Oppenheimer Principal Protected Main Street Fund(R)

497 1 pptpspsai.htm PSP AND SAI PPT Oppenheimer Principal Protected Main Street Fund(R)

Oppenheimer
Principal Protected
Main Street Fund(R)

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Prospectus dated December 15, 2006 Oppenheimer Principal Protected Main
Street Fund(R)is a mutual fund that
seeks capital preservation in order to
have a net asset value on the Maturity
Date at least equal to your original
investment (reduced by any adjustments
to the Warranty Amount permitted under
the Warranty Agreement and less any
sales charges, your share of
extraordinary expenses and the

Shares of the Fund cannot be purchased proportional reduction for dividends
except by the reinvestment of the paid in cash and redemption of Fund
Fund's dividends and distributions. shares). The Fund seeks high total
return as a secondary objective. It
As with all mutual funds, the invests in shares of the Oppenheimer
Securities and Exchange Commission has Main Street Fund(R)(which invests
not approved or disapproved the Fund's mainly in common stocks) and U.S.
securities nor has it determined that government securities, including zero
this Prospectus is accurate or coupon bonds.
complete. It is a criminal offense to This Prospectus contains important
represent otherwise. information about the Fund's
objective, investment policies,
strategies and risks. It also contains
important information about how to
sell shares of the Fund and other
account features. Please read this
Prospectus carefully before you invest
and keep it for future reference about
An investment in the Fund is not a your account.
deposit of any bank and is not insured
or guaranteed by the Federal Deposit
Insurance Corporation or any other
government agency or any person.
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(logo) OppenheimerFunds
The Right Way to Invest

CONTENTS

ABOUT THE FUND

Overview
The Fund's Investment Objective and Principal Investment
Strategies
Main Risks of Investing in the Fund
The Fund's Past Performance
Fees and Expenses of the Fund
About the Fund's Investments
The Warranty Agreement and the Financial Warranty
How is the Warranty Amount Determined?
How the Fund is Managed

ABOUT YOUR ACCOUNT

Special Investor Services
AccountLink
PhoneLink
OppenheimerFunds Internet Website
Reinvestment Privilege

How to Sell Shares
By Mail
By Telephone

How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Financial Highlights of the Fund
Financial Highlights of the Underlying Fund

ABOUT THE FUND

Overview

The Oppenheimer Principal Protected Main Street Fund is a "fund of funds"
that invests a portion of its assets in shares of Oppenheimer Main Street
Fund(R)and a portion of its assets in U.S. government securities.

The Fund has an Offering Period, a Warranty Period and a Post-Warranty
Period. Shares of the Fund were offered during an Offering Period but will
not be offered during the Warranty Period, except in connection with
reinvestment of dividends and distributions. The Offering Period was from May
30, 2003 through July 31, 2003.

The Warranty Period began on August 5, 2003 and will run until August
5, 2010 (the "Maturity Date"). During the Warranty Period, the Fund will seek
primarily capital preservation, and secondarily high total return, by
allocating its assets between an equity portfolio (consisting of Class Y
shares of Oppenheimer Main Street Fund(R)) and a debt portfolio (consisting of
U.S. government securities, including zero coupon bonds and certain
securities guaranteed by U.S. government agencies and instrumentalities).
Shareholders may receive taxable gains from portfolio transactions by the
Fund, whether they take payment in cash or reinvest them to purchase
additional Fund shares.

The Fund has entered into a Financial Warranty Agreement (the "Warranty
Agreement") with Merrill Lynch Bank USA (the "Warranty Provider") pursuant to
which the Warranty Provider has issued, subject to certain conditions, a
financial warranty (the "Financial Warranty") to the Fund. The Financial
Warranty attempts to make sure that the value of each shareholder's account
on the Maturity Date will be no less than the value of that shareholder's
account on the second business day after the end of the Offering Period,
including net income, if any, earned by the Fund during the Offering Period,
reduced by (i) sales charges, (ii) the shareholder's pro rata portion of any
Extraordinary Expenses (as described on page 11), (iii) the proportional
reduction for dividends and distributions paid in cash and redemptions of
Fund shares, (iv) the shareholder's pro rata portion of the value of any
shares issued by the Fund during the Warranty Period other than in connection
with the reinvestment of dividends and distributions, (v) the amount of any
increase in that shareholder's investment in the Fund as a result of changes
in accounting practices for the Fund, corporate actions or certain other
events, and (vi) if OppenheimerFunds, Inc., as manager of the Fund (the
"Manager"), is required to make payments under the Warranty Agreement in
certain instances, and the Manager fails to do so in a timely manner, the
amount of such payments (on a pro rata basis). The value of the shareholder's
account on the second business day after the end of the Offering Period minus
the above-described reductions is referred to as the "Warranty Amount." In
order to avoid having their Warranty Amount reduced, shareholders must
reinvest all dividends and distributions received from the Fund to purchase
additional shares of the Fund and must not redeem any shares of the Fund
during the Warranty Period. If the value of the Fund's assets on the Maturity
Date is insufficient to result in the value of each shareholder's account
being at least equal to the shareholder's Warranty Amount, the Warranty
Provider will pay the Fund an amount sufficient to make sure that each
shareholder's account can be redeemed on the Maturity Date for an amount
equal to his or her Warranty Amount.

Because the front-end sales charge paid on the purchase of Class A
shares reduces the Warranty Amount for Class A shareholders, Class A shares
will have a lower Warranty Amount than the Class B, Class C or Class N
shares. Normal operating fees and expenses of the Fund incurred in the
ordinary course of business will not reduce the Warranty Amount. However,
certain Extraordinary Expenses (as described on page 11) incurred by the Fund
will reduce the Warranty Amount. In addition, in the event the Fund is
completely and irreversibly invested in U.S. government securities, any Fund
expenses in excess of certain limits (as described on page 27) will reduce
the Warranty Amount.

The Warranty Provider, a wholly-owned subsidiary of Merrill Lynch &
Co., Inc., is licensed as an industrial bank organized under Utah law. The
Warranty Provider's principal business is to engage in banking activities.
The Warranty Provider is regulated and examined by the FDIC and the Utah
Department of Financial Institutions. The Warranty Provider is not regulated
by the Federal Reserve or the U.S. Department of Treasury. Neither Merrill
Lynch & Co., Inc. nor any other entity will be guaranteeing the obligations
of the Warranty Provider. The Warranty Provider has not participated in the
organization of the Fund and makes no representation regarding the
advisability of an investment in the Fund. Further information about the
Warranty Provider can be found in the Statement of Additional Information.

Shareholders could lose money by investing in this Fund. A
shareholder's Warranty Amount will be reduced, as more fully described in
this Prospectus, if the shareholder takes any dividends or distributions in
cash instead of reinvesting them in additional shares of the Fund, redeems
any shares before the Maturity Date, if the Fund incurs Extraordinary
Expenses (as described on page 11), or if the Fund or the Manager fails to
perform certain obligations under the Warranty Agreement (in which case the
Warranty Provider may have the right to terminate the Financial Warranty).
Moreover, shareholders could lose money if the Warranty Provider fails or is
unable to meet its obligations under the Warranty Agreement.

During the Post-Warranty Period, which will commence immediately
following the Warranty Period, the Fund will seek high total return by
investing in Class Y shares of Oppenheimer Main Street Fund, common stocks of
U.S. companies of different capitalization ranges, and/or debt securities,
such as bonds and debentures. The Fund's shares will be offered on a
continuous basis during the Post-Warranty Period.

The Fund's Investment Objective and Principal Investment Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE DURING THE WARRANTY PERIOD? During
the Warranty Period, the Fund will seek capital preservation in order to have
a net asset value on the Maturity Date at least equal to the Warranty Amount.
The Fund seeks high total return as a secondary objective. The Fund's
investment objectives are fundamental policies that can be changed only with
the approval of a majority of the Fund's outstanding voting shares, as
described in the Statement of Additional Information.

WHAT DOES THE FUND MAINLY INVEST IN DURING THE WARRANTY PERIOD? The Fund is a
special type of mutual fund known as a "fund of funds" because it can invest
a substantial portion of its assets in other mutual funds. During the
Warranty Period, the Fund's investment manager, OppenheimerFunds, Inc. (the
"Manager"), will allocate the Fund's assets, consistent with the Warranty
Agreement, between a portfolio of equity securities as described below (the
"equity portfolio") and a portfolio of debt securities as described below
(the "debt portfolio"). The equity portfolio will consist of Class Y shares
of Oppenheimer Main Street Fund(R)(referred to as the "Underlying Fund"). The
Underlying Fund's investment objective is to seek high total return by
investing mainly in common stocks of U.S. companies of different
capitalization ranges. The debt portfolio will principally consist of zero
coupon U.S. government securities, but may also include certain other
securities guaranteed by certain U.S. government agencies and
instrumentalities and securities issued by government sponsored enterprises
which are neither guaranteed nor insured by the U.S. government. The
securities in the debt portfolio will have a maturity approximately equal to
the period remaining in the Warranty Period.

WHO IS THE FUND DESIGNED FOR? The Fund may be an appropriate investment for
you if you:
o Have an investment time horizon of at least 7 years (measured from the
beginning of the Warranty Period)

o Seek potential for growth but are concerned about capital preservation
o Want a professionally managed and diversified portfolio
o Are not seeking current income through cash dividends

Main Risks of Investing in the Fund

All investments have risks to some degree. The Fund's investments are subject
to changes in their value from a number of factors described below. There is
also the risk that poor security selection by the Manager, either in its
capacity as the Fund's investment manager or in its capacity as the
Underlying Fund's investment manager, will cause the Fund to underperform
other funds having a similar objective.

The principal risks of an investment in the Fund during the Warranty
Period and the Post-Warranty Period are those generally attributable to
investing in stocks and debt securities. Because the Fund invests in both
stocks (indirectly through investment in the Underlying Fund) and debt
securities during the Warranty Period, the Fund may underperform stock funds
when stocks are in favor and underperform bond funds when debt securities are
in favor.

To obtain the benefits of the Financial Warranty, the Fund expects to
comply with certain investment limitations established by the Warranty
Agreement. If the Fund or the Manager chooses not to comply with those
investment limitations because it determines that such non-compliance would
be in the shareholder's best interests, the Warranty Provider may exercise
its rights to have more of the Fund's assets invested in the debt portfolio
(including a complete and irreversible allocation to the debt portfolio) or
could terminate the Financial Warranty.

As with any mutual fund, the value of the Fund's investments, and
therefore the value of Fund shares, may go down. Although the Fund will seek
to return a shareholder's Warranty Amount at the end of the Warranty Period,
the value of the Fund's shares will fluctuate during the Warranty Period and
may decline below your original account value. Changes in the value of the
Fund's shares may occur because a particular stock market in which the
Underlying Fund invests is rising or falling or because of the effect of the
change on the value of the Fund's debt portfolio in response to interest rate
changes. You could lose money by investing in the Fund if you redeem your
shares prior to the Maturity Date or if the value of the Fund's investments
goes down and the Warranty Provider is unable to meet its obligations under
the Financial Warranty. See "The Warranty Agreement and the Financial
Warranty" on pages 22-24 for further information about the Warranty Agreement
and the circumstances under which the Financial Warranty may be terminated.

The Fund will distribute any net gains and income (including accrued
but unpaid income on zero coupon bonds) to shareholders at least annually.
Such distributions are taxable to shareholders even if the distributions are
reinvested in the Fund. Shareholders who reinvest distributions in the Fund
will be required to pay taxes on such distributions from other sources.
Shareholders who do not reinvest distributions, however, will be subject to a
reduction in their Warranty Amount.

RISKS OF INVESTING IN STOCKS. Stocks fluctuate in price, and their short-term
volatility at times may be great. Because the Underlying Fund currently
invests a substantial portion of its assets in common stocks, the value of
the Underlying Fund's portfolio and therefore the Fund's equity portfolio
will be affected by changes in the stock markets. Market risk will affect the
Fund's net asset values per share, which will fluctuate as the values of the
Underlying Fund's portfolio securities change. The corresponding effect on
the net asset value of the Fund will depend on the percentage of the Fund's
assets allocated to shares of the Underlying Fund.

A variety of factors can affect the price of a particular stock and the
prices of individual stocks do not all move in the same direction uniformly
or at the same time. Different stock markets may behave differently from each
other. In particular, because the Underlying Fund currently focuses its stock
investments in U.S. issuers, it will be primarily affected by changes in U.S.
stock markets.

Other factors can affect a particular stock's price, such as poor
earnings reports by the issuer, loss of major customers, major litigation
against the issuer, or changes in government regulations affecting the issuer
or its industry. The Underlying Fund currently invests substantial amounts in
large companies, but may buy securities of small- and medium-size companies,
which may have more volatile prices than stocks of large companies.
Therefore, if the Underlying Fund is focusing on or has substantial
investments in smaller capitalization companies at times of market
volatility, the Underlying Fund's share price may fluctuate more than that of
funds focusing on larger capitalization issuers.

At times, the Underlying Fund's emphasis of its investments in a
particular industry may differ compared to the weighting of that industry in
the Standard and Poor's 500 Composite Stock Price Index ("S&P 500 Index"),
which the Underlying Fund uses as a performance benchmark. To the extent that
the Underlying Fund increases its emphasis on stocks in a particular
industry, its share values may fluctuate in response to events affecting that
industry, such as changes in economic conditions, government regulations,
availability of basic resources or supplies, or other events that affect that
industry more than others.

INTEREST RATE RISK. Debt securities are subject to changes in value when
prevailing interest rates change. When interest rates fall, the values of
already-issued debt securities generally rise. When interest rates rise, the
values of already-issued debt securities generally fall, and those securities
may sell at a discount from their face amount. The magnitude of these price
fluctuations is generally greater for debt securities having longer
maturities and for zero coupon securities.

The Fund buys zero-coupon or "stripped" securities, which are
particularly sensitive to interest rate changes. Their prices may go up or
down more than the prices of other types of debt securities in response to
interest rate changes.

CREDIT RISK. Credit risk is the risk that the issuer of a debt security might
not make interest and principal payments on the security as they become due.
Securities, including zero-coupon securities, directly issued by the U.S.
Treasury and certain U.S. government agencies that are backed by the full
faith and credit of the U.S. government have little credit risk. Securities
issued by other agencies or instrumentalities of the U.S. government
generally have low credit risks. Securities issued by government-sponsored
enterprises, such as the Federal Home Loan Mortgage Corporation, the Federal
National Mortgage Association and the Federal Home Loan Bonds, are neither
guaranteed nor insured by the U.S. government and thus may experience greater
credit risk than other types of U.S. government securities.

RISKS ASSOCIATED WITH THE FINANCIAL WARRANTY. Although neither the Warranty
Provider nor any other person (including the Manager, its affiliates or the
United States government) has guaranteed the performance of the Fund, the
Fund has entered into the Warranty Agreement with the Warranty Provider to
try to make sure that on the Maturity Date shareholders will be able to
redeem their shares of the Fund at their Warranty Amount. The Financial
Warranty is solely the obligation of the Warranty Provider. It is possible
that the financial position of the Warranty Provider may deteriorate and it
would be unable to satisfy its obligations under the Financial Warranty. As
described above, shareholders could lose money if the Warranty Provider fails
to or is unable to perform its obligations under the Warranty Agreement.

The Fund's assets and the obligations of the Warranty Provider under
the Warranty Agreement are not guaranteed by Merrill Lynch & Co., Inc., the
United States government, the Manager, or any other entity or person. The
lack of a guarantee of the Warranty Provider's obligations under the Warranty
Agreement presents some risk to shareholders if the Warranty Provider fails
to or is unable to honor its obligations to the Fund on the Maturity Date
under the Warranty Agreement.

The Warranty Agreement may be terminated by the Warranty Provider in
certain circumstances, as discussed in "The Warranty Agreement and the
Financial Warranty," on pages 22-24. In such event, shareholders will not
receive the Warranty Amount but instead will receive the Fund's then-current
net asset value when they redeem their shares, which may be lower than the
Warranty Amount. Shareholders may receive less than their Warranty Amount in
certain other circumstances as well. For example, the Warranty Agreement
requires the Manager to make payments to the Warranty Provider upon the
happening of certain specified events. If the Manager fails to make a
required payment, the Warranty Provider may reduce its obligations under the
Financial Warranty. As a result, a shareholder's Warranty Amount may be
reduced.

In addition, the Manager has contractually agreed to reduce its
management fee for the remainder of the Warranty Period in the event that the
Fund becomes completely and irreversibly invested in the debt portfolio to
the extent necessary so that total annual operating expenses of the Fund are
limited to certain agreed amounts (as described under "Advisory Fees" on page
27) for each share class (excluding Extraordinary Expenses and certain other
expenses). However, if this reduction in the management fee is not sufficient
to reduce total annual operating expenses to these limits, the Manager is not
required to subsidize Fund expenses to assure that expenses do not exceed
those limits. Under such circumstances, the aggregate Warranty Amount will be
reduced by the portion of the Fund's annual operating expenses that exceed
these limits.

Furthermore, a shareholder's Warranty Amount per share will be reduced
by the shareholder's proportionate share of any Extraordinary Expenses
incurred by the Fund, by any shortfall amount resulting from the negligence
of the Manager, by dividends and distributions paid in cash, and by
redemption of Fund shares during the Warranty Period. If any of those were to
occur, the shareholder will receive less than the shareholder's original
Warranty Amount on the Maturity Date. The Manager will not be responsible to
the Fund for a reduction in the Warranty Amount due to an Extraordinary
Expense or other shortfall resulting from the Manager's negligent acts.

INVESTMENT RESTRICTIONS UNDER WARRANTY AGREEMENT. To avoid losing the
benefits of the Financial Warranty, the Fund must satisfy conditions of the
Warranty Agreement that require the Manager to make investment allocation
decisions based on a mathematical formula (the "Warranty Formula") that
limits the amount of the Fund's assets that may be allocated to the equity
portfolio. This limitation is designed to reduce, but does not eliminate, the
risk that the Fund's assets will be insufficient to allow the Fund to redeem
shares at not less than the Warranty Amount on the Maturity Date.
Accordingly, the Warranty Agreement could limit the Manager's ability to
respond to changing market conditions during the Warranty Period. If the
Manager fails to comply with the agreed-upon investment parameters or
otherwise fails to comply with certain requirements set forth in the Warranty
Agreement, the Warranty Provider may terminate the Financial Warranty,
exercise its right to instruct the Manager to immediately allocate the Fund's
assets to the debt portfolio, deliver to the Fund's custodian (the
"Custodian") pre-signed instructions from the Manager instructing the
Custodian to immediately allocate all of the Fund's assets to the debt
portfolio, or change one of the variables in the Warranty Formula to increase
the portion of the Fund's assets allocated to the debt portfolio. If the
Warranty Provider were to exercise the right to have all of the Fund's assets
invested in the debt portfolio, the Fund's ability to participate in upward
equity market movements would be eliminated.

RISK OF DEFAULT. A shareholder's ability to receive the Warranty Amount
depends on the financial condition of the Warranty Provider. The Warranty
Agreement is an obligation that runs solely to the Fund, not to the Fund's
shareholders, and shareholders would have no recourse against the Warranty
Provider in the event it defaults on its obligation to the Fund. Since the
Financial Warranty is solely an obligation of the Warranty Provider, an
investment in the Fund involves a risk of loss if the Warranty Provider is
placed in receivership, or is otherwise unable to perform its obligations or
defaults on its obligations, if any, to the Fund. In the event of an act of
insolvency by the Warranty Provider, the Fund's board of trustees (the
"Board") could take a variety of actions including replacing the Financial
Warranty. However, the Board is under no obligation to replace the Financial
Warranty or otherwise find a substitute provider of principal protection. In
each of the above circumstances, shareholders could suffer a loss of
principal. No entity or person is obligated to make up any shortfall in the
event the Warranty Provider defaults on its obligations to the Fund and the
Fund's assets are insufficient to redeem the Fund's shares for the Warranty
Amount on the Maturity Date. The Warranty Provider may, under certain
conditions, assign its obligations under the Warranty Agreement to an
affiliate, provided the Warranty Provider's parent company guarantees the
obligations of the affiliate. The Warranty Provider may assign its
obligations under the Warranty Agreement to a non-affiliate only if the Board
and the Manager have consented to such assignment. There is a risk that the
substitute Warranty Provider may not have the financial resources to fulfill
its obligations under the Warranty Agreement.

The availability of the Financial Warranty on the Maturity Date is
conditioned upon the Manager and the Fund satisfying their respective
obligations under the Warranty Agreement. Should the Manager or the Fund fail
to satisfy their respective obligations under the Warranty Agreement, the
Warranty Provider is permitted to terminate the Financial Warranty and thus
terminate its obligations to make any payment to the Fund if a shortfall
exists on the Maturity Date. In addition, the availability of the Financial
Warranty on the Maturity Date is conditional upon the Manager and the Fund's
Custodian providing certain information to the Warranty Provider. If the
Manager or the Custodian fails to provide such information, the Warranty
Provider may require the Fund to invest exclusively in the debt portfolio,
which will eliminate the Fund's ability to participate in upward equity
market movements.

RISKS ASSOCIATED WITH ASSET ALLOCATION. At times, the Fund's assets may be
largely invested in the debt portfolio in order to increase the likelihood of
preserving the original principal value of the Fund. If Fund assets are
largely invested in the debt portfolio, the Fund's exposure to equity markets
will decrease and the Fund's performance will be more highly correlated with
debt securities. In addition, if during the Warranty Period the equity
markets experience a major decline, the Fund's assets may become largely or
entirely invested in the debt portfolio. If the value of the shares of the
Underlying Fund were to decline significantly (whether within a short period
of time or over a protracted period), a complete and irreversible
reallocation to the debt portfolio may occur. In this circumstance, the Fund
would not participate in any subsequent recovery in the equity markets.
Investment in debt securities during the Warranty Period reduces the Fund's
ability to participate as fully in upward equity market movements, and
therefore represents some loss of opportunity compared to a portfolio that
invests principally in equity securities. In addition, the terms of the
Warranty Agreement prescribe certain investment parameters within which the
Fund must be managed during the Warranty Period to preserve the benefit of
the Financial Warranty. Accordingly, the Warranty Agreement could limit the
Manager's ability to alter the allocation of Fund assets during the Warranty
Period in response to changing market conditions. The terms of the Warranty
Agreement could require the Fund to liquidate an equity position when it
otherwise would not be in the shareholders' best interests or at a time when
the Manager otherwise would not recommend that the securities be sold.

The asset allocation process may result in additional transaction
costs. This process can have an adverse effect on the performance of the Fund
during periods of increased equity market volatility. In addition, a high
portfolio turnover rate may increase the Fund's transaction costs, which
would adversely affect performance. Also, you may receive taxable gains from
portfolio transactions by the Fund, whether you take payment in cash or
reinvest them to purchase additional Fund shares.

HOW RISKY IS THE FUND OVERALL? The risks described above collectively form
the overall risk profile of the Fund and can affect the value of the Fund's
investments, its investment performance and the prices of its shares.
Particular investments and investment strategies also have risks. These risks
mean that you can lose money by investing in the Fund, particularly if the
financial condition of the Warranty Provider deteriorates and it is unable to
make a payment to the Fund, if necessary, under the Financial Warranty. You
could lose money if, among other reasons, the Fund incurs Extraordinary
Expenses as described on page 11 or is liquidated prior to the Maturity Date,
or if you redeem your shares prior to the Maturity Date and the Fund's net
asset value is less than the Warranty Amount on the date of redemption. It is
possible that the Warranty Provider will not be able to satisfy its
obligations under the Warranty Agreement as of the Maturity Date or that the
Manager or the Fund will not be able to satisfy their respective obligations
under the Warranty Agreement. As a result, the Fund may not be able to redeem
your shares for the Warranty Amount on the Maturity Date, and the value of
your shares on the Maturity Date may be more or less than your Warranty
Amount. There is no assurance that the Fund will achieve its investment
objective.

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The life of the Fund is divided into three phases: an Offering Period (which
has ended), a Warranty Period and a Post-Warranty Period.
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Warranty Period. The Warranty Period began August 5, 2003, the third business
day after the end of the Offering Period, and will run through August 5,
2010, or if that day is not a business day, the first business day thereafter
(previously defined as the "Maturity Date"). During the Warranty Period, the
Fund will not accept purchase orders for Fund shares, except for reinvestment
of dividends and distributions.

If you maintain your investment in the Fund through the Maturity Date,
do not redeem any shares, and reinvest all dividends and distributions, you
will be entitled to redeem your shares held as of the Maturity Date for the
greater of the then-current net asset value of your shares or your Warranty
Amount. A transfer or re-registration of existing shares during the Warranty
Period that does not result in an increase in Fund shares that are issued and
outstanding will not interrupt the seven year period calculated to determine
the Warranty Amount. Shareholders must redeem their shares in the Fund on,
and only on, the Maturity Date (August 5, 2010) to ensure that they receive
the greater of the then-current net asset value of the Fund or their Warranty
Amount. Prior to the Maturity Date the Fund will provide each shareholder a
notice reminding them that shares must be redeemed on the Maturity Date to
receive the full benefit of the Financial Warranty. In the event there is a
shortfall on the Maturity Date, each redeeming shareholder will be entitled
to redemption proceeds that include a pro rata allocation of any payments
made to the Fund by the Warranty Provider. Shareholders who remain invested
in the Fund past the Maturity Date will also receive the benefit of a pro
rata allocation of any shortfall payments made by the Warranty Provider, if
any, on the Maturity Date. However, after the Maturity Date shares of the
Fund will not be protected by the Financial Warranty, will be subject to
market fluctuations, and will then be redeemable at the Fund's then-current
net asset value, which may be lower than the Warranty Amount.

The Fund never restricts your ability to redeem your shares. However,
shareholders who do not reinvest their distributions or dividends will reduce
their Warranty Amount and shareholders who redeem prior to the Maturity Date
will bear the cost of the Warranty Agreement without receiving any
corresponding benefit. As explained in the examples on pages 24-26, if you
reinvest your dividends and distributions, the number of shares you own in
the Fund will increase at each date on which a dividend or distribution is
effective and the corresponding Warranty Amount per share decreases so that
your overall Warranty Amount does not change. Therefore, if you fail to
reinvest the Fund's dividends or distributions or you redeem Fund shares,
your overall Warranty Amount will decrease because you will have fewer shares
multiplied by the applicable Warranty Amount per share. See "How is the
Warranty Amount Determined?" for further information. Shareholders (other
than certain retirement plans) are subject to income taxes on distributions
from the Fund whether they take payment of distributions in cash or reinvest
them to purchase additional Fund shares.

If the Fund incurs certain Extraordinary Expenses or if the Manager is
required to make payments under the Warranty Agreement in certain instances
and the Manager fails to do so in a timely manner, your Warranty Amount also
will be reduced by the proportionate amount of the Extraordinary Expenses or
the amount of the payment which the Manager failed to make.

"Extraordinary Expenses" means any Fund fees and expenses that are not
incurred or accrued in the ordinary course of the Fund's business (including
for example, all costs of defending or prosecuting any claim, or litigation,
to which the Fund is a party, together with any amounts in judgment,
settlement or indemnification expense incurred by the Fund or any other
non-recurring, non-operating expenses). If the Fund's assets are invested
completely and irreversibly in the debt portfolio, Extraordinary Expenses
will also include any Fund fees and expenses incurred in excess of the Fund's
expense limits whether or not incurred in the ordinary course of the Fund's
business. Those expense limits are 1.30% for Class A shares, 2.05% for Class
B shares, 2.05% for Class C shares and 1.55% for Class N shares. The Fund
will invest its assets completely and irreversibly in the debt portfolio if
the Warranty Formula provides for such allocation or if, under the terms of
the Warranty Agreement, the Warranty Provider exercises its right to instruct
the Manager to allocate the Fund's assets to the debt portfolio, or deliver
to the Fund's Custodian pre-signed instructions from the Manager instructing
the Custodian to immediately allocate all of the assets of the Fund to the
debt portfolio.

Post-Warranty Period. On and after the Maturity Date, you can redeem your
shares or exchange your shares for shares of the same class of another
Oppenheimer fund that offers an exchange privilege. The value of your shares
on the Maturity Date will be the greater of (i) the then-current net asset
value of the Fund or (ii) the Warranty Amount. Because the benefits of the
Warranty Agreement terminate after the Maturity Date, the entire amount of
your investment in the Fund following the Maturity Date will be subject to
market risk.

If after the Maturity Date shares of the Fund remain issued and
outstanding, the Board may elect at the recommendation of the Manager and
without shareholder approval (1) to have the Fund redeem all issued and
outstanding shares and then terminate the Fund, (2) to merge the Fund into
the Underlying Fund, or (3) to continue the existence of the Fund.
Shareholders who continue their investment in the Fund after the Maturity
Date will receive prior notice of the Board's decision. If the Board chooses
to have the Fund redeem all issued and outstanding shares and terminate the
Fund, those remaining shareholders will receive the then-current net asset
value, which may be more or less than their Warranty Amount. If the Board
chooses to continue the existence of the Fund during the Post-Warranty
Period, then the Fund's investment objectives will be changed by the Board to
the single objective of seeking high total return and the Fund's name will
change to an appropriate name as determined by the Board. To achieve that
objective, the Fund may invest its assets during the Post-Warranty Period
primarily in shares of the Underlying Fund, common stocks of U.S. companies
of different capitalization ranges, and debt securities, such as bonds and
debentures. The Manager will sell a portfolio security during the
Post-Warranty Period if it determines that the security will not provide the
return anticipated. During the Post-Warranty Period, the Fund's shares will
be offered on a continuous basis. Shareholders will not have the benefit of
the Financial Warranty during the Post-Warranty Period.

------------------------------------------------------------------------------
An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency or any person.
------------------------------------------------------------------------------

The Fund's Past Performance

Please remember that the Fund is intended to be a long-term investment and
that performance results are historical, and that past performance
(particularly over a short-term period) is not predictive of future results.
Because the Fund may invest a significant amount of its assets in Class Y
shares of the Underlying Fund, financial information about Class Y shares of
the Underlying Fund is included beginning on page 47 of this Prospectus. That
information is not intended to predict the performance of the Fund. The
Fund's performance will differ from the performance of the Underlying Fund.

The bar chart and table below show one measure of the risks of
investing in the Fund, by showing the Fund's performance (for its Class A
shares) for the full calendar year since the Fund's inception and by showing
how the average annual total returns of the Fund's shares, both before and
after taxes, compared to those of a broad-based market index. The after-tax
returns for the other classes of shares will vary.

The after-tax returns are shown for Class A shares only and are
calculated using the historical highest individual federal marginal income
tax rates in effect during the periods shown, and do not reflect the impact
of state or local taxes. In certain cases, the figure representing "Return
After Taxes on Distributions and Sale of Fund Shares" may be higher than the
other return figures for the same period. A higher after-tax return results
when a capital loss occurs upon redemption and translates into an assumed tax
deduction that benefits the shareholder. The after-tax returns are calculated
based on certain assumptions mandated by regulation and your actual after-tax
returns may differ from those shown, depending on your individual tax
situation. The after-tax returns set forth below are not relevant to
investors who hold their fund shares through tax-deferred arrangements such
as IRAs or to institutional investors not subject to tax. The Fund's past
investment performance, before and after taxes, is not necessarily an
indication of how the Fund will perform in the future.

Annual Total Returns (Class A) (as of 12/31 each year)
[See appendix to prospectus for data in bar chart showing the annual total
return]

Sales charges and taxes are not included in the calculations of return in
this bar chart, and if those charges and taxes were included, the returns may
be less than those shown.

For the period from January 1, 2006 through September 30, 2006, the
cumulative return (not annualized) before taxes for Class A shares was 7.28%.

During the period shown in the bar chart, the highest return (not annualized)
before taxes for a calendar quarter was 6.32% (4th Qtr 04) and the lowest
return (not annualized) before taxes for a calendar quarter was -2.36% (1st
Qtr 05).

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

Average Annual Total Returns 1 Year 5 Years
for the periods ended December 31, (or life of class, if
2005 less)

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class A Shares (inception June 2,

2003) -2.83% 5.14%
Return Before Taxes -3.13% 4.70%
Return After Taxes on Distributions
Return After Taxes on Distributions -1.83% 4.15%
and Sale of Fund Shares

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

S&P 500 Index (reflects no deduction 4.91% 12.52%(1)
for fees, expenses or taxes)

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

Class B Shares (inception June 2, -2.59% 5.77%

2003)
---------------------------------------------------------------------------------

Class C Shares (inception June 2, 1.37% 6.82%

2003)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Class N Shares (inception June 2, 2.02% 7.41%

2003)
---------------------------------------------------------------------------------
From 5/31/03.

The Fund's average annual total returns include applicable sales charges: for
Class A, the current maximum initial sales charge of 5.75%; for Class B, the
contingent deferred sales charge of 5% (1-year) and 3% (life of class); and
for Class C and Class N, the 1% contingent deferred sales charge for the
1-year period. The returns measure the performance of a hypothetical account
and assume that all dividends and capital gains distributions have been
reinvested in additional shares. The performance of the Fund's Class A shares
is compared to the Standard & Poor's 500 Index, an unmanaged index of U.S.
equity securities. The index performance includes reinvestment of income but
does not reflect transaction costs, fees, expenses or taxes. The Fund's
investments vary from those in the index.

Fees and Expenses of the Fund

The Fund pays a variety of expenses directly for management of its assets,
administration, distribution of its shares and other services and for the
Financial Warranty. Those expenses are subtracted from the Fund's assets to
calculate the Fund's net asset value per share. All shareholders therefore
pay those expenses indirectly. The fees for the Fund may be higher than fees
paid by other mutual funds which do not offer principal protection. In
addition, the Fund, and therefore its shareholders, will indirectly bear its
pro rata share of the expenses of the Underlying Fund. Shareholders pay other
expenses directly, such as sales charges and account transaction charges. The
following tables are meant to help you understand the fees and expenses you
may pay if you buy and hold shares of the Fund. "Other Expenses" and "Total
Annual Operating Expenses" are based on the Fund's expenses during its fiscal
year ended August 31, 2006.

Shareholder Fees (charges paid directly from your investment):
---------------------------------------------------------------------------------
Class A Class B Class C Class N
Shares Shares Shares Shares
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Maximum Sales Charge (Load) on 5.75% None None None
purchases (as % of offering price)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load)
(as % of the lower of the original
offering None(1) 5%(2) 1%(3) 1%(4)
price or redemption proceeds)
---------------------------------------------------------------------------------

Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)
---------------------------------------------------------------------------------
Class A Class B Class C Class N
Shares Shares(5) Shares Shares
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Management Fees(6) 0.06% 0.06% 0.06% 0.06%

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Distribution and/or Service (12b-1) Fees 0.25% 1.00% 1.00% 0.50%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Warranty Fee(7) 0.60% 0.60% 0.60% 0.60%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Other Expenses(8) 0.12% 0.12% 0.11% 0.05%

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

Total Annual Operating Expenses 1.03% 1.78% 1.77% 1.21%

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

Underlying Fund Operating Expenses 0.47% 0.47% 0.47% 0.47%

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

Total Annual Fund and Underlying Fund 1.50% 2.25% 2.24% 1.68%
Operating Expenses(9)

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

Expenses may vary in future years.

"Total Annual Operating Expenses" include the fees directly incurred by the
Fund and the "Underlying Fund Operating Expenses" include the fees indirectly
incurred by the Fund through its investment in shares of the Underlying Fund.
The expenses of the Underlying Fund are based on the net annual expense
ratio, after giving effect to any waivers or reimbursements, of the
Underlying Fund for its last fiscal year. In addition, any material changes
to the Fund's asset allocation in the Underlying Fund during the Fund's
current fiscal year could increase or decrease the "Underlying Fund Operating
Expenses."

1. A contingent deferred sales charge may apply to redemptions of investments
of $1 million or more of Class A shares. See "How to Sell Shares - How
Contingent Deferred Sales Charges Affect Redemptions" for details.
2. Applied to redemptions in first year after purchase. The contingent
deferred sales charge gradually declines from 5% to 1% in years one through
six and is eliminated after that.
3. Applied to shares redeemed within 12 months of purchase.
4. A contingent deferred sales charge applies to shares redeemed within 18
months of retirement plan's first purchase of Class N shares.
5. Class B shares automatically convert to Class A shares 88 months after
purchase.

6. Under the investment advisory agreement, the Manager receives an advisory
fee equal to 0.50% of the average annual net assets of the Fund, reduced by
the amount of advisory fees paid to the Manager by the Underlying Fund
relating to the Fund's assets invested in the Underlying Fund. However, the
management fee will not be reduced below zero. The Manager has contractually
agreed to further reduce its management fee to 0.25% of average annual net
assets for the remainder of the Warranty Period in the event that 100% of the
Fund's assets are completely and irreversibly invested in the debt portfolio
to the extent necessary so that total annual operating expenses of the Fund
(other than Extraordinary Expenses such as litigation costs) do not exceed
1.30% for Class A shares, 2.05% for Class B shares, 2.05% for Class C shares
and 1.55% for Class N shares. However, if this reduction in the management
fee is not sufficient to reduce total annual operating expenses to these
limits, the Manager is not required to subsidize Fund expenses to assure that
expenses do not exceed those limits. Furthermore, if the Fund's total annual
operating expenses exceed those limits while the Fund's assets are completely
and irreversibly allocated to the debt portfolio, the Warranty Amount will be
reduced by the portion of the Fund's total annual operating expenses" that
exceeds those limits. The Manager has voluntarily agreed to waive its
management fee payable by the Fund by 0.00833% per month in any month
following a month where the Fund's average daily equity allocation was less
than 10%. The Manager may amend or terminate that voluntary undertaking at
any time.
7. If the Fund becomes completely and irreversibly invested in the debt
portfolio, the Warranty Fee payable by the Fund to the Warranty Provider
under the Warranty Agreement will decrease to 0.35% per annum.
8. "Other Expenses" include transfer agent fees, custodial fees, and
accounting and legal expenses that the Fund pays. The Transfer Agent has
voluntarily undertaken to the Fund to limit the transfer agent fees to 0.35%
of average daily net assets per fiscal year for all classes. That voluntary
undertaking may be amended or withdrawn at any time. No transfer agent fees
were waived or reimbursed under this arrangement during the Fund's last
fiscal year.
9. The Manager has voluntarily agreed to reimburse the Fund for certain
expenses of the Underlying Fund, other than advisory fees paid to the Manager
by the Underlying Fund, relating to the Fund's assets invested in the
Underlying Fund. For the fiscal year ended August 31, 2006, following this
reimbursement, the Fund's actual "Total Annual Fund and Underlying Fund
Operating Expenses" as a percentage of daily net assets were 1.47% for Class
A shares, 2.22% for Class B shares, 2.21% for Class C shares, and 1.65% for
Class N shares. The amount of this expense reimbursement is based on the
percentage allocation of the Fund's assets in shares of the Underlying Fund
and will fluctuate as the allocation changes. The Manager may amend or
withdrawal that voluntary undertaking at any time.

EXAMPLES. The following examples are intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
examples are based on the "Total Annual Fund and Underlying Fund Operating
Expenses" shown in the table above, and assume that you invest $10,000 in a
class of shares of the Fund for the time periods indicated and reinvest your
dividends and distributions.

The first example assumes that you redeem all of your shares at the end
of those periods. The second example assumes that you keep your shares. Both
examples also assume that your investment has a 5% return each year and that
the class's operating expenses remain the same. Your actual costs may be
higher or lower because expenses will vary over time. Based on these
assumptions your expenses would be as follows:

If shares are redeemed:* 1 Year 3 Years 5 Years 10 Years

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

Class A Shares $720 $1,025 $1,352 $2,275

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

Class B Shares $731 $1,011 $1,418 $2,331**

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

Class C Shares $330 $708 $1,213 $2,603

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

Class N Shares $272 $534 $920 $2,003

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

If shares are not redeemed:* 1 Year 3 Years 5 Years 10 Years

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

Class A Shares $720 $1,025 $1,352 $2,275

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

Class B Shares $231 $711 $1,218 $2,331**

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

Class C Shares $230 $708 $1,213 $2,603

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

Class N Shares $172 $534 $920 $2,003

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

*In the first example, expenses include the initial sales charge for Class A
and the applicable Class B, Class C or Class N contingent deferred sales
charges. In the second example, the Class A expenses include the sales
charge, but Class B, Class C and Class N expenses do not include the
contingent deferred sales charges.
**Class B expense for years 8 through 10 are based on Class A expenses
because Class B shares automatically convert to Class

A 88 months after purchase.

About the Fund's Investments

THE FUND'S PRINCIPAL INVESTMENT POLICIES AND RISKS. The allocation of the
Fund's assets among the debt portfolio and the equity portfolio will vary
over time based upon the Warranty Formula, which is a mathematical formula
intended to allow the Fund to have a net asset value on the Maturity Date at
least equal to the Warranty Amount. The Statement of Additional Information
contains more detailed information about the Fund's investment policies and
risks.

Investment in Shares of Oppenheimer Main Street Fund(R). The Fund invests most
of the equity portfolio in Class Y shares of Oppenheimer Main Street
Fund(R)(the "Underlying Fund"). The Underlying Fund seeks high total
return, by investing mainly in common stocks of U.S. companies of
different capitalization ranges, presently focusing on large
capitalization issuers. It also can buy debt securities, such as bonds
and debentures but does not currently emphasize these investments. The
portfolio managers of the Underlying Fund use a variety of proprietary
quantitative models to rank stocks on the basis of valuation, momentum
and investor psychology, fundamental research about particular
industries and individual judgment. While this process and the
inter-relationship of the factors used may change over time and its
implementation may vary in particular cases, in general the selection
process currently involves the use of:

o Multi-factor quantitative models: The Underlying Fund uses both "top
down" and "bottom up" models. The "top down" models are primarily
used to help the portfolio managers of the Underlying Fund determine
its market capitalization exposure (large, mid, small) and rely on
indicators such as relative valuations, relative price trends and
interest rate relationships. The "bottom up" models help the
portfolio managers identify the most attractive stocks within each
market capitalization category. These stock selection models are
based upon many factors that measure the attractiveness of
individual securities relative to each other. The portfolio managers
typically follow and analyze more than 3,000 stocks on a daily basis
and select those that are deemed attractive.
o Fundamental research: The portfolio managers use internal research
and analysis by other market analysts, with emphasis on current
company news and industry-related events.
o Judgment: The portfolio is then continuously rebalanced by the
portfolio managers, using the tools described above.

The portfolio managers of the Underlying Fund emphasize wide
diversification. The allocation of the Underlying Fund's portfolio among
different investments will vary over time based upon the Manager's evaluation
of economic and market trends. The Underlying Fund's portfolio might not
always include all of the different types of investments described below.

Stock Investments. The Underlying Fund currently invests mainly in common
stocks. The Underlying Fund currently focuses on securities of issuers
that have large capitalizations. Historically the prices of securities
of large capitalization issuers have tended to be less volatile than
those of smaller issuers. However, the Underlying Fund can buy stocks
of issuers in all capitalization ranges. "Capitalization" refers to the
market value of all of the issuer's outstanding common stock.
Debt Securities. The mix of equities and debt securities in the Underlying
Fund's portfolio will vary over time depending on the Manager's
judgment about market and economic conditions. The Underlying Fund
currently does not emphasize investment in debt securities. The
Underlying Fund's investments in debt securities can include securities
issued or guaranteed by the U.S. government or its agencies and
instrumentalities, and foreign and domestic corporate bonds, notes and
debentures. Securities issued by government-sponsored enterprises, such
as the Federal Home Loan Mortgage Corporation, the Federal National
Mortgage Association and the Federal Home Loan Bonds, are neither
guaranteed nor insured by the U.S. government and thus may experience
greater credit risk than other types of U.S. government securities.
They may be selected for their income possibilities, for liquidity and
to help cushion fluctuations in the Underlying Fund's net asset values.

The debt securities the Underlying Fund buys may be rated by nationally
recognized rating organizations such as Moody's Investors Service, Inc.
or Standard & Poor's Rating Service or they may be unrated securities
assigned a comparable rating by the Manager.

o Special Credit Risks of Lower-Grade Securities. The Underlying Fund can
invest
up to 25% of its total assets in "lower-grade" securities commonly
known as "junk bonds." These are securities rated below "Baa" by
Moody's Investors Service, Inc. or "BBB" by Standard & Poor's
Ratings Service or have similar ratings by other ratings
organizations, or, if unrated, assigned a comparable rating by the
Manager. However, the Underlying Fund currently does not intend to
invest more than 10% of its assets in lower-grade securities and
cannot invest more than 10% of its total assets in lower-grade
securities that are not convertible.

Debt securities below investment grade, whether rated or unrated,
have greater risks than investment-grade securities. There may be
less of a market for them and therefore they may be harder to sell
at an acceptable price. There is a relatively greater possibility
that the issuer's earnings may be insufficient to make the payments
of interest and principal when due. These risks mean that the
Underlying Fund's net asset value per share could be affected by
declines in value of these securities.
Risks of Foreign Investing. The Underlying Fund can buy securities of
companies or governments in any country, developed or underdeveloped.
While there is no limit on the amount of the Underlying Fund's assets
that may be invested in foreign securities, the Manager does not
currently plan to invest significant amounts of the Underlying Fund's
assets in foreign securities. While foreign securities offer special
investment opportunities, there are also special risks, such as the
effects of a change in value of a foreign currency against the U.S.
dollar, which will result in a change in the U.S. dollar value of
securities denominated in that foreign currency. Foreign issuers are
not subject to the same accounting and disclosure requirements to which
U.S. companies are subject. The value of foreign investments may be
affected by exchange control regulations, expropriation or
nationalization of a company's assets, foreign taxes, delays in
settlement of transactions, changes in governmental economic or
monetary policy in the U.S. or abroad, or other political and economic
factors.

Additionally, if the Underlying Fund invests a significant amount of
its assets in foreign securities, it might expose the fund to
"time-zone arbitrage" attempts by investors seeking to take advantage
of the differences in value of foreign securities that might result
from events that occur after the close of the foreign securities market
on which a foreign security is traded and the close of the New York
Stock Exchange (the "NYSE") that day, when the Underlying Fund's net
asset value is calculated. If such time-zone arbitrage were successful,
it might dilute the interests of other shareholders. However, the
Underlying Fund's use of "fair value pricing" to adjust the closing
market prices of foreign securities under certain circumstances, to
reflect what the Manager and the Board believe to be their fair value
may help deter those activities.
Other Equity Securities. Equity securities include common stocks, as well as
"equity equivalents" such as preferred stocks and securities
convertible into common stock. Preferred stock has a set dividend rate
and ranks after bonds and before common stocks in its claim for
dividends and on assets if the issuer is liquidated or becomes
bankrupt. The Manager considers some convertible securities to be
"equity equivalents" because of the conversion feature and in that case
their rating has less impact on the investment decision than in the
case of debt securities.
Illiquid and Restricted Securities. Investments may be illiquid because they
do not have an active trading market, making it difficult to value them
or dispose of them promptly at an acceptable price. Restricted
securities may have terms that limit their resale to other investors or
may require registration under applicable securities laws before they
can be sold publicly. The Underlying Fund will not invest more than 10%
of its net assets in illiquid or restricted securities. The Underlying
Fund's Board can increase that limit to 15%. Certain restricted
securities that are eligible for resale to qualified institutional
purchasers may not be subject to that limit. The Manager monitors
holdings of illiquid securities on an ongoing basis to determine
whether to sell any holdings to maintain adequate liquidity.
Derivative Investments. The Underlying Fund can invest in a number of
different kinds of "derivative" investments. In general terms, a
derivative investment is an investment contract whose value depends on
(or is derived from) the value of an underlying asset, interest rate or
index. In the broadest sense, options, futures contracts, and other
hedging instruments the Underlying Fund might use may be considered
"derivative" investments. The Underlying Fund currently does not use
derivatives to a significant degree and is not required to use them in
seeking its objective.

Derivatives have risks. If the issuer of the derivative investment does
not pay the amount due, the Underlying Fund can lose money on the
investment. The underlying security or investment on which a derivative
is based, and the derivative itself, may not perform the way the
Manager expected it to. As a result of these risks the Underlying Fund
could realize less principal or income from the investment than
expected or its hedge might be unsuccessful. As a result, the
Underlying Fund's share prices could fall. Certain derivative
investments held by the Underlying Fund might be illiquid.
o Hedging. The Underlying Fund can buy and sell futures contracts, put
and call options, forward contracts and options on futures and
securities indices. These are all referred to as "hedging instruments."
Some of these strategies would hedge the Underlying Fund's portfolio
against price fluctuations. Other hedging strategies, such as buying
futures and call options, would tend to increase the Underlying Fund's
exposure to the securities market.

There are also special risks in particular hedging strategies. Options
trading involves the payment of premiums and can increase portfolio
turnover. If the Manager used a hedging instrument at the wrong time or
judged market conditions incorrectly, the strategy could reduce the
Underlying Fund's return.

Investments in Oppenheimer Institutional Money Market Fund. The Fund
can invest its free cash balances in the Class E shares of
Oppenheimer Institutional Money Market Fund, to seek current
income while preserving liquidity. The Oppenheimer Institutional
Money Market Fund is a registered open-end management investment
company, regulated as a money market fund under the Investment
Company Act of 1940, as amended. It invests in a variety of
short-term, high-quality, dollar-denominated money market
instruments issued by the U.S. government, domestic and foreign
corporations and financial institutions, and other entities. As a
shareholder, the Fund will be subject to its proportional share of
the Oppenheimer Institutional Money Market Fund's Class E
expenses, including its advisory fee. However, the Manager will
waive a portion of the Fund's advisory fee to the extent of the
Fund's share of the advisory fee paid by the Oppenheimer
Institutional Money Market Fund.

Temporary Defensive and Interim Investments. In times of adverse or unstable
market, economic or political conditions, the Underlying Fund can
invest up to 100% of its total assets in temporary defensive
investments that are inconsistent with its principal investment
strategies. Generally, they would be money market instruments, U.S.
government securities, highly-rated commercial paper, or repurchase
agreements. The Underlying Fund may also hold these types of securities
pending the investment of proceeds from the sale of Underlying Fund
shares or portfolio securities or to meet anticipated redemptions of
Underlying Fund shares. To the extent the Underlying Fund invests
defensively in these securities, it may not achieve its investment
objective.
For more information about the types of securities the Underlying Fund
may invest in, you can request a prospectus of Oppenheimer Main Street
Fund by calling the toll-free number listed on the back cover of this
Prospectus.

Loans of Portfolio Securities. The Underlying Fund may make loans of its
portfolio securities, with a value not to exceed 25% of its net assets,
in accordance with policies approved by the Underlying Fund's Board.
The Underlying Fund has entered into a securities lending agreement
with JPMorgan Chase Bank, N.A. ("JPMorgan Chase") for that purpose.
Under the agreement, the Underlying Fund's portfolio securities may be
loaned to brokers, dealers and financial institutions, provided that
such loans comply with the collateralization and other requirements of
the securities lending agreement, the Underlying Fund's policies and
applicable government regulations. JPMorgan Chase has agreed, in
general, to bear the risk that a borrower may default on its obligation
to return loaned securities. However, the Underlying Fund will be
responsible for risks associated with the investment of cash
collateral, including the risk of a default by the issuer of a security
in which cash collateral has been invested. If that occurs, the
Underlying Fund may incur additional costs in seeking to obtain the
collateral or may lose the amount of the collateral investment. The
Underlying Fund may also lose money if the value of the investments
purchased with cash collateral decreases.

INVESTMENT IN DEBT SECURITIES. During the Warranty Period, the Fund will
invest a portion of its assets, and in certain circumstances the Fund may
invest all of its assets, in U.S. government securities having a maturity
approximately equal to the period remaining in the Warranty Period.

U.S. Government Securities. U.S. government securities the Fund buys will
consist of non-callable general obligations of the U.S. Treasury backed
by the full faith and credit of the U.S. government or of any of the
following U.S. government agencies: Federal National Mortgage
Association, Federal Home Loan Mortgage Corporation, Federal Home Loan
Bank, Resolution Funding Corporation, Financing Corporation and
Tennessee Valley Authority, provided such securities are rated no less
than "AAA" by Standard & Poor's Rating Services or "Aaa" by Moody's
Investors Service, Inc. Securities issued by the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage Association and the
Federal Home Loan Banks are neither guaranteed nor insured by the U.S.
government.
o U.S. Treasury Obligations. These include Treasury bills (having
maturities of one year or less when issued), Treasury notes (having
maturities of more than one year and up to ten years when issued), and
Treasury bonds (having 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. The Fund can buy U. S. Treasury securities that have been
"stripped" of their coupons and zero-coupon securities described below.
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 U.S. government. Government National Mortgage
Association ("Ginnie Mae") pass-through mortgage certificates, for
example, are supported by the full faith and credit of the U.S.
government.
Zero-Coupon Securities. Some of the debt securities the Fund buys are
zero-coupon bonds that pay no interest. The Fund can invest up to 100%
of its assets in zero-coupon U.S. government securities. They are
issued at a substantial discount from their face value. Because
zero-coupon securities have no reinvestment risk if held to maturity,
they are more appropriate than coupon-paying securities for seeking to
ensure that the Fund has a certain amount of assets at the end of a set
period of time. Zero-coupon securities are subject to greater
fluctuations in price from interest rate changes than typical debt
securities that pay interest on a regular basis. The Fund may have to
pay out the imputed income on zero-coupon securities without receiving
the cash currently. The Fund will not purchase zero-coupon securities
in the form of collateralized mortgage obligations.
Short-Term Debt Securities. The Fund can buy high-quality, short-term money
market instruments, including obligations of the U.S. government and
its agencies, and certain short-term demand and time deposits in,
certificates of deposit of and bankers' acceptances issued by certain
U.S. depository institutions or trust companies, and certain commercial
paper having a maturity of not more than 180 days, which are
short-term, negotiable promissory notes of companies. Because these
instruments tend to offer lower yields than other debt securities, the
Fund ordinarily uses them for liquidity and cash management purposes or
for defensive purposes when market conditions are unstable.
Portfolio Turnover. A change in the securities held by the Fund is known as
"portfolio turnover." The Fund can engage in active and frequent
trading to try to achieve its objective, and will likely have a high
portfolio turnover rate. Increased portfolio turnover creates higher
brokerage and transaction costs for the Fund (and may reduce
performance). However, most of the Fund's portfolio transactions are
principal trades that do not entail brokerage fees. If the Fund
realizes capital gains when it sells its portfolio investments, it must
generally pay those gains out to shareholders, increasing their taxable
distributions. The Financial Highlights table at the end of the
Prospectus shows the Fund's portfolio turnover rate during the past
fiscal year.

Loans of Portfolio Securities. The Fund may make loans of its portfolio
securities, with a value not to exceed 331/3% of its net assets, in
accordance with policies approved by the Board. The Fund has entered
into a securities lending agreement with JP Morgan Chase for that
purpose. Under the agreement, the Fund's portfolio securities may be
loaned to brokers, dealers and financial institutions, provided that
such loans comply with the collateralization and other requirements of
the securities lending agreement, the Fund's policies and applicable
government regulations. JP Morgan Chase has agreed to bear the risk
that a borrower may default on its obligation to return loaned
securities. However, the Fund will be responsible for risks associated
with the investment of cash collateral, including the risk of a default
by the issuer of a security in which cash collateral has been invested.
If that occurs, the Fund may incur additional costs in seeking to
obtain the collateral or may lose the amount of the collateral
investment. The Fund may also lose money if the value of the
investments purchased with cash collateral decreases.

ASSET ALLOCATION. The Manager allocates the Fund's assets between the equity
portfolio (shares of the Underlying Fund) and the debt portfolio (consisting
of U.S. government securities, including zero coupon bonds and certain
securities guaranteed by certain U.S. government agencies and
instrumentalities) based upon the Warranty Formula. The Manager evaluates the
relative allocation between the equity portfolio and debt portfolio daily and
makes any necessary adjustments to the Fund's portfolio. The Warranty Formula
may allocate between 0% to 100% of the Fund's assets to the equity portfolio.
The allocation during the Warranty Period will fluctuate in response to
changes in the securities markets. Factors reflected in the asset allocation
methodology include, but are not limited to:
o The market value of the Fund's assets as compared to the Warranty Amount
o The prevailing level of interest rates
o Equity market volatility
o The length of time remaining until the Maturity Date

Under the terms of the Warranty Agreement, the Fund may be required in
certain limited circumstances, including a material decline in the value of
the Fund's assets relative to the Warranty Amount or a breach by the Fund or
the Manager of its obligations under the Warranty Agreement, to invest all or
a substantial portion of its assets in U.S. government securities (as well as
cash and cash equivalents to the extent necessary to meet redemption requests
and Fund expenses) or in zero coupon U.S. government securities (and cash or
cash equivalents to the extent necessary to meet redemption requests and Fund
expenses).

Specifically, situations where the Warranty Provider can require the
Fund to invest all of its assets in the debt portfolio include:
o if the Fund issues additional shares during the Warranty Period in
violation of the Warranty Agreement;
o if the Fund invests in securities other than as permitted in this
Prospectus or uses leverage in violation of the Financial Warranty
Agreement;
o if the Fund's investment in the equity portfolio on any given day
exceeds certain limitations as established by, or the Fund fails to
allocate assets pursuant to, the Warranty Formula;
o if the Fund fails to comply with the expense limitations imposed on the
Fund if it is required to invest completely and irreversibly in the
debt portfolio;
o if the Fund fails to pay the Warranty Agreement fee when due;
o if the investment advisory agreement with the Manager is terminated and
the successor investment adviser is not acceptable to the Warranty
Provider;
o if the Manager fails to manage the Fund in accordance with its
objectives, policies and strategies;
o if the Manager, the Fund or the Custodian fails to provide the Warranty
Provider with certain information necessary for it to monitor the
Fund's compliance with the Warranty Agreement;
o if representations or warranties made by the Manager or the Fund in
certain agreements and documents were incorrect or misleading when
made;
o if the Manager, the Fund or the Custodian fails to perform any
obligation or breaches any covenant under the Warranty Agreement or
other related agreements and such failure could have an adverse
effect on the Warranty Provider (including a change to the Fund's
investment objective or any material change to the Fund's investment
policies or strategies without the Warranty Provider's prior written
consent, even where such change is in the Fund's and the
shareholders' best interest);
o if the commencement of any proceeding in a federal, state or local
court which if adversely determined, could have an adverse effect on
the Manager or the Fund;
o if an action or proceeding is commenced to place the Fund or the
Manager in receivership or bankruptcy; or
o if any governmental or regulatory action limits, suspends, or
terminates the rights, privileges or operation of the Manager or the
Fund that could adversely affect the Manager or the Fund.

Under the Warranty Agreement, the Fund is also required to satisfy
certain risk management requirements, which will also restrict the manner in
which the Fund may invest its assets. The Fund's holdings of cash and cash
equivalents will generally be limited to an amount necessary to meet
anticipated expenses and redemptions.

The Warranty Formula may require the Fund to have a higher portfolio
turnover rate as compared to other mutual funds.

CAN THE FUND'S INVESTMENT OBJECTIVE AND POLICIES CHANGE? The Fund's Board of
Trustees can change non-fundamental investment policies without shareholder
approval, although significant changes will be described in amendments to
this Prospectus. Fundamental policies cannot be changed without the approval
of a majority of the Fund's outstanding voting shares. The Fund's investment
objective is a fundamental policy. Other investment restrictions that are
fundamental policies are listed in the Statement of Additional Information.
An investment policy is not fundamental unless this Prospectus or the
Statement of Additional Information says that it is.

The Warranty Agreement and the Financial Warranty

The Fund has entered into the Warranty Agreement to help make sure that on
the Maturity Date each shareholder will be entitled to redeem his or her
shares for an amount not less than the Warranty Amount, i.e., the initial
value of that shareholder's account on the second business day after the end
of the Offering Period (including any net income earned by the Fund during
the Offering Period and the two business days subsequent thereto, but reduced
by any adjustments the Warranty Provider is permitted to make under the
Warranty Agreement and less sales charges and Extraordinary Expenses and a
proportionate reduction for dividends and distributions paid in cash and
shares redeemed). Certain calculations under the Warranty Agreement
(including the calculation of any shortfall) will be performed by an
affiliate of the Warranty Provider as calculation agent.

The Warranty Agreement requires the Manager to comply with certain
investment parameters in an attempt to limit the Fund's risk. These
investment parameters are designed to reduce, but do not eliminate, the risk
that the Fund's assets will be insufficient to allow the Fund to redeem
shares at not less than the Warranty Amount on the Maturity Date. If the Fund
fails to comply with the agreed-upon investment parameters or otherwise fails
to comply with certain requirements set forth in the Warranty Agreement, the
Warranty Provider may terminate its Financial Warranty in the following
limited circumstances:

o if the Fund liquidates, is merged, reorganizes or sells all or
substantially all of its assets;
o if the Manager ceases to be the adviser of the Fund and any successor
adviser is not acceptable to the Warranty Provider;
o if under the terms of the Warranty Agreement, the Manager or the
Custodian is required to allocate all of the Fund's assets to the debt
portfolio and fails to do so within a reasonable time;
o if the Custodian agreement is amended so that the Custodian or
successor custodian is no longer obligated or does not agree to provide
the Warranty Provider with certain information regarding the Fund's
portfolio as required by the Warranty Agreement;
o if the conditions precedent to the Warranty Provider's issuance of the
Financial Warranty have not been met under the terms of the Warranty
Agreement;
o if the Manager fails to pay to the Warranty Provider a shortfall amount
resulting from the negligence, recklessness, bad faith, willful
misconduct or fraud of the Manager;
o a determination of negligence, recklessness, fraud, bad faith or
willful misconduct on the part of the Manager or the Fund under the
Warranty Agreement and related agreements by a court of competent
jurisdiction or a board of arbitration;
o if the Manager fails to provide the Warranty Provider with information
regarding the Underlying Fund in certain circumstances;
o if the Manager does not manage the assets of the Fund in accordance
with the Fund's objective, policies and strategies;
o if the Trust establishes another series other than this Fund during the
Warranty Period; or
o if the Manager fails to provide certain instructions and information
to, and cooperate with, the Custodian in the event that the Warranty
Provider has exercised its right to deliver pre-signed instructions
from the Manager to the Custodian instructing the Custodian to invest
all of the Fund's assets in the debt portfolio.

If the Fund receives notice of termination from the Warranty Provider,
the Fund will promptly notify shareholders of such termination.

The Warranty Provider (or its affiliate) may monitor the Fund's
compliance with the Warranty Agreement solely to protect the interests of the
Warranty Provider and not the Fund's shareholders. In monitoring the Fund's
compliance, the Warranty Provider (or its affiliate) will rely predominantly
on information provided by the Fund, the Manager and the Custodian.

The Fund and the Manager may terminate the Warranty Agreement if the
Warranty Provider becomes insolvent or if the Warranty Provider ceases to be
"well capitalized" within the meaning of the capital maintenance regulations
of the Federal Deposit Insurance Corporation.

The Fund will pay to the Warranty Provider, under the Warranty
Agreement, an annual fee equal to 0.60% of the average daily net assets of
the Fund during the Warranty Period. If the Fund is required to make a
complete and irreversible allocation of its assets to the debt portfolio, the
Warranty fee will thereafter be reduced to 0.35% of the average daily net
assets of the Fund. If the value of the Fund's assets on the Maturity Date is
insufficient to result in the value of each shareholder's account being at
least equal to his or her Warranty Amount (a "Shortfall"), the Warranty
Provider will pay to the Fund an amount sufficient to make sure that each
shareholder's account can be redeemed on the Maturity Date for an amount
equal to his or her Warranty Amount. The amount of any Shortfall required to
be paid by the Warranty Provider will be less if the Warranty Amount is
reduced. The Warranty Amount will be reduced by (i) the amount of any
dividends and distributions taken in cash rather than reinvested in
additional shares of the Fund; (ii) the value of any shares redeemed; (iii)
the shareholder's pro rata portion of the amount of any Extraordinary
Expenses or any expenses incurred by the Fund in excess of the expense limits
described under "Warranty Period" on pages 10-11; (iv) the shareholder's pro
rata portion of the value of any shares issued by the Fund during the
Warranty Period other than in connection with the reinvestment of dividends
and distributions; (v) the amount of any increase in the Warranty Amount per
share as a result of changes in accounting practices for the Fund, corporate
actions or certain other events; and (vi) if the Manager is required to make
payments under the Warranty Agreement in certain instances and the Manager
fails to do so in a timely manner, the amount of the payments the Manager
failed to make (on a pro rata basis).

A shareholder's ability to receive his or her Warranty Amount depends
on the financial condition of the Warranty Provider. If the Warranty Provider
becomes insolvent or its credit deteriorates substantially, payment under the
Financial Warranty may not be made or may become unlikely. In such event, the
Board could take a variety of actions, including replacing the Financial
Warranty or liquidating the Fund. In such circumstances, shareholders could
suffer a loss of principal. The Board is under no obligation to replace the
Financial Warranty. If it does so, the fee charged by any replacement
warranty provider may be higher or lower than the fee charged by the Warranty
Provider. If the Board were to determine that liquidation of the Fund during
the Warranty Period is in the shareholders' best interests, the Warranty
Agreement would automatically terminate upon such liquidation and the
Warranty Provider would have no obligations to make a payment to the Fund. In
that event neither the Manager nor any other person would be liable to make a
payment to the Fund to provide shareholders with their Warranty Amount. Upon
liquidation, shareholders would receive the then-current net asset value of
their Fund account, which may be less than the Warranty Amount they would
have received on the Maturity Date.

The Warranty Agreement may be amended with the prior consent of the
Warranty Provider, the Fund and the Manager. Therefore, material changes to
the Warranty Agreement may be made without shareholder approval, even to the
extent such change could have a direct or indirect impact on a shareholder's
investment in the Fund. Any material amendments to the Warranty Agreement
will be disclosed in amendments to this Prospectus.

The Fund will provide you with a copy of the most recent audited annual
or unaudited quarterly financial statements of the Warranty Provider, free of
charge, upon your request. To receive a copy of these financial statements,
please contact the Fund at the telephone number or write to the Fund at the
address shown on the outside back cover of this Prospectus.

HOW IS THE WARRANTY AMOUNT DETERMINED?

Example.* Assume you have $20,000 to invest in Fund shares. Assume that you
decided to purchase Class A shares and the public offering price is $10.61
per share (initial net asset value of $10.00 per share plus a sales load of
5.75%). After deducting your sales load of 5.75%,
$18,850.14 will be invested in Fund shares and you will have 1,885.01 shares
in your account. Your initial Warranty Amount will be $18,850.14.

* Figures used in the example have been rounded to the nearest hundredth.

The full amount of your investment will not receive the benefit of the
Financial Warranty. Rather, the Financial Warranty protects only the amount
invested, as reduced by any adjustments to the Warranty Amount by the
Warranty Provider permitted under the Warranty Agreement and less any sales
charges and your proportionate share of certain Extraordinary Expenses, and
reduced proportionately for any dividends paid in cash or redemption of
shares.

Redemption of shares during the Warranty Period will decrease the Warranty
Amount to which a shareholder is entitled. If a shareholder redeems shares in
the Fund, he or she will then hold fewer shares at the then-current Warranty
Amount per share, thereby reducing the overall Warranty Amount for the
shareholder. A redemption made from the Fund prior to the Maturity Date will
be made at the Fund's then-current net asset value per share, less any
applicable deferred sales charge, which may be higher or lower than the
Warranty Amount per share.

The Warranty Amount per share will decline as dividends and distributions are
made to shareholders. If a shareholder automatically reinvests dividends and
distributions in additional shares of the Fund, the shareholder's total
Warranty Amount will remain the same because he or she will hold a greater
number of shares at a reduced Warranty Amount per share following payment of
a dividend or distribution. The result is to preserve the total Warranty
Amount to which he or she was entitled before the dividend or distribution
was made. If a shareholder elects to receive any dividends or distributions
in cash, however, he or she will hold the original number of shares at the
reduced Warranty Amount per share following payment of a dividend or
distribution. This will reduce the Warranty Amount to which such shareholder
was entitled before the dividend or distribution was made.

Example 1. Assume you reinvest your dividends and distributions. The number
of shares you own in the Fund will increase at each date on which a dividend
or distribution is effective. Although the number of shares in your account
increases, and the Warranty Amount per share decreases, your overall Warranty
Amount does not change. Using our example, assume it is now December 30, 2006
and the Fund makes effective a dividend of $0.15 per share. Also, assume that
the net asset value is $11.25 per share at the end of the day on December 30,
2006.

To recalculate your Warranty Amount per share:
1. Determine the value of your dividend. Your total dividend will equal
the per share dividend multiplied by the number of shares you own
the day before the dividend is declared. In our example, we will
multiply 1,885.01 shares by $0.15 per share to arrive at $282.75.
2. Determine the number of shares that will get added to your account when
your dividend is reinvested. Your additional shares equal the value
of your dividend divided by the ending net asset value per share on
the day the dividend was declared. In our case, $282.75 divided by
$11.25 equals 25.13 additional shares.
3. Adjust your account for your additional shares. Add 1,885.01 and 25.13
to arrive at your new share balance of 1,910.14.
4. Determine your new Warranty Amount per share. Take your original
Warranty Amount and divide by your new share balance. Using our
example, divide $18,850.14 by 1,910.14 shares to arrive at the new
Warranty Amount per share of $9.87.
5. Your Warranty Amount still equals $18,850.14.

If you do not reinvest your dividends and distributions in additional
shares of the Fund, your Warranty Amount will be reduced with the same effect
as if you had reinvested such dividends and distributions and then
immediately redeemed them.

Example 2. Assume you elect to receive Fund dividends and distributions in
cash. On each date on which a dividend or distribution is effective, the
number of shares you own in the Fund will remain the same and the Warranty
Amount per share will decrease resulting in your overall Warranty Amount
declining. Using our example, assume it is now December 30, 2006 and the Fund
makes effective a dividend of $0.15 per share. Also assume that the net asset
value is $11.25 per share at the end of the day on December 30, 2006.

2. Determine your new Warranty Amount per share. Take your original
Warranty Amount and divide by the number of shares you would have
had if you reinvested the distribution. Using our example, divide
$18,850.14 by 1,910.14 shares to arrive at $9.87 per share.

3. Multiply $9.87 by the number of shares you actually own (1,885.01) to
arrive at your new Warranty Amount of $18,605.05.

Although shareholders can perform this calculation themselves, the Fund
will recalculate the Warranty Amount per share whenever the Fund declares a
dividend or makes a distribution. It is possible that the Fund's calculations
may differ from a shareholder's calculation, for example, because of rounding
or the number of decimal places used. In each case, the Fund's calculations
will control.

See "Dividends, Capital Gains and Taxes" for additional details
regarding the Financial Warranty.

How the Fund is Managed

THE MANAGER. OppenheimerFunds, Inc., referred to as the Manager, serves as
Investment Adviser to the Fund and to the Underlying Fund. The Manager
chooses the Fund's investments and handles its day-to-day business. The
Manager carries out its duties, subject to the policies established by the
Fund's Board of Trustees, under an investment advisory agreement that states
the Manager's responsibilities. The agreement sets the fees the Fund pays to
the Manager and describes the expenses that the Fund is responsible to pay to
conduct its business.

The Manager has been an investment advisor since 1960. The
Manager and its subsidiaries and controlled affiliates managed more than $220
billion in assets as of September 30, 2006, including other Oppenheimer funds
with more than 6 million shareholder accounts. The Manager is located at Two
World Financial Center, 225 Liberty Street, 11th Floor, New York, New York
10281-1008.

Advisory Fees. Under the investment advisory agreement, the Fund pays the
Manager a managment fee at an annual rate of 0.50% per annum of the
average annual net assets of the Fund reduced by the amount of advisory
fees paid to the Manager by the Underlying Fund relating to the Fund's
assets invested in the Underlying Fund. However, the management fee
shall not be reduced below zero. That fee will apply during the
Warranty Period and the Post-Warranty Period. If during the Warranty
Period 100% of the Fund's assets are completely and irreversibly
invested in the debt portfolio, the advisory fee will be at an annual
rate of 0.25% of the average annual net assets of the Fund, and if that
occurs the Manager will further reduce its management fee to the extent
necessary so that total annual operating expenses of the Fund (other
than Extraordinary Expenses such as litigation costs) do not exceed
1.30% for Class A shares, 2.05% for Class B shares, 2.05% for Class C
shares and 1.55% for Class N shares. However, if this reduction in the
management fee is not sufficient to reduce total annual operating
expenses to these limits, the Manager is not required to subsidize Fund
expenses to assure that expenses do not exceed those limits.
Furthermore, if expenses exceed these expense limits, the Warranty
Amount will be reduced by any expenses that exceed those limits. The
Manager voluntarily waived its management fee during the Offering
Period. In addition, during the Warranty Period the manger has
voluntarily agreed to reduce the management fee payable by the Fund by
0.00833% per month in any month following a month where the Fund's
average daily equity allocation was less than 10%. Those voluntary
undertakings may be amended or eliminated at any time. A discussion
regarding the basis for the Board of Trustees' approval of the Fund's
investment advisory contract is available in the Fund's Annual Report
to shareholders for the year ended August 31, 2006.

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

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

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

Portfolio Managers. The Fund's portfolio is managed by Angelo
Manioudakis and Rudi W. Schadt who are primarily responsible for the
day-to-day management of the Fund's investments.

Mr. Manioudakis has been a Vice President and portfolio manager of the
Fund since May 2003. He has been a Senior Vice President of the
Manager and of HarbourView Asset Management Corporation since April
2002. He has been a Senior Vice President of OFI Institutional Asset
Management, Inc. since June 2002. He is also a portfolio manager and
officer of other portfolios in the OppenheimerFunds complex.
Mr. Manioudakis was Executive Director and portfolio manager for
Miller, Anderson & Sherrerd, a division of Morgan Stanley Investment
Management from August 1993 through April 2002.

Mr. Schadt has been a Vice President and portfolio manager of the Fund
since August 2004. He has been a Vice President, Director of Equity
Analytics and Risk in Product Design and Risk Management of the Manager
since February 2002 and is an officer and portfolio manager of other
portfolios in the OppenheimerFunds complex. Prior to joining the
Manager in February 2002, he was a Director and Senior Quantitative
Analyst from 2000 through 2001 at UBS Asset Management and an Associate
Director, Senior Researcher and Portfolio Manager from June 1997 to
August 2000 at State Street Global Advisors.

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

Portfolio Holdings. The Fund's portfolio holdings are included in semi-annual
and annual reports that are distributed to shareholders of the Fund within 60
days after the close of the period for which such report is being made. The
Fund also discloses its portfolio holdings in its Statements of Investments
on Form N-Q, which are filed with the Securities and Exchange Commission (the
"SEC") no later than 60 days after the close of its first and third fiscal
quarters. These required filings are publicly available at the SEC.
Therefore, portfolio holdings of the Fund are made publicly available no
later than 60 days after the close of each of the Fund's fiscal quarters.

A description of the Fund's policies and procedures with respect to the
disclosure of the Fund's portfolio securities is available in the Fund's
Statement of Additional Information.

ABOUT YOUR ACCOUNT

CAN YOU PURCHASE SHARES OF THE FUND? No, shares of the Fund cannot be
purchased during the Warranty Period other than by the reinvestment of the
Fund's dividends and distributions in additional shares of the Fund.

Net Asset Value. The Fund calculates the net asset value of each class of
shares as of the close of the NYSE, on each day the NYSE is open for
trading (referred to in this Prospectus as a "regular business day").
The NYSE normally closes at 4:00 p.m., Eastern time, but may close
earlier on some days. All references to time in this Prospectus are to
"Eastern time."

The net asset value per share for a class of shares on a "regular
business day" is determined by dividing the value of the Fund's net
assets attributable to that class by the number of shares of that class
outstanding on that day. To determine net asset values, the Fund's
asset are valued primarily on the basis of current market quotations.
If market quotations are not readily available or do not accurately
reflect fair value for a security (in the Manager's judgment) or if a
security's value has been materially affected by events occurring after
the close of the market on which the security is principally traded,
that security may be valued by another method that the Board of
Trustees believes accurately reflects the fair value.

The Board has adopted valuation procedures for the Fund and has
delegated the day-to-day responsibility for fair value determinations
to the Manager's Valuation Committee. Fair value determinations by the
Manager are subject to review, approval and ratification by the Board
at its next scheduled meeting after the fair valuations are determined.
In determining whether current market prices are readily available and
reliable, the Manager monitors the information it receives in the
ordinary course of its investment management responsibilities for
significant events that it believes in good faith will affect the
market prices of the securities of issuers held by the Fund. Those may
include events affecting specific issuers (for example, a halt in
trading of the securities of an issuer on an exchange during the
trading day) or events affecting securities markets (for example, a
foreign securities market closes early because of a natural disaster).
The Fund uses fair value pricing procedures to reflect what the Manager
and the Board believe to be more accurate values for the Fund's
portfolio securities, although it may not always be able to accurately
determine such values. There can be no assurance that the Fund could
obtain the fair value assigned to a security if it were to sell the
security at the same time at which the Fund determines its net asset
value per share.

If, after the close of the principal market on which a security held by
the Fund is traded and before the time as of which the Fund's net asset
values are calculated that day, an event occurs that the Manager learns
of and believes in the exercise of its judgment will cause a material
change in the value of that security from the closing price of the
security on the principal market on which it is traded, the Manager
will use its best judgment to determine a fair value for that security.

DISTRIBUTION AND SERVICE (12b-1) PLANS.

Service Plan for Class A Shares. The Fund has adopted a Service Plan for
Class A shares. It reimburses the Distributor for a portion of its
costs incurred for services provided to accounts that hold Class A
shares. Reimbursement is made quarterly at an annual rate of up to
0.25% of the average annual net assets of Class A shares of the Fund.
The Distributor currently uses all of those fees to pay dealers,
brokers, banks and other financial institutions periodically for
providing personal service and maintenance of accounts of their
customers that hold Class A shares. With respect to Class A shares
subject to a Class A contingent deferred sales charge purchased by
grandfathered retirement accounts, the Distributor paid the 0.25%
service fee to dealers in advance for the first year after the shares
were sold by the dealer. The Distributor retained the first year's
service fee paid by the Fund. After the shares had been held by
grandfathered retirement accounts for a year, the Distributor paid the
service fee to dealers periodically.

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 pay the Distributor for its services and costs in
distributing Class B, Class C and Class N 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 the Class B, Class C and Class N plans.

The asset-based sales charge and service fees increase Class B and
Class C expenses by 1.0% and increase Class N expenses by 0.50% of the
net assets per year of the respective class. Because these fees are
paid out of the Fund's assets on an on-going basis, over time these
fees will increase the cost of your investment and may cost you more
than other types of sales charges.

The Distributor uses the service fees to compensate dealers for
providing personal services for accounts that hold Class B, Class C or
Class N shares. The Distributor paid the 0.25% service fees to dealers
in advance for the first year after the shares are sold by the dealer.
After the shares have been held for a year, the Distributor pays the
service fees to dealers periodically.

The Distributor paid a sales concession of 3.75% of the purchase price
of Class B shares to dealers from its own resources at the time of
sale. Including the advance of the service fee, the total amount paid
by the Distributor to the dealer at the time of sale of Class B shares
was therefore 4.00% of the purchase price. The Distributor normally
retains the Class B asset-based sales charge. See the Statement of
Additional Information for exceptions.

The Distributor paid a sales concession of 0.75% of the purchase price
of Class C shares to dealers from its own resources at the time of
sale. Including the advance of the service fee, the total amount paid
by the Distributor to the dealer at the time of sale of Class C shares
was therefore 1.0% of the purchase price. The Distributor pays the
asset-based sales charge as an ongoing concession to the dealer on
Class C shares that have been outstanding for a year or more. The
Distributor typically retained the asset-based sales charge on Class C
shares during the first year after the purchase of Class C shares. See
the Statement of Additional Information for exceptions.

The Distributor paid a sales concession of 0.75% of the purchase price
of Class N shares to dealers from its own resources at the time of
sale. Including the advance of the service fee, the total amount paid
by the Distributor to the dealer at the time of sale of Class N shares
was therefore 1.0% of the purchase price. The Distributor normally
retained the asset-based sales charge on Class N shares. See the
Statement of Additional Information for exceptions.

OTHER PAYMENTS TO FINANCIAL INTERMEDIARIES AND SERVICE PROVIDERS. The Manager
and the Distributor, in their discretion, also may pay dealers or other
financial intermediaries and service providers for distribution and/or
shareholder servicing activities. These payments are made out of the
Manager's and/or the Distributor's own resources, including from the profits
derived from the advisory fees the Manager receives from the Fund. These cash
payments, which may be substantial, are paid to many firms having business
relationships with the Manager and Distributor. These payments are in
addition to any distribution fees, servicing fees, or transfer agency fees
paid directly or indirectly by the Fund to these financial intermediaries and
any commissions the Distributor pays to these firms out of the sales charges
paid by investors. These payments by the Manager or Distributor from their
own resources are not reflected in the tables in the section called "Fees and
Expenses of the Fund" in this Prospectus because they are not paid by the
Fund.

"Financial intermediaries" are firms that have offered and sold Fund
shares to their clients, or provide shareholder services to the Fund, or
both, and receive compensation for doing so. Your securities dealer or
financial adviser, for example, is a financial intermediary, and there are
other types of financial intermediaries that receive payments relating to the
sale or servicing of the Fund's shares. In addition to dealers, the financial
intermediaries that may receive payments include sponsors of fund
"supermarkets," sponsors of fee-based advisory or wrap fee programs, sponsors
of college and retirement savings programs, banks and trust companies
offering products that hold Fund shares, and insurance companies that offer
variable annuity or variable life insurance products.

In general, these payments to financial intermediaries can be
categorized as "distribution-related" or "servicing" payments. Payments for
distribution-related expenses, such as marketing or promotional expenses, are
often referred to as "revenue sharing." Revenue sharing payments may be made
on the basis of the sales of shares attributable to that dealer, the average
net assets of the Fund and other Oppenheimer funds attributable to the
accounts of that dealer and its clients, negotiated lump sum payments for
distribution services provided, or sales support fees. In some circumstances,
revenue sharing payments may create an incentive for a dealer or financial
intermediary or its representatives to recommend or offer shares of the Fund
or other Oppenheimer funds to its customers. These payments also may give an
intermediary an incentive to cooperate with the Distributor's marketing
efforts. A revenue sharing payment, for example, may have qualified the Fund
for preferred status with the intermediary receiving the payment or provide
representatives of the Distributor with access to representatives of the
intermediary's sales force, in some cases on a preferential basis over funds
of competitors. Additionally, as firm support, the Manager or Distributor may
reimburse expenses related to educational seminars and "due diligence" or
training meetings (to the extent permitted by applicable laws or the rules of
the NASD) designed to increase sales representatives' awareness about
Oppenheimer funds, including travel and lodging expenditures. However, the
Manager does not consider a financial intermediary's sale of shares of the
Fund or other Oppenheimer funds when selecting brokers or dealers to effect
portfolio transactions for the funds.

Various factors are used to determine whether to make revenue sharing
payments. Possible considerations include, without limitation, the types of
services provided by the intermediary, past sales of Fund shares, the
redemption rates on accounts of clients of the intermediary or overall asset
levels of Oppenheimer funds held for or by clients of the intermediary, the
willingness of the intermediary to allow the Distributor to provide
educational and training support for the intermediary's sales personnel
relating to the Oppenheimer funds, the availability of the Oppenheimer funds
on the intermediary's sales system, as well as the overall quality of the
services provided by the intermediary and the Manager or Distributor's
relationship with the intermediary. The Manager and Distributor have adopted
guidelines for assessing and implementing each prospective revenue sharing
arrangement. To the extent that financial intermediaries receiving
distribution-related payments from the Manager or Distributor sell more
shares of the Oppenheimer funds or retain more shares of the funds in their
client accounts, the Manager and Distributor benefit from the incremental
management and other fees they receive with respect to those assets.

Payments may also be made by the Manager, the Distributor or the
Transfer Agent to financial intermediaries to compensate or reimburse them
for administrative or other client services provided such as sub-transfer
agency services for shareholders or retirement plan participants, omnibus
accounting or sub-accounting, participation in networking arrangements,
account set-up, recordkeeping and other shareholder services. Payments may
also be made for administrative services related to the past distribution of
Fund shares through the intermediary. Firms that may receive servicing fees
include retirement plan administrators, qualified tuition program sponsors,
banks and trust companies, and others. These fees may be used by the service
provider to offset or reduce fees that would otherwise be paid directly to
them by certain account holders, such as retirement plans.

The Statement of Additional Information contains more information about
revenue sharing and service payments made by the Manager or the Distributor.
Your dealer may charge you fees or commissions in addition to those disclosed
in this Prospectus. You should ask your dealer or financial intermediary for
details about any such payments it receives from the Manager or the
Distributor and their affiliates, or any other fees or expenses it charges.

Special Investor Services

ACCOUNTLINK. You can use our AccountLink feature to link your fund account
with an account at a U.S. bank or other financial institution. It must be an
Automated Clearing House (ACH) member. AccountLink lets you:
o transmit funds electronically to purchase shares by telephone (through
a service representative or by PhoneLink) or automatically under Asset
Builder Plans, or
o have the Transfer Agent send redemption proceeds or transmit dividends
and distributions directly to your bank account. Please call the
Transfer Agent for more information.

AccountLink privileges should have been requested on your Application
or your dealer's settlement instructions if you bought your shares through a
dealer. After your account is established, you can request AccountLink
privileges by sending signature-guaranteed instructions and proper
documentation to the Transfer Agent. AccountLink privileges will apply to
each shareholder listed in the registration on your account as well as to
your dealer representative of record unless and until the Transfer Agent
receives written instructions terminating or changing those privileges. After
you establish AccountLink for your account, any change you make to the bank
account information must be made by signature-guaranteed instructions to the
Transfer Agent signed by all shareholders who own the account.

PHONELINK. PhoneLink is the OppenheimerFunds automated telephone system that
enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the PhoneLink number, 1.800.225.5677.
Exchanging Shares. With the OppenheimerFunds Exchange Privilege, described
below, you can exchange shares automatically by phone from your Fund
account to another OppenheimerFunds account you have already
established by calling the special PhoneLink number.

Selling Shares. You can redeem shares by telephone automatically by calling
the PhoneLink number and the Fund will send the proceeds directly to
your AccountLink bank account. Please refer to "How to Sell Shares,"
below for details.

CAN YOU SUBMIT TRANSACTION REQUESTS BY FAX? You may send requests for certain
types of account transactions to the Transfer Agent by fax (telecopier).
Please call 1.800.225.5677 for information about which transactions may be
handled this way. Transaction requests submitted by fax are subject to the
same rules and restrictions as written and telephone requests described in
this Prospectus.

OPPENHEIMERFUNDS INTERNET WEBSITE. You can obtain information about the Fund,
as well as your account balance, on the OppenheimerFunds Internet website, at
www.oppenheimerfunds.com. Additionally, shareholders listed in the account
registration (and the dealer of record) may request certain account
transactions through a special section of that website. To perform account
transactions or obtain account information online, you must first obtain a
user I.D. and password on that website. If you do not want to have Internet
account transaction capability for your account, please call the Transfer
Agent at 1.800.225.5677. At times, the website may be inaccessible or its
transaction features may be unavailable.

REINVESTMENT PRIVILEGE. If you redeem some or all of your Class A or Class B
shares of the Fund at any time, you have up to six months to reinvest all or
a part of the redemption proceeds in Class A shares of other Oppenheimer
funds without paying a sales charge. If you redeem some or all of your Class
A or Class B shares of the Fund during the Post-Warranty Period, you have up
to six months to reinvest all or a part of the redemption proceeds in Class A
shares of this Fund or other Oppenheimer funds without paying a sales charge.
This privilege applies only to Class A shares that you purchased subject to
an initial sales charge and to Class A or Class B shares on which you paid a
contingent deferred sales charge when you redeemed them. This privilege does
not apply to Class C or Class N shares. You must have asked the Distributor
for this privilege when you sent your payment.

How to Sell Shares

You can sell (redeem) some or all of your shares on any regular business day.
Prior to the Maturity Date and during the Post-Warranty Period, shares are
redeemed at their net asset value (which may be less than your Warranty
Amount) minus any applicable contingent deferred sales charge. For
redemptions prior to the Maturity Date and during the Post-Warranty Period,
the net asset value used in determining your share price is the next one
calculated after your redemption order is received in proper form (which
means that it must comply with the procedures described below) and is
accepted by the Transfer Agent. Redemption of Fund shares prior to the
Maturity Date will reduce your Warranty Amount. The Fund lets you sell your
shares by writing a letter, by wire or by telephone. If you have questions
about any of these procedures, and especially if you are redeeming shares in
a special situation, such as due to the death of the owner or from a
retirement plan account, please call the Transfer Agent first, at
1.800.225.5677, for assistance. Redemption requests received after 4:00 p.m.
(or such earlier time as may be required by your financial intermediary) will
be priced at the net asset value at the close of business on the next
business day.

For redemptions made on the Maturity Date (August 5, 2010), the value
used in determining your share price will be the greater of (i) the
then-current net asset value or (ii) your Warranty Amount per share. See the
examples starting on page 24 for help in understanding how this amount is
calculated. Redemptions made prior to the Maturity Date or during the
Post-Warranty Period will not be protected by the Financial Warranty and the
value of your shares will be the then-current net asset value of the Fund,
which may be less than your Warranty Amount.

Certain Requests Require a Signature Guarantee. To protect you and the Fund
from fraud, the following redemption requests must be in writing and
must include a signature guarantee (although there may be other
situations that also require a signature guarantee):

o You wish to redeem more than $100,000 and receive a check.
o The redemption check is not payable to all shareholders listed on the
account statement.
o The redemption check is not sent to the address of record on your
account statement,
o Shares are being transferred to a Fund account with a different owner
or name.
o Shares are being redeemed by someone (such as an Executor) other than
the owners.

Where Can You Have Your Signature Guaranteed? The Transfer Agent will accept
a guarantee of your signature by a number of financial institutions,
including:
o a U.S. bank, trust company, credit union or savings association,
o a foreign bank that has a U.S. correspondent bank,
o a U.S. registered dealer or broker in securities, municipal securities
or government securities, or
o a U.S. national securities exchange, a registered securities
association or a clearing agency.
If you are signing on behalf of a corporation, partnership or other
business or as a fiduciary, you must also include your title in the
signature.

Retirement Plan Accounts. There are special procedures to sell shares in an
OppenheimerFunds retirement plan account. Call the Transfer Agent for a
distribution request form. Special income tax withholding requirements
apply to distributions from retirement plans. You must submit a
withholding form with your redemption request to avoid delay in getting
your money and if you do not want tax withheld. If your employer holds
your retirement plan account for you in the name of the plan, you must
ask the plan trustee or administrator to request the sale of the Fund
shares in your plan account.

Receiving Redemption Proceeds by Wire. While the Fund normally sends your
money by check, you can arrange to have the proceeds of shares you sell
sent by Federal Funds wire to a bank account you designate. It must be
a commercial bank that is a member of the Federal Reserve wire system.
The minimum redemption you can have sent by wire is $2,500. There is a
$10 fee for each request. To find out how to set up this feature on
your account or to arrange a wire, call the Transfer Agent at
1.800.225.5677.

HOW DO YOU SELL SHARES BY MAIL? Write a letter of instruction that includes:
o Your name,
o The Fund's name,
o Your Fund account number (from your account statement),
o The dollar amount or number of shares to be redeemed,
o Any special payment instructions,
o Any share certificates for the shares you are selling,
o The signatures of all registered owners exactly as the account is

registered, and
o Any special documents requested by the Transfer Agent to assure proper
authorization of the person asking to sell the shares.

Use the following address for Send courier or express mail
requests by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue, Building D
Denver, Colorado 80217 Denver, Colorado 80231

HOW DO YOU SELL SHARES BY TELEPHONE? You and your dealer representative of
record may also sell your shares by telephone. To receive the redemption
price calculated on a particular regular business day, your call must be
received by the Transfer Agent by the close of the NYSE that day, which is
normally 4:00 p.m. Eastern time, but may be earlier on some days. You may not
redeem shares held in an OppenheimerFunds-sponsored qualified retirement plan
account or under a share certificate by telephone.

o To redeem shares through a service representative or automatically on
PhoneLink, call 1.800.225.5677.

Whichever method you use, you may have a check sent to the address on
the account statement, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds sent to that bank account.

Are There Limits on Amounts Redeemed by Telephone?
Telephone Redemptions Paid by Check. Up to $100,000 may be redeemed by
telephone in any seven-day period. The check must be payable to all
owners of record of the shares and must be sent to the address on the
account statement. This service is not available within 30 days of
changing the address on an account.

Telephone Redemptions Through AccountLink or by Wire. There are no dollar
limits on telephone redemption proceeds sent to a bank account
designated when you establish AccountLink. Normally the ACH transfer to
your bank is initiated on the business day after the redemption. You do
not receive dividends on the proceeds of the shares you redeemed while
they are waiting to be transferred.

If you have requested Federal Funds wire privileges for your account,
the wire of the redemption proceeds will normally be transmitted on the
next bank business day after the shares are redeemed. There is a
possibility that the wire may be delayed up to seven days to enable the
Fund to sell securities to pay the redemption proceeds. No dividends
are accrued or paid on the proceeds of shares that have been redeemed
and are awaiting transmittal by wire.

CAN YOU SELL SHARES THROUGH YOUR DEALER? The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on behalf of
their customers. Brokers or dealers may charge a processing fee for that
service. If your shares are held in the name of your dealer, you must redeem
them through your dealer.

HOW CONTINGENT DEFERRED SALES CHARGES AFFECT REDEMPTIONS. If you purchased
shares subject to a Class A, Class B, Class C or Class N contingent deferred
sales charge and redeem any of those shares during the applicable holding
period for the class of shares, the contingent deferred sales charge will be
deducted from the redemption proceeds (unless you are eligible for a waiver
of that sales charge based on the categories listed in Appendix B to the
Statement of Additional Information and you advise the Transfer Agent of your
eligibility for the waiver when you place your redemption request.)

A contingent deferred sales charge will be based on the lesser of the
net asset value of the redeemed shares at the time of redemption or the
original net asset value. A contingent deferred sales charge is not imposed
on:
o the amount of your account value represented by an increase in net
asset value over the initial purchase price,
o shares purchased by the reinvestment of dividends or capital gains
distributions, or
o shares redeemed in the special circumstances described in Appendix B to
the Statement of Additional Information.
To determine whether a contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order:
1. shares acquired by reinvestment of dividends and capital gains
distributions,
2. shares held for the holding period that applies to the class, and
3. shares held the longest during the holding period.

Contingent deferred sales charges are not charged when you exchange
shares of the Fund for shares of other Oppenheimer funds. However, if you
exchange them within the applicable contingent deferred sales charge holding
period, the holding period will carry over to the fund whose shares you
acquire. Similarly, if during the Offering Period you acquired Class A, Class
B, Class C or Class N shares of this Fund by exchanging shares of another
Oppenheimer fund that were still subject to a contingent deferred sales
charge holding period, that holding period will carry over to this Fund.
During the Post-Warranty Period, if you acquire Class A, Class B, Class C or
Class N shares of this Fund by exchanging the same class of shares of another
Oppenheimer fund that are subject to a contingent deferred sales charge
holding period, that holding period will carry over to this Fund.

If you purchased Class A Shares of any one or more of the Oppenheimer
funds aggregating $1 million or more and if you redeem any of those shares
within an 18-month "holding period" measured from the beginning of the
calendar month of their purchase, a contingent deferred sales charge (called
the "Class A contingent deferred sales charge") may be deducted from the
redemption proceeds. That sales charge will be equal to 1.0% of the lesser of:
o the aggregate net asset value of the redeemed shares at the time of
redemption (excluding shares purchased by reinvestment of dividends or
capital gain distributions) or
o the original net asset value of the redeemed shares.

The Class A contingent deferred sales charge will not exceed the
aggregate amount of the concessions the Distributor paid to your dealer on
all purchases of Class A shares of all Oppenheimer funds you made that were
subject to the Class A contingent deferred sales charge.

If Class B shares are redeemed within six years (72 months) from the
beginning of the calendar month of their purchase, a contingent deferred
sales charge will be deducted from the redemption proceeds. The Class B
contingent deferred sales charge is paid to compensate the Distributor for
its expenses of providing distribution-related services to the Fund in
connection with the sale of Class B shares.

The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule for the Class B contingent deferred sales
charge holding period:

-------------------------------------------------------------------------------
Contingent Deferred Sales Charge on
Years Since Beginning of Month in Redemptions in That Year
Which Purchase Order was Accepted (As % of Amount Subject to Charge)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
0 - 1 5.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1 - 2 4.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2 - 3 3.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
3 - 4 3.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
4 - 5 2.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
5 - 6 1.0%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
More than 6 None
-------------------------------------------------------------------------------

In the table, a "year" is a 12-month period. In applying the contingent
deferred sales charge, all purchases are considered to have been made on the
first regular business day of the month in which the purchase was made.

Automatic Conversion of Class B Shares. Class B shares automatically
convert to Class A shares 88 months after you purchase them. This
conversion feature relieves Class B shareholders of the asset-based
sales charge (which stops 72 months after purchase) that applies to
Class B shares under the Class B Distribution and Service Plan,
described above. The conversion is based on the relative net asset
value of the two classes, and no sales load or other charge is imposed.
When any Class B shares that you hold convert, any other Class B shares
that were acquired by reinvesting dividends and distributions on the
converted shares will also convert to Class A shares. For further
information on the conversion feature and its tax implications, see
"Class B Conversion" in the Statement of Additional Information.

If Class C shares are redeemed within a holding period of 12 months
from the beginning of the calendar month of their purchase, a contingent
deferred sales charge of 1.0% will be deducted from the redemption proceeds.
The Class C contingent deferred sales charge is paid to compensate the
Distributor for its expenses of providing distribution-related services to
the Fund in connection with the sale of Class C shares.

A contingent deferred sales charge of 1.0% will be imposed upon the
redemption of Class N shares, if:
o The group retirement plan 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
o With respect to an IRA 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.

Retirement plans that offer Class N shares may impose charges on plan
participant accounts. The procedures for selling, exchanging and transferring
the Fund's other classes of shares (other than the time those orders must be
received by the Distributor or Transfer Agent in Colorado) and the special
account features applicable to purchasers of those other classes of shares
described elsewhere in this Prospectus do not apply to Class N shares offered
through a group retirement plan. Instructions for selling, exchanging or
transferring Class N shares offered through a group retirement plan must be
submitted by the plan, not by plan participants for whose benefit the shares
are held.

How to Exchange Shares

The Fund does not offer the ability to exchange into the Fund during the
Warranty Period. Because the Fund is not continuously offering its shares
during the Warranty Period, if you exchange your shares of the Fund for
shares of another fund you will not be able to effect an exchange back into
the Fund during the Warranty Period. In addition, your exchange will be
considered a redemption and will reduce your Warranty Amount.

If you make an exchange prior to the Maturity Date, you may receive an
amount less than your original investment in the Fund. To exchange shares,
you must meet several conditions:

o Shares of the fund selected for exchange must be available for sale in
your state of residence.
o The prospectus of the selected fund must offer the exchange privilege.
o When you establish an account, you must hold the shares you buy for at
least seven days before you can exchange them. After your account is
open for seven days, you can exchange shares on any regular business
day, subject to the limitations described below.
o You must meet the minimum purchase requirements for the selected fund.
o Generally, exchanges may be made only between identically registered
accounts, unless all account owners send written exchange instructions
with a signature guarantee.
o Before exchanging into a fund, you must obtain its prospectus and
should read it carefully.

For tax purposes, an exchange of shares of the Fund is considered a
sale of those shares and a purchase of the shares of the fund into which you
are exchanging. An exchange may result in a capital gain or loss.

You can find a list of the Oppenheimer funds that are currently
available for exchanges in the Statement of Additional Information or you can
obtain a list by calling a service representative at 1.800.225.5677. The
funds available for exchange can change from time to time.

A contingent deferred sales charge (CDSC) is not charged when you
exchange shares of the Fund for shares of another Oppenheimer fund. However,
if you exchange your shares during the applicable CDSC holding period, the
holding period will carry over to the fund shares that you acquire.
Similarly, if you acquired shares of the Fund in exchange for shares of
another Oppenheimer fund that are subject to a CDSC holding period, that
holding period will carry over to the acquired shares of the Fund. In either
of these situations, a CDSC may be imposed if the acquired shares are
redeemed before the end of the CDSC holding period that applied to the
exchanged shares.

There are a number of other special conditions and limitations that
apply to certain types of exchanges. These conditions and circumstances are
described in detail in the "How to Exchange Shares" section in the Statement
of Additional Information.

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

Written Exchange Requests. Send a request letter, signed by all owners of the
account, to the Transfer Agent at the address on the back cover.
Exchanges of shares for which share certificates have been issued
cannot be processed unless the Transfer Agent receives the certificates
with the request letter.

Telephone and Internet Exchange Requests. Telephone exchange requests may be
made either by calling a service representative or by using PhoneLink
by calling 1.800.225.5677. You may submit internet exchange requests on
the OppenheimerFunds internet website, at www.oppenheimerfunds.com. You
must have obtained a user I.D. and password to make transactions on
that website. Telephone and/or internet exchanges may be made only
between accounts that are registered with the same name(s) and address.
Shares for which share certificates have been issued may not be
exchanged by telephone or the internet.

Automatic Exchange Plan. Shareholders can authorize the Transfer Agent to
exchange a pre-determined amount of shares automatically on a monthly,
quarterly, semi-annual or annual basis.

Please refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.

ARE THERE LIMITATIONS ON FREQUENT PURCHASES, REDEMPTIONS AND EXCHANGES?

Risks from Excessive Purchase, Redemption and Short-Term Exchange Activity.
The OppenheimerFunds exchange privilege affords investors the ability to
switch their investments among Oppenheimer funds if their investment needs
change. However, there are limits on that privilege. Frequent purchases,
redemptions and exchanges of fund shares may interfere with the Manager's
ability to manage the fund's investments efficiently, increase the fund's
transaction and administrative costs and/or affect the fund's performance,
depending on various factors, such as the size of the fund, the nature of its
investments, the amount of fund assets the portfolio manager maintains in
cash or cash equivalents and the aggregate dollar amount, number and
frequency of trades. If large dollar amounts are involved in exchange and/or
redemption transactions, a fund might be required to sell portfolio
securities at unfavorable times to meet redemption or exchange requests, and
the fund's brokerage or administrative expenses might be increased.

Therefore, the Manager and the Fund's Board of Trustees have adopted the
following policies and procedures to detect and prevent frequent and/or
excessive exchanges, and/or purchase and redemption activity, while balancing
the needs of investors who seek liquidity from their investment and the
ability to exchange shares as investment needs change. There is no guarantee
that the policies and procedures described below will be sufficient to
identify and deter excessive short-term trading.

o Timing of Exchanges. Exchanged shares are normally redeemed from one
fund and the proceeds are reinvested in the fund selected for
exchange on the same regular business day on which the Transfer
Agent or its agent (such as a financial intermediary holding the
investor's shares in an "omnibus" or "street name" account) receives
an exchange request that conforms to these policies. The request
must be received by the close of the NYSE that day, which is
normally 4:00 p.m. Eastern time, but may be earlier on some days, in
order to receive that day's net asset value on the exchanged shares.
Exchange requests received after the close of the NYSE will receive
the next net asset value calculated after the request is received.
However, the Transfer Agent may delay transmitting the proceeds from
an exchange for up to five business days if it determines, in its
discretion, that an earlier transmittal of the redemption proceeds
to the receiving fund would be detrimental to either the fund from
which the exchange is being made or the fund into which the exchange
is being made. The proceeds will be invested in the fund into which
the exchange is being made at the next net asset value calculated
after the proceeds are received. In the event that such a delay in
the reinvestment of proceeds occurs, the Transfer Agent will notify
you or your financial representative.

o Limits on Disruptive Activity. The Transfer Agent may, in its
discretion, limit or terminate trading activity by any person, group
or account that it believes would be disruptive, even if the
activity has not exceeded the policy outlined in this Prospectus.
The Transfer Agent may review and consider the history of frequent
trading activity in all accounts in the Oppenheimer funds known to
be under common ownership or control as part of the Transfer Agent's
procedures to detect and deter excessive trading activity.

o Exchanges of Client Accounts by Financial Advisers. The Fund and the
Transfer Agent permit dealers and financial intermediaries to submit
exchange requests on behalf of their customers (unless the customer has
revoked that authority). The Distributor and/or the Transfer Agent have
agreements with a number of financial intermediaries that permit them
to submit exchange orders in bulk on behalf of their clients. Those
intermediaries are required to follow the exchange policies stated in
this Prospectus and to comply with additional, more stringent
restrictions. Those additional restrictions include limitations on the
funds available for exchanges, the requirement to give advance notice
of exchanges to the Transfer Agent, and limits on the amount of client
assets that may be invested in a particular fund. A fund or the
Transfer Agent may limit or refuse bulk exchange requests submitted by
such financial intermediaries if, in the Transfer Agent's judgment,
exercised in its discretion, the exchanges would be disruptive to any
of the funds involved in the transaction.

o Redemptions of Shares. These exchange policy limits do not apply to
redemptions of shares. Shareholders are permitted to redeem their
shares on any regular business day, subject to the terms of this
Prospectus. Further details are provided under "How to Sell Shares."

o Right to Refuse Exchange and Purchase Orders. The Distributor and/or
the Transfer Agent may refuse any purchase or exchange order in their
discretion and are not obligated to provide notice before rejecting an
order. The Fund may amend, suspend or terminate the exchange privilege
at any time. You will receive 60 days' notice of any material change in
the exchange privilege unless applicable law allows otherwise.

o Right to Terminate or Suspend Account Privileges. The Transfer Agent
may send a written warning to direct shareholders that the Transfer
Agent believes may be engaging in excessive purchases, redemptions
and/or exchange activity and reserves the right to suspend or terminate
the ability to purchase shares and/or exchange privileges for any
account that the Transfer Agent determines, in carrying out these
policies and in the exercise of its discretion, has engaged in
disruptive or excessive trading activity, with or without such warning.

o Omnibus Accounts. If you hold your shares of the Fund through a
financial intermediary such as a broker-dealer, a bank, an insurance
company separate account, an investment adviser, an administrator or
trustee of a retirement plan or 529 plan, that holds your shares in an
account under its name (these are sometimes referred to as "omnibus" or
"street name" accounts), that financial intermediary may impose its own
restrictions or limitations to discourage short-term or excessive
trading. You should consult your financial intermediary to find out
what trading restrictions, including limitations on exchanges, they may
apply.

While the Fund, the Distributor, the Manager and the Transfer Agent encourage
financial intermediaries to apply the Fund's policies to their customers who
invest indirectly in the Fund, the Transfer Agent may not be able to detect
excessive short term trading activity facilitated by, or in accounts
maintained in, the "omnibus" or "street name" accounts of a financial
intermediary. Therefore the Transfer Agent might not be able to apply this
policy to accounts such as (a) accounts held in omnibus form in the name of a
broker-dealer or other financial institution, or (b) omnibus accounts held in
the name of a retirement plan or 529 plan trustee or administrator, or (c)
accounts held in the name of an insurance company for its separate
account(s), or (d) other accounts having multiple underlying owners but
registered in a manner such that the underlying beneficial owners are not
identified to the Transfer Agent.

However, the Transfer Agent will attempt to monitor overall purchase and
redemption activity in those accounts to seek to identify patterns that may
suggest excessive trading by the underlying owners. If evidence of possible
excessive trading activity is observed by the Transfer Agent, the financial
intermediary that is the registered owner will be asked to review account
activity, and to confirm to the Transfer Agent and the Fund that appropriate
action has been taken to curtail any excessive trading activity. However, the
Transfer Agent's ability to monitor and deter excessive short-term trading in
omnibus or street name accounts ultimately depends on the capability and
cooperation of the financial intermediaries controlling those accounts.

Additional Policies and Procedures. The Fund's Board has adopted the
following additional policies and procedures to detect and prevent frequent
and/or excessive exchanges and purchase and redemption activity:

o 30-Day Limit. A direct shareholder may exchange some or all of the
shares of the Fund held in his or her account to another eligible
Oppenheimer fund once in a 30 calendar-day period. When shares are
exchanged into a fund account, that account will be "blocked" from
further exchanges into another fund for a period of 30 calendar days
from the date of the exchange. The block will apply to the full
account balance and not just to the amount exchanged into the
account. For example, if a shareholder exchanged $1,000 from one
fund into another fund in which the shareholder already owned shares
worth $10,000, then, following the exchange, the full account
balance ($11,000 in this example) would be blocked from further
exchanges into another fund for a period of 30 calendar days. A
"direct shareholder" is one whose account is registered on the
Fund's books showing the name, address and tax ID number of the
beneficial owner.

o Exchanges Into Money Market Funds. A direct shareholder will be
permitted to exchange shares of a stock or bond fund for shares of a
money market fund that offers an exchange privilege at any time,
even if the shareholder has exchanged shares into the stock or bond
fund during the prior 30 days. However, all of the shares held in
that money market fund would then be blocked from further exchanges
into another fund for 30 calendar days.

o Dividend Reinvestments/B Share Conversions. Reinvestment of dividends
or distributions from one fund to purchase shares of another fund
and the conversion of Class B shares into Class A shares will not be
considered exchanges for purposes of imposing the 30-day limit.

o Asset Allocation. Third-party asset allocation and rebalancing programs
will be subject to the 30-day limit described above. Asset
allocation firms that want to exchange shares held in accounts on
behalf of their customers must identify themselves to the Transfer
Agent and execute an acknowledgement and agreement to abide by these
policies with respect to their customers' accounts. "On-demand"
exchanges outside the parameters of portfolio rebalancing programs
will be subject to the 30-day limit. However, investment programs by
other Oppenheimer "funds-of-funds" that entail rebalancing of
investments in underlying Oppenheimer funds will not be subject to
these limits.

o Automatic Exchange Plans. Accounts that receive exchange proceeds
through automatic or systematic exchange plans that are established
through the Transfer Agent will not be subject to the 30-day block
as a result of those automatic or systematic exchanges (but may be
blocked from exchanges, under the 30-day limit, if they receive
proceeds from other exchanges).

Shareholder Account Rules and Policies

More information about the Fund's policies and procedures for selling and
exchanging shares is contained in the Statement of Additional Information.
A $12 annual "Minimum Balance Fee" is assessed on each Fund account with a

value of less than $500. The fee is automatically deducted from each
applicable Fund account annually in September. See the Statement of
Additional Information to learn how you can avoid this fee and for
circumstances under which this fee will not be assessed.
Telephone transaction privileges for redemptions or exchanges may be
modified, suspended or terminated by the Fund at any time. The Fund
will provide you notice whenever it is required to do so by applicable
law. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer
representative of record for the account unless the Transfer Agent
receives cancellation instructions from an owner of the account.
The Transfer Agent will record any telephone calls to verify data concerning
transactions and has adopted other procedures to confirm that telephone
instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. The Transfer Agent and the
Fund will not be liable for losses or expenses arising out of telephone
instructions reasonably believed to be genuine.
Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form. From time to time, the
Transfer Agent in its discretion may waive certain of the requirements
for redemptions stated in this Prospectus.
Dealers that perform account transactions for their clients by participating
in NETWORKING through the National Securities Clearing Corporation are
responsible for obtaining their clients' permission to perform those
transactions, and are responsible to their clients who are shareholders
of the Fund if the dealer performs any transaction erroneously or
improperly.
The redemption price for shares will vary from day to day because the value
of the securities in the Fund's portfolio fluctuates. The redemption
price, which is the net asset value per share, will normally differ for
each class of shares. If you redeem your shares before or after the
Maturity Date, the redemption value of your shares may be more or less
than their original cost. The value of your shares on the Maturity Date
will equal the greater of the Warranty Amount or the Fund's
then-current net asset value.
Payment for redeemed shares ordinarily is made in cash. It is forwarded by
check, or through AccountLink or by Federal Funds wire (as elected by
the shareholder) within seven days after the Transfer Agent receives
redemption instructions in proper form. However, under unusual
circumstances determined by the Securities and Exchange Commission,
payment may be delayed or suspended. For accounts registered in the
name of a broker-dealer, payment will normally be forwarded within
three business days after redemption.
The Transfer Agent may delay processing any type of redemption payment as
described under "How to Sell Shares" for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much
as 10 days from the date the shares were purchased. That delay may be
avoided if you purchase shares by Federal Funds wire or certified
check, or arrange with your bank to provide telephone or written
assurance to the Transfer Agent that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the Fund if the
account value has fallen below $500 for reasons other than the fact
that the market value of shares has dropped. In some cases, involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
Shares may be "redeemed in kind" under unusual circumstances (such as a lack
of liquidity in the Fund's portfolio to meet redemptions). This means
that the redemption proceeds will be paid with liquid securities from
the Fund's portfolio. If the Fund redeems your shares in kind, you may
bear transaction costs and will bear market risks until such time as
such securities are converted into cash. However, the Fund has made an
election which requires it to pay a certain portion of redemption
proceeds in cash. See the section entitled "Payments in-Kind" in the
Statement of Additional Information for more information.
Federal regulations may require the Fund to obtain your name, your date of
birth (for a natural person), your residential street address or
principal place of business and your Social Security Number, Employer
Identification Number or other government issued identification when
you open an account. Additional information may be required in certain
circumstances or to open corporate accounts. The Fund or the Transfer
Agent may use this information to attempt to verify your identity. The
Fund may not be able to establish an account if the necessary
information is not received. The Fund may also place limits on account
transactions while it is in the process of attempting to verify your
identity. Additionally, if the Fund is unable to verify your identity
after your account is established, the Fund may be required to redeem
your shares and close your account.
"Backup withholding" of federal income tax may be applied against taxable
dividends, distributions and redemption proceeds (including exchanges)
if you fail to furnish the Fund your correct, certified Social Security
or Employer Identification Number when you sign your application, or if
you under-report your income to the Internal Revenue Service.
To avoid sending duplicate copies of materials to households, the Fund will
mail only one copy of each prospectus, annual and semi-annual report
and annual notice of the Fund's privacy policy to shareholders having
the same last name and address on the Fund's records. The consolidation
of these mailings, called householding, benefits the Fund through
reduced mailing expense.

If you want to receive multiple copies of these materials, you may call
the Transfer Agent at 1.800.225.5677. You may also notify the Transfer
Agent in writing. Individual copies of prospectuses, reports and
privacy notices will be sent to you commencing within 30 days after the
Transfer Agent receives your request to stop householding.

Dividends, Capital Gains and Taxes

DIVIDENDS. The Fund intends to declare dividends separately for each class of
shares from net investment income on an annual basis and to pay them to
shareholders on a date selected by the Board of Trustees. Dividends and
distributions paid to Class A shares will generally be higher than dividends
for Class B, Class C and Class N shares, which normally have higher expenses
than Class A. The Fund has no fixed dividend rate and cannot guarantee that
it will pay any dividends or distributions.

CAPITAL GAINS. The Fund may realize capital gains on the sale of portfolio
securities. If it does, it may make distributions out of any net short-term
or long-term capital gains in December of each year. The Fund may make
supplemental distributions of dividends and capital gains following the end
of its fiscal year. There can be no assurance that the Fund will pay any
capital gains distributions in a particular year.

WHAT CHOICES DO YOU HAVE FOR RECEIVING DISTRIBUTIONS?

Reinvest All Distributions in the Fund. You can elect to reinvest all
dividends and capital gains distributions in additional shares of the
Fund.
Reinvest Dividends or Capital Gains. You can elect to reinvest some
distributions (dividends, short-term capital gains or long-term capital
gains distributions) in the Fund while receiving the other types of
distributions by check or having them sent to your bank account through
AccountLink.
Receive All Distributions in Cash. You can elect to receive a check for all
dividends and capital gains distributions or have them sent to your
bank through AccountLink.
Reinvest Your Distributions in Another OppenheimerFunds Account. You can
reinvest all distributions in the same class of shares of another
OppenheimerFunds account you have established.

Unless otherwise specified, all dividends and distributions will be
automatically reinvested in additional full and fractional shares of the
Fund. If you do not reinvest all of your dividends and capital gains
distributions in the Fund during the Warranty Period, your Warranty Amount
will be reduced.

TAXES. If your shares are not held in a tax-deferred retirement account, you
should be aware of the following tax implications of investing in the Fund.
Distributions are subject to federal income tax and may be subject to state
or local taxes. Dividends paid from short-term capital gains and net
investment income are taxable as ordinary income. Long-term capital gains are
taxable as long-term capital gains when distributed to shareholders. It does
not matter how long you have held your shares. Whether you reinvest your
distributions in additional shares or take them in cash, the tax treatment is
the same.

The asset allocation process may increase turnover of the Fund's
assets, which may result in the realization of additional gains by the Fund.
It may also result in a larger portion of any net gains being treated as
short-term capital gains, which would be taxed as ordinary income when
distributed to shareholders. As noted above, distributions of any gains and
income will be taxable to shareholders even if those distributions are
reinvested in Fund shares. Shareholders may receive taxable distributions of
income from investments included in the debt portfolio even in situations
where the Fund has capital losses from investments in the equity portfolio.

The determination of the tax character of any payment of the Warranty
Amount under the Warranty Agreement to the Fund as capital gain or ordinary
income is not free from doubt under federal tax law. The Fund intends to take
the position that its right to receive the payment under the Warranty
Agreement is itself a capital asset, and that the payment in termination of
such right gives rise to capital gain. Were the Internal Revenue Service to
challenge such position, at least the portion of such payment attributable to
capital losses previously realized by the Fund, and perhaps attributable to
the Fund's unrealized capital losses, should be treated as capital gain. Any
such gain would be offset by otherwise allowable capital losses, if any. To
the extent that the Fund distributes such payment to its shareholders, a
portion of such payment may constitute ordinary income to the shareholders,
provided however, that if the trustees of the Fund should elect to terminate
the Fund at the end of the Warranty Period, it is anticipated that the
shareholders receiving such payment in exchange for their shares would be
treated as receiving a return of capital to the extent of their basis in the
shares of the Fund, and to the extent such payment exceeds basis, as having
capital gain.

Every year the Fund will send you and the IRS a statement showing the
amount of any taxable distribution you received in the previous year. Any
long-term capital gains will be separately identified in the tax information
the Fund sends you after the end of the calendar year. In January of each
year the Fund will mail to you information about your dividends,
distributions and any shares you sold in the previous calendar year.

The Fund intends each year to qualify as a "regulated investment
company" under the Internal Revenue Code, but reserves the right not to
qualify. It qualified during its last fiscal year. The Fund, as a regulated
investment company, will not be subject to federal income taxes on any of its
income, provided that it satisfies certain income, diversification and
distribution requirements.

Remember, There May be Taxes on Transactions. Because the Fund's share prices
fluctuate, you may have a capital gain or loss when you sell or
exchange your shares. A capital gain or loss is the difference between
the price you paid for the shares and the price you received when you
sold them. Any capital gain is subject to capital gains tax.
Returns of Capital Can Occur. In certain cases, distributions made by the
Fund may be considered a non-taxable return of capital to shareholders.
If that occurs, it will be identified in notices to shareholders.

The Fund will invest in zero coupon U.S. Treasury bonds and other debt
securities that are issued at a discount or provide for deferred interest.
Even though the Fund receives no actual interest payments on these
securities, the Fund will be deemed to receive income equal, generally, to a
portion of the excess of the face value of the securities over their issue
price ("original issue discount") each year that the securities are held.
Since the original issue discount income earned by the Fund in a taxable year
may not be represented by cash income, the Fund may have to dispose of
securities, which it might otherwise have continued to hold, to generate cash
in order to satisfy its distribution requirements if shareholders request
cash distributions.

This information is only a summary of certain federal income tax
information about your investment. You should consult with your tax advisor
about the effect of an investment in the Fund on your particular tax
situation.

Financial Highlights of the Fund

The Financial Highlights Table shown below is presented to help you
understand the Fund's financial performance since inception. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned
(or lost) on an investment in the Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by Deloitte &
Touche LLP, the Fund's independent registered public accounting firm, whose
report, along with the Fund's financial statements, is included in the
Statement of Additional Information, which is available on request.

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

CLASS A YEAR ENDED AUGUST 31, 2006 2005 2004 2003 1
-----------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.46 $ 10.88 $ 10.28 $ 10.00
-----------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .07 2 .11 2 .07 -- 3
Net realized and unrealized gain .80 .65 .64 .28
----------------------------------------------
Total from investment operations .87 .76 .71 .28
-----------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.01) (.12) (.07) --
Tax return of capital distribution from
net investment income (.09) -- 3 -- --
Dividends from net realized gain -- (.02) (.02) --
Tax return of capital distribution from net realized gain -- (.04) (.02) --
----------------------------------------------
Total dividends and/or distributions to shareholders (.10) (.18) (.11) --
-----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.23 $ 11.46 $ 10.88 $ 10.28
==============================================

-----------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 7.67% 6.98% 6.87% 2.80%
-----------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $54,800 $64,304 $71,666 $78,758
-----------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $60,071 $68,812 $78,668 $39,416
-----------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income 0.62% 1.02% 0.65% 0.35%
Total expenses 6 1.03% 1.10% 1.14% 1.13%
Less reimbursement of management fees during offering period -- -- -- (0.32)%
Payments and waivers and reduction to custodian expenses (0.03)% (0.06)% (0.12)% --
----------------------------------------------
Net expenses 1.00% 1.04% 1.02% 0.81% 7
-----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 122% 179% 12%

1. For the period from June 2, 2003 (commencement of operations) to August 31,
2003.

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

3. Less than $0.005 per share.

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

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

6. Expenses paid including all underlying fund expenses were as follows:

Year Ended August 31, 2006 1.50%
Year Ended August 31, 2005 1.52% 8
Year Ended August 31, 2004 1.60%
Period Ended August 31, 2003 1.38%

7. For this period reduction to custodian expenses was zero.

8. Restated since August 31, 2005.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CLASS B YEAR ENDED AUGUST 31, 2006 2005 2004 2003 1
----------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
Net asset value, beginning of period $11.40 $ 10.82 $ 10.28 $ 10.00

Income (loss) from investment operations: (.02) 2 .03 2 (.02) -- 3
Net investment income (loss)
Net realized and unrealized gain .80 .64 .63 .28
------------------------------------------------
Total from investment operations .78 .67 .61 .28
----------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- 3 (.03) (.03) --
Tax return of capital distribution from net investment income (.01) -- 3 -- --
Dividends from net realized gain -- (.02) (.02) --
Tax return of capital distribution from net realized gain -- (.04) (.02) --
------------------------------------------------
Total dividends and/or distributions to shareholders (.01) (.09) (.07) --
----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.17 $ 11.40 $ 10.82 $ 10.28
================================================

----------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 6.89% 6.21% 5.94% 2.80%
----------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $110,228 $117,057 $122,411 $122,968
----------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $114,903 $120,928 $127,128 $ 64,461
----------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income (loss) (0.19)% 0.23% (0.14)% (0.20)%
Total expenses 6 1.78% 1.86% 1.89% 1.88%
Less reimbursement of management fees during offering period -- -- -- (0.32)%
----------------------------------------------------------------------------------------------------------------
Less reimbursement to maintain yield -- -- -- (0.31)%
----------------------------------------------------------------------------------------------------------------
Payments and waivers and reduction to custodian expenses (0.03)% (0.06)% (0.12)% --
------------------------------------------------
Net expenses 1.75% 1.80% 1.77% 1.25% 7
----------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 122% 179% 12%

1. For the period from June 2, 2003 (commencement of operations) to August 31,
2003.

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

3. Less than $0.005 per share.

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

6. Expenses paid including all underlying fund expenses were as follows:

Year Ended August 31, 2006 2.25%
Year Ended August 31, 2005 2.28% 8
Year Ended August 31, 2004 2.35%
Period Ended August 31, 2003 2.13%

7. For this period reduction to custodian expenses was zero.

8. Restated since August 31, 2005.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CLASS C YEAR ENDED AUGUST 31, 2006 2005 2004 2003 1
-----------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.42 $ 10.82 $ 10.28 $ 10.00
-----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.02) 2 .03 2 (.02) -- 3
Net realized and unrealized gain .81 .65 .64 .28
--------------------------------------------
Total from investment operations .79 .68 .62 .28
-----------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- 3 (.02) (.04) --
Tax return of capital distribution from net investment income (.01) -- 3 -- --
Dividends from net realized gain -- (.02) (.02) --
Tax return of capital distribution from net realized gain -- (.04) (.02) --
--------------------------------------------
Total dividends and/or distributions to shareholders (.01) (.08) (.08) --
-----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.20 $ 11.42 $ 10.82 $ 10.28
============================================

-----------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 4 6.93% 6.24% 5.95% 2.80%
-----------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $35,733 $41,333 $51,741 $60,271
-----------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $38,862 $46,152 $59,429 $31,946
-----------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income (loss) (0.14)% 0.29% (0.10)% (0.20)%
Total expenses 6 1.77% 1.85% 1.88% 1.88%
Less reimbursement of management fees during offering period -- -- -- (0.32)%
Less reimbursement to maintain yield -- -- -- (0.32)%
Payments and waivers and reduction to custodian expenses (0.03)% (0.06)% (0.12)% --
--------------------------------------------
Net expenses 1.74% 1.79% 1.76% 1.24% 7
-----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 122% 179% 12%

1. For the period from June 2, 2003 (commencement of operations) to August 31,
2003.

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

3. Less than $0.005 per share.

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

6. Expenses paid including all underlying fund expenses were as follows:

Year Ended August 31, 2006 2.24%
Year Ended August 31, 2005 2.27% 8
Year Ended August 31, 2004 2.34%
Period Ended August 31, 2003 2.13%

7. For this period reduction to custodian expenses was zero.

8. Restated since August 31, 2005.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CLASS N YEAR ENDED AUGUST 31, 2006 2005 2004 2003 1
------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.45 $10.86 $10.28 $10.00
------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income .04 2 .09 2 .05 -- 3
Net realized and unrealized gain .81 .65 .63 .28
-----------------------------------------
Total from investment operations .85 .74 .68 .28
------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.01) (.09) (.06) --
Tax return of capital distribution from net investment income (.07) -- 3 -- --
Dividends from net realized gain -- (.02) (.02) --
Tax return of capital distribution from net realized gain -- (.04) (.02) --
-----------------------------------------
Total dividends and/or distributions to shareholders (.08) (.15) (.10) --
------------------------------------------------------------------------------------------------------
Net asset value, end of period $12.22 $11.45 $10.86 $10.28
=========================================

------------------------------------------------------------------------------------------------------
TOTAL RETURN,AT NET ASSET VALUE 4 7.50% 6.85% 6.55% 2.80%
------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $4,542 $4,324 $5,109 $5,432
------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $4,477 $4,659 $5,408 $3,713
------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income 0.34% 0.77% 0.46% 0.06%
Total expenses 6 1.21% 1.28% 1.34% 1.38%
Less reimbursement of management fees during offering period -- -- -- (0.32)%
Payments and waivers and reduction to custodian expenses (0.03)% (0.06)% (0.12)% --
-----------------------------------------
Net expenses 1.18% 1.22% 1.22% 1.06% 7
------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 122% 179% 12%

1. For the period from June 2, 2003 (commencement of operations) to August 31,
2003.

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

3. Less than $0.005 per share.

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

6. Expenses paid including all underlying fund expenses were as follows:

Year Ended August 31, 2006 1.68%
Year Ended August 31, 2005 1.70% 8
Year Ended August 31, 2004 1.80%
Period Ended August 31, 2003 1.63%

7. For this period reduction to custodian expenses was zero.

8. Restated since August 31, 2005.

Financial Highlights of the Underlying Fund

Because the Fund may invest a significant amount of its assets in the
Underlying Fund, the Financial Highlights Table on the following page is
presented to help you understand the Underlying Fund's Class Y share
financial performance for the past five fiscal years. The total returns in
the table represent the rate that an investor would have earned (or lost) on
an investment in the Underlying Fund (assuming reinvestment of all dividends
and distributions). This information has been audited by Deloitte & Touche
LLP, the Fund's and the Underlying Fund's independent registered public
accounting firm, whose report, along with the Underlying Fund's financial
statements, is incorporated by reference in the Fund's Statement of
Additional Information, which is available on request.

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

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

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 36.18 $ 32.78 $ 29.62 $ 27.90 $ 32.15
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .35 1 .47 1 .26 .22 .16
Net realized and unrealized gain (loss) 2.96 3.34 3.10 1.69 (4.29)
----------------------------------------------------------------------------------
Total from investment operations 3.31 3.81 3.36 1.91 (4.13)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.37) (.41) (.20) (.19) (.07)
Distributions from net realized gain -- -- -- -- (.05)
----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.37) (.41) (.20) (.19) (.12)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 39.12 $ 36.18 $ 32.78 $ 29.62 $ 27.90
==================================================================================

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 9.19% 11.68% 11.37% 6.93% (12.90)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $7,680,186 $7,810,714 $7,384,256 $7,033,312 $6,443,983
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $7,845,096 $7,759,230 $7,521,103 $6,310,359 $7,203,226
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.93% 1.36% 0.75% 0.87% 0.52%
Total expenses 0.92% 4 0.92% 4 0.93% 4,5 0.97% 4 0.99% 4
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 84% 79% 76% 94% 78%

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

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

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

4. Reduction to custodian expenses less than 0.01%.

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

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

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 34.99 $ 31.67 $ 28.68 $ 27.04 $ 31.34
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .05 1 .20 1 (.21) (.13) (.20)
Net realized and unrealized gain (loss) 2.86 3.21 3.20 1.77 (4.05)
----------------------------------------------------------------------------------
Total from investment operations 2.91 3.41 2.99 1.64 (4.25)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.03) (.09) -- -- --
Distributions from net realized gain -- -- -- -- (.05)
----------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.03) (.09) -- -- (.05)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 37.87 $ 34.99 $ 31.67 $ 28.68 $ 27.04
==================================================================================

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 8.32% 10.79% 10.43% 6.06% (13.58)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,453,679 $1,968,829 $2,558,206 $2,941,765 $3,510,800
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,685,648 $2,295,269 $2,884,434 $2,964,666 $4,607,653
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) 0.13% 0.59% (0.10)% 0.04% (0.25)%
Total expenses 1.71% 4 1.72% 4 1.78% 4,5 1.81% 4 1.75% 4
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 84% 79% 76% 94% 78%

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

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

4. Reduction to custodian expenses less than 0.01%.

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

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

PER SHARE OPERATING DATA
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 34.98 $ 31.71 $ 28.69 $ 27.03 $ 31.33
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .07 1 .21 1 (.03) -- (.11)
Net realized and unrealized gain (loss) 2.85 3.22 3.05 1.66 (4.14)
---------------------------------------------------------------------------------
Total from investment operations 2.92 3.43 3.02 1.66 (4.25)
----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.09) (.16) -- -- --
Distributions from net realized gain -- -- -- -- (.05)
---------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.09) (.16) -- -- (.05)
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 37.81 $ 34.98 $ 31.71 $ 28.69 $ 27.03
=================================================================================

----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 8.36% 10.83% 10.53% 6.14% (13.58)%
----------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $1,107,962 $1,206,335 $1,241,930 $1,188,826 $1,198,517
----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $1,163,337 $1,250,845 $1,278,659 $1,111,131 $1,432,566
----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) 0.18% 0.62% (0.01)% 0.09% (0.24)%
Total expenses 1.67% 4 1.67% 4 1.70% 4,5 1.74% 4 1.75% 4
----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 84% 79% 76% 94% 78%

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

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

4. Reduction to custodian expenses less than 0.01%.

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

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

PER SHARE OPERATING DATA
--------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 35.71 $ 32.39 $ 29.33 $ 27.72 $ 32.09
--------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .24 1 .35 1 .15 .20 .12
Net realized and unrealized gain (loss) 2.92 3.30 3.05 1.65 (4.31)
----------------------------------------------------------------
Total from investment operations 3.16 3.65 3.20 1.85 (4.19)
--------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.28) (.33) (.14) (.24) (.13)
Distributions from net realized gain -- -- -- -- (.05)
----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.28) (.33) (.14) (.24) (.18)
--------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 38.59 $ 35.71 $ 32.39 $ 29.33 $ 27.72
================================================================

--------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 8.87% 11.30% 10.93% 6.78% (13.15)%
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $207,339 $177,463 $150,955 $ 79,188 $ 43,464
--------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $194,639 $168,866 $122,478 $ 60,950 $ 28,141
--------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 0.63% 1.02% 0.38% 0.65% 0.28%
Total expenses 1.22% 1.26% 1.31% 1.23% 1.24%
Expenses after payments and waivers
and reduction to custodian expenses 1.22% 1.26% 1.31% 1.18% 1.24%
--------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 84% 79% 76% 94% 78%

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

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

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

PER SHARE OPERATING DATA
Net asset value, beginning of period $ 36.38 $ 32.93 $ 29.75 $ 28.02 $ 32.28
--------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .52 1 .64 1 .34 .11 .19
Net realized and unrealized gain (loss) 2.96 3.34 3.13 1.86 (4.28)
----------------------------------------------------------------
Total from investment operations 3.48 3.98 3.47 1.97 (4.09)
--------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.53) (.53) (.29) (.24) (.12)
Distributions from net realized gain -- -- -- -- (.05)
----------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.53) (.53) (.29) (.24) (.17)
--------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 39.33 $ 36.38 $ 32.93 $ 29.75 $ 28.02
================================================================

--------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 9.63% 12.15% 11.69% 7.11% (12.74)%
--------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
--------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $668,823 $483,532 $570,991 $441,460 $225,298
--------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $594,018 $496,349 $558,130 $242,029 $227,835
--------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 1.38% 1.82% 1.07% 1.01% 0.74%
Total expenses 0.49% 0.53% 0.60% 0.87% 0.92%
Expenses after payments and waivers
and reduction to custodian expenses 0.49% 0.53% 0.60% 0.83% 0.78%
--------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 84% 79% 76% 94% 78%

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

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

INFORMATION AND SERVICES

For More Information on Oppenheimer Principal Protected Main Street Fund(R)
The following additional information about the Fund is available without
charge upon request:

STATEMENT OF ADDITIONAL INFORMATION. This document includes additional
information about the Fund's investment policies, risks, and operations. It
is incorporated by reference into this Prospectus (which means it is legally
part of this Prospectus).

ANNUAL AND SEMI-ANNUAL REPORTS. Additional information about the Fund's
investments and performance is available in the Fund's Annual and Semi-Annual
Reports to shareholders. The Annual Report includes a discussion of market
conditions and investment strategies that significantly affected the Fund's
performance during its last fiscal year.

How to Get More Information
You can request the Statement of Additional Information, the Annual and
Semi-Annual Reports, the notice explaining the Fund's privacy policy and
other information about the Fund or your account:

------------------------------------------------------------------------------
By Telephone: Call OppenheimerFunds Services toll-free:
1.800.CALL OPP (225.5677)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
By Mail: Write to:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217-5270
------------------------------------------------------------------------------
------------------------------------------------------------------------------
On the Internet: You can request these documents by e-mail or
through the OppenheimerFunds website. You may
also read or download certain documents on the
OppenheimerFunds website at:
www.oppenheimerfunds.com
------------------------------------------------------------------------------

Information about the Fund including the Statement of Additional Information
can be reviewed and copied at the SEC's Public Reference Room in Washington,
D.C. Information on the operation of the Public Reference Room may be
obtained by calling the SEC at 1.202.942.8090. Reports and other information
about the Fund are available on the EDGAR database on the SEC's Internet
website at www.sec.gov. Copies may be obtained after payment of a duplicating
fee by electronic request at the SEC's e-mail address: publicinfo@sec.gov or
by writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.
No one has been authorized to provide any information about the Fund or to
make any representations about the Fund other than what is contained in this
Prospectus. This Prospectus is not an offer to sell shares of the Fund, nor a
solicitation of an offer to buy shares of the Fund, to any person in any
state or other jurisdiction where it is unlawful to make such an offer.

The Fund's SEC File No. 811-21281 The Fund's shares are distributed by:
PR0676.001.1206 [logo] OppenheimerFunds Distributor,
Inc.

Printed on recycled paper.

APPENDIX TO THE PROSPECTUS OF
OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND(R)

Graphic material included in the Prospectus of Oppenheimer Principal
Protected Main Street Fund ("the Fund") includes "Annual Total Returns (Class
A) (as of 12/31 each year)"

A bar chart is included in the Prospectus of the Fund depicting the
annual total returns of a hypothetical investment in Class A shares of the
Fund since inception of the Class A shares, without deducting sales charges.
Set forth below are the relevant data points that will appear in the bar
chart:

Calendar Year Ended: Annual Total Returns
12/31/04 5.35%

12/31/05 3.10%

Oppenheimer Principal Protected Main Street Fund(R)

6803 South Tucson Way, Centennial, Colorado 80112-3924
1.800.CALL OPP (225.5677)

Statement of Additional Information dated December 15, 2006

This Statement of Additional Information is not a prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated December 15, 2006. It should be read
together with the Prospectus, which may be obtained by writing to the
Fund's Transfer Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver,
Colorado 80217, or by calling the Transfer Agent at the toll-free number
shown above, or by downloading it from the OppenheimerFunds Internet
website at www.oppenheimerfunds.com.

Contents

Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks......2
The Fund's Investment Policies.........................................2
The Asset Allocation Process...........................................3
Other Investment Restrictions.........................................10
Disclosure of Portfolio Holdings......................................12
How the Fund is Managed...................................................16
Organization and History..............................................16
Board of Trustees and Oversight Committees............................17
Trustees and Officers of the Fund.....................................18
The Manager...........................................................28
Brokerage Policies of the Fund............................................32
Distribution and Service Plans............................................34
Payments to Fund Intermediaries...........................................38
Performance of the Fund...................................................42

About Your Account
How to Sell Shares........................................................50
How to Exchange Shares....................................................52
Dividends, Capital Gains and Taxes........................................57
Additional Information About the Fund.....................................61

Financial Information About the Fund
Report of Independent Registered Public Accounting Firm...................62
Financial Statements......................................................63

Appendix A: Industry Classifications.....................................A-1
Appendix B: Special Sales Charge Arrangements and Waivers................B-1
Appendix C: Information About the Underlying Fund........................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 as well as information about any non-principal
investment policies and the attendant risks not described in the
prospectus and the types of securities that the Fund's investment Manager,
OppenheimerFunds, Inc., can select for the Fund. Additional information is
also provided about the strategies that the Fund can use to try to achieve
its objective.

The Fund's Investment Policies. The composition of the Fund's portfolio
and the techniques and strategies that the Fund's Manager can use in
selecting portfolio securities will vary over time. The "Warranty Period"
began August 5, 2003 and will end August 5, 2010 or the next following
business day (the "Maturity Date"). The investment objective of the Fund
during the Warranty Period is to seek capital preservation in order to
attempt to make sure that the value of each shareholder's account on the
Maturity Date will be no less than the value of that shareholder's account
on the last day of the Offering Period, less sales charges, extraordinary
expenses and other amounts not covered by the "Warranty Agreement" (the
"Warranty Amount"). The Fund seeks high total return as a secondary
objective. There can be no assurance that the Fund will achieve its
objective. The Fund's investment objective during the "Post-Warranty
Period," the period immediately following the Maturity Date, is high total
return. This section supplements the disclosure in the Fund's Prospectus
and provides additional information on the Fund's investment policies or
restrictions to the extent permitted under the Financial Warranty
Agreement, dated May 29, 2003 (the "Warranty Agreement"), among the Fund,
the Manager and Merrill Lynch Bank USA. Restrictions or policies stated as
a maximum percentage of the Fund's assets are only applied immediately
after a portfolio investment to which the policy or restriction is
applicable (other than the limitations on borrowing and illiquid
securities). Accordingly, any later increase or decrease resulting from a
change in values, net assets or other circumstances will not be considered
in determining whether the investment complies with the Fund's
restrictions and policies.

Under normal market conditions, during the Warranty Period the
Fund's assets are allocated between an equity component, consisting
exclusively of Class Y shares of the Oppenheimer Main Street Fund (the
"Underlying Fund"), and a fixed income component, normally consisting
primarily of zero-coupon U.S. government securities. However, as explained
more fully in the prospectus, under certain circumstances, the Fund's
assets may be invested primarily or even exclusively in U.S. government
securities.

Merrill Lynch Bank USA ("MLBUSA" or the "Warranty Provider") is a
wholly-owned subsidiary of Merrill Lynch & Co., Inc. MLBUSA is licensed as
an industrial bank pursuant to the laws of the State of Utah. MLBUSA is
regulated by certain Federal and state agencies and is examined by those
agencies. MLBUSA may hedge its risks under the Warranty Agreement with one
or more counterparties, including with an affiliate of MLBUSA (which may
include the calculation agent under the Warranty Agreement). MLBUSA is not
required to hedge its risk under the Warranty Agreement and may choose not
to do so. Whether MLBUSA attempts to hedge its risk under the Warranty
Agreement or not, it is the sole entity responsible for making payments to
the Fund, if any, under the Warranty Agreement.

The Asset Allocation Process. In pursuing the Fund's investment objective
during the Warranty Period, the Manager allocates the Fund's assets
between the equity and fixed income components of the portfolio. The Fund
did not employ an asset allocation model during the Offering Period and
will not do so during the Post-Warranty Period.

The prevailing level of interest rates and the volatility of the
equity markets will significantly influence the allocation of Fund assets
between the equity component and the fixed income component. The Manager
will monitor the allocation of the Fund's assets on a daily basis.

The asset allocation process will also be affected by the Manager's
ability to manage the Underlying Fund. If the market value of the
Underlying Fund increases, a smaller portion of the Fund's assets would be
allocated to the fixed income component. On the other hand, if the market
value of the Underlying Fund decreases, a higher portion of the Fund's
assets would have to be allocated to the fixed income component, and the
ability of the Fund to participate in any subsequent upward movement in
the equity market would be reduced.

The Warranty Agreement contains a mathematical formula which
provides the maximum amount of the Fund's assets that may be invested in
the equity component on any given day during the Warranty Period. That
percentage allocation to the equity component can be as high as 100% and
as low as zero. Accordingly, the Warranty Agreement could limit the way
that the Manager manages the Fund during the Warranty Period in response
to changing market conditions.

In allocating the Fund's assets between the equity and fixed income
components, the Manager will base its decision on the formula set forth in
the Warranty Agreement. The formula will help establish both the initial
allocation of the Fund's assets and on a daily basis will reevaluate the
Fund's then maximum permitted allocation in the equity component. The
objective of the formula is to preserve the principal of the Fund,
primarily through allocations to the fixed income component. The formula
takes into account a number of factors, including, but not limited to:
o The market value of the Fund's assets as compared to the Warranty
Amount;
o The prevailing level of interest rates;
o Equity market volatility; and
o The length of time remaining until the Maturity Date.

The model may allocate between 0% to 100% of the Fund's assets to
the equity component. However, initially a significant portion of the
Fund's assets will be allocated to the fixed income component. It is also
possible that 100% of the Fund's assets will be allocated to the debt
component during the Warranty Period.

The basic terms of the asset allocation model were determined prior
to the Fund entering into the Warranty Agreement with MLBUSA. MLBUSA
reviewed the asset allocation model in determining whether it was prepared
to offer the Financial Warranty to the Fund and negotiated some
modifications to manage its financial risk. MLBUSA has no right to require
any modification to the structure of the asset allocation formula during
the Warranty Period, but has discretion in certain limited circumstances
to adjust certain variables in the formula. Because the model impacts
MLBUSA's financial exposure, MLBUSA has a right to approve any changes
that the Fund wishes to make to the model during the Warranty Period.
MLBUSA has informational rights regarding the model's allocation and the
Fund's portfolio during the Warranty Period, but these rights are intended
to enable MLBUSA to monitor its financial exposure. Under the terms of the
Warranty Agreement, the Fund is subject to certain investment parameters
during the Warranty Period. The Fund has also agreed to be bound by
various covenants. If the Fund's assets are not managed in accordance with
the parameters set forth in the Warranty Agreement or if the Fund breaches
these covenants, the Fund's assets could be allocated entirely to the
fixed income portfolio for the remainder of the Warranty Period, or MLBUSA
may terminate the Warranty Agreement.

The Financial Warranty. The prospectus contains a detailed description of
the Warranty Agreement. The "Financial Warranty" that the Warranty
Provider issued is a contractual obligation to make a payment to the Fund
in the event there is a shortfall between the Warranty Amount and the
then-current net asset value of the Fund on the Maturity Date
("Shortfall"). The Financial Warranty is not a guarantee and therefore the
availability of the Financial Warranty on the Maturity Date will be
conditioned upon the Manager and the Fund satisfying their respective
obligations under the Warranty Agreement. Should the Fund and/or the
Manager fail to satisfy their respective obligations under the Warranty
Agreement, the Warranty Provider is permitted to terminate the Financial
Warranty and thus terminate its obligation, if any, to make any payment to
the Fund on the Maturity Date. Shareholders also bear the risk that the
Warranty Provider will become insolvent or otherwise fail to or become
unable to satisfy its payment obligation to the Fund, if any, under the
Financial Warranty. If either event were to occur, shareholders'
investment in the Fund would no longer be protected by the Financial
Warranty, which means their shares may be worth less than their
anticipated Warranty Amount. The Fund's Board of Trustees will
periodically review the financial statements of the Warranty Provider. In
the event that the financial condition of the Warranty Provider has
deteriorated beyond certain thresholds, the Trustees will determine
whether there is a substantial likelihood that the Warranty Provider will
be unable to satisfy its obligations under the Warranty Agreement. Under
such circumstances the Board may, but is not obligated to, replace the
Warranty Provider.

In the event the Manager acts with negligence, recklessness, bad
faith, willful misconduct or fraud and the Fund's net asset value is below
a set limit, the Manager will be required to make a payment under the
Warranty Agreement in an amount equal to the amount of any reduction in
the Fund's net asset value below a set limit that is directly or
indirectly attributable to the Manager's conduct. Additionally, in the
event the Manager is required to allocate the Fund's assets to the debt
component and fails to do so and such failure results in the Fund's net
asset value falling below a set limit, the Manager will be required to pay
to the Warranty Provider an amount equal to the Shortfall due to the
Fund's assets not being so invested. In the event the Manager fails to make
any such payment, deliver a notice of objection, or pay such amount into
an escrow account to the Warranty Provider within five business days, then
the Warranty Provider may terminate the Financial Warranty. The Warranty
Provider may also terminate the Financial Warranty for other reasons, as
discussed in the Prospectus and this Statement of Additional Information.

The Warranty Agreement imposes certain conditions and requirements
on the Fund and the Manager. Failure to satisfy those conditions and
requirements, which are described in detail in the Prospectus, gives the
Warranty Provider the ability to (i) reduce the amount of the Fund's
assets invested in shares of the Underlying Fund, (ii) require 100% of the
Fund's assets to be invested in U.S. government securities, or (iii)
terminate the Warranty Agreement, depending on the condition or
requirement. The Manager will monitor the conditions and requirements of
the Warranty Agreement on a daily basis to ensure that the Fund and the
Manager satisfy those conditions and requirements. In certain
circumstances, the Warranty Agreement provides that in the case of certain
deficiencies, the Fund may have a specified period of time to cure the
deficiency. In the case of other deficiencies, the Warranty Provider has
the right, in its sole discretion, to either direct the Manager to
allocate all of the Fund's assets to the debt component, deliver to the
Fund's Custodian pre-signed instructions from the Manager instructing the
Custodian to immediately allocate all of the Fund's assets to the debt
component or change one of the variables in the formula which would have
the effect of increasing the portion of the Fund's assets allocated to the
debt component or in certain circumstances terminate the Warranty
Agreement. The Warranty Provider will rely on the Manager as well as on
the Fund's Custodian bank for the information necessary to monitor the
Fund's and/or the Manager's compliance with the terms of the Warranty
Agreement. The attendant risks to the Fund and shareholders are if the
Manager or the Custodian bank fails to provide the information required by
the Warranty Agreement, in which case the Warranty Provider may require
the Fund to invest exclusively in U.S. government securities.

On the Maturity Date, if there is a Shortfall between the Warranty
Amount and the Fund's then-current net asset value, the Warranty Provider
will be required to make a payment to the Fund in the amount of the
Shortfall. The Shortfall amount will be determined per class of shares and
then the specific Shortfall amount per class of shares will be allocated
to the respective class. Once the dollar amount of Shortfall is allocated
per class, that amount will then be divided evenly among the outstanding
shares of the class to apply on a shareholder basis. The Fund will then
provide those shareholders who redeem their Fund shares on the Maturity
Date with their respective Warranty Amount.

During the Warranty Period, the Fund may purchase securities or
engage in investment techniques set forth in the following sections.

|X| Investments in Equity Securities. The Fund's investments in
equity securities will consist exclusively of Class Y shares of the
Oppenheimer Main Street Fund - the Underlying Fund. The Underlying Fund
does not limit its investments in equity securities to issuers having a
market capitalization of a specified size or range, and therefore can
invest in securities of small-, mid- and large-capitalization issuers. At
times, the Underlying Fund can focus its equity investments in securities
of one or more capitalization ranges, based upon the Manager's judgment of
where the best market opportunities are to seek the Underlying Fund's
objective. At times, the market may favor or disfavor securities of
issuers of a particular capitalization range. Securities of small
capitalization issuers may be subject to greater price volatility in
general than securities of larger companies. Therefore, if the Underlying
Fund is focusing on or has substantial investments in smaller
capitalization companies at times of market volatility, the Underlying
Fund's share prices may fluctuate more than that of funds focusing on
larger capitalization issuers. Further information about the Underlying
Fund is included under "Information About the Underlying Fund" in Appendix
C to this Statement of Additional Information. The Underlying Fund's
Prospectus and Statement of Additional Information describe in detail the
Underlying Fund's investment policies, risks, management, investment
restrictions, strategies and types of securities in which it may invest,
and contains other information about the Underlying Fund. The Prospectus,
Statement of Additional Information and annual and semi-annual reports of
the Underlying Fund are available without charge upon request by calling
1.800.525.7048.

|X| Investments in Bonds and Other Debt Securities. The Fund will
invest in U.S. government securities to seek its investment objective. In
general, debt securities are subject to two 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. The
fixed income component of the Fund's portfolio consists of 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, a division of the McGraw-Hill Companies, Inc.
("S&P") or Fitch, Inc. ("Fitch"), or that have comparable ratings by
another nationally-recognized 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.

|X| U.S. Government Securities. U.S. government securities the Fund
buys will include non-callable general obligations of the U.S. Treasury
backed by the full faith and credit of the U.S. government or of any of
the following U.S. government agencies, instrumentalities or government
sponsored enterprises: Federal National Mortgage Association, Federal Home
Loan Mortgage Corporation, Federal Home Loan Bank, Resolution Funding
Corporation, Financing Corporation and Tennessee Valley Authority,
provided such securities are rated no less than "AAA" by Standard & Poor's
Rating Services or "Aaa" by Moody's Investors Service, Inc.

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.

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. The Fund may invest in, Government National Mortgage
Association pass-through mortgage certificates (called "Ginnie Maes"),
which are supported by the full faith and credit of the U.S. government.

|X| Zero-Coupon Securities. The Fund can buy zero-coupon and
delayed-interest securities. The Fund can buy 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. The buyer recognizes a
rate of return determined by the gradual appreciation of the security,
which is redeemed at face value on a specified maturity date. This
discount depends on the time remaining until maturity, as well as
prevailing interest rates, the liquidity of the security and the credit
quality of the issuer. The discount typically decreases as the maturity
date approaches. 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 typically
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| 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. During the Offering Period the Fund invested its assets in:

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 Standard & Poor's 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.

During the Warranty Period, the Fund may invest in bank deposits,
commercial paper and U.S. government securities (excluding U.S. government
zero coupon securities), having a remaining maturity of 90 days or less.
The bank deposits will include demand and time deposits in, certificates
of deposit of, and bankers' acceptances issued by, any U.S. depository
institution or trust company. The bank deposits and commercial paper must
have a credit rating of at least "P-1" by Moody's Investors Service, Inc.
and at least "A-1" by Standard & Poor's Rating Services, and the issuer
thereof must have at the time of such investment a long-term credit rating
of at least "Aa3" by Moody's or at least "AA" by S&P.

|X| Borrowing. The Fund may borrow for temporary or emergency
purposes only to the extent necessary to meet redemption requests after
using all cash held by the Fund to meet such redemption requests, other
than cash necessary to pay Fund fees and expenses. Currently, under the
Investment Company Act of 1940 (the "Investment Company Act"), a mutual
fund may borrow only from banks and the maximum amount it may borrow is up
to one-third of its total assets (including the amount borrowed less its
liabilities, other than borrowings), except that a fund may borrow up to
5% of its total assets for temporary purposes from any person. Under the
Investment Company Act, there is a rebuttable presumption that a loan is
temporary if it is repaid within 60 days and not extended or renewed. As a
matter of fundamental policy, the Fund is authorized to borrow up to the
limits set forth in the Investment Company Act. During periods of
substantial borrowings, the value of the Fund's assets would be reduced
due to the added expense of interest on borrowed monies. The Fund is
authorized to borrow, and to pledge assets to secure such borrowings, up
to the maximum extent permissible under the Investment Company Act. Any
such borrowing will be made only pursuant to the requirements of the
Investment Company Act and will be made only to the extent that the value
of each Fund's assets less its liabilities, other than borrowings, is
equal to at least 300% of all borrowings including the proposed borrowing.
If the value of the Fund's assets, so computed, should fail to meet the
300% asset coverage requirement, the Fund is required, within three days
to reduce its bank debt to the extent necessary to meet such requirement
and may have to sell a portion of its investments at a time when
independent investment judgment would not dictate such sale. Interest on
money borrowed is an expense the Fund would not otherwise incur, so that
it may have little or no net investment income during periods of
substantial borrowings. Since substantially all of the Fund's assets
fluctuate in value, but borrowing obligations are fixed when the Fund has
outstanding borrowings, the net asset value per share of the Fund
correspondingly will tend to increase and decrease more when the Fund's
assets increase or decrease in value than would otherwise be the case.

The Fund will pay interest on these loans, and that interest
expense will raise the overall expenses of the Fund and reduce its
returns. If it does borrow, its expenses will be greater than comparable
funds that do not borrow for leverage. 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| Portfolio Turnover. "Portfolio turnover" describes the rate at
which the Fund traded its portfolio securities during its previous 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 is likely to
have a portfolio turnover rate of 100% or more. Increased portfolio
turnover creates higher brokerage and transaction costs for the Fund,
which may reduce its overall performance. Additionally, the realization of
capital gains from selling portfolio securities may result in
distributions of taxable long-term capital gains to shareholders, since
the Fund will normally distribute all of its capital gains realized each
year, to avoid excise taxes under the Internal Revenue Code. As a result
of the Fund's dynamic asset allocation model, the Fund may have a higher
portfolio turnover rate than other mutual funds.

|X| Investment in Other Investment Companies. As stated above, the
Fund can invest in the Class Y shares of Oppenheimer Main Street Fund,
subject to the limits set forth in the Investment Company Act or any
exemption therefrom that apply to those types of investments and any
percentage limit established, from time to time, by the asset allocation
formula described in the Warranty Agreement. As a shareholder of an
investment company, the Fund will be subject to its ratable share of that
investment company's expenses, including its advisory and administration
expenses.

|X| Loans of Portfolio Securities. The Fund may lend its portfolio
securities pursuant to policies approved by the Fund's Board. It may do so
to try to provide income or to raise cash for liquidity purposes. These
loans are limited to not more than 331/3% of the value of the Fund's net
assets.

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

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

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

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.

The Underlying Fund's investment objective is a fundamental policy.
Other policies described in the Underlying Fund's Prospectus or its
Statement of Additional Information and in Appendix C to this Statement of
Additional Information are "fundamental" only if they are identified as
such. The Underlying Fund's Board of Directors can change non-fundamental
policies without shareholder approval. However, significant changes to
investment policies will be described in supplements or updates to the
Underlying Fund's Prospectus or Statement of Additional Information, as
appropriate. The Underlying Fund's most significant investment policies
are described in its Prospectus as well as in the Oppenheimer Principal
Protected Main Street Fund Prospectus.

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

o The Fund cannot concentrate investments. That means it cannot
invest 25% or more of its total assets in any industry. However, there is
no limitation on investments in affiliated funds and obligations issued or
guaranteed by the U.S. government, its agencies or instrumentalities.

o The Fund cannot invest in commodities. However, the Fund can buy and
sell any of the hedging instruments permitted by any of its other
policies. It does not matter if the hedging instrument is considered to be
a commodity or commodity contract.

o The Fund cannot invest in real estate or in interests in real
estate. However, the Fund can purchase securities of issuers holding real
estate or interests in real estate (including securities of real estate
investment trusts).

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.

o The Fund cannot 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 statutes,
rules or regulations may be amended or interpreted from time to time.

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

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

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

o The Underlying Fund cannot concentrate investments. That means it
cannot invest 25% or more of its total assets in any industry. However,
there is no limitation on investments in U.S. government securities.

o The Underlying Fund cannot invest in commodities. However, the
Underlying Fund can buy and sell any of the hedging instruments permitted
by any of its other policies. It does not matter if the hedging instrument
is considered to be a commodity or commodity contract.

o The Underlying Fund cannot invest in real estate or in interests
in real estate. However, the Underlying Fund can purchase securities of
issuers holding real estate or interests in real estate (including
securities of real estate investment trusts).

o The Underlying 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 Underlying 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.

o The Underlying Fund cannot borrow money in excess of 33 1/3% of
the value of its total assets (including the amount borrowed). The
Underlying Fund may borrow only from banks and/or affiliated investment
companies. With respect to this fundamental policy, the Underlying Fund
can borrow only if it maintains a 300% ratio of assets to borrowings at
all times in the manner set forth in the Investment Company Act.

o The Underlying Fund cannot make loans except (a) through lending
of securities, (b) through the purchase of debt instruments or similar
evidences of indebtedness, and (c) through repurchase agreements

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

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 an investment (except in the case of borrowing
and investments in illiquid securities) is made. The Fund and the
Underlying 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 or Underlying Fund.

For purposes of the policy not to concentrate investments as
described above, the Fund and the Underlying Fund have each adopted as a
non-fundamental policy the industry classifications set forth in Appendix
A to its Statement of Additional Information. The Fund and the Underlying
Fund do not intend to concentrate its investments in a group of industries.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How the Fund is Managed

Organization and History. The Fund, a series of Oppenheimer Principal
Protected Trust, 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 January 2003.

|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 will generally have a different net asset value,
o will generally have separate voting rights on matters in which
interests of one class are different from interests of another
class, and
o votes as a class on matters that affect that class alone.

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

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

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

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

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

Board of Trustees and Oversight Committees. The Fund is governed by a
Board of Trustees, which is responsible for protecting the interests of
shareholders under Massachusetts law. The Trustees meet periodically
throughout the year to oversee the Fund's activities, review its
performance, and review the actions of the Manager.

The Board of Trustees has an Audit Committee, a Review Committee and a
Governance Committee. Each committee is comprised solely of Trustees who are
not "interested persons" under the Investment Company Act (the "Independent
Trustees"). The members of the Audit Committee are Edward L. Cameron
(Chairman), George C. Bowen, Robert J. Malone and F. William Marshall, Jr.
The Audit Committee held eight meetings during the Fund's fiscal year ended
August 31, 2006. The Audit Committee furnishes the Board with
recommendations regarding the selection of the Fund's independent registered
public accounting firm (also referred to as the "independent Auditors").
Other main functions of the Audit Committee, outlined in the Audit Committee
Charter, include, but are not limited to: (i) reviewing the scope and
results of financial statement audits and the audit fees charged;
(ii) reviewing reports from the Fund's independent Auditors regarding the
Fund's internal accounting procedures and controls; (iii) reviewing reports
from the Manager's Internal Audit Department; (iv) reviewing certain
reports from and meet periodically with the Funds' Chief Compliance Officer;
(v) maintaining a separate line of communication between the Fund's
independent Auditors and the Independent Trustees; (vi) reviewing the
independence of the Fund's independent Auditors; and (vii) pre-approving the
provision of any audit or non-audit services by the Fund's independent
Auditors, including tax services, that are not prohibited by the
Sarbanes-Oxley Act, to the Fund, the Manager and certain affiliates of the
Manager.

The Review Committee is comprised solely of Independent Trustees. The
members of the Review Committee are Jon S. Fossel (Chairman), Robert G.
Avis, Sam Freedman and Beverly L. Hamilton. The Review Committee held six
meetings during the Fund's fiscal year ended August 31, 2006. Among other
duties, as set forth in the Review Committee's Charter, the Review Committee
reports and makes recommendations to the Board concerning the fees paid to
the Fund's transfer agent and the Manager and the services provided to the
Fund by the transfer agent and the Manager. The Review Committee also
reviews the Fund's investment performance as well as the policies and
procedures adopted by the Fund to comply with the Investment Company Act and
other applicable law.

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

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

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

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

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

Messrs. Gillespie, Manioudakis, Murphy, Petersen, Schadt, Vandehey,
Szilagyi, Wixted and Zack and Mss. Bloomberg and Ives, who are officers of
the Fund, hold the same offices with one or more of the other Board II
Funds. As of November 6, 2006 the Trustees and officers of the Fund, as a
group, owned of record or beneficially less than 1%, of any class A shares
of the Fund. The foregoing statement does not reflect ownership of shares
held of record by an employee benefit plan for employees of the Manager,
other than the shares beneficially owned under that plan by the officers
of the Board II Funds. In addition, none of the Independent Trustees (nor
any of their immediate family members) owns securities of either the
Manager or the Distributor or of any entity directly or indirectly
controlling, controlled by or under common control with the Manager or the
Distributor of the Board II Funds.

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

----------------------------------------------------------------------------------------
Independent Trustees
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Name, Position(s) Principal Occupation(s) During the Dollar Range Aggregate
Dollar Range
of Shares
Past 5 Years; Other of Shares Beneficially
with the Fund, Trusteeships/Directorships Held; Beneficially Owned in All
Length of Service, Number of Portfolios in the Fund Owned in the Supervised
Age Complex Currently Overseen Fund Funds
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
As of December 31, 2005
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
William L. President, Colorado Christian None Over $100,000
Armstrong, University (since 2006);Chairman of
Chairman of the the following private mortgage banking
Board of Trustees companies: Cherry Creek Mortgage
since 2003, Company (since 1991), Centennial State
Trustee since 1999 Mortgage Company (since 1994), and The
Age: 69 El Paso Mortgage Company (since 1993);
Chairman of the following private
companies: Ambassador Media
Corporation (since 1984) and Broadway
Ventures (since 1984); Director of the
following: Helmerich & Payne, Inc.
(oil and gas drilling/production
company) (since 1992), Campus Crusade
for Christ (since 1991) and The Lynde
and Harry Bradley Foundation, Inc.
(non-profit organization) (since
2002); former Chairman of the
following: Transland Financial
Services, Inc. (private mortgage
banking company) (1997-2003), Great
Frontier Insurance (insurance agency)
(1995-2000), Frontier Real Estate,
Inc. (residential real estate
brokerage) (1994-2000) and Frontier
Title (title insurance agency)
(1995-2000); former Director of the
following: UNUMProvident (insurance
company) (1991-2004), Storage
Technology Corporation (computer
equipment company) (1991-2003) and
International Family Entertainment
(television channel) (1992-1997); U.S.
Senator (January 1979-January 1991).
Oversees 37 portfolios in the
OppenheimerFunds complex.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Robert G. Avis, Director and President of A.G. Edwards None Over $100,000
Trustee since 1993 Capital, Inc. (General Partner of
Age: 75 private equity funds) (until February
2001); Chairman, President and Chief
Executive Officer of A.G. Edwards
Capital, Inc. (until March 2000);
Director of A.G. Edwards & Sons, Inc.
(brokerage company) (until 2000) and
A.G. Edwards Trust Company (investment
adviser) (until 2000); Vice Chairman
and Director of A.G. Edwards, Inc.
(until March 1999); Vice Chairman of
A.G. Edwards & Sons, Inc. (until March
1999); Chairman of A.G. Edwards Trust
Company (until March 1999) and A.G.E.
Asset Management (investment adviser)
(until March 1999). Oversees 37
portfolios in the OppenheimerFunds
complex.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
George C. Bowen, Assistant Secretary and Director of None Over $100,000
Trustee since 1998 Centennial Asset Management
Age: 70 Corporation (December 1991-April
1999); President, Treasurer and
Director of Centennial Capital
Corporation (June 1989-April 1999);
Chief Executive Officer and Director
of MultiSource Services, Inc. (March
1996-April 1999); Mr. Bowen held
several positions with the Manager and
with subsidiary or affiliated
companies of the Manager (September
1987-April 1999). Oversees 37
portfolios in the OppenheimerFunds
complex.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Edward L. Cameron, Member of The Life Guard of Mount None Over $100,000
Trustee since 1999 Vernon (George Washington historical
Age: 68 site) (since June 2000); Director of
Genetic ID, Inc. (biotech company)
(March 2001-May 2002); Partner at
PricewaterhouseCoopers LLP (accounting
firm) (July 1974-June 1999); Chairman
of Price Waterhouse LLP Global
Investment Management Industry
Services Group (accounting firm) (July
1994-June 1998). Oversees 37
portfolios in the OppenheimerFunds
complex.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Jon S. Fossel, Director of UNUMProvident (insurance None Over $100,000
Trustee since 1990 company) (since June 2002); Director
Age: 64 of Northwestern Energy Corp. (public
utility corporation) (since November
2004); Director of P.R.
Pharmaceuticals (October 1999-October
2003); Director of Rocky Mountain Elk
Foundation (non-profit organization)
(February 1998-February 2003 and since
February 2005); Chairman and Director
(until October 1996) and President and
Chief Executive Officer (until October
1995) of the Manager; President, Chief
Executive Officer and Director of the
following: Oppenheimer Acquisition
Corp. ("OAC") (parent holding company
of the Manager), Shareholders
Services, Inc. and Shareholder
Financial Services, Inc. (until
October 1995). Oversees 37 portfolios
in the OppenheimerFunds complex.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Sam Freedman, Director of Colorado Uplift None Over $100,000
Trustee since 1996 (charitable organization) (since
Age: 66 September 1984). Mr. Freedman held
several positions with the Manager and
with subsidiary or affiliated
companies of the Manager (until
October 1994). Oversees 37 portfolios
in the OppenheimerFunds complex.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Beverly L. Trustee of Monterey Institute for None Over $100,000
Hamilton, International Studies (educational
Trustee since 2002 organization) (since February 2000);
Age: 60 Board Member of Middlebury College
(educational organization) (since
December 2005); Director of The
California Endowment (philanthropic
organization) (since April 2002);
Director (February 2002-2005) and
Chairman of Trustees (since 2006) of
the Community Hospital of Monterey
Peninsula; Director (October
1991-2005) and Vice Chairman (since
2006) of American Funds' Emerging
Markets Growth Fund, Inc. (mutual
fund); President of ARCO Investment
Management Company (February
1991-April 2000); Member of the
investment committees of The
Rockefeller Foundation (since 2001)
and The University of Michigan (since
2000); Advisor at Credit Suisse First
Boston's Sprout venture capital unit
(venture capital fund) (1994-January
2005); Trustee of MassMutual
Institutional Funds (investment
company) (1996-June 2004); Trustee of
MML Series Investment Fund (investment
company) (April 1989-June 2004);
Member of the investment committee of
Hartford Hospital (2000-2003); and
Advisor to Unilever (Holland) pension
fund (2000-2003). Oversees 37
portfolios in the OppenheimerFunds
complex.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Robert J. Malone, Director of Jones International None Over $100,000
Trustee since 2002 University (educational organization)
Age: 62 (since August 2005); Chairman, Chief
Executive Officer and Director of
Steele Street State Bank (commercial
banking) (since August 2003); Director
of Colorado UpLIFT (charitable
organization) (since 1986); Trustee of
the Gallagher Family Foundation
(non-profit organization) (since
2000); Former Chairman of U.S.
Bank-Colorado (subsidiary of U.S.
Bancorp and formerly Colorado National
Bank) (July 1996-April 1999); Director
of Commercial Assets, Inc. (real
estate investment trust) (1993-2000);
Director of Jones Knowledge, Inc.
(2001-July 2004); and Director of U.S.
Exploration, Inc. (oil and gas
exploration) (1997-February 2004).
Oversees 37 portfolios in the
OppenheimerFunds complex.
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
F. William Trustee of MassMutual Select Funds None Over $100,000
Marshall, Jr., (formerly MassMutual Institutional
Trustee since 2000 Funds) (investment company) (since
Age: 64 1996) and MML Series Investment Fund
(investment company) (since 1996);
Trustee (since 1987) and Chairman
(1994-2005) of the Investment
Committee of the Worcester Polytech
Institute (private university);
President and Treasurer of the SIS
Funds (private charitable fund) (since
January 1999); Chairman of SIS &
Family Bank, F.S.B. (formerly SIS
Bank) (commercial bank) (January
1999-July 1999); and Executive Vice
President of Peoples Heritage
Financial Group, Inc. (commercial
bank) (January 1999-July 1999).
Oversees 39 portfolios in the
OppenheimerFunds complex.*
----------------------------------------------------------------------------------------
* Includes two open-end investment companies: MassMutual Select Funds and
MML Series Investment Fund. In accordance with the instructions for
Form N-1A, for purposes of this section only, MassMutual Select Funds
and MML Series Investment Fund are included in the "Fund Complex." The
Manager does not consider MassMutual Select Funds and MML Series
Investment Fund to be part of the OppenheimerFunds' "Fund Complex" as
that term may be otherwise interpreted.

The address of Mr. Murphy is Two World Financial Center, 225 Liberty
Street, 11th Floor, New York, New York 10281-1008. Mr. Murphy serves as a
Trustee and as an officer for an indefinite term, or until his
resignation, retirement, death or removal. Mr. Murphy is an "Interested
Trustee" because he is affiliated with the Manager by virtue of his
positions as an officer and director of the Manager, and as a shareholder
of its parent company. Mr. Murphy was elected as a Trustee of the Fund
with the understanding that in the event he ceases to be the chief
executive officer of the Manager, he will resign as a Trustee of the Fund
and the other Board II Funds (defined below) for which he is a director or
trustee.

----------------------------------------------------------------------------------------
Interested Trustee and Officer
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Name, Principal Occupation(s) During the Past 5 Dollar Aggregate
Dollar
Range Of
Shares
Range of Beneficially
Position(s) Shares Owned in
Held with the Years; Other Trusteeships/Directorships Held; Beneficially All
Fund, Length of Number of Portfolios in the Fund Complex Owned in Supervised
Service, Age Currently Overseen the Fund Funds
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
As of December 31, 2005
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
John V. Murphy, Chairman, Chief Executive Officer and None Over
President, Director (since June 2001) and President $100,000
Principal (since September 2000) of the Manager;
Executive President and director or trustee of other
Officer and Oppenheimer funds; President and Director of
Trustee since OAC and of Oppenheimer Partnership Holdings,
2001 Inc. (holding company subsidiary of the
Age: 57 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
2001) and Director (since July 2001) of
Oppenheimer Real Asset Management, Inc.;
Executive Vice President of Massachusetts
Mutual Life Insurance Company (OAC's parent
company) (since February 1997); Director of
DLB Acquisition Corporation (holding company
parent of Babson Capital Management LLC)
(since June 1995); Member of the Investment
Company Institute's Board of Governors (since
October 3, 2003); Chief Operating Officer of
the Manager (September 2000-June 2001);
President and Trustee of MML Series
Investment Fund and MassMutual Select Funds
(open-end investment companies) (November
1999-November 2001); Director of C.M. Life
Insurance Company (September 1999-August
2000); President, Chief Executive Officer and
Director of MML Bay State Life Insurance
Company (September 1999-August 2000);
Director of Emerald Isle Bancorp and Hibernia
Savings Bank (wholly-owned subsidiary of
Emerald Isle Bancorp) (June 1989-June 1998).
Oversees 92 portfolios in the
OppenheimerFunds complex.
----------------------------------------------------------------------------------------

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

----------------------------------------------------------------------------------
Other Officers of the Fund
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Name, Position(s) Principal Occupation(s) During Past 5 Years
Held with the Fund,
Length of Service,
Age
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Angelo Manioudakis, Senior Vice President of the Manager (since April 2002),
Vice President and of HarbourView Asset Management Corporation (since April,
Portfolio Manager 2002 and of OFI Institutional Asset Management, Inc.
since 2003 (since June 2002); Executive Director and portfolio
Age: 40 manager for Miller, Anderson & Sherrerd, a division of
Morgan Stanley Investment Management (August 1993-April
2002). An officer of 13 portfolios in the OppenheimerFunds
complex.
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Rudi W. Schadt, Vice President, Director of Research in Product Design and
Vice President and Risk Management of the Manager. Prior to joining the
Portfolio Manager Manager in February 2002 he was a Director and Senior
since 2004 Quantitative Analyst (2000-2001) at UBS Asset Management
Age: 48 prior to which he was an Associate Director of Research
(since June 1999) and Senior Researcher and Portfolio
Manager (from June 1997) at State Street Global Advisors.
An officer of 7 portfolios in the OppenheimerFunds complex.
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Mark S. Vandehey, Senior Vice President and Chief Compliance Officer of the
Vice President and Manager (since March 2004); Vice President of
Chief Compliance OppenheimerFunds Distributor, Inc., Centennial Asset
Officer since 2004 Management Corporation and Shareholder Services, Inc.
Age: 56 (since June 1983); Vice President and Director of Internal
Audit of the Manager (1997-February 2004). An officer of
92 portfolios in the OppenheimerFunds complex.
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer of the Manager (since
Treasurer and March 1999); Treasurer of the following: HarbourView Asset
Principal Financial Management Corporation, Shareholder Financial Services,
& Accounting Officer Inc., Shareholder Services, Inc., Oppenheimer Real Asset
since 1999 Management Corporation, and Oppenheimer Partnership
Age: 47 Holdings, Inc. (since March 1999), OFI Private
Investments, Inc. (since March 2000), OppenheimerFunds
International Ltd. and OppenheimerFunds plc (since May
2000), OFI Institutional Asset Management, Inc. (since
November 2000), and OppenheimerFunds Legacy Program (since
June 2003); Treasurer and Chief Financial Officer of OFI
Trust Company (trust company subsidiary of the Manager)
(since May 2000); Assistant Treasurer of the following:
OAC (since March 1999), Centennial Asset Management
Corporation (March 1999-October 2003) and OppenheimerFunds
Legacy Program (April 2000-June 2003); Principal and Chief
Operating Officer of Bankers Trust Company-Mutual Fund
Services Division (March 1995-March 1999). An officer of
92 portfolios in the OppenheimerFunds complex.
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Brian Petersen, Assistant Vice President of the Manager (since August
Assistant Treasurer 2002); Manager/Financial Product Accounting of the Manager
since 2004 (November 1998-July 2002). An officer of 92 portfolios in
Age:36 the OppenheimerFunds complex.
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Brian C. Szilagyi, Assistant Vice President of the Manager (since July 2004);
Assistant Treasurer Director of Financial Reporting and Compliance of First
since 2005 Data Corporation (April 2003-July 2004); Manager of
Age: 36 Compliance of Berger Financial Group LLC (May 2001-March
2003). An officer of 92 portfolios in the OppenheimerFunds
complex.
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Robert G. Zack, Executive Vice President (since January 2004) and General
Vice President and Counsel (since March 2002) of the Manager; General Counsel
Secretary since 2001 and Director of the Distributor (since December 2001);
Age: 58 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 92 portfolios in the OppenheimerFunds complex.
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Lisa I. Bloomberg, Vice President and Associate Counsel of the Manager (since
Assistant Secretary May 2004); First Vice President (April 2001-April 2004),
since 2004 Associate General Counsel (December 2000-April 2004),
Age: 38 Corporate Vice President (May 1999-April 2001) and
Assistant General Counsel (May 1999-December 2000) of UBS
Financial Services Inc. (formerly, PaineWebber
Incorporated). An officer of 92 portfolios in the
OppenheimerFunds complex.
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Kathleen T. Ives, Vice President (since June 1998) and Senior Counsel and
Assistant Secretary Assistant Secretary (since October 2003) of the Manager;
since 2001 Vice President (since 1999) and Assistant Secretary (since
Age: 41 October 2003) of the Distributor; Assistant Secretary of
Centennial Asset Management Corporation (since October
2003); Vice President and Assistant Secretary of
Shareholder Services, Inc. (since 1999); Assistant
Secretary of OppenheimerFunds Legacy Program and
Shareholder Financial Services, Inc. (since December
2001); Assistant Counsel of the Manager (August
1994-October 2003). An officer of 92 portfolios in the
OppenheimerFunds complex.
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
Phillip S. Gillespie, Senior Vice President and Deputy General Counsel of the
Assistant Secretary Manager (since September 2004); First Vice President
since 2004 (2000-September 2004), Director (2000-September 2004) and
Age: 42 Vice President (1998-2000) of Merrill Lynch Investment
Management. An officer of 92 portfolios in the
OppenheimerFunds complex.
----------------------------------------------------------------------------------

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

---------------------------------------------------------------------------------
Name of Trustee and Other Fund Aggregate Compensation Total Compensation
From the Fund and
Position(s) (as applicable) From the Fund(1) Fund Complex(2)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
William L. Armstrong $1,397 $178,000
Chairman of the Board and
Governance Committee Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert G. Avis $931 $118,500
Review Committee Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
George C. Bowen $931 $118,500
Audit Committee Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Edward L. Cameron $1,102 $136,000
Audit Committee Chairman
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Jon S. Fossel $985 $124,100
Review Committee Chairman
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Sam Freedman $931 $118,500
Review Committee Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Beverly Hamilton $857(3) $107,175
Review Committee Member and
Governance Committee Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert J. Malone $1,0704) $134,868
Governance Committee Chairman
and
Audit Committee Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
F. William Marshall, Jr.
Audit Committee Member and $931 $169,500(5)
Governance Committee Member
---------------------------------------------------------------------------------
1. "Aggregate Compensation From the Fund" includes fees and deferred
compensation, if any.
2. In accordance with SEC regulations, for purposes of this section
only, "Fund Complex" includes the Oppenheimer funds, the MassMutual
Institutional Funds, the MassMutual Select Funds and the MML Series
Investment Fund, the investment adviser for which is the indirect
parent company of the Fund's Manager. The Manager also serves as the
Sub-Advisor to the following: MassMutual Premier International Equity
Fund, MassMutual Premier Main Street Fund, MassMutual Premier Strategic
Income Fund, MassMutual Premier Capital Appreciation Fund, and
MassMutual Premier Global Fund. The Manager does not consider
MassMutual Institutional Funds, MassMutual Select Funds and MML Series
Investment Fund to be part of the OppenheimerFunds' "Fund Complex" as
that term may be otherwise interpreted.
3. Includes $857 deferred by Ms. Hamilton under the "Compensation
Deferral Plan" described below.
4. Includes $323 deferred by Mr. Malone under the "Compensation
Deferral Plan" described below.
5. Includes $51,000 compensation paid to Mr. Marshall for serving as a
Trustee for MassMutual Select Funds and MML Series Investment Fund.

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

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

|X| Major Shareholders. As of November 3, 2006, the only persons or
entities who owned of record or were known by the Fund to own beneficially
5% or more of any class of the Fund's outstanding shares were:

MLPF&S for the Sole Benefit of its Customers, Attn: Fund Administration,
4800 Deer Lake Drive E., Floor 3, Jacksonville, FL 32246-6484, which owned
785,772.264 Class B shares (representing approximately 8.92% of the Class
B shares then outstanding).

MLPF&S for the Sole Benefit of its Customers, Attn: Fund Administration,
4800 Deer Lake Drive E., Floor 3, Jacksonville, FL 32246-6484, which owned
579,905.965 Class C shares (representing approximately 20.57% of the Class
C shares then outstanding).

NFS LLC FEBO, J A Van winter, K G Marconi TTEE, Computer Packages Inc.,
401K, Pooled Fund, 414 Hungerford Drive, Rockville, MD 20850, which owned
245.721.931 Class N shares (representing approximately 66.16% of the Class
N shares then outstanding).

RPSS Customer 403-B Plan, Milford Central School, FBO Marilyn J. Garman,
3259 County Highway 44, Unadilla, NY 13849-3300, which owned 20,588.977
Class N shares (representing approximately 5.54% of the Class N shares
then outstanding).

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

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

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

|X| Portfolio Proxy Voting. The Fund has adopted Portfolio Proxy Voting
Policies and Procedures under which the Fund votes proxies relating to
securities ("portfolio proxies") held by the Fund. The Fund's primary
consideration in voting portfolio proxies is the financial interests of
the Fund and its shareholders. The Fund has retained an unaffiliated
third-party as its agent to vote portfolio proxies in accordance with the
Fund's Portfolio Proxy Voting Guidelines and to maintain records of such
portfolio proxy voting. The 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.

|X| The Investment Advisory Agreement. The Manager provides investment
advisory and management services to the Fund under an investment advisory
agreement between the Manager and the Fund. The Manager selects securities
for the Fund's portfolio and handles its day-to-day business. 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.

The agreement requires the Manager, at its expense, to provide the
Fund with adequate office space, facilities and equipment. It also
requires the Manager to provide and supervise the activities of all
administrative and clerical personnel required to provide effective
administration for the Fund. Those responsibilities include the
compilation and maintenance of records with respect to its operations, the
preparation and filing of specified reports, and composition of proxy
materials and registration statements for continuous public sale of shares
of the Fund.

The Fund pays expenses not expressly assumed by the Manager under
the advisory agreement. The advisory agreement lists examples of expenses
paid by the Fund. The major categories relate to interest, taxes,
brokerage commissions, fees to certain Trustees, legal and audit expenses,
custodian and transfer agent expenses, share issuance costs, certain
printing and registration costs and non-recurring expenses, including
litigation costs. The management fees paid by the Fund to the Manager are
calculated at the rates described in the Prospectus, which are applied to
the assets of the Fund as a whole. The fees are allocated to each class of
shares based upon the relative proportion of the Fund's net assets
represented by that class. The management fees paid by the Fund to the
Manager during its last three fiscal years were:

-----------------------------------------------------------------
Fiscal Year Ended August 31: Management Fee Paid to
OppenheimerFunds, Inc.
-----------------------------------------------------------------
-----------------------------------------------------------------
2004 $426,546
-----------------------------------------------------------------
-----------------------------------------------------------------
2005 $327,588
-----------------------------------------------------------------
-----------------------------------------------------------------
2006 $134,914
-----------------------------------------------------------------

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 names "Oppenheimer"
and "Main Street" 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's parent corporation to use the names
"Oppenheimer" and "Main Street" as part of its name and the name of the
Fund.

Portfolio Manager. The Fund's portfolio is managed by Angelo Manioudakis
and Rudi W. Schadt (the "Portfolio Managers") who are responsible for the
day-to-day management of the Fund's investments.

Other Accounts Managed. In addition to managing the Fund's
investments, each Portfolio Manager 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 August 31, 2006. No account has a performance-based
advisory fee:

Portfolio RegistereTotal Other Total Other Total
Assets in
Assets in Other
Registered Pooled Pooled Assets
InvestmenInvestment InvestmentInvestment in Other 2)
CompaniesCompanies Vehicles Vehicles AccountsAccounts
Manager Managed Managed* Managed Managed(1) Managed Managed(1,
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Angelo 15 $9,262.4 6 $200 1 $160.8
Manioudakis
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Rudi W. Schadt 6 $2,283.9 None None None None
----------------------------------------------------------------------------

1. In millions.
2. Does not include personal accounts of portfolio managers and their
families, which are subject to the Code of Ethics.

As indicated above, 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 August 31, 2006, each Portfolio Managers' compensation
consisted of three elements: a base salary, an annual discretionary
bonus and eligibility to participate in long-term awards of options
and appreciation rights in regard to the common stock of the
Manager's holding company parent. Senior portfolio managers may also
be eligible to participate in the Manager's deferred compensation
plan.

To help the Manager attract and retain talent, the base pay
component of each portfolio manager is reviewed regularly to ensure
that it reflects the performance of the individual, is commensurate
with the requirements of the particular portfolio, reflects any
specific competence or specialty of the individual manager, and is
competitive with other comparable positions. The annual
discretionary bonus is determined by senior management of the
Manager and is based on a number of factors, including a fund's
pre-tax performance for periods of up to five years, measured
against an appropriate Lipper benchmark selected by management.
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 August 31, 2006, the Portfolio
Managers did not beneficially own any shares of the Funds.

Brokerage Policies of the Fund

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

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

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

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

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

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

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

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

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

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

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

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

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

---------------------------------------------------------------------
Fiscal Year Ended Total Brokerage Commissions Paid by the
August 31: Fund(1)
---------------------------------------------------------------------
---------------------------------------------------------------------
2004 None
---------------------------------------------------------------------
---------------------------------------------------------------------
2005 None
---------------------------------------------------------------------
---------------------------------------------------------------------
2006 None(2)
---------------------------------------------------------------------
1. Amounts do not include spreads or commissions on principal
transactions on a net trade basis.
2. In the fiscal year ended August 31, 2006, 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 acted as the Fund's principal underwriter in the public
offering of the Fund's classes of shares. The Distributor bore 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 was not obligated to sell a
specific number of shares.

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

---------------------------------------------
Fiscal Aggregate Class A
Front-End Sales
Year Front-End Sales Charges
Ended Charges on Class Retained by
8/31: A Shares Distributor(1)
---------------------------------------------
---------------------------------------------
2004 $4,775 $3,071
---------------------------------------------
---------------------------------------------
2005 None None
---------------------------------------------
---------------------------------------------
2006 None None
---------------------------------------------
1. Includes amounts retained by a broker-dealer that is an affiliate or
a parent of the Distributor.

--------------------------------------------------------------------------------
Fiscal Concessions on Concessions on Concessions on Concessions on
Year Class A Shares Class B Shares Class C Shares Class N Shares
Ended Advanced by Advanced by Advanced by Advanced by
8/31: Distributor(1) Distributor(1) Distributor Distributor
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2004 None None None None
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2005 None None None None
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2006 None None None None
--------------------------------------------------------------------------------
1. Includes amounts retained by a broker-dealer that is an affiliate or
parent of the distributor.

--------------------------------------------------------------------------------
Fiscal Class A Class B Class C Class N
Contingent Contingent Contingent Contingent
Period Deferred Sales Deferred Sales Deferred Sales Deferred Sales
Ended Charges Charges Charges Charges
8/31: Retained by Retained by Retained by Retained by
Distributor Distributor Distributor Distributor
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2004 $337 $275,030 $22,133 $6,056
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2005 $1,195 $350,078 $44,714 $209
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2006 None $252,360 None None
--------------------------------------------------------------------------------

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

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

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

The Board of Trustees and the Independent Trustees must approve all
material amendments to a plan. An amendment to increase materially the
amount of payments to be made under a plan must be approved by
shareholders of the class affected by the amendment. Because Class B
shares of the Fund automatically convert into Class A shares 88 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.

During the first year after the shares were sold, the Distributor
retained the service fee to reimburse itself for the costs of distributing
the shares. After the first year shares were outstanding, the Distributor
made service fee payments to recipients periodically on those shares. The
advance payment was based on the net asset value of shares sold. Shares
purchased by exchange did not qualify for the advance service fee payment.
If Class A shares purchased by grandfathered retirement accounts were
redeemed during the first year after their purchase, the recipient of the
service fees on those shares would be obligated to repay the Distributor a
pro rata portion of the advance payment of the service fee made on those
shares.

For the fiscal year ended August 31, 2006 payments under the Class A
plan totaled $149,430, all of which was paid by the Distributor to
recipients and included $11,519 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 were outstanding, after
their purchase, the Distributor made service fee payments periodically on
those shares. The advance payment was based on the net asset value of
shares sold. Shares purchased by exchange did not qualify for the advance
service fee payment. If Class B, Class C or Class N shares were redeemed
during the first year after their purchase, the recipient of the service
fees on those shares was 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 were not allowed to be purchased by an
investor directly from the Distributor without the investor designating
another registered broker-dealer. If an 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.

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 on Class B and Class C shares, but
does not retain any service fees to the assets represented by that
account. The asset-based sales charge on Class B, Class C and Class N
shares allowed investors to buy shares without a front-end sales charge
while allowing the Distributor to compensate dealers that sold 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 paid 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 that provide distribution-related services of
Class B, Class C and Class N shares,
o bore 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 have been 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 have been 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, and
o may not be able to continue providing, at the same or at a lesser
cost, the same quality distribution-related 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 or
Class N shares may have been more than the payments it received from the
contingent deferred sales charges collected on redeemed shares and from
the Fund under the plans. If 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 Fees Paid to the Distributor in the Fiscal Period Ended August
31, 2006
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Total Amount Distributor's Distributor's
Aggregate Unreimbursed
Unreimbursed Expenses as %
Payments Retained by Expenses of Net Assets
Under Plan Distributor Under Plan of Class
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class B Plan $1,149,097 $861,996(1) $3,065,230 2.78%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class C Plan $388,736 $12,014(2) $811,090 2.27%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class N Plan $22,348 $11,192(3) $91,045 2.00%
-------------------------------------------------------------------------------
1. Includes $7,536 paid to an affiliate of the Distributor's parent
company.
2. Includes $16,214 paid to an affiliate of the Distributor's parent
company.
3. Includes $3,469 paid to an affiliate of the Distributor's parent
company.

All payments under the Class B, Class C and Class N 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.

Payments to Fund Intermediaries

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

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

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

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

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

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

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

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

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

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

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

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

ADVEST INC. AEGON
A.G. Edwards & Sons, Inc AIG Network
Allianz Life Insurance Company Allstate Life Insurance Company
Ameritas Life Insurance Corporation American Centurian Life Insurance
American Enterprise Life Insurance American Express Financial Advisors
Inc.
American Portfolios Annuity Investors Life
AXA Advisors Banc One Securities Corporation
Bank of New York Cadaret Grant & Co. Inc.
Charter One Securities Inc. Chase Investment Services
Citigroup Financial Network CitiStreet
Citizens Bank of Rhode Island CJM Planning Corp.
Columbus Life Insurance Company Commonwealth Financial Network
CUNA Brokerage Services Inc. CUSO Financial Services, L.P.
Federal Kemper First Allied Securities Inc
First Global Capital GE Financial Assurance
GlenBrook Life and Annuity Co. Great West Life & Annuity Co., Inc.
HD Vest Hewitt Associates
HSBC Brokerage (USA) Inc. ING Network
Jefferson Pilot Securities Corporation John Hancock Variable Life Insurance
Company
Kemper Life Assurance Company Legend Equities Corporation
Legg Mason Wood Walker, Incorporated Lincoln National Life Insurance
Company
Lincoln Financial Advisors Corporation Lincoln Investment Planning
Linsco/Private Ledger Corp. MassMutual Financial Group and
affiliates
McDonald Investments, Inc. Merrill Lynch & Co., Inc. and
affiliates
Metlife and affiliates Minnesota Life Insurance Company
Morgan Stanley DW Inc. NPH Network
Nationwide and affiliates New York Life Securities, LLC
PacLife Network Park Avenue Securities LLC
Planmember Securities Corporation Prime Capital Services, Inc.
Princor Financial Services Corporation Protective Life Insurance Co.
Provident Mutual Insurance Company Prudential Investment Management
Services LLC
Raymond James Financial Services, Inc. Raymond James & Associates, Inc.
RBC Dain Rauscher Inc. Securities America, Inc.
Security Benefit Life Insurance Company Signator Investments
Sun Life Insurance Company Suntrust Investment Services, Inc.
Tower Square Securities, Inc Travelers Life & Annuity Co., Inc.
UBS Financial Services Inc. Union Central Life Insurance Company
Wachovia Securities LLC Wells Fargo Investments, LLC

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

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

Performance of the Fund

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

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

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

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

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

|X| Total Return Information. There are different types of "total
returns" to measure the Fund's performance. Total return is the change in
value of a hypothetical investment in the Fund over a given period,
assuming that all dividends and capital gains distributions are reinvested
in additional shares and that the investment is redeemed at the end of the
period. Because of differences in expenses for each class of shares, the
total returns for each class are separately measured. The cumulative total
return measures the change in value over the entire period (for example,
ten years). An average annual total return shows the average rate of
return for each year in a period that would produce the cumulative total
return over the entire period. However, average annual total returns do
not show actual year-by-year performance. The Fund uses standardized
calculations for its total returns as prescribed by the SEC. The
methodology is discussed below.

In calculating total returns for Class A shares, the current maximum
sales charge of 5.75% (as a percentage of the offering price) is deducted
from the initial investment ("P" in the formula below) (unless the return
is shown without sales charge, as described below). For Class B shares,
payment of the applicable contingent deferred sales charge is applied,
depending on the period for which the return is shown: 5.0% in the first
year, 4.0% in the second year, 3.0% in the third and fourth years, 2.0% in
the fifth year, 1.0% in the sixth year and none thereafter. For Class C
shares, the 1.0% contingent deferred sales charge is deducted for returns
for the one-year period. For Class N shares, the 1.0% contingent deferred
sales charge is deducted for returns for the one-year 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:

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

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

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

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

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

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

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

o Total Returns at Net Asset Value. From time to time the Fund may
also quote a cumulative or an average annual total return "at net asset
value" (without deducting sales charges) for Class A, Class B, Class C or
Class N shares. 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 August 31, 2006
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class of Cumulative Total Average Annual Total Returns
Returns (10 Years or
life-of-class, if
Shares less)(1)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1-Year 5-Year
(or life of class if
less)(1)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
After Without After Without After Without
Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class A(1) 19.27% 26.55% 1.48% 7.67% 5.58% 7.52%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class B(1) 20.65% 23.65% 1.89% 6.89% 5.95% 6.75%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class C(1) 23.73% 23.73% 5.93% 6.93% 6.78% 6.78%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class N(1) 25.81% 25.81% 6.50% 7.50% 7.33% 7.33%
-------------------------------------------------------------------------------
1. Inception of Class A, Class B, Class C and Class N: 6/2/03.

----------------------------------------------------------------
Average Annual Total Returns for Class A Shares (After Sales
Charge)
For the Periods Ended August 31, 2006
----------------------------------------------------------------
----------------------------------------------------------------
1-Year 5-Year
(or life of class
if less) (1)
----------------------------------------------------------------
----------------------------------------------------------------
After Taxes on Distributions 1.17% 5.22%(1)
----------------------------------------------------------------
----------------------------------------------------------------
After Taxes on 0.95% 4.58%(1)
Distributions and
Redemption of Fund Shares
----------------------------------------------------------------
1. Inception of Class A shares: 6/2/03.

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 domestic
hybrid funds.

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

|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

Appendix B contains more information about the special sales charge
arrangements offered by the Fund, and the circumstances in which sales
charges may be reduced.

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 permitted an
investor to choose the method of purchasing shares that was more
appropriate for the investor. That may have depended on the amount of the
purchase, the length of time the investor expected 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 sold
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.

|X| 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 were paid to the broker-dealer of record on sales of
Class A shares purchased with the redemption proceeds of shares of another
mutual fund offered as an investment option in a retirement plan in which
Oppenheimer funds are also offered as investment options under a special
arrangement with the Distributor, if the purchase occurred more than 30
days after the Oppenheimer funds were added as an investment option under
that plan. Additionally, that concession was 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 88 months from the date of 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 88 months.

|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 New York Stock Exchange (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, with respect
to certain securities held by the Underlying Fund, 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 held by the Underlying Fund and
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 Underlying 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 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).

How to Sell Shares

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

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

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

The reinvestment may be made without sales charge only in Class A
shares of the Fund if the reinvestment occurs during the Post-Warranty
Period or, if the reinvestment occurs during the Warranty Period, in any
of the other Oppenheimer funds into which shares of the Fund are
exchangeable as described in "How to Exchange Shares" below. Reinvestment
will be at the net asset value next computed after the Transfer Agent
receives the reinvestment order. The shareholder must ask the Transfer
Agent for that privilege at the time of reinvestment. This privilege does
not apply to Class C 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 Sell 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.

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.

How to Exchange Shares

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

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

The following funds only offer Class A shares:

Centennial California Tax Exempt Trust Centennial New York Tax Exempt Trust
Centennial Government Trust Centennial Tax Exempt Trust
Centennial Money Market Trust

The following funds do not offer Class N shares:

Limited Term New York Municipal Fund Oppenheimer Rochester Arizona
Municipal Fund
Oppenheimer AMT-Free Municipals Oppenheimer Rochester Maryland
Municipal Fund
Oppenheimer AMT-Free New York Municipals Oppenheimer Rochester Massachusetts
Municipal Fund
Oppenheimer California Municipal Fund Oppenheimer Rochester Michigan
Municipal Fund
Oppenheimer Institutional Money Market Oppenheimer Rochester Minnesota
Fund Municipal Fund
Oppenheimer International Value Fund Oppenheimer Rochester National
Municipals
Oppenheimer Limited Term California Oppenheimer Rochester North Carolina
Municipal Fund Municipal Fund
Oppenheimer Limited Term Municipal Fund Oppenheimer Rochester Ohio Municipal
Fund
Oppenheimer Money Market Fund, Inc. Oppenheimer Rochester Virginia
Municipal Fund
Oppenheimer New Jersey Municipal Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Principal Protected Main Rochester Fund Municipals
Street Fund II
Oppenheimer Pennsylvania Municipal Fund

The following funds do not offer Class Y shares:

Limited Term New York Municipal Fund Oppenheimer Principal Protected Main
Street Fund
Oppenheimer AMT-Free Municipals Oppenheimer Principal Protected Main
Street Fund II
Oppenheimer AMT-Free New York Municipals Oppenheimer Principal Protected Main
Street Fund III
Oppenheimer Balanced Fund Oppenheimer Quest Capital Value Fund,
Inc.
Oppenheimer California Municipal Fund Oppenheimer Quest International Value
Fund, Inc.
Oppenheimer Capital Income Fund Oppenheimer Rochester Arizona Municipal
Fund
Oppenheimer Cash Reserves Oppenheimer Rochester Maryland
Municipal Fund
Oppenheimer Convertible Securities Fund Oppenheimer Rochester Massachusetts
Municipal Fund
Oppenheimer Dividend Growth Fund Oppenheimer Rochester Michigan
Municipal Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Rochester Minnesota
Municipal Fund
Oppenheimer Institutional Money Market Oppenheimer Rochester National
Fund Municipals
Oppenheimer Limited Term California Oppenheimer Rochester North Carolina
Municipal Fund Municipal Fund
Oppenheimer Limited Term Municipal Fund Oppenheimer Rochester Ohio Municipal
Fund
Oppenheimer New Jersey Municipal Fund Oppenheimer Rochester Virginia
Municipal Fund
Oppenheimer Pennsylvania Municipal Fund

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

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

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

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

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

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

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

o When Class B, Class C or Class N shares are redeemed to effect an
exchange, the priorities described in "How To Sell 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. Shareholders 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 into which you may
exchange shares. Reinvestment will be made without sales charge at the net
asset value per share in effect at the close of business on the payable
date of the dividend or distribution. However, such reinvestment will not
be protected by the Financial Warranty and will result in a reduction of
the shareholder's Warranty Amount. 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.

Additional Information About the Fund

The Distributor. The Fund's shares were 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 Warranty Provider. Merrill Lynch Bank USA, located at 15 West South
Temple Square, Suite 300 Salt Lake City, Utah 84101, has entered into the
Warranty Agreement with the Fund. Merrill Lynch Bank USA is a wholly-owned
subsidiary of Merrill Lynch & Co., Inc. and its principal business is to
engage in banking activities. The audited financial statements of Merrill
Lynch Bank USA through the fiscal year ended December 30, 2005, and its
subsequent quarterly unaudited financial statements dated March 31, 2006,
June 30, 2006 and September 29, 2006, have been filed with Post-Effective
Amendment No. 7 to Oppenheimer Principal Protected Trust's Form N-1A
Registration Statement and are incorporated herein by reference. You may
request a copy of the Merrill Lynch Bank USA's financial statements, free
of charge, by calling the Transfer Agent at the toll-free number listed on
the back cover of this Statement of Additional Information.

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

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

Financial Statements. The audited financial statements for the Oppenheimer
Main Street Fund (the "Underlying Fund") are incorporated in this
Statement of Additional Information by reference to the August 31, 2006
annual report to shareholders of the Underlying Fund. You may request a
copy of that annual report at no charge by calling the toll-free number
listed on the back cover of this Statement of Additional Information
during normal business hours on any business day.

The financial statements for the Fund for the Fund's fiscal year
ended August 31, 2006 follow.

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

--------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
OPPENHEIMER PRINCIPAL PROTECTED MAIN STREET FUND:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Principal Protected Main Street Fund, a series of Oppenheimer
Principal Protected Trust, including the statement of investments, as of August
31, 2006, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the two years in the period then
ended, and the financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audit includes consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of August 31, 2006, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Principal Protected Main Street Fund as of August 31, 2006, the
results of its operations for the year then ended, the changes in its net assets
for each of the two years in the period then ended, and the financial highlights
for the periods presented, in conformity with accounting principles generally
accepted in the United States of America.

DELOITTE & TOUCHE LLP

Denver, Colorado
October 16, 2006

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

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

INVESTMENTS IN AFFILIATED COMPANIES--99.6% 1
------------------------------------------------------------------------------------
Oppenheimer Main Street Fund, Cl. Y (Cost $150,397,702) 5,200,552 $204,537,707

PRINCIPAL
AMOUNT
------------------------------------------------------------------------------------
JOINT REPURCHASE AGREEMENTS--0.9%
------------------------------------------------------------------------------------
Undivided interest of 0.35% in joint repurchase
agreement (Principal Amount /Value with a maturity
value of $500,507,285) with Cantor $500,435,000,
Fitzgerald & Co./Cantor Fitzgerald 5.20%, dated
8/31/06, to Securities, be repurchased at $1,764,255
on 9/1/06, collateralized by U.S. Treasury Bonds,
6.125%-8.50%, 2/15/20-11/15/27, with a value of
$511,207,010 (Cost $1,764,000) $1,764,000 1,764,000
------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $152,161,702) 100.5% 206,301,707
------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.5) (998,459)
---------------------------
NET ASSETS 100.0% $205,303,248
===========================

FOOTNOTE TO STATEMENT OF INVESTMENTS

1. Represents ownership of an affiliated fund, at or during the period ended
August 31, 2006. Transactions during the period in which the issuer was an
affiliate are as follows:

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

Oppenheimer Main Street Fund, Cl. Y 5,428,525 1,105,831 1,333,804 5,200,552

VALUE DIVIDEND REALIZED
SEE NOTE 1 INCOME LOSS
-------------------------------------------------------------------------------------------

Oppenheimer Main Street Fund, Cl. Y $204,537,707 $3,149,822 $557,671

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

--------------------------------------------------------------------------------
ASSETS
--------------------------------------------------------------------------------
Investments, at value--see accompanying statement of
investments:
Unaffiliated companies (cost $1,764,000) $ 1,764,000
Affiliated companies (cost $150,397,702) 204,537,707
-------------
206,301,707
--------------------------------------------------------------------------------
Cash 90,505
--------------------------------------------------------------------------------
Receivables and other assets:
Interest 255
Other 7,940
-------------
Total assets 206,400,407

--------------------------------------------------------------------------------
LIABILITIES
--------------------------------------------------------------------------------
Payables and other liabilities:
Shares of beneficial interest redeemed 712,845
Warranty agreement fees 204,977
Distribution and service plan fees 87,021
Shareholder communications 24,564
Transfer and shareholder servicing agent fees 13,025
Trustees' compensation 5,134
Other 49,593
-------------
Total liabilities 1,097,159

--------------------------------------------------------------------------------
NET ASSETS $205,303,248
=============

--------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
--------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 16,839
--------------------------------------------------------------------------------
Additional paid-in capital 153,468,339
--------------------------------------------------------------------------------
Accumulated net investment loss (89,761)
--------------------------------------------------------------------------------
Accumulated net realized loss on investments (2,232,174)
--------------------------------------------------------------------------------
Net unrealized appreciation on investments 54,140,005
-------------
NET ASSETS $205,303,248

--------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
--------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on
net assets of $54,799,781 and 4,479,459 shares of
beneficial interest outstanding) $ 12.23
Maximum offering price per share (net asset value plus
sales charge of 5.75% of offering price) $ 12.98
--------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $110,227,985 and 9,057,550
shares of beneficial interest outstanding) $ 12.17
--------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $35,733,086 and 2,929,954
shares of beneficial interest outstanding) $ 12.20
--------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable
contingent deferred sales charge) and offering price per
share (based on net assets of $4,542,396 and 371,663
shares of beneficial interest outstanding) $ 12.22

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

--------------------------------------------------------------------------------
INVESTMENT INCOME
--------------------------------------------------------------------------------
Dividends from affiliated companies $ 3,149,822
--------------------------------------------------------------------------------
Interest 292,287
--------------------------------------------------------------------------------
Other income 72
------------
Total investment income 3,442,181

--------------------------------------------------------------------------------
EXPENSES
--------------------------------------------------------------------------------
Management fees 134,914
--------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 149,430
Class B 1,149,097
Class C 388,736
Class N 22,348
--------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 40,870
Class B 88,982
Class C 25,951
Class N 810
--------------------------------------------------------------------------------
Shareholder communications:
Class A 19,761
Class B 32,428
Class C 10,227
Class N 560
--------------------------------------------------------------------------------
Warranty agreement fees 1,310,243
--------------------------------------------------------------------------------
Trustees' compensation 7,135
--------------------------------------------------------------------------------
Custodian fees and expenses 1,728
--------------------------------------------------------------------------------
Administration service fees 1,500
--------------------------------------------------------------------------------
Other 27,547
------------
Total expenses 3,412,267
Less reduction to custodian fees (232)
Less waivers and reimbursements of expenses (76,722)
------------
Net expenses 3,335,313

--------------------------------------------------------------------------------
NET INVESTMENT INCOME 106,868
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
--------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments:
Unaffiliated companies (354,650)
Affiliated companies 557,671
------------
Net realized gain 203,021
--------------------------------------------------------------------------------
Net change in unrealized appreciation on investments 14,942,095

--------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $15,251,984
============

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

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

OPERATIONS
-----------------------------------------------------------------------------------
Net investment income $ 106,868 $ 1,146,783
-----------------------------------------------------------------------------------
Net realized gain (loss) 203,021 (1,432,637)
-----------------------------------------------------------------------------------
Net change in unrealized appreciation 14,942,095 15,647,720
----------------------------
Net increase in net assets resulting from operations 15,251,984 15,361,866

-----------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
-----------------------------------------------------------------------------------
Dividends from net investment income:
Class A (78,074) (740,479)
Class B (20,939) (334,234)
Class C (5,166) (60,042)
Class N (4,483) (37,650)
-----------------------------------------------------------------------------------
Tax return of capital distribution from net
investment income:
Class A (476,878) (26,368)
Class B (127,894) (46,339)
Class C (31,550) (17,685)
Class N (27,384) (1,785)
-----------------------------------------------------------------------------------
Distributions from net realized gain:
Class A -- (116,398)
Class B -- (196,622)
Class C -- (77,353)
Class N -- (6,968)
-----------------------------------------------------------------------------------
Tax return of capital distribution from net
realized gain:
Class A -- (243,697)
Class B -- (428,267)
Class C -- (163,449)
Class N -- (16,502)

-----------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
-----------------------------------------------------------------------------------
Net decrease in net assets resulting from
beneficial interest transactions:
Class A (13,502,136) (10,988,559)
Class B (14,393,299) (11,713,778)
Class C (8,227,940) (13,016,364)
Class N (70,695) (1,038,745)

-----------------------------------------------------------------------------------
NET ASSETS
-----------------------------------------------------------------------------------
Total decrease (21,714,454) (23,909,418)
-----------------------------------------------------------------------------------
Beginning of period 227,017,702 250,927,120
----------------------------
End of period (including accumulated net investment
loss of $89,761 and $109,396, respectively) $205,303,248 $227,017,702
============================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

CLASS A YEAR ENDED AUGUST 31, 2006 2005 2004 2003 1
-----------------------------------------------------------------------------------------------------------

1. For the period from June 2, 2003 (commencement of operations) to August 31,
2003.

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

3. Less than $0.005 per share.

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

6. Expenses paid including all underlying fund expenses were as follows:

Year Ended August 31, 2006 1.50%
Year Ended August 31, 2005 1.52% 8
Year Ended August 31, 2004 1.60%
Period Ended August 31, 2003 1.38%

7. For this period reduction to custodian expenses was zero.

8. Restated since August 31, 2005.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CLASS B YEAR ENDED AUGUST 31, 2006 2005 2004 2003 1
----------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
Net asset value, beginning of period $11.40 $ 10.82 $ 10.28 $ 10.00

1. For the period from June 2, 2003 (commencement of operations) to August 31,
2003.

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

3. Less than $0.005 per share.

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

6. Expenses paid including all underlying fund expenses were as follows:

Year Ended August 31, 2006 2.25%
Year Ended August 31, 2005 2.28% 8
Year Ended August 31, 2004 2.35%
Period Ended August 31, 2003 2.13%

7. For this period reduction to custodian expenses was zero.

8. Restated since August 31, 2005.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CLASS C YEAR ENDED AUGUST 31, 2006 2005 2004 2003 1
-----------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 11.42 $ 10.82 $ 10.28 $ 10.00
-----------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) (.02) 2 .03 2 (.02) -- 3
Net realized and unrealized gain .81 .65 .64 .28
--------------------------------------------
Total from investment operations .79 .68 .62 .28
-----------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income -- 3 (.02) (.04) --
Tax return of capital distribution from net investment income (.01) -- 3 -- --
Dividends from net realized gain -- (.02) (.02) --
Tax return of capital distribution from net realized gain -- (.04) (.02) --
--------------------------------------------
Total dividends and/or distributions to shareholders (.01) (.08) (.08) --
-----------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.20 $ 11.42 $ 10.82 $ 10.28
============================================

-----------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $35,733 $41,333 $51,741 $60,271
-----------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $38,862 $46,152 $59,429 $31,946
-----------------------------------------------------------------------------------------------------------
Ratios to average net assets: 5
Net investment income (loss) (0.14)% 0.29% (0.10)% (0.20)%
Total expenses 6 1.77% 1.85% 1.88% 1.88%
Less reimbursement of management fees during offering period -- -- -- (0.32)%
Less reimbursement to maintain yield -- -- -- (0.32)%
Payments and waivers and reduction to custodian expenses (0.03)% (0.06)% (0.12)% --
--------------------------------------------
Net expenses 1.74% 1.79% 1.76% 1.24% 7
-----------------------------------------------------------------------------------------------------------
Portfolio turnover rate 26% 122% 179% 12%

1. For the period from June 2, 2003 (commencement of operations) to August 31,
2003.

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

3. Less than $0.005 per share.

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

6. Expenses paid including all underlying fund expenses were as follows:

Year Ended August 31, 2006 2.24%
Year Ended August 31, 2005 2.27% 8
Year Ended August 31, 2004 2.34%
Period Ended August 31, 2003 2.13%

7. For this period reduction to custodian expenses was zero.

8. Restated since August 31, 2005.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CLASS N YEAR ENDED AUGUST 31, 2006 2005 2004 2003 1
------------------------------------------------------------------------------------------------------

1. For the period from June 2, 2003 (commencement of operations) to August 31,
2003.

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

3. Less than $0.005 per share.

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

6. Expenses paid including all underlying fund expenses were as follows:

Year Ended August 31, 2006 1.68%
Year Ended August 31, 2005 1.70% 8
Year Ended August 31, 2004 1.80%
Period Ended August 31, 2003 1.63%

7. For this period reduction to custodian expenses was zero.

8. Restated since August 31, 2005.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

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

Oppenheimer Principal Protected Main Street Fund (the Fund), a series of
Oppenheimer Principal Protected Trust, is registered under the Investment
Company Act of 1940, as amended, as an open-end management investment company.
During the Warranty Period, the Fund will seek capital preservation in order to
have a net asset value on the Maturity Date at least equal to the Warranty
Amount. The Fund seeks high total return as a secondary objective. The Fund's
investment advisor is OppenheimerFunds, Inc. (the Manager).

Shares of the Fund were offered during the Offering Period (May 30, 2003 to
July 31, 2003). Shares are not offered during the Warranty Period (August 5,
2003 to August 5, 2010) to the Maturity Date (August 5, 2010) except in
connection with reinvestment of dividends and distributions. During the Warranty
Period, the Fund will allocate its assets between Oppenheimer Main Street Fund
(the Underlying Fund) and certain U.S. government securities.

The Fund offered Class A, Class B, Class C and Class N shares. Class A
shares were sold at their offering price, which is normally net asset value plus
a front-end sales charge. Class B, Class C and Class N shares were sold without
a front-end sales charge but may be subject to a contingent deferred sales
charge (CDSC). Class N shares were 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 88 months after the
date of purchase.

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

--------------------------------------------------------------------------------
WARRANTY AGREEMENT. The Fund has entered into a Financial Warranty Agreement
with Merrill Lynch Bank USA (the Warranty Provider) to ensure that on the
Maturity Date each shareholder's account will be no less than the value of that
shareholder's account on the second business day after the end of the Offering
Period (the Warranty Amount). This value will include net income, if any, earned
by the Fund during the offering period and be reduced by adjustments permitted
under the Warranty Agreement, sales charges, applicable share of extraordinary
expenses and proportionately reduced for dividends and distributions paid in
cash and redemptions of Fund shares. To avoid a reduced Warranty Amount,
shareholders must reinvest all dividends and distributions received from the
Fund to purchase additional shares of the Fund and must not redeem any shares of
the Fund during the Warranty Period. If the value of the Fund's assets on the
Maturity Date is insufficient to result in the value of each shareholder's
account being at least equal to the shareholder's Warranty Amount, the Warranty
Provider will pay the Fund an amount equal to the excess of his or her Warranty
Amount over his or her account value. The Financial Warranty is

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

solely the obligation of the Warranty Provider. It is possible that the
financial position of the Warranty Provider may deteriorate and it would be
unable to satisfy its obligations under the Financial Warranty. The Fund's
assets and the obligations of the Warranty Provider under the Warranty Agreement
are not guaranteed by Merrill Lynch & Co., Inc. (the Warranty Provider's parent
company), the United States Government, the Manager, or any other entity or
person. The Warranty Agreement requires the Manager, on behalf of the Fund, to
comply with certain agreed upon investment parameters in an attempt to limit the
Fund's risk. If the Manager fails to comply with the agreed-upon investment
parameters or otherwise fails to comply with certain requirements set forth in
the Warranty Agreement, the Warranty Provider may terminate its Financial
Warranty in certain limited circumstances. The Warranty Provider may monitor the
Fund's compliance with the Warranty Agreement solely to protect the interests of
the Warranty Provider and not the Fund's shareholders.

The fee paid to the Warranty Provider is an annual fee of 0.60% of the
average daily net assets of the Fund. If the Fund is required to make a complete
and irreversible allocation of its assets to the debt portfolio, the Warranty
Fee will thereafter be reduced to 0.35% of the average daily net assets of the
Fund.

--------------------------------------------------------------------------------
SECURITIES VALUATION. The allocation of the Fund's assets between the debt
portfolio and the equity portfolio will vary over time based upon the Warranty
Formula. The formula is intended to allow the Fund to have a net asset value on
the Maturity Date at least equal to the Warranty Amount.

During the Warranty Period, the Fund will invest a portion of its assets,
and in certain circumstances, the Fund may invest all of its assets, in U.S.
government securities having maturities approximately equal to the period
remaining in the Warranty Period. Long term debt securities having a remaining
maturity in excess of sixty days will be valued at the mean between the "bid"
and "asked" prices. Long-term and short-term "non-money market" debt securities
are valued by a portfolio pricing service approved by 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).

The Fund invests the equity portfolio in Class Y shares of Oppenheimer Main
Street Fund (the Underlying Fund). The net asset value of the Underlying Fund is
determined 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.
The net asset value per share is determined 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.

--------------------------------------------------------------------------------
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. Securitiespledged as collateral for repurchase agreements are held
by a custodian bank until the agreements mature. Each agreement requires that
the market value of the collateral be sufficient to cover payments of interest
and principal. In the event of default by the other party to the agreement,
retention of the collateral may be subject to legal proceedings.

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

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

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

NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3 TAX PURPOSES
------------------------------------------------------------------------
$-- $-- $1,992,779 $53,900,610

1. As of August 31, 2006, the Fund had $1,992,779 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of August 31, 2006, details
of the capital loss carryforward were as follows:

EXPIRING
---------------------
2014 $1,992,779

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

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

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

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

REDUCTION TO
REDUCTION TO ACCUMULATED NET
PAID-IN CAPITAL INVESTMENT LOSS
---------------------------------
$685,135 $685,135

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

YEAR ENDED YEAR ENDED
AUGUST 31, 2006 AUGUST 31, 2005
------------------------------------------------------------
Distributions paid from:
Ordinary income $108,662 $1,172,405
Long-term capital gain -- 397,341
Return of capital 663,706 944,092
---------------------------------
Total $772,368 $2,513,838
=================================

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

Federal tax cost of securities $152,401,097
============
Gross unrealized appreciation $ 53,900,610
Gross unrealized depreciation --
------------
Net unrealized appreciation $ 53,900,610
============

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

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

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

--------------------------------------------------------------------------------
CUSTODIAN FEES. "Custodian fees and expenses" in the Statement of Operations may
include interest expense incurred by the Fund on any cash overdrafts of its
custodian account during the period. Such cash overdrafts may result from the
effects of failed trades in portfolio securities and from cash outflows
resulting from unanticipated shareholder redemption activity. The Fund pays
interest to its custodian on such cash overdrafts, to the extent they are not
offset by positive cash balances maintained by the Fund, at a rate equal to the
Federal Funds Rate plus 0.50%. The "Reduction to custodian expenses" line item,
if applicable, represents earnings on cash balances maintained by the Fund
during the period. Such interest expense and other custodian fees may be paid
with these earnings.

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

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

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

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

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

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

SHARES AMOUNT SHARES AMOUNT
-------------------------------------------------------------------------------------

CLASS A
Sold 6,556 $ 79,128 1 -- $ --
Dividends and/or
distributions reinvested 43,093 505,045 89,132 1,017,885
Redeemed (1,179,635) (14,086,309) (1,068,185) (12,006,444)
----------------------------------------------------------
Net decrease (1,129,986) $(13,502,136) (979,053) $(10,988,559)
==========================================================

-------------------------------------------------------------------------------------
CLASS B
Dividends and/or
distributions reinvested 10,834 $ 126,979 74,867 $ 854,981
Redeemed (1,218,645) (14,520,278) (1,121,129) (12,568,759)
----------------------------------------------------------
Net decrease (1,207,811) $(14,393,299) (1,046,262) $(11,713,778)
==========================================================

-------------------------------------------------------------------------------------
CLASS C
Dividends and/or
distributions reinvested 2,288 $ 26,884 20,067 $ 229,565
Redeemed (691,022) (8,254,824) (1,182,239) (13,245,929)
----------------------------------------------------------
Net decrease (688,734) $ (8,227,940) (1,162,172) $(13,016,364)
==========================================================

-------------------------------------------------------------------------------------
CLASS N
Dividends and/or
distributions reinvested 2,716 $ 31,858 5,502 $ 62,890
Redeemed (8,595) (102,553) (98,232) (1,101,635)
----------------------------------------------------------
Net decrease (5,879) $ (70,695) (92,730) $ (1,038,745)
==========================================================

1. Result of a broker correction to a shareholder transaction.

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

The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations, for the year ended August 31, 2006, were as
follows:

PURCHASES SALES
------------------------------------------------------------
Investment securities $40,886,066 $49,684,431
U.S. government and government
agency obligations 15,699,080 43,315,230

--------------------------------------------------------------------------------
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 average annual net assets of the Fund reduced by
the amount of advisory fees paid to the Manager by the Underlying Fund relating
to the Fund's assets invested in the Underlying Fund. However, the management
fees shall not be reduced below zero. Management fees will apply during the
Warranty Period and the Post-Warranty Period.

If during the Warranty Period 100% of the Fund's assets are completely and
irreversibly invested in the debt portfolio, the management fee will be at an
annual rate of 0.25% of the average annual net assets of the Fund, and if that
occurs the Manager will further reduce its management fee to the extent
necessary so that expenses after waivers and reductions to the Fund (other than
Extraordinary Expenses such as litigation costs) do not exceed 1.30% for Class A
shares, 2.05% for Class B shares, 2.05% for Class C shares and 1.55% for Class N
shares. However, if this reduction in the management fee is not sufficient to
reduce expenses after waivers and reductions to these limits, the Manager is not
required to subsidize Fund expenses to assure that expenses do not exceed those
limits. Furthermore, if expenses exceed these expense limits, the Warranty
Amount will be reduced by any expenses that exceed those limits. The Manager
voluntarily waived its management fee during the Offering Period. In addition,
during the Warranty Period the Manager has voluntarily agreed to reduce the
management fee payable by the Fund by 0.00833% per month in any month following
a month where the Fund's average daily equity allocation was less than 10%.
Those voluntary undertakings may be amended or eliminated at any time.

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

--------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended August 31, 2006, the Fund paid
$158,454 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
periodically at an annual rate of up to 0.25% of the average annual net assets
of Class A shares of the Fund. The Distributor currently uses all of those fees
to pay dealers, brokers, banks and other financial institutions periodically for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Any unreimbursed expenses the Distributor incurs with
respect to Class A shares in any fiscal year cannot be recovered in subsequent
periods. Fees incurred by the Fund under the plan are detailed in the Statement
of Operations.

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

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

shares and servicing accounts. Under the plans, the Fund pays the Distributor an
annual asset-based sales charge of 0.75% on Class B and Class C shares and 0.25%
on Class N shares. The Distributor also receives a service fee of 0.25% per year
under each plan. If either the Class B, Class C or Class N plan is terminated by
the Fund or by the shareholders of a class, the Board of Trustees and its
independent trustees must determine whether the Distributor shall be entitled to
payment from the Fund of all or a portion of the service fee and/or asset-based
sales charge in respect to shares sold prior to the effective date of such
termination. The Distributor's aggregate uncompensated expenses under the plan
at August 31, 2006 for Class B, Class C and Class N shares were $3,065,230,
$811,090 and $91,045, respectively. Fees incurred by the Fund under the plans
are detailed in the Statement of Operations.

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

CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
-----------------------------------------------------------------------------------------------
August 31, 2006 $-- $-- $252,360 $-- $--
--------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. The Manager has voluntarily undertaken
to reimburse the Fund for expenses equal to the Underlying Fund expenses, other
than Underlying Fund management fees, paid by the Fund as a shareholder of the
Underlying Fund. That expense reimbursement will fluctuate as the Fund's
allocation between the Underlying Fund and the debt portfolio changes. During
the year ended August 31, 2006, the Manager reimbursed the Fund $76,722. This
voluntary undertaking may be amended or eliminated 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. This
undertaking may be amended or withdrawn at any time.

--------------------------------------------------------------------------------
5. RECENT ACCOUNTING PRONOUNCEMENT

In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Fund's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Fund's tax return will
be ultimately sustained. A tax liability and expense must be recorded in respect
of any tax position that, in Management's judgment, will not be fully realized.
FIN 48 is effective for fiscal years beginning after December 15, 2006. As of
August 31, 2006, the Manager is evaluating the implications of FIN 48. Its
impact in the Fund's financial statements has not yet been determined.

--------------------------------------------------------------------------------
6. LITIGATION

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

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

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

Appendix A

Industry Classifications

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

Appendix B

OppenheimerFunds Special Sales Charge Arrangements and Waivers

Shares of the Fund were sold during the Offering Period and cannot be
purchased during the Warranty Period.

In certain cases, the initial sales charge that applies to purchases of
Class A shares(1) of the Oppenheimer funds or the contingent deferred
sales charge that may apply to Class A, Class B or Class C shares may be
waived.(2) That is because of the economies of sales efforts realized by
OppenheimerFunds Distributor, Inc., (referred to in this document as the
"Distributor"), or by dealers or other financial institutions that offer
those shares to certain classes of investors. Not all waivers apply to all
funds.

For 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(3)
4) Group Retirement Plans(4)
5) 403(b)(7) custodial plan accounts
6) Individual Retirement Accounts ("IRAs"), including traditional
IRAs, Roth IRAs, SEP-IRAs, SARSEPs or SIMPLE plans

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

Waivers that apply at the time shares are redeemed must be requested by
the shareholder and/or dealer in the redemption request.
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."(5) This waiver provision
applies to:
|_| Purchases of Class A shares aggregating $1 million or more.
|_| Purchases of Class A shares by a Retirement Plan that was permitted
to purchase such shares at net asset value but subject to a
contingent deferred sales charge prior to March 1, 2001. That
included plans (other than IRA or 403(b)(7) Custodial Plans)
that: 1) bought shares costing $500,000 or more, 2) had at the
time of purchase 100 or more eligible employees or total plan
assets of $500,000 or more, or 3) certified to the Distributor
that it projects to have annual plan purchases of $200,000 or
more.
|_| Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the
purchases are made:
1) through a broker, dealer, bank or registered investment
adviser that has made special arrangements with the
Distributor for those purchases, or
2) by a direct rollover of a distribution from a qualified
Retirement Plan if the administrator of that Plan has made
special arrangements with the Distributor for those purchases.
|_| Purchases of Class A shares by Retirement Plans that have any of the
following record-keeping arrangements:
1) The record keeping is performed by Merrill Lynch Pierce Fenner
& Smith, Inc. ("Merrill Lynch") on a daily valuation basis for
the Retirement Plan. On the date the plan sponsor signs the
record-keeping service agreement with Merrill Lynch, the Plan
must have $3 million or more of its assets invested in (a)
mutual funds, other than those advised or managed by Merrill
Lynch Investment Management, L.P. ("MLIM"), that are made
available under a Service Agreement between Merrill Lynch and
the mutual fund's principal underwriter or distributor, and
(b) funds advised or managed by MLIM (the funds described in
(a) and (b) are referred to as "Applicable Investments").
2) The record keeping for the Retirement Plan is performed on a
daily valuation basis by a record keeper whose services are
provided under a contract or arrangement between the
Retirement Plan and Merrill Lynch. On the date the plan
sponsor signs the record keeping service agreement with
Merrill Lynch, the Plan must have $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.

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.(6)
5) Under a Qualified Domestic Relations Order, as defined in the
Internal Revenue Code, or, in the case of an IRA, a divorce or
separation agreement described in Section 71(b) of the
Internal Revenue Code.
6) To meet the minimum distribution requirements of the Internal
Revenue Code.
7) To make "substantially equal periodic payments" as described
in Section 72(t) of the Internal Revenue Code.
8) For loans to participants or beneficiaries.
9) Separation from service.(7)
10) Participant-directed redemptions to purchase shares of a
mutual fund (other than a fund managed by the Manager or a
subsidiary of the Manager) if the plan has made special
arrangements with the Distributor.
11) Plan termination or "in-service distributions," if the
redemption proceeds are rolled over directly to an
OppenheimerFunds-sponsored IRA.
|_| For distributions from 401(k) plans sponsored by broker-dealers that
have entered into a special agreement with the Distributor
allowing this waiver.
|_| For distributions from retirement plans that have $10 million or
more in plan assets and that have entered into a special
agreement with the Distributor.
|_| For distributions from retirement plans which are part of a
retirement plan product or platform offered by certain banks,
broker-dealers, financial advisors, insurance companies or record
keepers which have entered into a special agreement with the
Distributor.
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(8) from Retirement Plans or other employee benefit
plans for any of the following purposes:
1) Following the death or disability (as defined in the Internal
Revenue Code) of the participant or beneficiary. The death or
disability must occur after the participant's account was
established in an Oppenheimer fund.
2) To return excess contributions made to a participant's account.
3) To return contributions made due to a mistake of fact.
4) To make hardship withdrawals, as defined in the plan.(9)
5) To make distributions required under a Qualified Domestic
Relations Order or, in the case of an IRA, a divorce or
separation agreement described in Section 71(b) of the
Internal Revenue Code.
6) To meet the minimum distribution requirements of the Internal
Revenue Code.
7) To make "substantially equal periodic payments" as described
in Section 72(t) of the Internal Revenue Code.
8) For loans to participants or beneficiaries.(10)
9) On account of the participant's separation from service.(11)
10) Participant-directed redemptions to purchase shares of a
mutual fund (other than a fund managed by the Manager or a
subsidiary of the Manager) offered as an investment option in
a Retirement Plan if the plan has made special arrangements
with the Distributor.
11) Distributions made on account of a plan termination or
"in-service" distributions, if the redemption proceeds are
rolled over directly to an OppenheimerFunds-sponsored IRA.
12) For distributions from a participant's account under an
Automatic Withdrawal Plan after the participant reaches age
59 1/2, as long as the aggregate value of the distributions does
not exceed 10% of the account's value, adjusted annually.
13) Redemptions of Class B shares under an Automatic
Withdrawal Plan for an account other than a Retirement Plan,
if the aggregate value of the redeemed shares does not exceed
10% of the account's value, adjusted annually.
14) For distributions from 401(k) plans sponsored by
broker-dealers that have entered into a special arrangement
with the Distributor allowing this waiver.
|_| Redemptions of Class B shares or Class C shares under an Automatic
Withdrawal Plan from an account other than a Retirement Plan if
the aggregate value of the redeemed shares does not exceed 10% of
the account's value annually.

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

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

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

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

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

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

A. Reductions or Waivers of Class A Sales Charges.

|X| Reduced Class A Initial Sales Charge Rates for Certain Former Quest
for Value Funds Shareholders.

Purchases by Groups and Associations. The following table sets forth the
initial sales charge rates for Class A shares purchased by members of
"Associations" formed for any purpose other than the purchase of
securities. The rates in the table apply if that Association purchased
shares of any of the Former Quest for Value Funds or received a proposal
to purchase such shares from OCC Distributors prior to November 24, 1995.

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

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

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

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

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

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

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

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

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

A shareholder's account will be credited with the amount of any
contingent deferred sales charge paid on the redemption of any Class A,
Class B or Class C shares of the Oppenheimer fund described in this
section if the proceeds are invested in the same Class of shares in that
fund or another Oppenheimer fund within 90 days after redemption.
V. Special Sales Charge Arrangements for Shareholders of Certain
Oppenheimer Funds Who Were Shareholders of Connecticut Mutual
Investment Accounts, Inc.
----------------------------------------------------------------------------

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

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

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

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

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

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

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

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

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

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

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

Appendix C

Information About the Underlying Fund

Additional Information About the Underlying Fund's Investment Policies and
Risks

The investment objective, the principal investment policies and the main
risks of the Oppenheimer Main Street Fund (the "Underlying Fund") are
described in the Underlying Fund's Prospectus as well as the Prospectus
for Oppenheimer Principal Protected Main Street Fund. This Appendix C
contains supplemental information about those policies and risks and the
types of securities that the Underlying Fund's investment Manager,
OppenheimerFunds, Inc., can select for the Underlying Fund. Additional
information is also provided about the strategies that the Underlying Fund
can use to try to achieve its objective.

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

|X| Investments in Equity Securities. The Underlying Fund does not
limit its investments in equity securities to issuers having a market
capitalization of a specified size or range, and therefore can invest in
securities of small-, mid- and large-capitalization issuers. At times, the
Underlying Fund can focus its equity investments in securities of one or
more capitalization ranges, based upon the Manager's judgment of where the
best market opportunities are to seek the Underlying Fund's objective. At
times, the market may favor or disfavor securities of issuers of a
particular capitalization range. Securities of small capitalization
issuers may be subject to greater price volatility in general than
securities of larger companies. Therefore, if the Underlying Fund is
focusing on or has substantial investments in smaller capitalization
companies at times of market volatility, the Underlying Fund's share
prices may fluctuate more than that of funds focusing on larger
capitalization issuers.

|_| Rights and Warrants. The Underlying Fund can invest up to 10%
of its total assets in warrants or rights, although the Underlying Fund
does not currently intend to invest more than 5% of its total assets in
warrants or rights. Warrants basically are options to purchase equity
securities at specific prices valid for a specific period of time. Their
prices do not necessarily move parallel to the prices of the underlying
securities. Rights are similar to warrants, but normally have a short
duration and are distributed directly by the issuer to its shareholders.
Rights and warrants have no voting rights, receive no dividends and have
no rights with respect to the assets of the issuer.

|_| 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 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
many cases their conversion feature (allowing conversion into equity
securities) caused them to be regarded by the Manager more as "equity
equivalents." As a result, the rating assigned to the security has less
impact on the Manager's investment decision than in the case of
non-convertible fixed-income securities.

To determine whether convertible securities should be regarded as
"equity equivalents," the Manager examines the following factors:
o 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,
o 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
o 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| Investments in Bonds and Other Debt Securities. The Underlying
Fund can invest in bonds, debentures and other debt securities to seek its
investment objective. Because the Underlying Fund currently emphasizes
investments in equity securities, such as stocks, it is not anticipated
that significant amounts of the Underlying Fund's assets will be invested
in debt securities. However, if market conditions suggest that debt
securities may offer better total return opportunities than stocks, or if
the Manager determines to seek a higher amount of current income to
distribute to shareholders, the Manager can shift more of the Underlying
Fund's investments into debt securities.

The Underlying Fund's debt investments can include investment-grade
and non-investment-grade bonds (commonly referred to as "junk bonds").
Investment-grade bonds are bonds rated at least "Baa" by Moody's Investors
Service, Inc., or at least "BBB" by Standard & Poor's Corporation or
Fitch, Inc., or that have comparable ratings by another
nationally-recognized rating organization. In making investments in debt
securities, the Manager can rely to some extent on the ratings of ratings
organizations or it can use its own research to evaluate a security's
credit-worthiness. If the securities that the Underlying Fund buys are
unrated, to be considered part of the Underlying 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.

|_| U.S. Government Securities. The Underlying Fund can buy
securities issued or guaranteed by the U.S. government or its agencies and
instrumentalities. Securities issued by the U.S. Treasury are backed by
the full faith and credit of the U.S. government and are subject to very
little credit risk. Obligations of U.S. government agencies or
instrumentalities (including mortgage-backed securities) may or may not be
guaranteed or supported by the "full faith and credit" of the United
States. Some are backed by the right of the issuer to borrow from the U.S.
Treasury; others, by discretionary authority of the U.S. government to
purchase the agencies' obligations; while others are supported only by the
credit of the instrumentality. 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 and may not
be able to assert a claim against the United States in the event that the
agency or instrumentality does not meet its commitment. The Underlying
Fund will invest in securities of U.S. government agencies and
instrumentalities only when the Manager is satisfied that the credit risk
with respect to the agency or instrumentality is minimal.

|_| Special Risks of Lower-Grade Securities. While it is not
anticipated that the Underlying Fund will invest a substantial portion of
its assets in debt securities, the Underlying Fund can do so to seek
current income. Because lower-rated securities tend to offer higher yields
than investment grade securities, the Underlying Fund can invest in lower
grade securities if the Manager is trying to achieve greater income (and,
in some cases, the appreciation possibilities of lower-grade securities
may be a reason they are selected for the Underlying Fund's portfolio).

The Underlying Fund can invest up to 25% of its total assets in
"lower grade" debt securities. However, the Underlying Fund does not
currently intend to invest more that 10% of its total assets in lower
grade debt securities. "Lower-grade" debt securities are those rated below
"investment grade" which means they have a rating lower than "Baa" by
Moody's or lower than "BBB" by Standard & Poor's or Fitch, Inc., or similar
ratings by other rating organizations. If they are unrated, and are
determined by the Manager to be of comparable quality to debt securities
rated below investment grade, they are included in the limitation on the
percentage of the Underlying Fund's assets that can be invested in
lower-grade securities. The Underlying Fund can invest in securities rated
as low as "C" or "D" or which may be in default at the time the Underlying
Fund buys them.

Some of the special credit risks of lower-grade securities are
discussed in the Prospectus. 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 risk of foreign
investing discussed in the Prospectus and in this Statement of Additional
Information.

However, the Underlying Fund's limitations on buying these
investments can reduce the effect of those risks to the Underlying Fund,
as will the Underlying Fund's policy of diversifying its investments.
Additionally, to the extent they can be converted into stock, convertible
securities may be less subject to some of these risks than non-convertible
high yield bonds, since stock may be more liquid and less affected by some
of these risk factors. The Underlying Fund may not invest more than 10% of
its total assets in lower-grade debt securities that are not convertible.

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

|X| Foreign Securities. The Underlying Fund can purchase equity and
debt securities issued or guaranteed by foreign companies or foreign
governments or their agencies. "Foreign securities" include equity and
debt securities of companies organized under the laws of countries other
than the United States and debt securities of foreign governments. They
may be traded on foreign securities exchanges or in the foreign
over-the-counter markets.

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

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

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

o reduction of income by foreign taxes;
o fluctuation in value of foreign investments due to changes in
currency rates or currency control regulations (for example,
currency blockage);
o transaction charges for currency exchange;
o lack of public information about foreign issuers;
o lack of uniform accounting, auditing and financial reporting
standards in foreign countries comparable to those applicable
to domestic issuers;
o less volume on foreign exchanges than on U.S. exchanges;
o greater volatility and less liquidity on foreign markets than in the
U.S.;
o less governmental regulation of foreign issuers, stock exchanges and
brokers than in the U.S.;
o 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 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.

|X| Passive Foreign Investment Companies. The Underlying Fund may
purchase the securities of certain foreign investment corporations called
passive foreign investment companies ("PFICs"). Such entities have been
the only or primary way to invest in certain countries because some
foreign countries limit, or prohibit, all direct foreign investment in the
securities of companies domiciled therein. However, the governments of
some countries have authorized the organization of investment funds to
permit indirect foreign investment in such securities. For tax purposes,
these funds also may be PFICs.

The Underlying Fund is subject to certain percentage limitations
under the Investment Company Act relating to the purchase of securities of
investment companies, and, consequently, the Underlying Fund may have to
subject any of its investment in other investment companies, including
PFICs, to the limitation that no more than 10% of the value of the
Underlying Fund's total assets may be invested in such securities. 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. Like other foreign
securities, interests in PFICs also involve the risk of foreign
securities, as described above.

|X| Portfolio Turnover. "Portfolio turnover" describes the rate at
which the Underlying Fund traded its portfolio securities during its
previous fiscal year. For example, if a fund sold all of its securities
during the year, its portfolio turnover rate would have been 100%. The
Underlying Fund's portfolio turnover rate will fluctuate from year to
year, and the Underlying Fund can have a portfolio turnover rate of 100%
or more. Increased portfolio turnover creates higher brokerage and
transaction costs for the Underlying 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 Underlying Fund will normally
distribute all of its capital gains realized each year, to avoid excise
taxes under the Internal Revenue Code. The Financial Highlights table at
the end of the Prospectus shows the Underlying Fund's portfolio turnover
rates during prior fiscal years.

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

|X| Investing in Small, Unseasoned Companies. The Underlying Fund
can invest in securities of small, unseasoned companies. These are
companies that have been in operation for less than three years, including
the operations of any predecessors. Securities of these companies may be
subject to volatility in their prices. They may have a limited trading
market, which may adversely affect the Underlying Fund's ability to
dispose of them and can reduce the price the Underlying Fund might be able
to obtain for them. Other investors that own a security issued by a small,
unseasoned issuer for which there is limited liquidity might trade the
security when the Underlying Fund is attempting to dispose of its holdings
of that security. In that case the Underlying Fund might receive a lower
price for its holdings than might otherwise be obtained. The Underlying
Fund currently intends to invest no more than 5% of its net assets in
securities of small, unseasoned issuers.

|X| When-Issued and Delayed-Delivery Transactions. The Underlying
Fund can invest in securities on a "when-issued" basis and can 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 Underlying Fund.
During the period between purchase and settlement, no payment is made by
the Underlying Fund to the issuer and no interest accrues to the
Underlying Fund from the investment.

The Underlying Fund will engage in when-issued transactions to
secure what the Manager considers to be an advantageous price and yield at
the time of entering into the obligation. When the Underlying 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
Underlying Fund to lose the opportunity to obtain the security at a price
and yield the Manager considers to be advantageous.

When the Underlying 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 Underlying Fund will
enter into delayed-delivery or when-issued purchase transactions to
acquire securities, it can dispose of a commitment prior to settlement. If
the Underlying 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 Underlying 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 Underlying Fund's net asset value. In a sale
transaction, it records the proceeds to be received. The Underlying Fund
will identify on its books liquid securities of any type at least equal in
value to the value of the Underlying Fund's purchase commitments until the
Underlying Fund pays for the investment.

When issued and delayed-delivery transactions can be used by the
Underlying 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 Underlying 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 Underlying 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.

Investment in Other Investment Companies. The Underlying 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 of 1940 (the
"Investment Company Act") that apply to those types of investments. For
example, the Underlying Fund can invest in Exchange-Traded Funds, which
are typically open-end funds or unit investment trusts, listed on a stock
exchange. The Underlying 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 Underlying Fund may
not be able to buy those portfolio securities directly. As a
non-fundamental policy, the Underlying Fund cannot invest in the
securities of other registered open-end 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.

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 Underlying 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 Underlying Fund
would be subject to its ratable share of that investment company's
expenses, including its advisory and administration expenses. The
Underlying Fund does not anticipate investing a substantial amount of its
net assets in shares of other investment companies.

|X| Repurchase Agreements. The Underlying Fund can acquire
securities subject to repurchase agreements. It may do so for liquidity
purposes to meet anticipated redemptions of Underlying Fund shares, or
pending the investment of the proceeds from sales of Underlying Fund
shares, or pending the settlement of portfolio securities transactions.

In a repurchase transaction, the Underlying 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 Underlying Fund's limits on holding illiquid investments.
The Underlying Fund will not enter into a repurchase agreement having a
maturity beyond seven days that causes more than 10% of its net assets to
exceed that limit. There is no limit on the amount of the Underlying
Fund's net assets that may be subject to repurchase agreements having
maturities of seven days or less.

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

|X| Illiquid and Restricted Securities. To enable the Underlying
Fund to sell its holdings of a restricted security not registered under
the Securities Act of 1933, the Underlying Fund may have to cause those
securities to be registered. The expenses of registering restricted
securities may be negotiated by the Underlying Fund with the issuer at the
time the Underlying Fund buys the securities. When the Underlying Fund
must arrange registration because the Underlying 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 Underlying Fund could sell it. The Underlying Fund would bear the
risks of any downward price fluctuation during that period.

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

The Underlying 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 Underlying 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| Loans of Portfolio Securities. The Underlying Fund can lend its
portfolio securities to certain types of eligible borrowers approved by
the Board of Directors. It may do so to try to provide income or to raise
cash for liquidity purposes. These loans are limited to not more than 25%
of the value of the Underlying Fund's net assets. There are some risks in
connection with securities lending. The Underlying Fund might experience a
delay in receiving additional collateral to secure a loan, or a delay in
recovery of the loaned securities. The Fund presently does not intend to
engage in loans of securities in the coming year.

The Underlying Fund must receive collateral for a loan. Under
current applicable regulatory requirements (which are subject to change),
on each business day the loan collateral must be at least equal to the
value of the loaned securities. It must consist of cash, bank letters of
credit, securities of the U.S. government or its agencies or
instrumentalities, or other cash equivalents in which the Underlying Fund
is permitted to invest. To be acceptable as collateral, letters of credit
must obligate a bank to pay amounts demanded by the Underlying 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 Underlying 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 Underlying Fund can also pay reasonable finder's,
custodian bank and administrative fees in connection with these loans.
The terms of the Underlying Fund's loans must meet applicable tests under
the Internal Revenue Code and must permit the Underlying Fund to reacquire
loaned securities on five days' notice or in time to vote on any important
matter.

The Underlying Fund may lend its portfolio securities pursuant to
the Securities Lending Agreement (the "Securities Lending Agreement") with
JP Morgan Chase, subject to the restrictions stated in the Prospectus. The
Underlying Fund will lend such portfolio securities to attempt to increase
the Fund's income. Under the Securities Lending Agreement and applicable
regulatory requirements (which are subject to change), the loan collateral
must, on each business day, be at least equal to the value of the loaned
securities and must consist of cash, bank letters of credit or securities
of the U.S. Government (or its agencies or instrumentalities), or other
cash equivalents in which the Underlying Fund is permitted to invest. To
be acceptable as collateral, letters of credit must obligate a bank to pay
to JP Morgan Chase, as agent, amounts demanded by the Underlying Fund if
the demand meets the terms of the letter. Such terms of the letter of
credit and the issuing bank must be satisfactory to JP Morgan Chase and
the Underlying Fund. The Underlying Fund will receive, pursuant to the
Securities Lending Agreement, 80% of all annual net income (i.e., net of
rebates to the Borrower) from securities lending transactions. JP Morgan
Chase has agreed, in general, to guarantee the obligations of borrowers to
return loaned securities and to be responsible for expenses relating to
securities lending. The Underlying Fund will be responsible, however, for
risks associated with the investment of cash collateral, including the
risk that the issuer of the security in which the cash collateral has been
invested defaults. The Securities Lending Agreement may be terminated by
either JP Morgan Chase or the Fund on 30 days' written notice. The terms
of the Underlying Fund's loans must also meet applicable tests under the
Internal Revenue Code and permit the Underlying Fund to reacquire loaned
securities on five business days' notice or in time to vote on any
important matter.

|X| Derivatives. The Underlying Fund can invest in a variety of
derivative investments to seek income or for hedging purposes. Some
derivative investments the Underlying Fund can use are the hedging
instruments described below.

Other derivative investments the Underlying Fund can invest in
include "index-linked" notes. Principal and/or interest payments on these
notes depend on the performance of an underlying index. Currency-indexed
securities are another derivative the Underlying Fund can use. Typically
these are 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 Underlying 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.

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

The Underlying Fund can use hedging to establish a position in the
securities market as a temporary substitute for purchasing particular
securities. In that case, the Underlying Fund would normally seek to
purchase the securities and then terminate that hedging position. The
Underlying 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 Underlying Fund
could:
o buy futures, or
o buy calls on such futures or on securities.

The Underlying 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 Underlying Fund's strategy of hedging with futures
and options on futures will be incidental to the Underlying Fund's
activities in the underlying cash market. The particular hedging
instruments the Underlying Fund can use are described below. The
Underlying Fund can employ new hedging instruments and strategies when
they are developed, if those investment methods are consistent with the
Underlying Fund's investment objective and are permissible under
applicable regulations governing the Underlying Fund.

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

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

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

The Underlying 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 Underlying Fund can 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.

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

No money is paid or received by the Underlying Fund on the purchase
or sale of a future. Upon entering into a futures transaction, the
Underlying 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 Underlying 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 Underlying
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 Underlying Fund
can 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 Underlying Fund. Any
loss or gain on the future is then realized by the Underlying Fund for tax
purposes. All futures transactions, except forward contracts, are effected
through a clearinghouse associated with the exchange on which the
contracts are traded.

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

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

When the Underlying Fund writes a call on a security, it receives
cash (a premium). The Underlying 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 Underlying 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 Underlying 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 Underlying Fund would keep the cash premium and the
investment.

When the Underlying Fund writes a call on an index, it receives cash
(a premium). If the buyer of the call exercises it, the Underlying 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 Underlying Fund would keep the cash premium.

The Underlying Fund's custodian bank, or a securities depository
acting for the custodian bank, will act as the Underlying Fund's escrow
agent, through the facilities of the Options Clearing Corporation ("OCC"),
as to the investments on which the Underlying 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 Underlying Fund
enters into a closing transaction.

When the Underlying 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
Underlying 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 Underlying 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 Underlying Fund can purchase a corresponding call in a "closing
purchase transaction." The Underlying 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 Underlying Fund
wrote is more or less than the price of the call the Underlying Fund
purchases to close out the transaction. The Underlying Fund may realize a
profit if the call expires unexercised, because the Underlying 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 Underlying Fund they are taxable as ordinary income. If
the Underlying 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 Underlying Fund can 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 Underlying Fund
must cover the call by identifying an equivalent dollar amount of liquid
assets on the Underlying Fund's books. The Underlying Fund will identify
additional liquid assets on its books if the value of the segregated
assets drops below 100% of the current value of the future. Because of
this segregation requirement, in no circumstances would the Underlying
Fund's receipt of an exercise notice as to that future require the
Underlying Fund to deliver a futures contract. It would simply put the
Underlying Fund in a short futures position, which is permitted by the
Underlying Fund's hedging policies.

o Writing Put Options. The Underlying Fund can sell put options. A
put option on securities gives the purchaser the right to sell, and the
writer the obligation to buy, the underlying investment at the exercise
price during the option period. The Underlying Fund will not write puts
if, as a result, more than 25% of the Underlying Fund's total assets would
be required to be segregated to cover such put options.

If the Underlying Fund writes a put, the put must be covered by
liquid assets identified on the Underlying Fund's books. The premium the
Underlying 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 Underlying 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 Underlying Fund
has written expires unexercised, the Underlying Fund realizes a gain in
the amount of the premium less the transaction costs incurred. If the put
is exercised, the Underlying 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
Underlying 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 Underlying Fund incurred.

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

As long as the Underlying 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 Underlying
Fund to take delivery of the underlying security and pay the exercise
price. The Underlying 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
Underlying Fund effects a closing purchase transaction by purchasing a put
of the same series as it sold. Once the Underlying Fund has been assigned
an exercise notice, it cannot effect a closing purchase transaction.

The Underlying Fund can 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 Underlying 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 Underlying 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 Underlying Fund, are taxable as ordinary income.

o Purchasing Calls and Puts. The Underlying Fund can purchase calls
to protect against the possibility that the Underlying Fund's portfolio
will not participate in an anticipated rise in the securities market. When
the Underlying Fund buys a call (other than in a closing purchase
transaction), it pays a premium. The Underlying 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
Underlying 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 Underlying Fund exercises the call. If the
Underlying 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 Underlying Fund will have paid the premium but lost the right to
purchase the underlying investment.

The Underlying Fund can buy puts whether or not it holds the
underlying investment in its portfolio. When the Underlying 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 Underlying Fund owns enables the Underlying
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 Underlying Fund will have paid the premium but lost the
right to sell the underlying investment. However, the Underlying Fund can
sell the put prior to its expiration. That sale may or may not be at a
profit.

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

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

|_| Buying and Selling Options on Foreign Currencies. The Underlying
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 Underlying 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 Underlying 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 Underlying Fund's position. The Underlying Fund will then
have incurred option premium payments and transaction costs without a
corresponding benefit.

A call the Underlying Fund writes on a foreign currency is "covered"
if the Underlying 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 Underlying 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 Underlying 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
Underlying Fund covers the option by maintaining cash, U.S. government
securities or other liquid, high-grade debt securities in an amount equal
to the exercise price of the option, in a segregated account with the
Underlying Fund's custodian bank.

|_| 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
Underlying Fund's return. The Underlying Fund could also experience losses
if the prices of its futures and options positions were not correlated
with its other investments.

The Underlying Fund's option activities could affect its portfolio
turnover rate and brokerage commissions. The exercise of calls written by
the Underlying Fund might cause the Underlying Fund to sell related
portfolio securities, thus increasing its turnover rate. The exercise by
the Underlying 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 Underlying
Fund's control, holding a put might cause the Underlying Fund to sell the
related investments for reasons that would not exist in the absence of the
put.

The Underlying 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
Underlying Fund's net asset value being more sensitive to changes in the
value of the underlying investment.

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

An option position may be closed out only on a market that provides
secondary trading for options of the same series, and there is no
assurance that a liquid secondary market will exist for any particular
option. The Underlying 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 Underlying 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 Underlying Fund's securities. For example, it is possible that while
the Underlying Fund has used hedging instruments in a short hedge, the
market might advance and the value of the securities held in the
Underlying Fund's portfolio might decline. If that occurred, the
Underlying 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 Underlying 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 Underlying 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 Underlying 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 Underlying Fund does so the market might decline.
If the Underlying Fund then concludes not to invest in securities because
of concerns that the market might decline further or for other reasons,
the Underlying Fund will realize a loss on the hedging instruments that is
not offset by a reduction in the price of the securities purchased.

|_| Forward Contracts. Forward contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency for
future delivery at a fixed price. The Underlying Fund uses them to "lock
in" the U.S. dollar price of a security denominated in a foreign currency
that the Underlying 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 Underlying Fund limits its exposure in foreign
currency exchange contracts in a particular foreign currency to the amount
of its assets denominated in that currency or a closely-correlated
currency. The Underlying Fund can also use "cross-hedging" where the
Underlying 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 Underlying Fund can 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 Underlying 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 Underlying 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
Underlying 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 Underlying Fund might enter into a forward contract for the purchase
or sale of the amount of foreign currency involved in the underlying
transaction, in a fixed amount of U.S. dollars per unit of the foreign
currency. This is called a "transaction hedge." The transaction hedge will
protect the Underlying 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 Underlying 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 Underlying 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 Underlying Fund's portfolio
securities denominated in that foreign currency. When the Underlying Fund
believes that the U.S. dollar may 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 Underlying
Fund could enter into a forward contract to sell a different foreign
currency for a fixed U.S. dollar amount if the Underlying 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
Underlying Fund are denominated. That is referred to as a "cross hedge."

The Underlying 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 Underlying Fund's commitment under forward
contracts. The Underlying Fund will not enter into forward contracts or
maintain a net exposure to such contracts if the consummation of the
contracts would obligate the Underlying Fund to deliver an amount of
foreign currency in excess of the value of the Underlying 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 Underlying Fund can maintain a net
exposure to forward contracts in excess of the value of the Underlying
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 Underlying Fund can
purchase a call option permitting the Underlying 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 Underlying Fund can purchase a put option permitting the Underlying
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 Underlying Fund
is obligated to deliver, the Underlying 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 Underlying Fund is obligated to deliver
to settle the trade, the Underlying 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
Underlying Fund to sustain losses on these contracts and to pay additional
transactions costs. The use of forward contracts in this manner might
reduce the Underlying Fund's performance if there are unanticipated
changes in currency prices to a greater degree than if the Underlying Fund
had not entered into such contracts.

At or before the maturity of a forward contract requiring the
Underlying Fund to sell a currency, the Underlying Fund might sell a
portfolio security and use the sale proceeds to make delivery of the
currency. In the alternative the Underlying Fund might retain the security
and offset its contractual obligation to deliver the currency by
purchasing a second contract. Under that contract the Underlying Fund will
obtain, on the same maturity date, the same amount of the currency that it
is obligated to deliver. Similarly, the Underlying 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 Underlying 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 Underlying 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 Underlying Fund must evaluate the credit and performance
risk of the counterparty under each forward contract.

Although the Underlying 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 Underlying Fund can
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 Underlying Fund at one rate, while offering
a lesser rate of exchange if the Underlying Fund desires to resell that
currency to the dealer.

|_| Interest Rate Swap Transactions. The Underlying Fund can enter
into interest rate swap agreements. In an interest rate swap, the
Underlying 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
Underlying Fund can enter into swaps only on securities that it owns. The
Underlying Fund will not enter into swaps with respect to more than 25% of
its total assets. Also, the Underlying Fund will identify liquid assets on
its books (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 Underlying 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 Underlying Fund's loss will consist of the net amount of
contractual interest payments that the Underlying Fund has not yet
received. The Manager will monitor the creditworthiness of counterparties
to the Underlying Fund's interest rate swap transactions on an ongoing
basis.

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

|_| 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. 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 Underlying 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 Underlying Fund can write or hold may be affected by
options written or held by other entities, including other investment
companies having the same advisor as the Underlying Fund (or an advisor
that is an affiliate of the Underlying Fund's advisor). The exchanges also
impose position limits on futures transactions. An exchange may order the
liquidation of positions found to be in violation of those limits and may
impose certain other sanctions.

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

|_| Tax Aspects of Certain Hedging Instruments. Certain foreign
currency exchange contracts in which the Underlying Fund can 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
Underlying 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 Underlying Fund to exempt those
transactions from this marked-to-market treatment.

Certain forward contracts the Underlying 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
Underlying 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 Underlying Fund accrues interest or
other receivables or accrues expenses or other liabilities
denominated in a foreign currency and the time the Underlying
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 Underlying Fund's investment income available for
distribution to its shareholders.

|X| Temporary Defensive and Interim Investments. The Underlying
Fund's temporary defensive investments can include (i) obligations issued
or guaranteed by the U.S. government, its agencies or instrumentalities;
(ii) commercial paper rated in the highest category by an established
rating organization; (iii) certificates of deposit or bankers' acceptances
of domestic banks with assets of $1 billion or more; (iv) any of the
foregoing securities that mature in one year or less (generally known as
"cash equivalents"); (v) other short-term corporate debt obligations; and
(vi) repurchase agreements.

Investment Restrictions

|X| What Are "Fundamental Policies?" Fundamental policies are those
policies that the Underlying Fund has adopted to govern its investments
that can be changed only by the vote of a "majority" of the Underlying
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 Underlying Fund's investment objective is a fundamental policy.
Other policies described in the Underlying Fund's Prospectus or its
Statement of Additional Information and in this Appendix C are
"fundamental" only if they are identified as such. The Underlying Fund's
Board of Directors can change non-fundamental policies without shareholder
approval. However, significant changes to investment policies will be
described in supplements or updates to the Underlying Fund's Prospectus or
Statement of Additional Information, as appropriate. The Underlying Fund's
most significant investment policies are described in its Prospectus as
well as in the Oppenheimer Principal Protected Main Street Fund
Prospectus.

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

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

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 Underlying Fund makes an investment (except
in the case of borrowing and investments in illiquid securities). The
Underlying Fund need not sell securities to meet the percentage limits if
the value of the investment increases in proportion to the size of the
Underlying Fund.

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

Oppenheimer Principal Protected Main Street Fund(R)

Internet Website:
www.oppenheimerfunds.com

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

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

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

Custodian Bank
JPMorgan Chase Bank
4 Chase MetroTech Center
Brooklyn, New York 11245

Independent Registered Public Accounting Firm
Deloitte & Touche LLP
555 Seventeenth Street
Denver, Colorado 80202

Counsel to the Fund
Myer, Swanson, Adams & Wolf, P.C.
1600 Broadway, Suite 1480
Denver, CO 80202

Counsel to the Independent Trustees
Bell, Boyd & Lloyd LLC
70 West Madison Street, Suite 3100
Chicago, Illinois 60602
1234
PX0676.001.1206

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