 with the proceeds of shares redeemed form other mutual funds, as a part of the
Edward Jones “Free Switch” program, may purchase those shares at net asset value and no concession
will be paid by the Distributor on such purchases.

B. Waivers of the Class A Initial and Contingent Deferred Sales Charges in Certain Transactions.

1. Class A shares issued or purchased in the following transactions are not subject to sales charges (and no
concessions are paid by the Distributor on such purchases):
|_| Shares issued in plans of reorganization, such as mergers, asset acquisitions and exchange offers, to which
the Fund is a party.
|_| Shares purchased by the reinvestment of dividends or other distributions reinvested from the Fund or other
Oppenheimer funds or unit investment trusts for which reinvestment arrangements have been made with
the Distributor.
|_| Shares purchased by certain Retirement Plans that are part of a retirement plan or platform offered by
banks, broker-dealers, financial advisors or insurance companies, or serviced by recordkeepers.
|_| Shares purchased by the reinvestment of loan repayments by a participant in a Retirement Plan for which the
Manager or an affiliate acts as sponsor.
|_| Shares purchased in amounts of less than $5.

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

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

The Class A contingent deferred sales charge is also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following cases:
|_| To make Automatic Withdrawal Plan payments that are limited annually to no more than 12% of the account
value adjusted annually.
|_| Involuntary redemptions of shares by operation of law or involuntary redemptions of small accounts (please
refer to “Shareholder Account Rules and Policies,” in the applicable fund Prospectus).
|_| For distributions from Retirement Plans, deferred compensation plans or other employee benefit plans for
any of the following purposes:
1) Following the death or disability (as defined in the Internal Revenue Code) of the participant or
beneficiary. The death or disability must occur after the participant’s account was established.
2) To return excess contributions.
3) To return contributions made due to a mistake of fact.
4) Hardship withdrawals, as defined in the plan.(7)
5) Under a Qualified Domestic Relations Order, as defined in the Internal Revenue Code, or, in the
case of an IRA, a divorce or separation agreement described in Section 71(b) of the Internal
Revenue Code.
6) To meet the minimum distribution requirements of the Internal Revenue Code.
7) To make “substantially equal periodic payments” as described in Section 72(t) of the Internal
Revenue Code.
8) For loans to participants or beneficiaries.
9) Separation from service.(8)
10) Participant-directed redemptions to purchase shares of a mutual fund (other than a fund managed by
the Manager or a subsidiary of the Manager) if the plan has made special arrangements with the
Distributor.
11) Plan termination or “in-service distributions,” if the redemption proceeds are rolled over
directly to an OppenheimerFunds-sponsored IRA.
|_| For distributions from 401(k) plans sponsored by broker-dealers that have entered into a special agreement
with the Distributor allowing this waiver.
|_| For distributions from retirement plans that have $10 million or more in plan assets and that have entered
into a special agreement with the Distributor.
|_| For distributions from retirement plans which are part of a retirement plan product or platform offered by
certain banks, broker-dealers, financial advisors, insurance companies or record keepers which have
entered into a special agreement with the Distributor.
III. Waivers of Class B, Class C and Class N Sales Charges of Oppenheimer Funds
----------------------------------------------------------------------------------------------------------------------

The Class B, Class C and Class N contingent deferred sales charges will not be applied to shares purchased in
certain types of transactions or redeemed in certain circumstances described below.

A. Waivers for Redemptions in Certain Cases.

The Class B, Class C and Class N contingent deferred sales charges will be waived for redemptions of shares in the
following cases:
|_| Shares redeemed involuntarily, as described in “Shareholder Account Rules and Policies,” in the applicable
Prospectus.
|_| Redemptions from accounts other than Retirement Plans following the death or disability of the last
surviving shareholder. The death or disability must have occurred after the account was established,
and for disability you must provide evidence of a determination of disability by the Social Security
Administration.
|_| The contingent deferred sales charges are generally not waived following the death or disability of a
grantor or trustee for a trust account. The contingent deferred sales charges will only be waived in
the limited case of the death of the trustee of a grantor trust or revocable living trust for which
the trustee is also the sole beneficiary. The death or disability must have occurred after the account
was established, and for disability you must provide evidence of a determination of disability (as
defined in the Internal Revenue Code).
|_| Distributions from accounts for which the broker-dealer of record has entered into a special agreement with
the Distributor allowing this waiver.
|_| Redemptions of Class B shares held by Retirement Plans whose records are maintained on a daily valuation
basis by Merrill Lynch or an independent record keeper under a contract with Merrill Lynch.
|_| Redemptions of Class C shares of Oppenheimer U.S. Government Trust from accounts of clients of financial
institutions that have entered into a special arrangement with the Distributor for this purpose.
|_| Redemptions of Class C shares of an Oppenheimer fund in amounts of $1 million or more requested in writing
by a Retirement Plan sponsor and submitted more than 12 months after the Retirement Plan’s first
purchase of Class C shares, if the redemption proceeds are invested to purchase Class N shares of one
or more Oppenheimer funds.
|_| Distributions(9) from Retirement Plans or other employee benefit plans for any of the following purposes:
1) Following the death or disability (as defined in the Internal Revenue Code) of the participant or
beneficiary. The death or disability must occur after the participant’s account was established in
an Oppenheimer fund.
2) To return excess contributions made to a participant’s account.
3) To return contributions made due to a mistake of fact.
4) To make hardship withdrawals, as defined in the plan.(10)
5) To make distributions required under a Qualified Domestic Relations Order or, in the case of an
IRA, a divorce or separation agreement described in Section 71(b) of the Internal Revenue Code.
6) To meet the minimum distribution requirements of the Internal Revenue Code.
7) To make “substantially equal periodic payments” as described in Section 72(t) of the Internal
Revenue Code.
8) For loans to participants or beneficiaries.(11)
9) On account of the participant’s separation from service.(12)
10) Participant-directed redemptions to purchase shares of a mutual fund (other than a fund managed by
the Manager or a subsidiary of the Manager) offered as an investment option in a Retirement Plan
if the plan has made special arrangements with the Distributor.
11) Distributions made on account of a plan termination or “in-service” distributions, if the
redemption proceeds are rolled over directly to an OppenheimerFunds-sponsored IRA.
12) For distributions from a participant’s account under an Automatic Withdrawal Plan after the
participant reaches age 59 1/2, as long as the aggregate value of the distributions does not exceed
10% of the account’s value, adjusted annually.
13) Redemptions of Class B shares under an Automatic Withdrawal Plan for an account other than a
Retirement Plan, if the aggregate value of the redeemed shares does not exceed 10% of the
account’s value, adjusted annually.
14) For distributions from 401(k) plans sponsored by broker-dealers that have entered into a special
arrangement with the Distributor allowing this waiver.
|_| Redemptions of Class B shares or Class C shares under an Automatic Withdrawal Plan from an account other
than a Retirement Plan if the aggregate value of the redeemed shares does not exceed 10% of the
account’s value annually.

B. Waivers for Shares Sold or Issued in Certain Transactions.

The contingent deferred sales charge is also waived on Class B and Class C shares sold or issued in the following
cases:
|_| Shares sold to the Manager or its affiliates.
|_| Shares sold to registered management investment companies or separate accounts of insurance companies
having an agreement with the Manager or the Distributor for that purpose.
|_| Shares issued in plans of reorganization to which the Fund is a party.
|_| Shares sold to present or former officers, directors, trustees or employees (and their “immediate families”
as defined above in Section I.A.) of the Fund, the Manager and its affiliates and retirement plans
established by them for their employees.

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

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

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

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

All of the funds listed above are referred to in this Appendix as the “Former Quest for Value Funds.” The
waivers of initial and contingent deferred sales charges described in this Appendix apply to shares of an
Oppenheimer fund that are either:
|_| acquired by such shareholder pursuant to an exchange of shares of an Oppenheimer fund that was one of the
Former Quest for Value Funds, or
|_| purchased by such shareholder by exchange of shares of another Oppenheimer fund that were acquired pursuant
to the merger of any of the Former Quest for Value Funds into that other Oppenheimer fund on November
24, 1995.

A. Reductions or Waivers of Class A Sales Charges.

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

----------------------------------------------------------------------------------------------------------------------
For purchases by Associations having 50 or more eligible employees or members, there is no initial sales
charge on purchases of Class A shares, but those shares are subject to the Class A contingent deferred sales charge
described in the applicable fund’s Prospectus.

Purchases made under this arrangement qualify for the lower of either the sales charge rate in the table
based on the number of members of an Association, or the sales charge rate that applies under the Right of
Accumulation described in the applicable fund’s Prospectus and Statement of Additional Information. Individuals who
qualify under this arrangement for reduced sales charge rates as members of Associations also may purchase shares
for their individual or custodial accounts at these reduced sales charge rates, upon request to the Distributor.

Waiver of Class A Sales Charges for Certain Shareholders. Class A shares purchased by the following
investors are not subject to any Class A initial or contingent deferred sales charges:
o Shareholders who were shareholders of the AMA Family of Funds on February 28, 1991 and who acquired shares
of any of the Former Quest for Value Funds by merger of a portfolio of the AMA Family of Funds.
o Shareholders who acquired shares of any Former Quest for Value Fund by merger of any of the portfolios of
the Unified Funds.

Waiver of Class A Contingent Deferred Sales Charge in Certain Transactions. The Class A contingent deferred
sales charge will not apply to redemptions of Class A shares purchased by the following investors who were
shareholders of any Former Quest for Value Fund:

Investors who purchased Class A shares from a dealer that is or was not permitted to receive a sales load
or redemption fee imposed on a shareholder with whom that dealer has a fiduciary relationship, under the Employee
Retirement Income Security Act of 1974 and regulations adopted under that law.

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

Waivers for Redemptions of Shares Purchased Prior to March 6, 1995. In the following cases, the contingent
deferred sales charge will be waived for redemptions of Class A, Class B or Class C shares of an Oppenheimer fund.
The shares must have been acquired by the merger of a Former Quest for Value Fund into the fund or by exchange from
an Oppenheimer fund that was a Former Quest for Value Fund or into which such fund merged. Those shares must have
been purchased prior to March 6, 1995 in connection with:
o withdrawals under an automatic withdrawal plan holding only either Class B or Class C shares if the annual
withdrawal does not exceed 10% of the initial value of the account value, adjusted annually, and
o liquidation of a shareholder’s account if the aggregate net asset value of shares held in the account is
less than the required minimum value of such accounts.

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

The initial and contingent deferred sale charge rates and waivers for Class A and Class B shares described in the
respective Prospectus (or this Appendix) of the following Oppenheimer funds (each is referred to as a “Fund” in this
section):
Oppenheimer U. S. Government Trust,
Oppenheimer Core Bond Fund,
Oppenheimer Value Fund and
Oppenheimer Disciplined Allocation Fund
are modified as described below for those Fund shareholders who were shareholders of the following funds (referred
to as the “Former Connecticut Mutual Funds”) on March 1, 1996, when OppenheimerFunds, Inc. became the investment
adviser to the Former Connecticut Mutual Funds:
Connecticut Mutual Liquid Account Connecticut Mutual Total Return Account
Connecticut Mutual Government Securities Account CMIA LifeSpan Capital Appreciation Account
Connecticut Mutual Income Account CMIA LifeSpan Balanced Account
Connecticut Mutual Growth Account CMIA Diversified Income Account

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

Class A Contingent Deferred Sales Charge. Certain shareholders of a Fund and the other Former Connecticut
Mutual Funds are entitled to continue to make additional purchases of Class A shares at net asset value without a
Class A initial sales charge, but subject to the Class A contingent deferred sales charge that was in effect prior
to March 18, 1996 (the “prior Class A CDSC”). Under the prior Class A CDSC, if any of those shares are redeemed
within one year of purchase, they will be assessed a 1% contingent deferred sales charge on an amount equal to the
current market value or the original purchase price of the shares sold, whichever is smaller (in such redemptions,
any shares not subject to the prior Class A CDSC will be redeemed first).

Those shareholders who are eligible for the prior Class A CDSC are:
1) persons whose purchases of Class A shares of a Fund and other Former Connecticut Mutual Funds were
$500,000 prior to March 18, 1996, as a result of direct purchases or purchases pursuant to the
Fund’s policies on Combined Purchases or Rights of Accumulation, who still hold those shares in
that Fund or other Former Connecticut Mutual Funds, and
2) persons whose intended purchases under a Statement of Intention entered into prior to March 18,
1996, with the former general distributor of the Former Connecticut Mutual Funds to purchase
shares valued at $500,000 or more over a 13-month period entitled those persons to purchase shares
at net asset value without being subject to the Class A initial sales charge

Any of the Class A shares of a Fund and the other Former Connecticut Mutual Funds that were purchased at
net asset value prior to March 18, 1996, remain subject to the prior Class A CDSC, or if any additional shares are
purchased by those shareholders at net asset value pursuant to this arrangement they will be subject to the prior
Class A CDSC.

Class A Sales Charge Waivers. Additional Class A shares of a Fund may be purchased without a sales charge,
by a person who was in one (or more) of the categories below and acquired Class A shares prior to March 18, 1996,
and still holds Class A shares:
1) any purchaser, provided the total initial amount invested in the Fund or any one or more of the
Former Connecticut Mutual Funds totaled $500,000 or more, including investments made pursuant to
the Combined Purchases, Statement of Intention and Rights of Accumulation features available at
the time of the initial purchase and such investment is still held in one or more of the Former
Connecticut Mutual Funds or a Fund into which such Fund merged;
2) any participant in a qualified plan, provided that the total initial amount invested by the plan
in the Fund or any one or more of the Former Connecticut Mutual Funds totaled $500,000 or more;
3) Directors of the Fund or any one or more of the Former Connecticut Mutual Funds and members of
their immediate families;
4) employee benefit plans sponsored by Connecticut Mutual Financial Services, L.L.C. (“CMFS”), the
prior distributor of the Former Connecticut Mutual Funds, and its affiliated companies;
5) one or more members of a group of at least 1,000 persons (and persons who are retirees from such
group) engaged in a common business, profession, civic or charitable endeavor or other activity,
and the spouses and minor dependent children of such persons, pursuant to a marketing program
between CMFS and such group; and
6) an institution acting as a fiduciary on behalf of an individual or individuals, if such
institution was directly compensated by the individual(s) for recommending the purchase of the
shares of the Fund or any one or more of the Former Connecticut Mutual Funds, provided the
institution had an agreement with CMFS.

Purchases of Class A shares made pursuant to (1) and (2) above may be subject to the Class A CDSC of the
Former Connecticut Mutual Funds described above.

Additionally, Class A shares of a Fund may be purchased without a sales charge by any holder of a variable
annuity contract issued in New York State by Connecticut Mutual Life Insurance Company through the Panorama Separate
Account which is beyond the applicable surrender charge period and which was used to fund a qualified plan, if that
holder exchanges the variable annuity contract proceeds to buy Class A shares of the Fund.

B. Class A and Class B Contingent Deferred Sales Charge Waivers.

In addition to the waivers set forth in the Prospectus and in this Appendix, above, the contingent deferred sales
charge will be waived for redemptions of Class A and Class B shares of a Fund and exchanges of Class A or Class B
shares of a Fund into Class A or Class B shares of a Former Connecticut Mutual Fund provided that the Class A or
Class B shares of the Fund to be redeemed or exchanged were (i) acquired prior to March 18, 1996 or (ii) were
acquired by exchange from an Oppenheimer fund that was a Former Connecticut Mutual Fund. Additionally, the shares of
such Former Connecticut Mutual Fund must have been purchased prior to March 18, 1996:
1) by the estate of a deceased shareholder;
2) upon the disability of a shareholder, as defined in Section 72(m)(7) of the Internal Revenue Code;
3) for retirement distributions (or loans) to participants or beneficiaries from retirement plans qualified
under Sections 401(a) or 403(b)(7)of the Code, or from IRAs, deferred compensation plans created under
Section 457 of the Code, or other employee benefit plans;
4) as tax-free returns of excess contributions to such retirement or employee benefit plans;
5) in whole or in part, in connection with shares sold to any state, county, or city, or any instrumentality,
department, authority, or agency thereof, that is prohibited by applicable investment laws from paying a
sales charge or concession in connection with the purchase of shares of any registered investment
management company;
6) in connection with the redemption of shares of the Fund due to a combination with another investment
company by virtue of a merger, acquisition or similar reorganization transaction;
7) in connection with the Fund’s right to involuntarily redeem or liquidate the Fund;
8) in connection with automatic redemptions of Class A shares and Class B shares in certain retirement plan
accounts pursuant to an Automatic Withdrawal Plan but limited to no more than 12% of the original value
annually; or
9) as involuntary redemptions of shares by operation of law, or under procedures set forth in the Fund’s
Articles of Incorporation, or as adopted by the Board of Directors of the Fund.
VI. Special Reduced Sales Charge for Former Shareholders of Advance America Funds, Inc.
----------------------------------------------------------------------------------------------------------------------

Shareholders of Oppenheimer AMT-Free Municipals, Oppenheimer U.S. Government Trust, Oppenheimer Strategic Income
Fund and Oppenheimer Capital Income Fund who acquired (and still hold) shares of those funds as a result of the
reorganization of series of Advance America Funds, Inc. into those Oppenheimer funds on October 18, 1991, and who
held shares of Advance America Funds, Inc. on March 30, 1990, may purchase Class A shares of those four Oppenheimer
funds at a maximum sales charge rate of 4.50%.
VII. Sales Charge Waivers on Purchases of Class M Shares of Oppenheimer Convertible Securities Fund
----------------------------------------------------------------------------------------------------------------------

Oppenheimer Convertible Securities Fund (referred to as the “Fund” in this section) may sell Class M shares at net
asset value without any initial sales charge to the classes of investors listed below who, prior to March 11, 1996,
owned shares of the Fund’s then-existing Class A and were permitted to purchase those shares at net asset value
without sales charge:
|_| the Manager and its affiliates,
|_| present or former officers, directors, trustees and employees (and their “immediate families” as defined in
the Fund’s Statement of Additional Information) of the Fund, the Manager and its affiliates, and
retirement plans established by them or the prior investment advisor of the Fund for their employees,
|_| registered management investment companies or separate accounts of insurance companies that had an
agreement with the Fund’s prior investment advisor or distributor for that purpose,
|_| dealers or brokers that have a sales agreement with the Distributor, if they purchase shares for their own
accounts or for retirement plans for their employees,
|_| employees and registered representatives (and their spouses) of dealers or brokers described in the
preceding section or financial institutions that have entered into sales arrangements with those
dealers or brokers (and whose identity is made known to the Distributor) or with the Distributor, but
only if the purchaser certifies to the Distributor at the time of purchase that the purchaser meets
these qualifications,
|_| dealers, brokers, or registered investment advisors that had entered into an agreement with the Distributor
or the prior distributor of the Fund specifically providing for the use of Class M shares of the Fund
in specific investment products made available to their clients, and
|_| dealers, brokers or registered investment advisors that had entered into an agreement with the Distributor
or prior distributor of the Fund’s shares to sell shares to defined contribution employee retirement
plans for which the dealer, broker, or investment advisor provides administrative services.

Oppenheimer Total Return Bond Fund

Internet Website
www.oppenheimerfunds.com

Investment Advisor
OppenheimerFunds, Inc.
Two World Financial Center
225 Liberty Street, 11th Floor
New York, New York 10281-1008

Distributor
OppenheimerFunds Distributor, Inc.
Two World Financial Center
225 Liberty Street, 11th Floor
New York, New York 10281-1008

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

Custodian Bank
Citibank, N.A.
111 Wall Street
New York, New York 10005

Independent Registered Public Accounting Firm
Ernst & Young LLP
5 Times Square
New York, New York 10036

Legal Counsel
Mayer, Brown, Rowe & Maw LLP
1675 Broadway
New York, New York 10019

1234

PX0535.001.1105

(1) In accordance with Rule 12b-1 of the Investment Company Act, the term “Independent Trustees/Directors” in this
Statement of Additional Information refers to those Trustees who are not “interested persons” of the Fund and who do
not have any direct or indirect financial interest in the operation of the distribution plan or any agreement under
the plan.
(2) Certain waivers also apply to Class M shares of Oppenheimer Convertible Securities Fund.
(3) In the case of Oppenheimer Senior Floating Rate Fund, a continuously-offered closed-end fund, references to
contingent deferred sales charges mean the Fund’s Early Withdrawal Charges and references to “redemptions” mean
“repurchases” of shares.
(4) An “employee benefit plan” means any plan or arrangement, whether or not it is “qualified” under the Internal
Revenue Code, under which Class N shares of an Oppenheimer fund or funds are purchased by a fiduciary or other
administrator for the account of participants who are employees of a single employer or of affiliated employers.
These may include, for example, medical savings accounts, payroll deduction plans or similar plans. The fund
accounts must be registered in the name of the fiduciary or administrator purchasing the shares for the benefit of
participants in the plan.
(5) The term “Group Retirement Plan” means any qualified or non-qualified retirement plan for employees of a
corporation or sole proprietorship, members and employees of a partnership or association or other organized group
of persons (the members of which may include other groups), if the group has made special arrangements with the
Distributor and all members of the group participating in (or who are eligible to participate in) the plan purchase
shares of an Oppenheimer fund or funds through a single investment dealer, broker or other financial institution
designated by the group. Such plans include 457 plans, SEP-IRAs, SARSEPs, SIMPLE plans and 403(b) plans other than
plans for public school employees. The term “Group Retirement Plan” also includes qualified retirement plans and
non-qualified deferred compensation plans and IRAs that purchase shares of an Oppenheimer fund or funds through a
single investment dealer, broker or other financial institution that has made special arrangements with the
Distributor.
(6) However, that concession will not be paid on purchases of shares in amounts of $1 million or more (including any
right of accumulation) by a Retirement Plan that pays for the purchase with the redemption proceeds of Class C
shares of one or more Oppenheimer funds held by the Plan for more than one year.
(7) This provision does not apply to IRAs.
(8) This provision only applies to qualified retirement plans and 403(b)(7) custodial plans after your separation
from service in or after the year you reached age 55.
(9) The distribution must be requested prior to Plan termination or the elimination of the Oppenheimer funds as an
investment option under the Plan.
(10) This provision does not apply to IRAs.
(11) This provision does not apply to loans from 403(b)(7) custodial plans and loans from the
OppenheimerFunds-sponsored Single K retirement plan.
(12) This provision does not apply to 403(b)(7) custodial plans if the participant is less than age 55, nor to IRAs.