Oppenheimer International Diversified Fund

497 1 sai.htm REVISED STATEMENT OF ADDITIONAL INFORMATION Oppenheimer International Diversified Fund

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

Statement of Additional Information dated August 27, 2007

This Statement of Additional Information ("SAI") is not a Prospectus. This document
contains additional information about the Fund and supplements information in the
Prospectus dated August 27, 2007. It should be read together with the Prospectus. You can
obtain the Prospectus by writing to the Fund's Transfer Agent, OppenheimerFunds Services,
at P.O. Box 5270, Denver, Colorado 80217, or by calling the Transfer Agent at the toll-free
number shown above, or by downloading it from the OppenheimerFunds Internet web site at
www.oppenheimerfunds.com.

Contents
Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks..
The Fund's Investment Policies.....................................
Other Investment Techniques and Strategies.........................
Other Investment Restrictions......................................
Disclosure of Portfolio Holdings...................................
How the Fund is Managed ...............................................
Organization and History...........................................
Board of Trustees and Oversight Committees.........................
Trustees and Officers of the Fund..................................
The Manager........................................................
Brokerage Policies of the Fund.........................................
Distribution and Service Plans.........................................
Payments to Fund Intermediaries........................................
Performance of the Fund................................................
About Your Account
How To Buy Shares......................................................
How To Sell Shares.....................................................
How To Exchange Shares.................................................
Dividends, Capital Gains and Taxes.....................................
Additional Information About the Fund..................................
Financial Information About the Fund
Report of Independent Registered Public Accounting Firm................
Appendix A: Ratings Definitions.....................................A-1
Appendix B: Special Sales Charge Arrangements and Waivers...........B-1

ABOUT THE FUND

Additional Information About the Fund's Investment Policies and Risks

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

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

The Underlying Funds' Investment Policies. The Fund can invest in various Oppenheimer
funds. The Fund normally invests in a portfolio consisting of an allocation in Class A or
Class Y shares of other Oppenheimer funds, referred to as "Underlying Funds." The
Prospectus contains a brief description of Oppenheimer Developing Markets Fund ("Developing
Markets Fund"), Oppenheimer Global Opportunities Fund ("Global Opportunities Fund"),
Oppenheimer International Bond Fund ("International Bond Fund"), Oppenheimer International
Growth Fund ("International Growth Fund"), Oppenheimer International Small Company Fund
("International Small Company Fund"), Oppenheimer International Value Fund ("International
Value Fund"), and Oppenheimer Quest International Value Fund, Inc. ("Quest International
Value Fund"), including each Underlying Fund's investment objective. Set forth below is
supplemental information about the types of securities the Underlying Funds may invest in,
as well as strategies the Underlying Funds may use to try to achieve their objectives.

For more complete information about each Underlying Fund's investment policies and
strategies, please refer to each Underlying Fund's Prospectus. You may obtain a copy of
each Underlying Fund's Prospectus by calling 1.800.225.5677.

|X| Foreign Securities. Some of the Underlying Funds may invest in foreign
securities. "Foreign securities" include equity and debt securities issued or guaranteed by
companies organized under the laws of countries other than the United States and debt
securities issued or guaranteed by governments other than the U.S. government or by foreign
supra-national entities, such as the World Bank. They also include securities of companies
(including those that are located in the U.S. or organized under U.S. law) that derive a
significant portion of their revenue or profits from foreign businesses, investments or
sales, or that have a significant portion of their assets abroad. Those securities may be
traded on foreign securities exchanges or in the foreign over-the-counter markets.
Securities denominated in foreign currencies issued by U.S. companies are also considered
to be "foreign securities." For specific information on the type of securities that an
Underlying Fund considers "foreign securities" and the limitations on the total amount of
assets of the Underlying Funds that can be invested in foreign securities, refer to the
Prospectus and SAI for the Underlying Fund.

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 may be considered "foreign securities" for the purpose of the Underlying Fund's
investment allocations because they are subject to some 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 income potential, or in foreign countries with
economic policies or business cycles different from those of the U.S., or to reduce
fluctuations in portfolio value by taking advantage of foreign securities markets that do
not move in a manner parallel to U.S. markets, or to benefit from the appreciation relative
to the U.S. Dollar of foreign currencies in which such securities may denominated. The
Underlying Funds will hold foreign currency only in connection with the purchase or sale of
foreign securities.

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

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

|X| Passive Foreign Investment Companies. Some securities of corporations domiciled
outside the U.S. which the Underlying Funds may purchase, may be considered passive foreign
investment companies ("PFICs") under U.S. tax laws. PFICs are those foreign corporations
which generate primarily passive income. They tend to be growth companies or "start-up"
companies. For federal tax purposes, a corporation is deemed a PFIC if 75% or more of the
foreign corporation's gross income for the income year is passive income or if 50% or more
of its assets are assets that produce or are held to produce passive income. Passive income
is further defined as any income to be considered foreign personal holding company income
within the subpart F provisions defined by Internal Revenue Code of 1986, as amended
("Internal Revenue Code")ss.954.

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

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

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

|X| Convertible Securities. Some of the Underlying Funds may invest in convertible
securities. Convertible securities are debt securities that are convertible into an
issuer's common stock. Convertible securities rank senior to common stock in a
corporation's capital structure and therefore are subject to less risk than common stock in
the case of the issuer's bankruptcy or liquidation.

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

While some convertible securities are a form of debt security, in certain cases their
conversion feature (allowing conversion into equity securities) causes them to be regarded
by the Manager more as "equity equivalents." As a result, the rating assigned to the
security might have less impact on the Manager's investment decision with respect to
convertible securities than in the case of non-convertible fixed-income securities.
Convertible debt securities are subject to the credit risks and interest rate risks
described below in "Debt Securities."

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

|X| Growth Companies. Some of the Underlying Funds invest in growth companies.
Growth companies are those companies that the Manager believes are entering into growth
cycles in their businesses, with the expectation that their stock will increase in value.
They may be established companies as well as newer companies in the development stage.

Growth companies may have a variety of characteristics that, in the Manager's view,
define them as "growth" issuers. They may be generating or applying new technologies, new
or improved distribution techniques or new services. They may own or develop natural
resources. They may be companies that can benefit from changing consumer demands or
lifestyles, or companies that have projected earnings in excess of the average for their
sector or industry. In each case, they have prospects that the Manager believes are
favorable for the long term. The portfolio managers of the Underlying Funds look for growth
companies with strong, capable management sound financial and accounting policies,
successful product development and marketing and other factors.

|X| Value Investing. Quest International Value Fund and International Value Fund
use a value investing style. In selecting equity investments for these portfolios, the
portfolio managers currently use a value investing style. In using a value approach, the
portfolio managers seek stock and other equity securities that appear to be temporarily
undervalued, by various measures, such as price/earnings ratios. This approach is subject
to change and may not necessarily be used in all cases. Value investing seeks stocks having
prices that are low in relation to their real worth or future prospects, in the hope that
the portfolios will realize appreciation in the value of their holdings when other
investors realize the intrinsic value of the stock.

Using value investing requires research as to the issuer's underlying financial
condition and prospects. Some of the measures used to identify these securities include,
among others:
o Price/Earnings Ratio, which is the stock's price divided by its earnings per
share. A stock having a price/earnings ratio lower than its historical range, or
the market as a whole or that of similar companies may offer attractive investment
opportunities.
o Price/Book Value Ratio, which is the stock price divided by the book value of the
company per share, which measures the company's stock price in relation to its
asset value.
o Discounted Future Value Analysis, which involves two steps: determining the
probable value of the stock at a specific point in the future by researching the
current and future prospects of the company; and then comparing the probable value
to the current stock price to determine if the stock is sufficiently undervalued
and if it offers an attractive return over the investment horizon.
o Valuation of Assets which compares the stock price to the value of the company's
underlying assets, including their projected value in the marketplace and
liquidation value.

|X| Investments in Equity Securities. Some of the Underlying Funds focus their
investments in equity securities of both U.S. companies and foreign countries. Equity
securities include common stocks, preferred stocks, rights and warrants, and securities
convertible into common stock. Investments in equity securities may include stocks of
companies of all market capitalization ranges: small-cap, mid-cap and large-cap.

At times, one or more of the Underlying Funds may increase their emphasis on 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 their objectives.

Securities of small capitalization issuers may be subject to greater price volatility
in general than securities of large-cap issuers and mid-cap issuers. Therefore, to the
degree that an Underlying Fund has investments in smaller capitalization companies at times
of market volatility, its share prices may fluctuate more. The market capitalization ranges
used by the Underlying Funds will vary from Fund to Fund. For specific information on the
market capitalization ranges and types of investments in equity securities for an
Underlying Fund, refer to the Statement of Information for the Underlying Fund.

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

If interest rates rise, the fixed dividend on preferred stocks may be less
attractive, causing the price of preferred stocks to decline. Preferred stock may have
mandatory sinking fund provisions, as well as provisions allowing calls or redemptions
prior to maturity, which can also have a negative impact on prices when interest rates
decline.

Preferred stocks are equity securities because they do not constitute a liability of
the issuer and therefore do not offer the same degree of assurance of continued income as
debt securities. The rights of preferred stock on distribution of a corporation's assets in
the event of a liquidation are generally subordinate to the rights associated with a
corporation's debt securities. Preferred stock generally has a preference over common stock
on the distribution of a corporation's assets in the event of liquidation of the
corporation.

|X| Portfolio Turnover. "Portfolio turnover" describes the rate at which the Fund
and the Underlying Funds traded their portfolio securities during their last fiscal year.
For example, if the Fund or Underlying Fund sold all of its securities during the year, its
portfolio turnover rate would have been 100%. The Fund's and Underlying Funds' portfolio
turnover rates will fluctuate from year to year, and they may have a portfolio turnover
rate of more than 100% annually. International Bond Fund may have a portfolio turnover rate
of more than 250% annually.

Increased portfolio turnover may result in higher brokerage and transaction costs for
the Fund and Underlying Funds, which may reduce their overall performance. However, most of
the Fund's portfolio transactions should involve trades in the Underlying Funds that do not
entail brokerage commissions. 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 and Underlying Funds will normally distribute all of their
capital gains realized each year, to avoid excise taxes under the Internal Revenue Code.

|X| Rights and Warrants. Some of the Underlying Funds may invest in warrants or
rights. For specific limitations on the Underlying Funds' investments in Rights and
Warrants, refer to the SAI for the Underlying Fund.

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.

|X| Special Risks of Emerging and Developing Markets. Emerging and developing markets
abroad may also offer special opportunities for investing but have greater risks than more
developed foreign markets, such as those in Europe, Canada, Australia, New Zealand and
Japan. There may be even less liquidity in their securities markets, and settlements of
purchases and sales of securities may be subject to additional delays. They are subject to
greater risks of limitations on the repatriation of income and profits because of currency
restrictions imposed by local governments. Those countries may also be subject to the risk
of greater political and economic instability, which can greatly affect the volatility of
prices of securities in those countries. The Underlying Funds' Manager will consider these
factors when evaluating securities in these markets. For specific limitations on the
Underlying Funds' investments in emerging and developing markets, refer to the SAI for the
Underlying Fund.

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

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

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

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

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

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

Other Investment Techniques and Strategies. In seeking their investment objectives, certain
Underlying Funds may from time to time use the types of investment strategies and
investments described below. They are not required to use all of these strategies at all
times, and at times may not use them.

|X| Investing in Small, Unseasoned Companies. Some of the Underlying Funds 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, an Underlying Fund might receive a
lower price for its holdings than might otherwise be obtained. For specific limitations on
the Underlying Funds' investments in small, unseasoned companies, refer to the SAI for the
Underlying Fund.

|X| Investment in Other Investment Companies. Some of the Underlying Funds can also
invest in the securities of other investment companies, which can include open-end funds,
closed-end funds and unit investment trusts, subject to the limits set forth in the
Investment Company Act that apply to those types of investments. For example, an Underlying
Fund may 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 Funds
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 Funds do 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. For specific limitations on the Underlying Funds' investments in securities of
other investment companies, refer to the SAI for the Underlying Fund. The Underlying Funds
do not anticipate investing a substantial amount of their net assets in shares of other
investment companies.

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

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

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

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

|X| Debt Securities. Some of the Underlying Funds can invest in a variety of debt
securities to seek their objectives, for defensive purposes or for liquidity. Foreign debt
securities are subject to the risks of foreign securities described below. For example,
when the stock market is volatile, or when the portfolio manager believes that growth
opportunities in stocks are not attractive, certain debt securities might not only offer
defensive opportunities but also some opportunities for capital appreciation. In general,
debt securities are also subject to two additional types of risk: credit risk and interest
rate risk. For specific limitations on the Underlying Funds' investments in debt
securities, refer to the SAI for the Underlying Fund.

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

Some of the Underlying Funds' investments are investment-grade debt securities and
U.S. government securities. U.S. government securities, although unrated, are generally
considered to be equivalent to securities in the highest rating categories.
Investment-grade bonds are bonds rated at least "Baa" by Moody's Investors Service, Inc.
("Moody's"), or at least "BBB" by Standard & Poor's Rating Service ("S&P") and Fitch, Inc.
("Fitch"), or have comparable ratings by another nationally-recognized rating organization.

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

Some of the Underlying Funds also buy non-investment-grade debt securities (commonly
referred to as "junk bonds"). "Lower-grade" debt securities are those rated below
"investment grade," which means they have a rating lower than "Baa" by Moody's or lower
than "BBB" by S&P or Fitch or similar ratings by other nationally recognized rating
organizations. If they are unrated, and are determined by an Underlying Fund's 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.

|X| 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 prevailing interest rates will tend to reduce the market value of
already-issued debt securities, and a decline in prevailing 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 an Underlying 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 an
Underlying Fund's net asset values will be affected by those fluctuations.

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

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

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

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

An Underlying Fund's investment in zero-coupon securities may cause the Underlying
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 Underlying 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
the Underlying Fund's shares.

|X| Special Risks of Lower-Grade Debt Securities. Because lower-grade debt securities
tend to offer higher yields than investment-grade securities, an Underlying Fund might
invest in lower-grade securities if its manager is trying to achieve higher income. For
specific limitations on these Underlying Funds' investments in lower-grade debt securities,
refer to the SAI for the Underlying Fund.

"Lower-grade" debt securities are those rated below "investment grade," which means
they have a rating lower than "Baa" by Moody's or lower than "BBB" by S&P or Fitch, or
similar ratings by other rating organizations. If they are unrated, and are determined by
an Underlying Fund's manager to be of comparable quality to debt securities rated below
investment grade, they are considered part of the Underlying Fund's portfolio of
lower-grade securities. International Bond Fund and Global Opportunities Fund can invest in
securities rated as low as "C" or "D" or which may be in default at the time it buys them.

Some of the special credit risks of lower-grade securities include the following:
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.

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

While securities rated "Baa" by Moody's or "BBB" by S&P or Fitch are investment grade
and are not regarded as junk bonds, those securities may be subject to special risks, and
have some speculative characteristics. A description of the debt security ratings
categories of the principal rating organizations is included in Appendix A to this SAI.

|X| Cyclical Opportunities. Some of the Underlying Funds seek to take advantage of
changes in the business cycle by investing in companies that are sensitive to those changes
if the portfolio manager(s) of these Underlying Funds believes they have growth potential.
For example, when the economy is expanding, companies in the consumer durable and
technology sectors might benefit and offer long-term growth opportunities. Other cyclical
industries include insurance, for example. These Underlying Funds focus on seeking growth
over the long term, but could seek to take tactical advantage of short-term market
movements or events affecting particular issuers or industries.

|X| Repurchase Agreements. Some of the Underlying Funds can acquire securities subject to
repurchase agreements. An Underlying Fund might do so for liquidity purposes to meet
anticipated redemptions of fund shares, or pending the investment of the proceeds from
sales of fund shares, or pending the settlement of portfolio securities transactions, or
for temporary defensive purposes.

In a repurchase transaction, an 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 Underlying Fund's Manager from time to time.

The majority of these transactions run from day to day, and delivery pursuant to the
resale typically occurs within one to five days of the purchase. Repurchase agreements
having a maturity beyond seven days are subject to an Underlying Fund's limits on holding
illiquid investments. There is generally no limit on the amount of the Underlying Funds'
net assets that may be subject to repurchase agreements having maturities of seven days or
less for defensive purposes. For specific limitations on the Underlying Funds' investments
in securities subject to repurchase agreements, refer to the SAI for the Underlying Fund.

Repurchase agreements, considered "loans" under the Investment Company Act are
collateralized by the underlying security. The Underlying Funds' 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 Underlying Funds' Manager will monitor the
vendor's creditworthiness to confirm that the vendor is financially sound and will
continuously monitor the collateral's value.

Pursuant to an Exemptive Order issued by the Securities and Exchange Commission
("SEC"), the Underlying Funds, along with other affiliated entities managed by their
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| Reverse Repurchase Agreements. Some of the Underlying Funds can use reverse
repurchase agreements on debt obligations they own. Under a reverse repurchase agreement,
the Underlying Fund sells an underlying debt obligation and simultaneously agrees to
repurchase the same security at an agreed-upon price on an agreed-upon date. The Underlying
Fund will identify on its books liquid assets in an amount sufficient to cover its
obligations under reverse repurchase agreements, including interest, until payment is made
to the seller.

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

|X| Illiquid and Restricted Securities. Under the policies and procedures established by
the Underlying Funds' Boards of Trustees/Directors, the Manager determines the liquidity of
certain of an Underlying Fund's investments. To enable an Underlying Fund to sell its
holdings of a restricted security not registered under applicable securities laws, 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 Funds may also acquire restricted securities through private
placements. Those securities have contractual restrictions on their public resale. Those
restrictions may make it more difficult to value them, and might limit an Underlying Fund's
ability to dispose of the securities and might lower the amount the Underlying Fund could
realize upon the sale.

The Underlying Funds have limitations that apply to purchases of restricted
securities, as stated in their prospectuses. Those percentage restrictions generally 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, an Underlying Fund's holdings of that security
may be considered to be illiquid.

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

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

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

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

|X| Loans of Portfolio Securities. To raise cash for income or liquidity purposes, some
of the Underlying Funds can lend their portfolio securities to brokers, dealers and other
types of financial institutions approved by the Underlying Funds' Board of Trustees or
Directors. For specific limitations on the Underlying Funds' loans of portfolio securities,
refer to the SAI for the Underlying Fund. In addition, these loans are subject to the other
conditions described in the SAI of the Underlying Fund.

There are some risks in connection with securities lending. An Underlying Fund might
experience a delay in receiving additional collateral to secure a loan, or a delay in
recovery of the loaned securities if the borrower defaults. An 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 or securities of the
U.S. government or its agencies or instrumentalities, or other cash equivalents in which an
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 Underlying 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 may also pay reasonable finder's, custodian 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.

Some of the Underlying Funds may lend their portfolio securities to brokers, dealers
and other financial institutions pursuant to the Securities Lending Agreement (the
"Securities Lending Agreement") with JP Morgan Chase, subject to the restrictions stated in
the prospectuses of these funds. 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 these funds are 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 these funds 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 fund. These funds 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. These funds 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 these funds' loans must also meet applicable tests under the
Internal Revenue Code and permit a fund to reacquire loaned securities on five business
days' notice or in time to vote on any important matter. These funds will lend their
portfolio securities in conformity with each fund's Securities Lending Guidelines, as
adopted by the Fund's Board.

|X| Borrowing for Leverage. The Fund and many of the Underlying Funds have the ability to
borrow from banks, to invest the borrowed funds in portfolio securities. This speculative
technique is known as "leverage." Currently, under the Investment Company Act, absent
exemptive relief, a mutual fund may borrow only from banks and the maximum amount it may
borrow is up to one-third of its total assets (including the amount borrowed) less all
liabilities and indebtedness other than borrowing, 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. If the value of the Fund's or the Underlying Fund's
assets fail to meet the 300% asset coverage requirement, the Fund or the Underlying Fund
will reduce its bank debt within three days to meet the requirement. To do so, the Fund or
the Underlying Fund might have to sell a portion of its investments at a disadvantageous
time.

The Fund or the Underlying Fund will pay interest on its borrowings, and that
interest expense will raise the overall expenses of the Fund or the Underlying 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 or an Underlying Fund's net asset
values per share might fluctuate more than that of funds that do not borrow.

|X| Derivatives. Many Underlying Funds can invest in a variety of derivative investments
to seek income, to seek income for liquidity needs or for hedging purposes. Some derivative
investments the Underlying Funds can use are the hedging instruments described below in
this SAI. Segregated accounts will be maintained for all derivative transactions, to the
extent required by the Investment Company Act. For specific limitations on the Underlying
Funds' investments in derivatives, refer to the SAI for the Underlying Fund.

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

Other derivative investments some of the Underlying Funds 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 Underlying Funds' manager expected.

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

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

|X| Hedging. Many Underlying Funds can use hedging instruments although they may not be
obligated to use them in seeking their objectives. To attempt to protect against declines
in the market value of the Underlying Funds' portfolios, to permit these funds to retain
unrealized gains in the value of portfolio securities which have appreciated, or to
facilitate selling securities for investment reasons, these funds could:
o sell futures contracts,
o buy puts on futures or on securities, or
o write covered calls on securities or futures. Covered calls may also be used to
increase these funds' income.

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

The Underlying Funds may not be obligated to use hedging instruments, even though
they may be permitted to use them in their manager's discretion, as described below. The
Underlying Funds' strategy of hedging with futures and options on futures may be incidental
to these funds' activities in the underlying cash market. The particular hedging
instruments these funds can use are described below. These funds may employ new hedging
instruments and strategies when they are developed, if those investment methods are
consistent with these funds' investment objectives and are permissible under applicable
regulations governing these funds.

|X| Futures. Some of the Underlying Funds can buy and sell futures contracts that relate
to (1) broadly-based bond or other security indices (these are referred to as "financial
futures"); (2) commodity contracts (these are referred to as "commodity futures"); (3) debt
securities (these are referred to as "interest rate futures"); (4) foreign currencies
(these are referred to as "forward contracts"); (5) individual stock (these are referred to
as "single stock futures"); (6) bond indices (these are referred to as "bond index
futures"); and (7) broadly-based stock indices (these are referred to as "stock index
futures"). For specific information on the permitted type of future contract for an
Underlying Fund, refer to the SAI for the Underlying Fund.

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

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

Certain Underlying Funds may invest a portion of their 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. These funds may purchase and sell commodity futures contracts, options on
futures contracts and options and futures on commodity indices with respect to these five
main commodity groups and the individual commodities within each group, as well as other
types of commodities.

No payment is made or received by an Underlying Fund on the purchase or sale of a
future. Upon entering into a futures transaction, an 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 an 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 an 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, an Underlying Fund may elect to close
out its position by taking an opposite position, at which time a final determination of
variation margin is made and any additional cash must be paid by or released to the
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.

|X| Put and Call Options. Some Underlying Funds can buy and sell certain kinds of put
options ("puts") and call options ("calls"). The Underlying Funds 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 in this SAI.

|X| Writing Covered Call Options. Some Underlying Funds can write (that is, sell) covered
calls. If these funds sell a call option, it must be covered. That means these funds must
own the security subject to the call while the call is outstanding, or, for calls on
futures and indices, the call may be covered by identifying liquid assets to enable the
Underlying Fund to satisfy its obligations if the call is exercised. For specific
limitations on the Underlying Funds' investments in covered calls, refer to the SAI for the
Underlying Fund.

When an 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 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 may
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 Funds may also write calls on a futures contract without owning the futures
contract or securities deliverable under the contract. To do so, at the time the call is
written, the Underlying Fund must cover the call by identifying on it books an equivalent
dollar amount of liquid assets. The Underlying Fund will identify additional liquid assets
on its books to cover the call if the value of the identified assets drops below 100% of
the current value of the future. Because of this asset coverage requirement, in no
circumstances would the 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.

|X| Writing Put Options. Some Underlying Funds can sell put options on securities,
broadly-based securities indices, foreign currencies and futures. A put option on
securities gives the purchaser the right to sell, and the writer the obligation to buy, the
underlying investment at the exercise price during the option period. For specific
limitations on the Underlying Funds' investments in put options, refer to the SAI for the
Underlying Fund.

If an 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 an 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.

An Underlying Fund may decide to effect a closing purchase transaction to realize a
profit on an outstanding put option it has written or to prevent the underlying security
from being put. Effecting a closing purchase transaction will also permit the 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.

|X| Purchasing Puts and Calls. Some of the Underlying Funds can purchase calls on
securities, broadly-based securities indices, foreign currencies and futures. They may do
so to protect against the possibility that an Underlying Fund's portfolio will not
participate in an anticipated rise in the securities market. When an 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. For specific
limitations on the Underlying Funds' investments in calls and puts, refer to the SAI for
the Underlying Fund.

An 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.

Some Underlying Funds can buy puts on securities, broadly-based securities indices,
foreign currencies and futures, whether or not they own the underlying investment.
Convertible Securities Fund may buy only those puts that relate to stocks including stocks
underlying the convertible securities that this fund owns. When an 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 an Underlying Fund owns enables this 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 may sell the put prior to its expiration. That
sale may or may not be at a profit.

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

When an 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 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.

|X| Buying and Selling Options on Foreign Currencies. Some of the Underlying Funds 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 Fund wants to acquire.

If their 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 their
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 an 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 identified on its books) upon conversion or
exchange of other foreign currency held in its portfolio.

The Underlying Funds 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 and identifying cash, U.S. government securities or
other liquid, high grade debt securities in an amount equal to the exercise price of the
option.

|X| 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.

An 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.

An 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 an 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.

An Underlying Fund may 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 an Underlying Fund does so the market might decline.
If an 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.

|X| 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. An
Underlying Fund may use them to "lock in" the U.S. dollar price of a security denominated
in a foreign currency that an 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. An Underlying Fund may also use "cross-hedging" where an 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.

An Underlying Fund may use forward contracts to protect against uncertainty in the
level of future exchange rates. The use of forward contracts does not eliminate the risk of
fluctuations in the prices of the underlying securities an 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 an 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 could enter into a forward contract for the purchase or sale of the amount
of foreign currency involved in the underlying transaction, in a fixed amount of U.S.
dollars per unit of the foreign currency. This is called a "transaction hedge." The
transaction hedge will protect the Fund against a loss from an adverse change in the
currency exchange rates during the period between the date on which the security is
purchased or sold or on which the payment is declared, and the date on which the payments
are made or received.

An 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 an 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 an Underlying Fund's portfolio securities denominated in that
foreign currency. When an Underlying Fund believes that the U.S. dollar might suffer a
substantial decline against a foreign currency, it could enter into a forward contract to
buy that foreign currency for a fixed dollar amount. Alternatively, the 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."

An Underlying Fund will cover its short positions in these cases by identifying to
its books assets having a value equal to the aggregate amount of the Underlying Fund's
commitment under forward contracts. An 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, an Underlying Fund may
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, an Underlying
Fund may 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, an Underlying Fund may 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 contract 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
Underlying Funds' 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 an 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 an 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 Funds to sustain losses on these contracts and to pay
additional transactions costs. The use of forward contracts in this manner might reduce the
Underlying Funds' performance if there are unanticipated changes in currency prices to a
greater degree than if the Underlying Funds had not entered into such contracts.

At or before the maturity of a forward contract requiring an 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 Funds 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 Funds must evaluate the credit and performance
risk of the counterparty under each forward contract.

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

|X| Interest Rate Swap Transactions. Some of the Underlying Funds can enter into interest
rate swap agreements. In an interest rate swap, these funds 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. These funds
can enter into swaps only on securities that they own. An Underlying Fund will identify on
its books liquid assets (such as cash or U.S. government securities) to cover any amounts
it could owe under swaps that exceed the amounts it is entitled to receive, and it will
adjust that amount daily, as needed. For specific limitations on the Underlying Funds'
investments in interest rate swap transactions, refer to the SAI for the Underlying Fund.

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 these funds 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, these funds'
loss will consist of the net amount of contractual interest payments that these funds have
not yet received. These funds' manager will monitor the creditworthiness of counterparties
to these funds' interest rate swap transactions on an ongoing basis.

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

|X| Total Return Swap Transactions. Some of the Underlying Funds may enter into total
return swaps. For specific limitations on the Underlying Funds' investments in total return
swaps, refer to the SAI for the Underlying Fund. A swap contract is essentially like a
portfolio of forward contracts, under which one party agrees to exchange an asset (for
example, bushels of wheat) for another asset (cash) at specified dates in the future. A
one-period swap contract operates in a manner similar to a forward or futures contract
because there is an agreement to swap a commodity for cash at only one forward date. The
Underlying Fund may engage in swap transactions that have more than one period and
therefore more than one exchange of assets.

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

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

|X| "Structured" Notes. Some of the Underlying Funds can buy "structured" notes, which
are specially-designed derivative debt investments with principal payments or interest
payments that are linked to the value of an index (such as a currency or securities index)
or commodity. The terms of the instrument may be "structured" by the purchaser (the
Underlying Fund) and the borrower issuing the note.

The principal and/or interest payments depend on the performance of one or more other
securities or indices, and the values of these notes will therefore fall or rise in
response to the changes in the values of the underlying security or index. They are subject
to both credit and interest rate risks and therefore the Underlying Fund could receive more
or less than it originally invested when the notes mature, or it might receive less
interest than the stated coupon payment if the underlying investment or index does not
perform as anticipated. Their values may be very volatile and they may have a limited
trading market, making it difficult for the Underlying Fund to sell its investment at an
acceptable price.

|X| Regulatory Aspects of Hedging Instruments. The Commodities Futures Trading Commission
(the "CFTC") has eliminated limitations on futures trading by certain regulated entities
including registered investment companies and consequently registered investment companies
may engage in unlimited futures transactions and options thereon provided that the Fund
claims an exclusion from regulation as a commodity pool operator. The Underlying Funds have
claimed such an exclusion from registration as a commodity pool operator under the
Commodity Exchange Act ("CEA"). The Underlying Funds may use futures and options for
hedging and non-hedging purposes to the extent consistent with their investment objective,
internal risk management guidelines adopted by the Underlying Fund's investment advisor (as
they may be amended from time to time), and as otherwise set forth in the Underlying Fund's
prospectus or this SAI.

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 may write
or hold may be affected by options written or held by other entities, including other
investment companies having the same advisor as the 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 SEC staff interpretations regarding applicable provisions of the Investment
Company Act, when the Underlying Fund purchases a future, it must segregate cash or readily
marketable short-term debt instruments in an amount equal to the purchase price of the
future, less the margin deposit applicable to it. The account must be a segregated account
or accounts held by the Underlying Fund.

|X| Tax Aspects of Certain Hedging Instruments. Certain foreign currency exchange
contracts in which the Underlying Funds may invest are treated as "Section 1256 contracts"
under the Internal Revenue Code. In general, gains or losses relating to Section 1256
contracts are characterized as 60% long-term and 40% short-term capital gains or losses
under the Code. However, foreign currency gains or losses arising from Section 1256
contracts that are forward contracts generally are treated as ordinary income or loss. In
addition, Section 1256 contracts held by the Underlying Funds 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 Funds to exempt those transactions from this marked-to-market treatment.

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

|X| Temporary Defensive and Interim Investments. When market, economic or political
conditions are unstable, or the Fund or the Underlying Funds' manager believes it is
otherwise appropriate to reduce holdings in stocks, the Fund and the Underlying Funds can
invest in a variety of debt securities for defensive purposes. The Fund and the Underlying
Funds can also purchase these securities for liquidity purposes to meet cash needs due to
the redemption of a Fund or an Underlying Fund, or to hold while waiting to reinvest cash
received from the sale of other portfolio securities. For specific types of securities an
Underlying Fund can buy when assuming a temporary defensive or interim investment position,
refer to the SAI for the Underlying Fund. Examples of temporary defensive and interim
investments the Fund may use, and that some of the Underlying Funds may use, include:
o high-quality (rated in the top two rating categories of nationally-recognized rating
organizations or deemed by the Manager to be of comparable quality),
short-term money market instruments, including those issued by the U. S.
Treasury or other government agencies,
o commercial paper (short-term, unsecured, promissory notes of domestic or foreign
companies),
o short-term debt obligations of corporate issuers,
o certificates of deposit and bankers' acceptances of domestic and foreign banks and
savings and loan associations, and
o repurchase agreements.

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

|X| Real Estate Investment Trusts (REITs). Some of the Underlying Funds can invest in
real estate investment trusts, as well as real estate development companies and operating
companies. They can also buy shares of companies engaged in other real estate businesses.
REITs are trusts that sell shares to investors and use the proceeds to invest in real
estate. A REIT can focus on a particular project, such as a shopping center or apartment
complex, or may buy many properties or properties located in a particular geographic region.

To the extent a REIT focuses on a particular project, sector of the real estate
market or geographic region, its share price will be affected by economic and political
events affecting that project, sector or geographic region. Property values may fall due to
increasing vacancies or declining rents resulting from unanticipated economic, legal,
cultural or technological developments. REIT prices also may drop because of the failure of
borrowers to pay their loans, a dividend cut, a disruption to the real estate investment
sales market, changes in federal or state taxation policies affecting REITs, and poor
management.

|X| 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 Underlying Funds can buy include U. S. Treasury securities that
have been "stripped" by a Federal Reserve Bank, zero-coupon U.S. Treasury securities
described below, and Treasury Inflation-Protection Securities ("TIPS").

|X| Obligations Issued or Guaranteed by U.S. Government Agencies or Instrumentalities.
These include direct obligations and mortgage-related securities that have different levels
of credit support from the government. Some are supported by the full faith and credit of
the U.S. government, such as Government National Mortgage Association pass-through mortgage
certificates (called "Ginnie Maes"). Some are supported by the right of the issuer to
borrow from the U.S. Treasury under certain circumstances, such as Federal National
Mortgage Association bonds. Others are supported only by the credit of the entity that
issued them, such as Federal Home Loan Mortgage Corporation obligations.

|X| Mortgage-Related U.S. Government Securities. These include interests in pools of
residential or commercial mortgages, in the form of CMOs and other "pass-through" mortgage
securities. CMOs that are U.S. government securities have collateral to secure payment of
interest and principal. They may be issued in different series with different interest
rates and maturities. The collateral is either in the form of mortgage pass-through
certificates issued or guaranteed by a U.S. agency or instrumentality or mortgage loans
insured by a U.S. government agency. For specific limitations on the Underlying Funds'
investments in mortgage-related U.S. government securities, refer to the SAI for the
Underlying Fund.

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

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

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

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

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

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

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

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

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

|X| Federal Home Loan Mortgage Corporation (FHLMC) Certificates. FHLMC, a corporate
instrumentality of the United States, issues FHLMC Certificates representing interests in
mortgage loans. FHLMC guarantees to each registered holder of a FHLMC Certificate timely
payment of the amounts representing a holder's proportionate share in:

o interest payments less servicing and guarantee fees,
o principal prepayments, and
o the ultimate collection of amounts representing the holder's proportionate interest
in principal payments on the mortgage loans in the pool represented by the
FHLMC Certificate, in each case whether or not such amounts are actually
received.

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

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

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

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

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

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

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

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

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

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

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

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

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

|X| Collateralized Mortgage Obligations. Collateralized mortgage obligations or CMOs, are
multi-class bonds that are backed by pools of mortgage loans or mortgage pass-through
certificates. They may be collateralized by:

o pass-through certificates issued or guaranteed by Government National Mortgage
Association (Ginnie Mae), Federal National Mortgage Association (Fannie Mae),
or Federal Home Loan Mortgage Corporation (Freddie Mac),
o unsecuritized mortgage loans insured by the Federal Housing Administration or
guaranteed by the Department of Veterans' Affairs,
o unsecuritized conventional mortgages,
o other mortgage-related securities, or
o any combination of these.

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

|X| Participation Interests. Some of the Underlying Funds can invest in participation
interests, subject to the Underlying Fund's limitation on investments in illiquid
investments. A participation interest is an undivided interest in a loan made by the
issuing financial institution in the proportion that the buyer's participation interest
bears to the total principal amount of the loan. The issuing financial institution may have
no obligation to this fund other than to pay this fund the proportionate amount of the
principal and interest payments it receives. For specific limitations on the Underlying
Funds' investments in participation interests, refer to the SAI for the Underlying Fund.

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

|X| Bank Obligations and Securities That Are Secured By Them. Some of the Underlying
Funds can invest in bank obligations, including time deposits, certificates of deposit, and
bankers' acceptances. They must be either obligations of a domestic bank with total assets
of at least $1 billion or obligations of a foreign bank with total assets of at least U.S.
$1 billion. These Underlying Funds may also invest in instruments secured by bank
obligations (for example, debt which is guaranteed by the bank). For purposes of this
policy, the term "bank" includes commercial banks, savings banks, and savings and loan
associations that may or may not be members of the Federal Deposit Insurance Corporation.

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

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

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

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

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

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

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

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

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

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

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

|X| "When-Issued" and "Delayed-Delivery" Transactions. Some of the Underlying Funds may
invest in securities on a "when-issued" basis and may purchase or sell securities on a
"delayed-delivery" basis. When-issued and delayed-delivery are terms that refer to
securities whose terms and indenture are available and for which a market exists, but which
are not available for immediate delivery. For specific limitations on the Underlying Funds'
investments in "when-issued" and "delayed-delivery" transactions, refer to the SAI for the
Underlying Fund.

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 an Underlying Fund. During the period between purchase and settlement,
no payment is made by an Underlying Fund to the issuer and no interest accrues to the
Underlying Fund from the investment until it receives the security at settlement. There is
a risk of loss to the Underlying Fund if the value of the security changes prior to the
settlement date, and there is the risk that the other party may not perform.

Some of the Underlying Funds may engage in when-issued transactions to secure what
the Manager considers to be an advantageous price and yield at the time the obligation is
entered into. When an 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 an Underlying Fund to lose the opportunity to obtain the security at a price and
yield its manager considers to be advantageous.

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

When-issued and delayed-delivery transactions can be used by an 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, an 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, an 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.

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

|X| Money Market Instruments. Some of the Underlying Funds can invest in a variety of
high quality money market instruments and short-term debt obligations, both under normal
market conditions and for defensive purposes. The following is a brief description of the
types of money market securities and short-term debt obligations the Underlying Funds can
invest in. Those money market securities are high-quality, short-term debt instruments that
are issued by the U.S. government, corporations, banks or other entities. They may have
fixed, variable or floating interest rates.

|X| Bank Obligations. Some of the Underlying Funds can buy time deposits, certificates of
deposit and bankers' acceptances. They must be:
o obligations issued or guaranteed by a domestic bank or foreign bank
(including a foreign branch of a domestic bank) having total assets of at
least U.S. $1 billion,
o banker's acceptances (which may or may not be supported by letters of credit) only if
guaranteed by a U.S. commercial bank with total assets of at least U.S. $1
billion.

Some of the Underlying Funds can make time deposits. These are non-negotiable
deposits in a bank for a specified period of time. They may be subject to early withdrawal
penalties. Time deposits that are subject to early withdrawal penalties are subject to the
Fund's limits on illiquid investments, as described below. "Banks" include commercial
banks, savings banks and savings and loan associations.

|X| Commercial Paper. Some of the Underlying Funds can invest in commercial paper if it
is rated within the top two or three rating categories of S&P and Moody's or other rating
organizations. If the paper is not rated, it may be purchased if the Underlying Fund's
manager determines that it is comparable to rated commercial paper in the top two or three
rating categories of national rating organizations.

Some of the Underlying Funds 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
an Underlying Fund.

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

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

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

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 not a fundamental policy and the investment objectives
of the Underlying Funds may be fundamental or non-fundamental, according to the
Prospectuses and Statements of Additional Information of these funds. Other policies
described in the Prospectus or this SAI are "fundamental" only if they are identified as
such. The Fund's Board of Trustees and the Underlying Funds' Boards of Trustees/Directors
can change non-fundamental policies without shareholder approval. However, significant
changes to investment policies will be described in supplements or updates to the
Prospectus or this SAI, as appropriate. The Fund's principal investment policies are
described in the Prospectus.

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

o The Fund may not borrow money, except to the extent permitted under the Investment
Company Act, the rules or regulations thereunder or any exemption therefrom that is
applicable to the Fund, as such statute, rules or regulations may be amended or
interpreted from time to time.
o The Fund cannot invest 25% or more of its total assets in any one industry. That
limit does not apply to securities issued or guaranteed by the U.S. government or its
agencies and instrumentalities or securities issued by investment companies.
o The Fund cannot buy securities or other instruments issued or guaranteed by any one
issuer if more than 5% of its total assets would be invested in securities or other
instruments of that issuer or if it would then own more than 10% of that issuer's
voting securities. This limitation applies to 75% of the Fund's total assets. The
limit does not apply to securities issued or guaranteed by the U.S. government or any
of its agencies or instrumentalities or securities of other investment companies.
o The Fund cannot make loans, except to the extent permitted under the Investment
Company Act, the rules or regulations thereunder or any exemption therefrom that is
applicable to the Fund, as such statute, rules or regulations may be amended or
interpreted from time to time.
o The Fund cannot invest in real estate, physical commodities or commodity contracts,
except to the extent permitted under the Investment Company Act, the rules or
regulations thereunder or any exemption therefrom, as such statute, rules or
regulations may be amended or interpreted from time to time.
o The Fund cannot issue senior securities, except to the extent permitted under the
Investment Company Act, the rules or regulations thereunder or any exemption
therefrom, as such statute, rules or regulations may be amended or interpreted from
time to time.
o The Fund may not underwrite securities issued by others, except to the extent that a
Fund may be considered an underwriter within the meaning of the Securities Act of
1933, as amended, when reselling securities held in its own portfolio.

Certain of the above restrictions apply to the Fund only to the extent required by the
Investment Company Act, the rules or regulations thereunder or any exemption therefrom. If
the applicable provisions of the Investment Company Act, the rules or regulations or any
exemption should change, those restrictions will automatically change to reflect the new
requirements. Therefore those fundamental policies may be changed without notice and
without a shareholder vote.

Presently, under the Investment Company Act a registered mutual fund cannot make any
commitment as an underwriter, if immediately thereafter the amount of its outstanding
underwriting commitments, plus the value of its investments in securities of issuers (other
than investment companies) of which it owns more than ten percent of the outstanding voting
securities, exceeds twenty-five percent of the value of its total assets.

Do the Underlying Funds Have Additional Fundamental Policies? Each of the Underlying Funds
has its own fundamental policies. Those policies may differ from the policies of the Fund
or the other Underlying Funds. The Fund and the Underlying Funds each apply their own
policies with respect to their own portfolio investments. The following investment
restrictions are fundamental policies of the Underlying Funds indicated below.

Developing Markets Fund

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

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

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

o Developing Markets Fund cannot invest in real estate, physical commodities, or
commodity contracts, except to the extent permitted under the Investment Company Act, the
rules or regulations thereunder or any exemption therefrom, as such statute, rules or
regulations may be amended or interpreted from time to time.

o Developing Markets Fund cannot issue senior securities, except to the extent
permitted under the Investment Company Act, the rules or regulations thereunder or any
exemption therefrom, as such statute, rules or regulations may be amended or interpreted
from time to time.

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

Global Opportunities Fund

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

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

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

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

o Global Opportunities Fund cannot invest in real estate, physical commodities or
commodity contracts, except to the extent permitted under the Investment Company Act, the
rules or regulations thereunder or any exception therefrom, as such statute, rules or
regulations may be amended or interpreted from time to time.

o Global Opportunities 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 Global Opportunities Fund cannot issue senior securities, except to the extent
permitted under the Investment Company Act, the rules or regulations thereunder or any
exemption therefrom, as such statute, rules or regulations may be amended or interpreted
from time to time.

International Bond Fund

o International Bond 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 inter-fund lending program with other affiliated funds, and (d) through
repurchase agreements.

o International Bond Fund cannot buy or sell real estate. However, International Bond
Fund can purchase debt securities secured by real estate or interests in real estate or
issued by companies, including real estate investment trusts, which invest in real estate
or interests in real estate.

o International Bond 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 International Bond Fund cannot issue senior securities, but this does not prohibit
certain investment activities for which assets of International Bond 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 International Bond Fund cannot borrow money in excess of 33 1/3% of the value of its
total assets. International Bond Fund may borrow only from banks and/or affiliated
investment companies. International Bond Fund cannot make any investment at a time during
which its borrowings exceed 5% of the value of its total assets. With respect to this
fundamental policy, International Bond 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 International Bond Fund cannot concentrate investments. That means it cannot invest
25% or more of its total assets in any one industry. International Bond Fund will not
invest 25% or more of its total assets in government securities of any one foreign company
or in debt and equity securities issued by companies organized under the laws of any one
foreign country. Obligations of the U.S. government, its agencies and instrumentalities are
not considered to be part of an "industry" for the purposes of this policy.

Non-Diversification of International Bond Fund's Investments. International Bond Fund is
"non-diversified," as defined in the Investment Company Act. Funds that are diversified
have restrictions against investing too much of their assets in the securities of any one
"issuer." That means that this fund can invest more of its assets in the securities of a
single issuer than a fund that is diversified.

Being non-diversified poses additional investment risks, because if International
Bond Fund invests more of its assets in fewer issuers, the value of its shares is subject
to greater fluctuations from adverse conditions affecting any one of those issuers.
However, International Bond Fund does limit its investments in the securities of any one
issuer to qualify for tax purposes as a "regulated investment company" under the Internal
Revenue Code. By qualifying, it does not have to pay federal income taxes on amounts
distributed if more than 90% of its earnings are distributed to shareholders. To qualify,
International Bond Fund must meet a number of conditions. First, not more than 25% of the
market value of International Bond Fund's total assets may be invested in the securities of
a single issuer. Second, with respect to 50% of the market value of its total assets, (1)
no more than 5% of the market value of its total assets may be invested in the securities
of a single issuer, and (2) International Bond Fund must not own more than 10% of the
outstanding voting securities of a single issuer. This is not a fundamental policy.

International Growth Fund

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

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

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

o International Growth Fund cannot invest in real estate, physical commodities or
commodity contracts, except to the extent permitted under the Investment Company Act, the
rules or regulations thereunder or any exception there from, as such statute, rules or
regulations may be amended or interpreted from time to time.

o International Growth Fund cannot issue senior securities. This restriction does not
prevent the Fund from borrowing money for investment or emergency purposes, or from
entering into margin, collateral or escrow arrangements permitted by its other investment
policies.

o International Growth 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.

International Small Company Fund

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

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

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

o International Small Company Fund cannot invest in real estate, physical commodities
or commodity contracts, except to the extent permitted under the Investment Company Act,
the rules or regulations thereunder or any exception therefrom, as such statute, rules or
regulations may be amended or interpreted from time to time.

o International Small Company Fund cannot issue senior securities, except to the extent
permitted under the Investment Company Act, the rules or regulations thereunder or any
exemption therefrom, as such statute, rules or regulations may be amended or interpreted
from time to time.

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

International Value Fund

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

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

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

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

o International Value Fund cannot invest in real estate, physical commodities or
commodity contracts, except to the extent permitted under the Investment Company Act, the
rules or regulations thereunder or any exemption therefrom, as such statute, rules or
regulations may be amended or interpreted from time to time

o International Value 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 International Value Fund cannot issue senior securities, except to the extent
permitted under the Investment Company Act, the rules or regulations thereunder or any
exemption therefrom, as such statute, rules or regulations may be amended or interpreted
from time to time.

Quest International Value Fund

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

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

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

o Quest International Value Fund cannot underwrite securities issued by others, except
to the extent that a Fund may be considered an underwriter within the meaning of the
Securities Act of 1933, as amended, when reselling securities held in its own portfolio.

o Quest International Value Fund cannot invest in real estate,
physical commodities or commodity contracts, except to the extent permitted under the
Investment Company Act, the rules or regulations thereunder or any exemption therefrom, as
such statute, rules or regulations may be amended or interpreted from time to time.

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

o Quest International Value Fund cannot issue senior securities, except to the extent
permitted under the Investment Company Act, the rules or regulations thereunder or any
exemption therefrom, as such statute, rules or regulations may be amended or interpreted
from time to time.

Do The Underlying Funds Have Any Restrictions That Are Not Fundamental? Each of
theUnderlying Funds has its own investment restrictions that are not fundamental policies,
which means that they can be changed by vote of a majority of each respective Underlying
Fund's Board of Trustees without shareholder approval. Those policies may differ from the
policies of the Funds or the other Underlying Funds. The Funds and the Underlying Funds
each apply their own policies with respect to their own portfolio investments. The
following investment restrictions are non-fundamental policies of the Underlying Funds as
indicated below.

o For purposes of each applicable Underlying Fund's policy not to concentrate its
investments as described above, each applicable Underlying Fund has adopted
classifications of industries and groups of related industries. These classifications
are not fundamental policies.

o Oppenheimer Developing Markets Fund, Oppenheimer International Growth Fund,
Oppenheimer International Bond Fund, Oppenheimer Global Opportunities Fund and
Oppenheimer International Value Fund cannot invest in the securities of other
registered investment companies or registered unit investment trusts in reliance on
sub-paragraph (F) or (G) of section 12(d)(1) of the Investment Company Act.

o Oppenheimer International Small Company Fund and Oppenheimer Developing Markets Fund
cannot invest in companies for the purpose of acquiring control or management of them.

o Oppenheimer International Small Company Fund and Oppenheimer Developing Markets Fund
cannot invest in or hold securities of any issuer if officers and Trustees of the
Fund or the Manager individually beneficially own more than1/2of 1% of the securities
of that issuer and together own more than 5% of the securities of that issuer.

o Oppenheimer International Small Company Fund and Oppenheimer Developing Markets Fund
cannot pledge any of its assets. However, this does not prohibit the escrow
arrangements contemplated by the writing of covered call options or other collateral
or margin arrangements in connections with any of the hedging instruments permitted
by any of its other investment policies.

o Oppenheimer International Small Company Fund and Oppenheimer Developing Markets Fund
cannot purchase securities on margin. However, the Fund may make margin deposits in
connection with any of the hedging instruments permitted by any of its other
investment policies. Oppenheimer International Value Fund, Inc. cannot purchase
securities on margin (except for short-term loans that are necessary for the
clearance of purchases of portfolio securities) or make short sales. Collateral
arrangements in connection with transactions in futures and options are not deemed to
be margin transactions.

o Oppenheimer International Value Fund, Inc. cannot invest in oil, gas or other mineral
exploration or development programs.

o Oppenheimer International Value Fund, Inc. cannot invest in real estate limited
partnership programs.

o Oppenheimer International Value Fund, Inc. cannot invest more than 5% of its assets
in unseasoned issuers.

o Oppenheimer International Value Fund, Inc. cannot purchase warrants if more than 5%
of its total assets would be invested in warrants.

o Oppenheimer Global Opportunities Fund cannot sell securities short except in short
sales "against-the-box." However, the Fund does not engage in this type of
transaction at all because of changes in applicable tax laws.

o Oppenheimer International Growth Fund cannot sell securities short except in
collateralized transactions. In those cases the Fund must own an equivalent amount of
the securities sold short. Not more than 15% of the Fund's net assets may be held as
collateral for short sales at any time. The Fund does not expect to engage in this
type of transaction as part of its normal portfolio management techniques.

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

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 report to shareholders, its annual report to shareholders, or its
Statements of Investments on Form N-Q. Those documents are publicly available
at the SEC. In addition, the top 20 month-end holdings may be posted on the
OppenheimerFunds' website at www.oppenheimerfunds.com (select the Fund's name
under the "View Fund Information for:" menu) with a 15-day lag. The Fund may
release a more restrictive list of holdings (e.g., the top five or top 10
portfolio holdings) or may release no holdings if that is in the best interests
of the Fund and its shareholders. Other general information about the Fund's
portfolio investments, such as portfolio composition by asset class, industry,
country, currency, credit rating or maturity, may also be posted.

Until publicly disclosed, the Fund's portfolio holdings are proprietary, confidential
business information. While recognizing the importance of providing 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 the portfolio manager is trading on the Fund's behalf.

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

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

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

o The third-party recipient must first submit a request for release of a Fund's or
Underlying Funds' holdings, explaining the business reason for the request;
o Senior officers (a Senior Vice President or above) in the Managers' Portfolio and
Legal departments must approve the completed request for release of a Fund's or
Underlying Funds' 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 or Underlying Funds' 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 Investment Advisor 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, Financial Industry
Regulatory Authority ("FINRA"), state securities regulators, and/or foreign
securities authorities, including without limitation requests for information in
inspections or for position reporting purposes),
o To potential sub-advisers of portfolios (pursuant to confidentiality agreements),
o To consultants for retirement plans for plan sponsors/discussions at due diligence
meetings (pursuant to confidentiality agreements),
o Investment bankers in connection with merger discussions (pursuant to confidentiality
agreements).

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

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

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

The Chief Compliance Officer (the "CCO") of the Fund and the Manager, Distributor, and
Transfer Agent shall oversee the compliance by the Manager, 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 and shall make recommendations to the
Board as to any amendments that the CCO believes are necessary and desirable to carry out
or improve these policies and procedures.

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

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

How the Fund is Managed

Organization and History. The Fund is an open-end, diversified management investment
company with an unlimited number of authorized shares of beneficial interest. The Fund was
organized as a Massachusetts business trust in June 2005.

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

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

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

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

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

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

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

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

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

The Board of Trustees has an Audit Committee, a Regulatory & Oversight Committee, and
a Governance Committee. Each committee is comprised solely of Independent Trustees who are
not "interested persons" under the Investment Company Act (the "Independent Trustees").
The members of the Audit Committee are David K. Downes (Chairman), Mary F. Miller, Joel W.
Motley, Russell S. Reynolds, Jr., Joseph M. Wikler and Peter I. Wold. The Audit Committee
held 5 meetings during the Fund's fiscal year ended April 30, 2007. The Audit Committee
furnishes the Board with recommendations regarding the selection of the Fund's independent
registered public accounting firm (also referred to as the "independent Auditors"). Other
main functions of the Audit Committee, outlined in the Audit Committee Charter, include,
but are not limited to: (i) reviewing the scope and results of financial statement audits
and the audit fees charged; (ii) reviewing reports from the Fund's independent Auditors
regarding the Fund's internal accounting procedures and controls; (iii) reviewing reports
from the Manager's Internal Audit Department; (iv) maintaining a separate line of
communication between the Fund's independent Auditors and the Independent Trustees;
(v) reviewing the independence of the Fund's independent Auditors; and (vi) pre-approving
the provision of any audit or non-audit services by the Fund's independent Auditors,
including tax services, that are not prohibited by the Sarbanes-Oxley Act, to the Fund, the
Manager and certain affiliates of the Manager.

The members of the Regulatory & Oversight Committee are Robert G. Galli (Chairman),
David K. Downes, Matthew P. Fink, Phillip A. Griffiths, Joel W. Motley and Joseph M.
Wikler. The Regulatory & Oversight Committee held 5 meetings during the Fund's fiscal year
ended April 30, 2007. The Regulatory & Oversight Committee evaluates and reports to the
Board on the Fund's contractual arrangements, including the Investment Advisory and
Distribution Agreements, transfer agency and shareholder service agreements and custodian
agreements as well as the policies and procedures adopted by the Fund to comply with the
Investment Company Act and other applicable law, among other duties as set forth in the
Regulatory & Oversight Committee's Charter.

The members of the Governance Committee are Phillip A. Griffiths (Chairman), Matthew
P. Fink, Robert G. Galli, Mary F. Miller, Russell S. Reynolds, Jr. and Peter I. Wold. The
Governance Committee held 8 meetings during the Fund's fiscal year ended April 30, 2007.
The Governance Committee reviews the Fund's governance guidelines, provides the Board with
recommendations for voting portfolio securities held by the Funds, and monitors the Fund's
proxy voting, among other duties set forth in the Governance Committee's Charter.

The Governance Committee's functions also include the selection and nomination of
Trustee, including Independent Trustees for election. The Governance Committee may, but
need not, consider the advice and recommendation of the Manager and its affiliates in
selecting nominees. The full Board elects new Trustees except for those instances when a
shareholder vote is required.

To date, the Governance Committee has been able to identify from its own resources an
ample number of qualified candidates. Nonetheless, under the current policy of the Board,
if the Board determines that a vacancy exists or is likely to exist on the Board, the
Governance Committee will consider candidates for Board membership including those
recommended by the Fund's shareholders. The Governance Committee will consider nominees
recommended by Independent Board members or recommended by any other Board members
including Board members affiliated with the Manager. The Governance Committee may, upon
Board approval, retain an executive search firm to assist in screening potential
candidates. Upon Board approval, the Governance Committee may also use the services of
legal, financial, or other external counsel that it deems necessary or desirable in the
screening process. Shareholders wishing to submit a nominee for election to the Board may
do so by mailing their submission to the offices of OppenheimerFunds, Inc., Two World
Financial Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008, to the
attention of the Board of Trustees of Oppenheimer International Diversified Fund, c/o the
Secretary of the Fund.

Submissions should, at a minimum, be accompanied by the following: (1) the name,
address, and business, educational, and/or other pertinent background of the person being
recommended; (2) a statement concerning whether the person is an "interested person" as
defined in the Investment Company Act; (3) any other information that the Fund would be
required to include in a proxy statement concerning the person if he or she was nominated;
and (4) the name and address of the person submitting the recommendation and, if that
person is a shareholder, the period for which that person held Fund shares. Shareholders
should note that a person who owns securities issued by Massachusetts Mutual Life Insurance
Company (the parent company of the Manager) would be deemed an "interested person" under
the Investment Company Act. In addition, certain other relationships with Massachusetts
Mutual Life Insurance Company or its subsidiaries, with registered broker-dealers, or with
the Funds' outside legal counsel may cause a person to be deemed an "interested person."

The Governance Committee has not established specific qualifications that it believes
must be met by a trustee nominee. In evaluating trustee nominees, the Governance Committee
considers, among other things, an individual's background, skills, and experience; whether
the individual is an "interested person" as defined in the Investment Company Act; and
whether the individual would be deemed an "audit committee financial expert" within the
meaning of applicable SEC rules. The Governance Committee also considers whether the
individual's background, skills, and experience will complement the background, skills, and
experience of other Trustees and will contribute to the Board. There are no differences in
the manner in which the Governance Committee evaluates nominees for trustees based on
whether the nominee is recommended by a shareholder. Candidates are expected to provide a
mix of attributes, experience, perspective and skills necessary to effectively advance the
interests of shareholders.

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

Oppenheimer AMT-Free Municipals Oppenheimer Money Market Fund, Inc.
Oppenheimer AMT-Free New York Municipals Oppenheimer Multi-State Municipal Trust
Oppenheimer Absolute Return Fund Oppenheimer Portfolio Series
Oppenheimer Balanced Fund Oppenheimer Real Estate Fund
Oppenheimer Rochester Arizona Municipal
Oppenheimer Baring China Fund Fund
Oppenheimer Rochester Maryland
Oppenheimer Baring Japan Fund Municipal Fund
Oppenheimer Rochester Massachusetts
Oppenheimer Baring SMA International Fund Municipal Fund
Oppenheimer Rochester Michigan
Oppenheimer California Municipal Fund Municipal Fund
Oppenheimer Rochester Minnesota
Oppenheimer Capital Appreciation Fund Municipal Fund
Oppenheimer Rochester North Carolina
Oppenheimer Developing Markets Fund Municipal Fund
Oppenheimer Rochester Ohio Municipal
Oppenheimer Discovery Fund Fund
Oppenheimer Rochester Virginia
Oppenheimer Dividend Growth Fund Municipal Fund
Oppenheimer Emerging Growth Fund Oppenheimer Select Value Fund
Oppenheimer Emerging Technologies Fund Oppenheimer Series Fund, Inc.
Oppenheimer Enterprise Fund Oppenheimer SMA Core Bond Fund
Oppenheimer Global Fund Oppenheimer SMA International Bond Fund
Oppenheimer Global Opportunities Fund Oppenheimer Transition 2010 Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Transition 2015 Fund
Oppenheimer Growth Fund Oppenheimer Transition 2020 Fund
Oppenheimer International Diversified Fund Oppenheimer Transition 2030 Fund
Oppenheimer International Growth Fund OFI Tremont Core Strategies Hedge Fund
Oppenheimer International Small Company
Fund OFI Tremont Market Neutral Hedge Fund
Oppenheimer Tremont Market Neutral Fund
Oppenheimer International Value Fund LLC
Oppenheimer Institutional Money Market
Fund Oppenheimer Tremont Opportunity Fund LLC
Oppenheimer Limited Term California
Municipal Fund Oppenheimer U.S. Government Trust

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

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

Messrs. Evans, Gillespie, Murphy, Petersen, Szilagyi, Vandehey, Wixted and Zack and
Mss. Bloomberg and Ives, who are officers of the Fund, hold the same offices with one or
more of the other Board I Funds. As of August 3, 2007 the Trustees and officers of the
Fund, as a group, owned of record or beneficially less than 1% of any class of shares of
the Fund. The foregoing statement does not reflect ownership of shares held of record by an
employee benefit plan for employees of the Manager, other than the shares beneficially
owned under that plan by the officers of the Fund listed above. In addition, none of the
Independent Trustees (nor any of their immediate family members) own securities of either
the Manager or the Distributor of the Board I Funds or of any entity directly or indirectly
controlling, controlled by or under common control with the Manager or the Distributor.

Biographical Information. The Trustees and officers, their positions with the Fund,
length of service in such position(s) and principal occupations and business affiliations
during at least the past five years are listed in the charts below. The charts also
include information about each Trustee's beneficial share ownership in the Fund and in all
of the registered investment companies that each 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, Principal Occupation(s) During the Dollar Aggregate
Dollar
Range Of
Range of Shares
Position(s) Held Past 5 Years; Other Shares Beneficially
with the Fund, Trusteeships/Directorships Held; BeneficiallOwned in
Length of Number of Portfolios in the Fund Owned in Supervised
Service, Age Complex Currently Overseen the Fund Funds
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
As of December 31,
2006
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian F. Wruble, General Partner of Odyssey Partners, None Over
Chairman of the L.P. (hedge fund) (since September $100,000
Board of 1995); Director of Special Value
Trustees since Opportunities Fund, LLC (registered
2007, investment company) (since September
Trustee since 2004); Member of Zurich Financial
2005 Investment Advisory Board (insurance)
Age: 64 (since October 2004); Board of
Governing Trustees of The Jackson
Laboratory (non-profit) (since August
1990); Trustee of the Institute for
Advanced Study (non-profit educational
institute) (since May 1992); Special
Limited Partner of Odyssey Investment
Partners, LLC (private equity
investment) (January 1999-September
2004); Trustee of Research Foundation
of AIMR (investment research,
non-profit) (2000-2002); Governor,
Jerome Levy Economics Institute of
Bard College (economics research)
(August 1990-September 2001); Director
of Ray & Berendtson, Inc. (executive
search firm) (May 2000-April 2002).
Oversees 65 portfolios in the
OppenheimerFunds complex.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David K. Downes, President, Chief Executive Officer and None None
Trustee since Board Member of CRAFund Advisors, Inc.
2007 (investment management company) (since
Age: 67 January 2004); President of The
Community Reinvestment Act Qualified
Investment Fund (investment management
company) (since January 2004);
Independent Chairman of the Board of
Trustees of Quaker Investment Trust
(registered investment company) (since
January 2004); Director of Internet
Capital Group (information technology
company) (since October 2003); Chief
Operating Officer and Chief Financial
Officer of Lincoln National Investment
Companies, Inc. (subsidiary of Lincoln
National Corporation, a publicly
traded company) and Delaware
Investments U.S., Inc. (investment
management subsidiary of Lincoln
National Corporation) (1993-2003);
President, Chief Executive Officer and
Trustee of Delaware Investment Family
of Funds (1993-2003); President and
Board Member of Lincoln National
Convertible Securities Funds, Inc. and
the Lincoln National Income Funds, TDC
(1993-2003); Chairman and Chief
Executive Officer of Retirement
Financial Services, Inc. (registered
transfer agent and investment adviser
and subsidiary of Delaware Investments
U.S., Inc.) (1993-2003); President and
Chief Executive Officer of Delaware
Service Company, Inc. (1995-2003);
Chief Administrative Officer, Chief
Financial Officer, Vice Chairman and
Director of Equitable Capital
Management Corporation (investment
subsidiary of Equitable Life Assurance
Society) (1985-1992); Corporate
Controller of Merrill Lynch & Company
(financial services holding company)
(1977-1985); held the following
positions at the Colonial Penn Group,
Inc. (insurance company): Corporate
Budget Director (1974-1977), Assistant
Treasurer (1972-1974) and Director of
Corporate Taxes (1969-1972); held the
following positions at Price
Waterhouse & Company (financial
services firm): Tax Manager
(1967-1969), Tax Senior (1965-1967)
and Staff Accountant (1963-1965);
United States Marine Corps
(1957-1959). Oversees 65 portfolios in
the OppenheimerFunds complex.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Matthew P. Fink, Trustee of the Committee for Economic None Over
Trustee since Development (policy research $100,000
2005 foundation) (since 2005); Director of
Age: 66 ICI Education Foundation (education
foundation) (October 1991-August
2006); President of the Investment
Company Institute (trade association)
(October 1991-June 2004); Director of
ICI Mutual Insurance Company
(insurance company) (October 1991-June
2004). Oversees 55 portfolios in the
OppenheimerFunds complex.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert G. Galli, A trustee or director of other None Over
Trustee since Oppenheimer funds. Oversees 65 $100,000
2005 portfolios in the OppenheimerFunds
Age: 73 complex.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Phillip A. Distinguished Presidential Fellow for None None
Griffiths, International Affairs (since 2002) and
Trustee since Member (since 1979) of the National
2005 Academy of Sciences; Council on
Age: 68 Foreign Relations (since 2002);
Director of GSI Lumonics Inc.
(precision medical equipment supplier)
(since 2001); Senior Advisor of The
Andrew W. Mellon Foundation (since
2001); Chair of Science Initiative
Group (since 1999); Member of the
American Philosophical Society (since
1996); Trustee of Woodward Academy
(since 1983); Foreign Associate of
Third World Academy of Sciences;
Director of the Institute for Advanced
Study (1991-2004); Director of Bankers
Trust New York Corporation
(1994-1999). Provost at Duke
University (1983-1991). Oversees 55
portfolios in the OppenheimerFunds
complex.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mary F. Miller, Trustee of the American Symphony None Over
Trustee since Orchestra (not-for-profit) (since $100,000
2005 October 1998); and Senior Vice
Age: 64 President and General Auditor of
American Express Company (financial
services company) (July 1998-February
2003). Oversees 55 portfolios in the
OppenheimerFunds complex.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Joel W. Motley, Managing Director of Public Capital None Over
Trustee since Advisors, LLC (privately held $100,000
2005 financial adviser) (since January
Age: 55 2006). Director of Columbia Equity
Financial Corp. (privately-held
financial adviser) (since 2002);
Managing Director of Carmona Motley,
Inc. (privately-held financial
adviser) (since January 2002);
Managing Director of Carmona Motley
Hoffman Inc. (privately-held financial
adviser) (January 1998-December 2001);
Member of the Finance and Budget
Committee of the Council on Foreign
Relations, Member of the Investment
Committee of the Episcopal Church of
America, Member of the Investment
Committee and Board of Human Rights
Watch and Member of the Investment
Committee of Historic Hudson Valley.
Oversees 55 portfolios in the
OppenheimerFunds complex.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Russell S. Chairman of RSR Partners (formerly None Over
Reynolds, Jr., "The Directorship Search Group, Inc.") $100,000
Trustee since (corporate governance consulting and
2005 executive recruiting) (since 1993);
Age: 75 Life Trustee of International House
(non-profit educational organization);
Former Trustee of The Historical
Society of the Town of Greenwich;
Former Director of Greenwich Hospital
Association. Oversees 55 portfolios in
the OppenheimerFunds complex.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Joseph M. Wikler, Director of the following medical None Over
Trustee since device companies: Medintec (since $100,000
2005 1992) and Cathco (since 1996);
Age: 66 Director of Lakes Environmental
Association (since 1996); Member of
the Investment Committee of the
Associated Jewish Charities of
Baltimore (since 1994); Director of
Fortis/Hartford mutual funds
(1994-December 2001). Oversees 55
portfolios in the OppenheimerFunds
complex.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Peter I. Wold, President of Wold Oil Properties, Inc. None Over
Trustee since (oil and gas exploration and $100,000
2005 production company) (since 1994); Vice
Age: 59 President, Secretary and Treasurer of
Wold Trona Company, Inc. (soda ash
processing and production) (since
1996); Vice President of Wold Talc
Company, Inc. (talc mining) (since
1999); Managing Member of
Hole-in-the-Wall Ranch (cattle
ranching) (since 1979); Vice
President, Secretary and Treasurer of
Wold Trona Company, Inc. (soda ash
processing and production)
(1996-2006); Director and Chairman of
the Denver Branch of the Federal
Reserve Bank of Kansas City
(1993-1999); and Director of
PacifiCorp. (electric utility)
(1995-1999). Oversees 55 portfolios in
the OppenheimerFunds complex.
---------------------------------------------------------------------------------

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

---------------------------------------------------------------------------------
Interested Trustee and Officer
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Name, Principal Occupation(s) During the Dollar Aggregate
Dollar
Range Of
Range of Shares
Position(s) Held Past 5 Years; Other Shares Beneficially
with Fund, Trusteeships/Directorships Held; BeneficiallOwned in
Length of Number of Portfolios in the Fund Owned in Supervised
Service, Age Complex Currently Overseen the Fund Funds
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
As of December 31,
2006
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
John V. Murphy, Chairman, Chief Executive Officer and None Over
Trustee since Director of the Manager since June $100,000
2005 and 2001; President of the Manager
President and (September 2000-March 2007); President
Principal and a director or trustee of other
Executive Oppenheimer funds; President and
Officer since Director of Oppenheimer Acquisition
2005 Corp. ("OAC") (the Manager's parent
Age: 58 holding company) and of Oppenheimer
Partnership Holdings, Inc. (holding
company subsidiary of the Manager)
(since July 2001); Director of
OppenheimerFunds Distributor, Inc.
(subsidiary of the Manager) (since
November 2001); Chairman and Director
of Shareholder Services, Inc. and of
Shareholder Financial Services, Inc.
(transfer agent subsidiaries of the
Manager) (since July 2001); President
and Director of OppenheimerFunds
Legacy Program (charitable trust
program established by the Manager)
(since July 2001); Director of the
following investment advisory
subsidiaries of the Manager: OFI
Institutional Asset Management, Inc.,
Centennial Asset Management
Corporation, Trinity Investment
Management Corporation and Tremont
Capital Management, Inc. (since
November 2001), HarbourView Asset
Management Corporation and OFI Private
Investments, Inc. (since July 2001);
President (since November 1, 2001) and
Director (since July 2001) of
Oppenheimer Real Asset Management,
Inc.; Executive Vice President of
Massachusetts Mutual Life Insurance
Company (OAC's parent company) (since
February 1997); Director of DLB
Acquisition Corporation (holding
company parent of Babson Capital
Management LLC) (since June 1995);
Member of the Investment Company
Institute's Board of Governors (since
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 102
portfolios in the OppenheimerFunds
complex.
---------------------------------------------------------------------------------

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

---------------------------------------------------------------------------------
Other Officers of the Fund
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Name, Position(s) Held Principal Occupation(s) During Past 5 Years
with Fund, Length of
Service, Age
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
George Evans, Vice President (since October 1993) and Director of
Vice President and International Equities (since July 2004) of the
Portfolio Manager Manager. Formerly Vice President of HarbourView Asset
since 2005 Management Corporation (July 1994-November 2001); an
Age: 47 officer of 3 portfolios in the OppenheimerFunds complex.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mark S. Vandehey, Senior Vice President and Chief Compliance Officer of
Vice President and the Manager (since March 2004); Vice President of
Chief Compliance OppenheimerFunds Distributor, Inc., Centennial Asset
Officer since 2005 Management Corporation and Shareholder Services, Inc.
Age: 56 (since June 1983). Former Vice President and Director
of Internal Audit of the Manager (1997-February 2004).
An officer of 102 portfolios in the OppenheimerFunds
complex.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer of the Manager
Treasurer and (since March 1999); Treasurer of the following:
Principal Financial & HarbourView Asset Management Corporation, Shareholder
Accounting Officer Financial Services, Inc., Shareholder Services, Inc.,
since 2005 Oppenheimer Real Asset Management Corporation, and
Age: 47 Oppenheimer Partnership Holdings, Inc. (since March
1999), OFI Private Investments, Inc. (since March
2000), OppenheimerFunds International Ltd. (since May
2000), OppenheimerFunds plc (since May 2000), OFI
Institutional Asset Management, Inc. (since November
2000), and OppenheimerFunds Legacy Program (charitable
trust program established by the Manager) (since June
2003); Treasurer and Chief Financial Officer of OFI
Trust Company (trust company subsidiary of the Manager)
(since May 2000); Assistant Treasurer of the following:
OAC (since March 1999),Centennial Asset Management
Corporation (March 1999-October 2003) and
OppenheimerFunds Legacy Program (April 2000-June 2003);
Principal and Chief Operating Officer of Bankers Trust
Company-Mutual Fund Services Division (March 1995-March
1999). An officer of 102 portfolios in the
OppenheimerFunds complex.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian Petersen, Vice President of the Manager (since February 2007);
Assistant Treasurer Assistant Vice President of the Manager (August
since 2005 2002-February 2007);Manager/Financial Product
Age: 36 Accounting of the Manager (November 1998-July 2002). An
officer of 102 portfolios in the OppenheimerFunds
complex.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian C. Szilagyi, Assistant Vice President of the Manager (since July
Assistant Treasurer 2004); Director of Financial Reporting and Compliance
since 2005 of First Data Corporation (April 2003-July 2004);
Age: 37 Manager of Compliance of Berger Financial Group LLC
(May 2001-March 2003); Director of Mutual Fund
Operations at American Data Services, Inc. (September
2000-May 2001). An officer of 102 portfolios in the
OppenheimerFunds complex.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert G. Zack, Executive Vice President (since January 2004) and
Secretary since 2005 General Counsel (since March 2002) of the Manager;
Age: 58 General Counsel and Director of the Distributor (since
December 2001); General Counsel of Centennial Asset
Management Corporation (since December 2001); Senior
Vice President and General Counsel of HarbourView Asset
Management Corporation (since December 2001); Secretary
and General Counsel of OAC (since November 2001);
Assistant Secretary (since September 1997) and Director
(since November 2001) of OppenheimerFunds International
Ltd. and OppenheimerFunds plc; Vice President and
Director of Oppenheimer Partnership Holdings, Inc.
(since December 2002); Director of Oppenheimer Real
Asset Management, Inc. (since November 2001); Senior
Vice President, General Counsel and Director of
Shareholder Financial Services, Inc. and Shareholder
Services, Inc. (since December 2001); Senior Vice
President, General Counsel and Director of OFI Private
Investments, Inc. and OFI Trust Company (since November
2001); Vice President of OppenheimerFunds Legacy
Program (since June 2003); Senior Vice President and
General Counsel of OFI Institutional Asset Management,
Inc. (since November 2001); Director of
OppenheimerFunds (Asia) Limited (since December 2003);
Senior Vice President (May 1985-December 2003), 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 102
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
since 2005 Manager; Vice President (since 1999) and Assistant
Age: 41 Secretary (since October 2003) of the Distributor;
Assistant Secretary of Centennial Asset Management
Corporation (since October 2003); Vice President and
Assistant Secretary of Shareholder Services, Inc.
(since 1999); Assistant Secretary of OppenheimerFunds
Legacy Program and Shareholder Financial Services, Inc.
(since December 2001); Assistant Counsel of the Manager
(August 1994-October 2003). An officer of 102
portfolios in the OppenheimerFunds complex.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Lisa I. Bloomberg, Vice President and Associate Counsel of the Manager
Assistant Secretary (since May 2004); First Vice President (April
since 2005 2001-April 2004), Associate General Counsel (December
Age: 39 2000-April 2004), 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 102
portfolios in the OppenheimerFunds complex.
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Phillip S. Gillespie, Senior Vice President and Deputy General Counsel of the
Assistant Secretary Manager (since September 2004); Mr. Gillespie held the
since 2005 following positions at Merrill Lynch Investment
Age: 43 Management: First Vice President (2001-September 2004);
Director (2000-September 2004) and Vice President
(1998-2000). An officer of 102 portfolios in the
OppenheimerFunds complex.
---------------------------------------------------------------------------------

Remuneration of the Officers and Trustees. The officers and the interested Trustee of
the Fund, who are affiliated with the Manager, receive no salary or fee from the Fund. The
Independent Trustees' compensation from the Fund, shown below, is for serving as a Trustee
and member of a committee (if applicable), with respect to the Fund's fiscal year ended
April 30, 2007, its first fiscal year end. The total compensation from the Fund and fund
complex represents compensation, including accrued retirement benefits, for serving as a
Trustee and member of a committee (if applicable) of the Boards of the Fund and other funds
in the OppenheimerFunds complex during the calendar year ended December 31, 2006.

---------------------------------------------------------------------------------
Name and Other Fund Aggregate Retirement Estimated Total
Benefits Annual Compensation
Compensation Accrued as Benefits From the Fund
Position(s) (as From the Part of Fund Upon and Fund
applicable) Fund(1) Expenses Retirement(2) Complex
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Fiscal year ended April 30, Year ended
December 31,
2007 2006
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Brian F. Wruble((3)) $984(4) $814 $81,942(5) $241,260(6)
Chairman of the Board (1(9))
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
David K. Downes
Audit Committee
Chairman and
Regulatory & None N/A $45,913(7) $146,668(8)
Oversight Committee
Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Matthew P. Fink $858 $891 $56,034((9)) $113,472
Governance Committee
Member and
Regulatory &
Oversight Committee
Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Robert G. Galli $1,031 $1,361 $574,819((9)) $264,812((1)(1))
Regulatory &
Oversight Committee
Chairman &
Governance Committee (1(0))
Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Phillip Griffiths
Governance Committee
Chairman and
Regulatory & $1,114((1)(2)) $3,354 $327,278((1)(9)) $150,760
Oversight Committee
Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Mary F. Miller
Audit Committee
Member and $835((1)(3)) $556 $66,814((1)(9)) $106,792
Governance
Committee Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Joel W. Motley
Audit Committee
Member and
Regulatory & $1,024((1)(4)) $1,253 $97,539((1)(9)) $150,760
Oversight Committee
Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Kenneth A. $932 $6,652 $67,138(1(6)) $134,080
Randall(1(5))

---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Russell S. Reynolds, $846 $2,704 $59,739((1)(6)) $110,120
Jr.
Audit Committee
Member and
Governance Committee
Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Joseph M. Wikler
Audit Committee
Member and
Regulatory & $807(1(7)) $2,834 $159,825((19)) $99,080
Oversight Committee
Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Peter I. Wold
Audit Committee
Member and $807((1)(8)) $2,144 $108,941((19)) $99,080
Governance Committee
Member
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------

Clayton K. $622((2)(1)) $8,352 $117,498((2)(2) $173,700
Yeutter((2)(0)) )
---------------------------------------------------------------------------------
1. "Aggregate Compensation From the Fund" includes fees and deferred compensation, if any.
2. "Estimated Annual Benefits Upon Retirement" is based on a straight life payment
election with the assumption that a Trustee will retire at the age of 75 and is eligible
(after 7 years of service) to receive retirement plan benefits with respect to certain
Board I Funds as described below under "Retirement Plan for Trustees." Plan participants
as of the Freeze Date will continue to receive accrued benefits under the Plan. Active
independent trustees as of the Freeze Date have each elected a distribution method with
respect to their benefits under the Plan.
3. Mr. Wruble became Chairman of the Board I Funds on January 1, 2007.
4. Includes $743 deferred by Mr. Wruble under the "Compensation Deferral Plan" described
below
5. Includes $45,544 estimated benefits to be paid to Mr. Wruble for serving as a
director or trustee of 10 other Oppenheimer funds that are not Board I Funds.
6. Includes $135,500 paid to Mr. Wruble for serving as a director or trustee of 10 other
Oppenheimer funds (at December 31, 2006) that are not Board I Funds.
7. Estimated benefits to be paid to Mr. Downes for serving as a director or trustee of
10 other Oppenheimer Funds that are not Board I Funds.
8. Compensation paid to Mr. Downes for serving as a director or trustee of 10 other
Oppenheimer Funds that are not Board I Funds.
9. Elected to receive a lump-sum payout in lieu of Retirement Plan benefits as of
December 31, 2006.
10. Includes $49,811 estimated benefits to be paid to Mr. Galli for serving as a director
or trustee of 10 other Oppenheimer funds that are not Board I Funds.
11. Includes $135,500 paid to Mr. Galli for serving as a director or trustee of 10 other
Oppenheimer funds (at December 31, 2006) that are not Board I Funds.
12. Includes $1,114 deferred by Mr. Griffiths under the "Compensation Deferral Plan"
described below.
13. Includes $295 deferred by Ms. Miller under the "Compensation Deferral Plan" described
below
14. Includes $240 deferred by Mr. Motley under the "Compensation Deferral Plan" described
below.
15. Mr. Randall retired from the Board I Funds effective June 30, 2007.
16. Mr. Randall and Mr. Reynolds have elected to receive Joint Survival Annuity benefits
payments based on the value of their Retirement Plan benefits as of December 31, 2006.
17. Includes $403 deferred by Mr. Wikler under the "Compensation Deferral Plan" described
below.
18. Includes $581deferred by Mr. Wold under the "Compensation Deferral Plan" described
below.
19. Received a lump-sum roll-over to the Compensation Deferral Plan in lieu of Retirement
Plan benefits as of December 31, 2006 year.
20. Mr. Yeutter retired as Chairman of the Board of Trustees of the Board I Funds
effective December 31, 2006.
21. Includes $156 deferred by Mr. Yeutter under the "Compensation Deferral Plan"
described below.
22. Mr. Yeutter elected to receive a single life annuity based on his benefits as of
December 31, 2006.
23. Received a lump-sum roll-over to the Compensation Deferral Plan in lieu of Retirement
Plan benefits as of December 31, 2006.

Retirement Plan for Trustees. The Board I Funds adopted a retirement plan that
provides for payments to retired Independent Trustees. Payments are up to 80% of the
average compensation paid during a Trustee's five years of service in which the highest
compensation was received. A Trustee must serve as trustee for any of the Board I Funds for
at least seven years to be eligible for retirement plan benefits and must serve for at
least 15 years to be eligible for the maximum benefit. Board has frozen the retirement plan
with respect to new accruals as of December 31, 2006 (the "Freeze Date"). Retirees as of
the Freeze Date will continue to receive benefits under the previous terms of the Plan.
Each Trustee continuing to serve on the Board of any of the Board I Funds after the Freeze
Date (each such Trustee a "Continuing Board Member") may elect to have his frozen benefit
(i.e. an amount equivalent to the actuarial present value of his benefit under the
retirement plan as of the Freeze Date) (i) paid at once or over time, (ii) rolled into the
Compensation Deferral Plan described below, or (iii) in the case of Continuing Board
Members having at least 7 years of service as of the Freeze Date paid in the form of an
annual benefit or joint and survivor annual benefit. The Board determined to freeze the
retirement plan after considering a recent trend among corporate boards of directors to
forego retirement plan payments in favor of current compensation.

|X| Compensation Deferral Plan. 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 certain Board I Funds. Under
the plan, the compensation deferred by a Trustee is periodically adjusted as though an
equivalent amount had been invested in shares of one or more Oppenheimer funds selected by
the Trustee. The amount paid to the Trustee under the plan will be determined based upon
the amount of compensation deferred and the performance of the selected funds.

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

Major Shareholders. As of August 3, 2007, the only persons or entities who owned of record
or were known by the Fund to own beneficially 5% or more of any class of the Fund's
outstanding shares were:

MLPF&S for the sole benefit of its customers, ATTN Fund Admin, 4800 Deer Lake Dr. E
Fl 3, Jacksonville FL 32246-6484, which owned 3,311,769.500 Class A shares (5.14% of the
Class A shares then outstanding).

Citigroup Global Mkts Inc., ATTN Cindy Tempesta, 7th Fl, 333 West 34th Street, New
York NY 10001-2483, which owned 699,567.282 Class B shares (6.70% of the Class B shares
then outstanding).

MLPF&S for the sole benefit of its customers, ATTN Fund Admin, 4800 Deer Lake Dr. E
Fl 3, Jacksonville FL 32246-6484, which owned 4,196,438.016 Class C shares (14.24% of the
Class C shares then outstanding).

Citigroup Global Mkts Inc., ATTN Cindy Tempesta, 7th Fl, 333 West 34th Street, New
York NY 10001-2483, which owned 1,954,010.338 Class C shares (6.63% of the Class C shares
then outstanding).

Orchard Trust CO LLC FBO Oppen Recordkeeperpro 8515 E Orchard Rd, Greenwood Village
CO 80111, which owned 508,292.850 Class N shares (15.53% of the Class N shares then
outstanding).

MLPF&S for the sole benefit of its customers, ATTN Fund Admin, 4800 Deer Lake Dr. E
Fl 3, Jacksonville FL 32246-6484, which owned 286,664.000 Class N shares (8.76% of the
Class N shares then outstanding).

TAYNIK & Co, c/o Investors Bank & Trust, FPG90, PO BOX 9130, Boston MA 02117-9130,
which owned 341,261.826 Class Y shares (39.30% of the Class Y shares then outstanding).

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

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

The Code of Ethics is an exhibit to the Fund's registration statement filed with the
SEC and can be reviewed and copied at the SEC's Public Reference Room in Washington, D.C.
You can obtain information about the hours of operation of the Public Reference Room by
calling the SEC at 1.202.551.8090. The Code of Ethics can also be viewed as part of the
Fund's registration statement on the SEC's EDGAR database at the SEC's Internet website at
www.sec.gov. Copies may be obtained, after paying a duplicating fee, by electronic request
at the following E-mail address: publicinfo@sec.gov, or by writing to the SEC's Public
Reference Section, Washington, D.C. 20549-0102.

| Portfolio Proxy Voting. The Fund is structured as a fund of funds and, as such, will
invest assets in certain of the Underlying Funds. Accordingly, the Fund, in its capacity as
a shareholder in the Underlying Funds, may be requested to vote on a matter pertaining to
those funds. With respect to any such matter, the Fund will vote its shares in the
Underlying Funds in the same proportion as the vote of all other shareholders in that
Underlying Fund.

Each of the Underlying Funds has adopted Portfolio Proxy Voting Policies and
Procedures under which the Underlying Fund votes proxies relating to securities ("portfolio
proxies") held by the Underlying Fund. Each Underlying Fund's primary consideration in
voting portfolio proxies is the financial interests of the Underlying Fund and its
shareholders. The Underlying Funds will retain an unaffiliated third-party as its agent to
vote portfolio proxies in accordance with the Underlying Funds' Portfolio Proxy Voting
Guidelines and to maintain records of such portfolio proxy voting. The Portfolio Proxy
Voting Policies and Procedures include provisions to address conflicts of interest that may
arise between the Underlying Funds and the Manager or the Manager's affiliates or business
relationships. Such a conflict of interest may arise, for example, where the Manager or an
affiliate of the Manager manages or administers the assets of a pension plan or other
investment account of the portfolio company soliciting the proxy or seeks to serve in that
capacity. The Manager and its affiliates generally seek to avoid such conflicts by
maintaining separate investment decision making processes to prevent the sharing of
business objectives with respect to proposed or actual actions regarding portfolio proxy
voting decisions. Additionally, the Manager employs the following two procedures: (1) if
the proposal that gives rise to the conflict is specifically addressed in the Proxy Voting
Guidelines, the Manager will vote the portfolio proxy in accordance with the Proxy Voting
Guidelines, provided that they do not provide discretion to the Manager on how to vote, on
the matter; and (2) if such proposal is not specifically addressed in the Proxy Voting
Guidelines or the Proxy Voting Guidelines provide discretion to the Manager how to vote,
the guidelines on the proposal provided that the Manager has reasonably determined that
there is no conflict of interest on the part of the proxy voting agent. If neither of the
previous two procedures provides an appropriate voting recommendation, the Manager may
retain an independent fiduciary to advise the Manager on how to vote the proposal or may
abstain from voting. The Proxy Voting Guidelines' provisions with respect to certain
routine and non-routine proxy proposals are summarized below:

o Each Underlying Fund generally votes with the recommendation of the issuer's
management on routine matters, including ratification of the independent
registered public accounting firm, unless circumstances indicate otherwise.

o Each Underlying Fund evaluates nominees for director nominated by management on a
case-by-case basis, examining the following factors, among others: Composition
of the board and key board committees, attendance at board meetings, corporate
governance provisions and takeover activity, long-term company performance and
the nominee's investment in the company.
o In general, each Underlying Fund opposes anti-takeover proposals and supports the
elimination, or the ability of shareholders to vote on the preservation or
elimination, of anti-takeover proposals, absent unusual circumstances.
o Each Underlying Fund supports shareholder proposals to reduce a super-majority vote
requirement, and opposes management proposals to add a super-majority vote
requirement.
o Each Underlying Fund opposes proposals to classify the board of directors or trustees.
o Each Underlying Fund supports proposals to eliminate cumulative voting.
o Each Underlying Fund opposes re-pricing of stock options without shareholder approval.
o Each Underlying Fund generally considers executive compensation questions such as
stock option plans and bonus plans to be ordinary business activity. The
Underlying Fund analyzes stock option plans, paying particular attention to
their dilutive effect. While each Underlying Fund generally supports management
proposals, it opposes plans it considers to be excessive.

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

| The Investment Advisory Agreement. The Manager provides investment advisory and
management services to the Fund under an investment advisory agreement between the Manager
and the Fund. The Manager selects securities for the Fund's portfolio and handles its
day-to-day business. The portfolio manager of the Fund is employed by the Manager and is
the person principally responsible for the day-to-day management of the Fund's portfolio.
Other members of the Manager's Equity, Fixed Income and Global Portfolio Team provide the
portfolio manager with counsel and support in managing the Fund's portfolio.

The agreement requires the Manager, at its expense, to provide the Fund with adequate
office space, facilities and equipment. It also requires the Manager to provide and
supervise the activities of all administrative and clerical personnel required to provide
effective administration for the Fund. Those responsibilities include the compilation and
maintenance of records with respect to their 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 Fund is a new fund that has not yet completed
three fiscal years. The management fees paid by the Fund to the Manager during its first
fiscal year was:

--------------------------------------------------------------------------------
Fiscal Year ended 2007: Management Fee Paid to OppenheimerFunds, Inc.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2006 $0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2007 $0
--------------------------------------------------------------------------------

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

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

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

| Other Accounts Managed. In addition to managing the Fund's investment portfolio, Mr.
Evans also manages other investment portfolios and other accounts, on behalf of the Manager
or its affiliates. The following table provides information regarding the other portfolios
and accounts managed by Mr. Evans as of April 30, 2007. No portfolio or account has an
advisory fee based on performance:

--------------------------------------------------------------------------------
Portfolio RegisteredTotal Other Total Other Total
Assets in
Assets in Other
Registered Pooled Pooled Assets
InvestmentInvestment InvestmentInvestment in Other )
Companies Companies Vehicles Vehicles Accounts Accounts
Manager Managed Managed(1) Managed Managed(1) Managed Managed(1,2
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
George Evans 6 $4213.6 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, the Portfolio Manager also manages other funds. Potentially, at
times, those responsibilities could conflict with the interests of the Fund. That may occur
whether the investment objective and strategies of the other funds are the same as, or
different from, the Fund's investment objectives and strategies. For example, the Portfolio
Manager may need to allocate investment opportunities between the Fund and another fund
having similar objectives or strategies, or he may need to execute transactions for another
fund 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 is more advantageous to the Manager than the fee structure of
the Fund, the Manager could have an incentive to favor the other fund. However, the
Manager's compliance procedures and Code of Ethics recognize the Manager's fiduciary
obligations to treat all of its clients, including the Fund, fairly and equitably, and are
designed to preclude the Portfolio Manager from favoring one client over another. It is
possible, of course, that those compliance procedures and the Code of Ethics may not always
be adequate to do so. At different times, the Fund's Portfolio Manager may manage other
funds or accounts with investment objectives and strategies similar to those of the Fund,
or may manage funds or accounts with different investment objectives and strategies.
| Compensation of the Portfolio Manager. The Fund's Portfolio Manager is employed and
compensated by the Manager, not the Fund. Under the Manager's compensation program for its
portfolio managers and portfolio analysts, their compensation is based primarily on the
investment performance results of the funds and accounts they manage, rather than on the
financial success of the Manager. This is intended to align the portfolio managers' and
analysts' interests with the success of the funds and accounts and their shareholders. The
Manager's compensation structure is designed to attract and retain highly qualified
investment management professionals and to reward individual and team contributions toward
creating shareholder value. As of April 30, 2006, the Portfolio Manager's compensation
consisted of three elements: a base salary, an annual discretionary bonus and eligibility
to participate in long-term awards of options and appreciation rights in regard to the
common stock of the Manager's holding company parent. Senior portfolio managers may also be
eligible to participate in the Manager's deferred compensation plan.
To help the Manager attract and retain talent, the base pay component of the
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 the fund's pre-tax performance
for periods of up to five years, measured against an appropriate Lipper benchmark selected
by management. The Portfolio Manager does not receive additional compensation with respect
to the performance of the Fund. He is compensated based on the performance of Underlying
Funds. Other factors considered include management quality (such as style consistency, risk
management, sector coverage, team leadership and coaching) and organizational development.
The compensation structure is intended to be internally equitable and serve to reduce
potential conflicts of interest between the Fund and other funds managed by the Portfolio
Manager. The compensation structure of certain other portfolios managed by the Portfolio
Manager may be different from the compensation structure of the Underlying Funds, described
above. The Portfolio Manager's compensation with regard to those portfolios may, under
certain circumstances, include an amount based on the amount of the management fee.
| Ownership of Fund Shares. As of April 30, 2007, the Portfolio Manager beneficially
owned shares of the Fund as follows:

----------------------------------------------------------
Portfolio Manager Range of Shares
Beneficially
Owned in the Fund
----------------------------------------------------------
----------------------------------------------------------
George Evans None
----------------------------------------------------------

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 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 year ended April 30, 2006 and 2007, the Fund paid the total
brokerage commissions indicated in the chart below. During the fiscal year ended April 30,
2006, the Fund did not execute any transactions through or pay any commissions to firms
that provide research services.

-------------------------------------------------------------------------
Fiscal Year Ended April 30, Total Brokerage Commissions Paid by the
2007 Fund*
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2006 $0
-------------------------------------------------------------------------
-------------------------------------------------------------------------
2007 $0
-------------------------------------------------------------------------
* Amounts do not include spreads or commissions on principal transactions on a net
trade basis.

Distribution and Service Plans

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

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

---------------------------------------------
Fiscal Aggregate Class A
Front-End
Year Ended Front-End Sales Sales Charges
April 30: Charges on Retained by
Class A Shares Distributor(1)
---------------------------------------------
---------------------------------------------
2006 $2,273,108 $476,477
---------------------------------------------
---------------------------------------------
2007 $6,429,344 $1,608,968
---------------------------------------------
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 Ended Class A Shares Class B Shares Class C Shares Class N Shares
April 30: Advanced by Advanced by Advanced by Advanced by
Distributor(1) Distributor(1) Distributor(1) Distributor(1)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2006 $68,030 $646,812 $547,109 $15,942
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
2007 $212,504 $1,631,033 $1,139,454 $59,581
-------------------------------------------------------------------------------
1. The Distributor advances concession payments to financial intermediaries for certain
sales of Class A shares and for sales of Class B, Class C and Class N shares from its
own resources at the time of sale.

--------------------------------------------------------------------------------
Fiscal Class A Class B Class C Class N
Contingent Contingent Contingent
Deferred Sales Deferred Sales Contingent Deferred Sales
Year Ended Charges Charges Deferred Sales Charges
April 30: Retained by Retained by Charges Retained Retained by
Distributor Distributor by Distributor Distributor
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2006 $10,566 $3,198 $4,418 $0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2007 $6,405 $128,695 $61,350 $458
--------------------------------------------------------------------------------

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 Board of Trustees and its Independent Trustees specifically
vote annually to approve its continuance. Approval must be by a vote cast in person at a
meeting called for the purpose of voting on continuing the plan. A plan may be terminated
at any time by the vote of a majority of the Independent Trustees or by the vote of the
holders of a "majority" (as defined in the Investment Company Act) of the outstanding
shares of that class.

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

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

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

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

| Class A Service Plan Fees. Under the Class A service plan, the Distributor currently
uses the fees it receives from the Fund to pay brokers, dealers and other financial
institutions (referred to as "recipients") for personal services and account maintenance
services they provide for their customers who hold Class A shares. The services include,
among others, answering customer inquiries about the Fund, assisting in establishing and
maintaining accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor. The Class A service
plan permits reimbursements to the Distributor at a rate of up to 0.25% of average net
assets of Class A shares. The Distributor makes payments to recipients periodically at an
annual rate not to exceed 0.25% of the average annual Class A share net assets held in the
accounts of the recipients or their customers.

The Distributor does not receive or retain the service fee on Class A shares in
accounts for which the Distributor has been listed as the broker-dealer of record. While
the plan permits the Board to authorize payments to the Distributor to reimburse itself for
services under the plan, the Board has not yet done so, except in the case of shares
purchased prior to March 1, 2007 with respect to certain group retirement plans that were
established prior to March 1, 2001 ("grandfathered retirement plans"). Prior to March 1,
2007, the Distributor paid the 0.25% service fee for grandfathered retirement plans in
advance for the first year and retained the first year's service fee paid by the Fund with
respect to those shares. After the shares were held for a year, the Distributor paid the
ongoing service fees to recipients on a periodic basis. Such shares are subject to a
contingent deferred sales charge if they are redeemed within 18 months. If Class A shares
purchased in a grandfathered retirement plan prior to March 1, 2007 are redeemed within the
first year after their purchase, the recipient of the service fees on those shares will be
obligated to repay the Distributor a pro rata portion of the advance payment of those fees.
For Class A shares purchased in grandfathered retirement plans on or after March 1, 2007,
the Distributor does not make any payment in advance and does not retain the service fee
for the first year. Such shares are not subject to the contingent deferred sales charge.

For the fiscal year ended April 30, 2007 payments under the Class A plan totaled
$982,769 of which $323 was retained by the Distributor under the arrangement described
above, regarding grandfathered retirement accounts, and included $28,960 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.

| 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 or Class N shares are purchased. After
the first year Class B, Class C or Class N shares are outstanding, after their purchase,
the Distributor makes service fee payments periodically on those shares. The advance
payment is based on the net asset value of shares sold. Shares purchased by exchange do not
qualify for the advance service fee payment. If Class B, Class C or Class N shares are
redeemed during the first year after their purchase, the recipient of the service fees on
those shares will be obligated to repay the Distributor a pro rata portion of the advance
payment of the service fee made on those shares. Class B, Class C or Class N shares may not
be purchased by a new investor directly from the Distributor without the investor
designating another registered broker-dealer. If a current investor no longer has another
broker-dealer of record for an existing account, the Distributor is automatically
designated as the broker-dealer of record, but solely for the purpose of acting as the
investor's agent to purchase the shares. In those cases, the Distributor retains the
asset-based sales charge paid on Class B, Class C or 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 increases 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 concessions and service fee in advance at the time of purchase.

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

During a calendar year, the Distributor's actual expenses in selling Class B, Class C
and Class N shares may be more than the payments it receives from the contingent deferred
sales charges collected on redeemed shares and from the asset-based sales charges paid to
the Distributor by the Fund under the distribution and service plans. Those excess expenses
are carried over on the Distributor's books and may be recouped from asset-based sales
charge payments from the Fund in future years. However, the Distributor has voluntarily
agreed to cap the amount of expenses under the plans that may be carried over from year to
year and recouped that relate to (i) expenses the Distributor has incurred that represent
compensation and expenses of its sales personnel and (ii) other direct distribution costs
it has incurred, such as sales literature, state registration fees, advertising and
prospectuses used to offer Fund shares. The cap on the carry-over of those categories of
expenses is set at 0.70% of annual gross sales of shares of the Fund. If those categories
of expenses exceed the capped amount, the Distributor bears the excess costs. If the Class
B, Class C or Class N plan were to be terminated by the Fund, the Fund's Board of Trustees
may allow the Fund to continue payments of the asset-based sales charge to the Distributor
for distributing shares prior to the termination of the plan.

--------------------------------------------------------------------------------
Distribution and Service Fees Paid to the Distributor for the Fiscal Year
Ended April 30, 2007
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class: Total Payments Amount Distributor's Distributor's
Aggregate Unreimbursed
Unreimbursed Expenses as %
Retained by Expenses Under of Net Assets
Under Plan Distributor Plan of Class
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class B Plan $693,103(1) $617,624 $1,919,298 1.61%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class C Plan $1,837,419(2) $1,221,663 $2,156,881 0.66%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class N Plan $86,460(3) $43,896 $222,866 0.63%
--------------------------------------------------------------------------------
1. Includes $2,186 paid to an affiliate of the Distributor's parent company.
2. Includes $8,979 paid to an affiliate of the Distributor's parent company.
3. Includes $613 paid to an affiliate of the Distributor's parent company.

All payments under the plans are subject to the limitations imposed by the Conduct
Rules of FINRA on payments of asset-based sales charges and service fees.

Payments to Fund Intermediaries

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

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

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

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

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

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

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

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

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

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

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

For the year ended December 31, 2006, the following financial intermediaries that are
broker-dealers offering shares of the Oppenheimer funds, and/or their respective
affiliates, received revenue sharing or similar distribution-related payments from the
Manager or Distributor for marketing or program support:

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

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

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

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

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

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

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

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

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

In calculating total returns for Class A shares, the current maximum sales charge of
5.75% (as a percentage of the offering price) is deducted from the initial investment ("P"
in the formula below) (unless the return is shown without sales charge, as described
below). For Class B shares, payment of the applicable contingent deferred sales charge is
applied, depending on the period for which the return is shown: 5.0% in the first year,
4.0% in the second year, 3.0% in the third and fourth years, 2.0% in the fifth year, 1.0%
in the sixth year and none thereafter. For Class C shares, the 1.0% contingent deferred
sales charge is deducted for returns for the one-year period. For Class N shares, the 1.0%
contingent deferred sales charge is deducted for returns for the one-year and life-of-class
periods, as applicable. There is no sales charge on Class Y shares.

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

ERV l/n - 1 Average Annual Total
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:

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

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

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

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

-------------------------------------------------------------------------------
The Fund's Total Returns for the Periods Ended April 30, 2007
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class of Cumulative Total Average Annual Total Returns
Returns
(10 Years or
life-of-class, if
Shares less)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
1-Year 5-Years
(or life of class, if (or life of class if
less) less)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
After Without After Without After Without
Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class 35.55% 43.82% 12.20% 19.05% 21.06% 25.65%
A(1)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class 37.91% 41.91% 13.06% 18.06% 22.38% 24.59%
B(2)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class 42.13% 42.13% 17.14% 18.14% 24.72% 24.72%
C(3)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class 43.22% 43.22% 17.70% 18.70% 25.32% 25.32%
N(4)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Class 44.80% 44.80% 19.51% 19.51% 26.19% 26.19%
Y(5)
-------------------------------------------------------------------------------
1. Inception of Class A: 09/27/05
2. Inception of Class B: 09/27/05
3. Inception of Class C: 09/27/05
4. Inception of Class N: 09/27/05
5. Inception of Class Y: 09/27/05

-----------------------------------------------------------
Average Annual Total Returns for Class A1 Shares (After
Sales Charge)
For the Periods Ended 4/30/07
-----------------------------------------------------------
-----------------------------------------------------------
1-Year 5-Years
(or life of
class, if (or life of
less) class if less)
-----------------------------------------------------------
-----------------------------------------------------------
After Taxes on Distributions 11.49% 19.98%
-----------------------------------------------------------
-----------------------------------------------------------
After Taxes on 8.06% 17.39%
Distributions and
Redemption of Fund Shares
-----------------------------------------------------------
1.Inception of Class A: 9/27/05

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

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

|X| Morningstar Ratings. From time to time the Fund may publish the star rating of the
performance of its classes of shares by Morningstar, Inc., ("Morningstar"), an independent
mutual fund monitoring service. Morningstar rates mutual funds in their specialized market
sector. The Funds are not yet rated.

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 the 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 the 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 prices are not guaranteed or insured
by the FDIC or any other agency and will fluctuate daily, while bank depository obligations
may be insured by the FDIC and may provide fixed rates of return. Repayment of principal
and payment of interest on Treasury securities is backed by the full faith and credit of
the U.S. government.

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

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

ABOUT YOUR ACCOUNT

How to Buy Shares

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

To access account documents electronically via eDocs Direct, please visit the Service
Center on our website at www.oppenheimerfunds.com and click the hyperlink "Sign Up for
Electronic Document Delivery" under the heading "I Want To," or call 1.888.470.0862 for
instructions.

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

Determination of Net Asset Values Per Share. The net asset values per share of each class
of shares of the Fund are determined as of the close of business of the NYSE on each day
that the NYSE is open. The calculation is done by dividing the value of the Fund's net
assets attributable to a class by the number of shares of that class that are outstanding.
The NYSE normally closes at 4:00 p.m., Eastern time, but may close earlier on some other
days (for example, in case of weather emergencies or on days falling before a U.S.
holiday). All references to time in this SAI mean "Eastern time." The NYSE's most recent
annual announcement (which is subject to change) states that it will close on New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day. It may also close on other days.

Dealers other than NYSE members may conduct trading in certain securities on days on
which the NYSE is closed (including weekends and holidays) or after 4:00 p.m. on a regular
business day. Because the Fund's net asset values will not be calculated on those days, the
Fund's net asset values per share may be significantly affected on such days when
shareholders may not purchase or redeem shares. Additionally, trading on many foreign stock
exchanges and over-the-counter markets normally is completed before the close of the NYSE.

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

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

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

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

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

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

How to Sell Shares

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

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

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

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

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

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

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

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

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

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

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

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

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

Special Arrangements for Repurchase of Shares from Dealers and Brokers. The Distributor is
the Fund's agent to repurchase its shares from authorized dealers or brokers on behalf of
their customers. Shareholders should contact their broker or dealer to arrange this type of
redemption. The repurchase price per share will be the net asset value next computed after
the Distributor receives an order placed by the dealer or broker. However, if the
Distributor receives a repurchase order from a dealer or broker after the close of the NYSE
on a regular business day, it will be processed at that day's net asset value if the order
was received by the dealer or broker from its customers prior to the time the NYSE closes.
Normally, the NYSE closes at 4:00 p.m., but may do so earlier on some days.

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

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

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

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

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

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

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

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

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

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

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

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

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

How to Exchange Shares

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

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

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

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

o Oppenheimer Money Market Fund, Inc. only offers Class A and Class Y shares.
o Oppenheimer Institutional Money Market Fund only offers Class E and Class L shares.
o Class B and Class C shares of Oppenheimer Cash Reserves are generally available only
by exchange from the same class of shares of other Oppenheimer funds or through
OppenheimerFunds-sponsored 401(k) plans.
o Class M shares of Oppenheimer Convertible Securities Fund may be exchanged only for
Class A shares of other Oppenheimer funds. They may not be acquired by exchange of
shares of any class of any other Oppenheimer funds except Class A shares of
Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves acquired by exchange
of Class M shares.
o Class A shares of Oppenheimer funds may be exchanged at net asset value for shares of
certain money market funds offered by the Distributor. Shares of any money market
fund purchased without a sales charge may be exchanged for shares of Oppenheimer
funds offered with a sales charge upon payment of the sales charge.
o Shares of the Fund acquired by reinvestment of dividends or distributions from any of
the other Oppenheimer funds or from any unit investment trust for which reinvestment
arrangements have been made with the Distributor may be exchanged at net asset value
for shares of the same class of any of the other Oppenheimer funds into which you may
exchange shares.
o Shares of Oppenheimer Principal Protected Main Street Fund may be exchanged at net
asset value for shares of the same class of any of the other Oppenheimer funds into
which you may exchange shares. However, shareholders are not permitted to exchange
shares of other Oppenheimer funds for shares of Oppenheimer Principal Protected Main
Street Fund until after the expiration of the warranty period (8/5/2010).
o Shares of Oppenheimer Principal Protected Main Street Fund II may be exchanged at net
asset value for shares of the same class of any of the 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 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.
o Shares of Oppenheimer International Small Company Fund may be acquired only by
existing shareholders of the fund. Existing shareholders may make exchanges into the
fund with as little as $50.
o In most cases, shares of Oppenheimer Small- & Mid- Cap Value Fund may be acquired
only by shareholders who currently own shares of that Fund.

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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

When you exchange some or all of your shares from one fund to another, any special
account features that are available in the new fund (such as an Asset Builder Plan or
Automatic Withdrawal Plan) will be switched to the new fund account unless you tell the
Transfer Agent not to do so.

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

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

Dividends, Capital Gains and Taxes

Dividends and Distributions.

The Fund has no fixed dividend rate and there can be no assurance as to the payment
of any dividends or the realization of any capital gains. The dividends and distributions
paid by a class of shares will vary from time to time depending on market conditions, the
composition of the Fund's portfolio, and expenses borne by the Fund or borne separately by
a class. Dividends are calculated in the same manner, at the same time, and on the same day
for each class of shares. However, dividends on Class B, Class C and Class N shares are
expected to be lower than dividends on Class A and Class Y shares. That is because of the
effect of the asset-based sales charge on Class B, Class C and Class N shares. Those
dividends will also differ in amount as a consequence of any difference in the net asset
values of the different classes of shares.

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

For some of the Underlying Funds, dividends will be payable on shares held of record
at the time of the previous determination of net asset value, or as otherwise described in
"How to Buy Shares." Normally, purchase checks received from investors are converted to
Federal Funds on the next business day. Shares purchased through dealers or brokers
normally are paid for by the third business day following the placement of the purchase
order.

Shares redeemed through the regular redemption procedure will be paid dividends
through and including the day on which the redemption request is received by the Transfer
Agent in proper form. Dividends will be declared on shares repurchased by a dealer or
broker for three business days following the trade date (this is, up to and including the
day prior to settlement of the repurchase). If all shares in an account are redeemed, all
dividends accrued on shares of the same class in the account will be paid together with the
redemption proceeds.

Some of the Underlying Funds have no fixed dividend rate and there can be no
assurance as to the payment of any dividends or the realization of any capital gains.

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 their shareholders.

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

Generally, the character of the income or capital gains that the Fund receives from the
Underlying Funds will pass through to the Fund's shareholders as long as the Fund and
Underlying Funds continue to qualify as regulated investment companies. However, short-term
capital gains will be taxed as ordinary income and therefore may not be offset against
long-term capital losses and foreign tax credits or deductions may not "pass through" to
the Fund's shareholders.

Qualification as a Regulated Investment Company. The Fund has elected to be taxed as
a regulated investment company ("RIC") 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 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 RIC, 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 RIC's principal business of investing in stock
or securities), and certain other income (including, but not limited to, gains from
options, futures or forward contracts) derived with respect to its business of investing in
such stock, securities or currencies, and net income derived from interests in certain
"qualified publicly traded partnerships."

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 certain Underlying Funds 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 an
Underlying Fund to a reduced rate of, or exemption from, taxes on such income. The Fund may
not be able to pass through certain foreign tax credits or deductions that would otherwise
be available to a shareholder in an Underlying Fund.

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 (in this situation) by the Fund is
remitted by the Fund to the U.S. Treasury and all income and any tax withheld is identified
in reports mailed to shareholders in January of each year with a copy sent to the IRS.

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

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

Additional Information About the Fund

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

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

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

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



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

--------------------------------------------------------------------------------
THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER INTERNATIONAL DIVERSIFIED
FUND:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer International Diversified Fund, including the statement of
investments, as of April 30, 2007, the related statement of operations for the
year then ended, and the statements of changes in net assets and the financial
highlights for the year then ended and for the period September 27, 2005
(commencement of operations) to April 30, 2006. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

      We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of April 30, 2007, by correspondence with
the custodian and brokers or by other appropriate auditing procedures where
replies from brokers were not received. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

      In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer International Diversified Fund as of April 30, 2007, the results of
its operations for the year then ended, and the changes in its net assets and
financial highlights for the year then ended and for the period September 27,
2005 (commencement of operations) to April 30, 2006, in conformity with U.S.
generally accepted accounting principles.

/s/ KPMG LLP
KPMG LLP

Denver, Colorado
June 14, 2007


STATEMENT OF INVESTMENTS  April 30, 2007
--------------------------------------------------------------------------------



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

INVESTMENTS IN AFFILIATED COMPANIES--99.5% 1
-----------------------------------------------------------------------------------------------------------------------------
FIXED INCOME FUND--9.1%
Oppenheimer International Bond Fund, Cl. Y                                                      17,188,277   $   107,426,734
-----------------------------------------------------------------------------------------------------------------------------
GLOBAL EQUITY FUNDS--89.9%
Oppenheimer Developing Markets Fund, Cl. Y                                                       3,974,441       174,477,959
-----------------------------------------------------------------------------------------------------------------------------
Oppenheimer International Growth Fund, Cl. Y                                                    11,815,445       359,307,682
-----------------------------------------------------------------------------------------------------------------------------
Oppenheimer International Small Company Fund, Cl. Y                                              6,108,521       184,843,860
-----------------------------------------------------------------------------------------------------------------------------
Oppenheimer Quest International Value Fund, Inc., Cl. A                                         14,658,968       345,072,106
                                                                                                             ----------------
                                                                                                               1,063,701,607
-----------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUND--0.5%
Oppenheimer Institutional Money Market Fund, Cl. E, 5.21% 2                                      5,849,559         5,849,559
                                                                                                             ----------------
Total Investments in Affiliated Companies (Cost $1,026,472,881)                                                1,176,977,900

-----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $1,026,472,881)                                                     99.5%    1,176,977,900
-----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS NET OF LIABILITIES                                                                        0.5         5,365,605
                                                                                                -----------------------------
NET ASSETS                                                                                           100.0%  $ 1,182,343,505
                                                                                                =============================


FOOTNOTES TO STATEMENT OF INVESTMENTS

1. Is or was an affiliate, as defined in the Investment Company Act of 1940, at
or during the period ended April 30, 2007, by virtue of the Fund owning at least
5% of the voting securities of the issuer or as a result of the Fund and the
issuer having the same investment advisor. Transactions during the period in
which the issuer was an affiliate are as follows:



                                                                    SHARES             GROSS          GROSS           SHARES
                                                            APRIL 30, 2006         ADDITIONS     REDUCTIONS   APRIL 30, 2007
----------------------------------------------------------------------------------------------------------------------------

Oppenheimer Developing Markets Fund, Cl. Y                       1,059,927         2,932,279         17,765        3,974,441
Oppenheimer Institutional Money Market Fund, Cl. E, 5.21%               --        73,523,268     67,673,709        5,849,559
Oppenheimer International Bond Fund, Cl. Y                       4,712,831        12,555,628         80,182       17,188,277
Oppenheimer International Growth Fund, Cl. Y                     3,587,686         8,281,067         53,308       11,815,445
Oppenheimer International Small Company Fund, Cl. Y              1,824,425         4,311,605         27,509        6,108,521
Oppenheimer Quest International Value Fund, Inc., Cl. A          4,227,659        10,496,689         65,380       14,658,968




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

Oppenheimer Developing Markets Fund, Cl. Y                                   $   174,477,959   $  3,749,731        $  72,919
Oppenheimer Institutional Money Market Fund, Cl. E, 5.21%                          5,849,559         84,144               --
Oppenheimer International Bond Fund, Cl. Y                                       107,426,734      2,664,292            9,621
Oppenheimer International Growth Fund, Cl. Y                                     359,307,682      2,686,217           45,050
Oppenheimer International Small Company Fund, Cl. Y                              184,843,860      2,262,443           56,179
Oppenheimer Quest International Value Fund, Inc., Cl. A                          345,072,106      8,244,106           46,531
                                                                             -----------------------------------------------
                                                                             $ 1,176,977,900   $ 19,690,933        $ 230,300
                                                                             ===============================================


2. Rate shown is the 7-day yield as of April 30, 2007.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.




STATEMENT OF ASSETS AND LIABILITIES  April 30, 2007
--------------------------------------------------------------------------------



--------------------------------------------------------------------------------------------------------
ASSETS
--------------------------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investment--
affiliated companies (cost $1,026,472,881)                                              $ 1,176,977,900
--------------------------------------------------------------------------------------------------------
Cash                                                                                            885,428
--------------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold                                                           13,203,429
Dividends                                                                                       372,671
Other                                                                                            12,305
                                                                                        ----------------
Total assets                                                                              1,191,451,733

--------------------------------------------------------------------------------------------------------
LIABILITIES
--------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased                                                                         7,097,669
Shares of beneficial interest redeemed                                                        1,494,616
Distribution and service plan fees                                                              221,823
Transfer and shareholder servicing agent fees                                                   136,937
Shareholder communications                                                                       85,006
Trustees' compensation                                                                           37,912
Other                                                                                            34,265
                                                                                        ----------------
Total liabilities                                                                             9,108,228

--------------------------------------------------------------------------------------------------------
NET ASSETS                                                                              $ 1,182,343,505
                                                                                        ================

--------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
--------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest                                              $        86,312
--------------------------------------------------------------------------------------------------------
Additional paid-in capital                                                                1,021,094,375
--------------------------------------------------------------------------------------------------------
Accumulated net investment loss                                                                 (35,847)
--------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments                                                 10,693,646
--------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments                                                  150,505,019
                                                                                        ----------------
NET ASSETS                                                                              $ 1,182,343,505
                                                                                        ================








--------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
--------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $695,477,927 and 50,623,258 shares of beneficial interest outstanding)                       $ 13.74
Maximum offering price per share (net asset value plus sales charge
of 5.75% of offering price)                                                                     $ 14.58
--------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $118,894,007 and 8,725,098 shares
of beneficial interest outstanding)                                                             $ 13.63
--------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $327,749,184 and 24,029,173 shares
of beneficial interest outstanding)                                                             $ 13.64
--------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $35,341,623 and 2,580,595 shares
of beneficial interest outstanding)                                                             $ 13.70
--------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets
of $4,880,764 and 353,609 shares of beneficial interest outstanding)                            $ 13.80


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.



STATEMENT OF OPERATIONS  For the Year Ended April 30, 2007
--------------------------------------------------------------------------------



--------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
--------------------------------------------------------------------------------------------------------
Dividends from affiliated companies                                                       $  19,690,933
--------------------------------------------------------------------------------------------------------
Interest                                                                                         97,242
                                                                                          --------------
Total investment income                                                                      19,788,175

--------------------------------------------------------------------------------------------------------
EXPENSES
--------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A                                                                                         982,769
Class B                                                                                         693,103
Class C                                                                                       1,837,419
Class N                                                                                          86,460
--------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A                                                                                         568,066
Class B                                                                                         167,804
Class C                                                                                         284,083
Class N                                                                                          36,646
Class Y                                                                                             195
--------------------------------------------------------------------------------------------------------
Shareholder communications:
Class A                                                                                          91,779
Class B                                                                                          30,332
Class C                                                                                          44,357
Class N                                                                                           3,446
Class Y                                                                                               3
--------------------------------------------------------------------------------------------------------
Trustees' compensation                                                                           42,918
--------------------------------------------------------------------------------------------------------
Custodian fees and expenses                                                                       3,030
--------------------------------------------------------------------------------------------------------
Other                                                                                            53,917
                                                                                          --------------
Total expenses                                                                                4,926,327
Less reduction to custodian expenses                                                               (139)
Less waivers and reimbursements of expenses                                                    (492,631)
                                                                                          --------------
Net expenses                                                                                  4,433,557

--------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME                                                                        15,354,618

--------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
--------------------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments:
Affiliated companies                                                                           (230,300)
Distributions received from affiliated companies                                             12,369,110
                                                                                          --------------
Net realized gain                                                                            12,138,810
--------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation on investments                                        129,981,994

--------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                                      $ 157,475,422
                                                                                          ==============


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.





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



YEAR ENDED APRIL 30,                                                                       2007            2006 1
-----------------------------------------------------------------------------------------------------------------

OPERATIONS
-----------------------------------------------------------------------------------------------------------------
Net investment income                                                           $    15,354,618   $     904,762
-----------------------------------------------------------------------------------------------------------------
Net realized gain                                                                    12,138,810       1,083,824
-----------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation                                               129,981,994      20,523,025
                                                                                ---------------------------------
Net increase in net assets resulting from operations                                157,475,422      22,511,611

-----------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
-----------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A                                                                             (10,171,822)       (712,897)
Class B                                                                              (1,414,813)       (128,919)
Class C                                                                              (3,882,167)       (221,423)
Class N                                                                                (439,944)        (13,342)
Class Y                                                                                 (56,588)         (2,866)
                                                                                ---------------------------------
                                                                                    (15,965,334)     (1,079,447)
-----------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A                                                                                (485,809)             --
Class B                                                                                 (85,742)             --
Class C                                                                                (225,452)             --
Class N                                                                                 (21,938)             --
Class Y                                                                                  (2,454)             --
                                                                                ---------------------------------
                                                                                       (821,395)             --

-----------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
-----------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from beneficial interest transactions:
Class A                                                                             428,919,290     169,798,646
Class B                                                                              70,777,058      31,525,125
Class C                                                                             204,970,855      78,877,189
Class N                                                                              25,290,376       5,634,714
Class Y                                                                               3,021,568       1,303,827
                                                                                ---------------------------------
                                                                                    732,979,147     287,139,501

-----------------------------------------------------------------------------------------------------------------
NET ASSETS
-----------------------------------------------------------------------------------------------------------------
Total increase                                                                      873,667,840     308,571,665
Beginning of period                                                                 308,675,665         104,000 2
                                                                                ---------------------------------
End of period (including accumulated net investment loss of $35,847
and $1,387, respectively)                                                       $ 1,182,343,505   $ 308,675,665
                                                                                =================================


1. For the period from September 27, 2005 (commencement of operations) to April
30, 2006.

2. Reflects the value of the Manager's initial seed money investment on August
25, 2005.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.





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



CLASS A     YEAR ENDED APRIL 30,                                                               2007        2006 1
------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                                                      $   11.81   $   10.00
------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2                                                                         .32         .14
Net realized and unrealized gain                                                               1.90        1.91
                                                                                          ------------------------
Total from investment operations                                                               2.22        2.05
------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                                                           (.28)       (.24)
Distributions from net realized gain                                                           (.01)         --
                                                                                          ------------------------
Total dividends and/or
distributions to shareholders                                                                  (.29)       (.24)
------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                                                            $   13.74   $   11.81
                                                                                          ========================

------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3                                                            19.05%      20.81%
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)                                                  $ 695,478   $ 182,910
------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                                                         $ 397,871   $  56,852
------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income                                                                          2.60%       2.10%
Total expenses 5                                                                               0.43%       0.53%
Expenses after payments, waivers and/or
reimbursements and reduction to custodian expenses                                             0.35%       0.46%
------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                                                           1%          0% 6


1. For the period from September 27, 2005 (commencement of operations) to April
30, 2006.

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

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

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

5. Expenses including all underlying fund expenses were as follows:

      Year Ended April 30, 2007       1.17%
      Period Ended April 30, 2006     1.43%

6. Less than 0.005%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                 24 | OPPENHEIMER INTERNATIONAL DIVERSIFIED FUND





CLASS B     YEAR ENDED APRIL 30,                                                               2007        2006 1
------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                                                      $   11.76    $  10.00
------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2                                                                         .21         .09
Net realized and unrealized gain                                                               1.89        1.90
                                                                                          ------------------------
Total from investment operations                                                               2.10        1.99
------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                                                           (.22)       (.23)
Distributions from net realized gain                                                           (.01)         --
                                                                                          ------------------------
Total dividends and/or
distributions to shareholders                                                                  (.23)       (.23)
------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                                                            $   13.63    $  11.76
                                                                                          ========================

------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3                                                            18.06%      20.20%
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)                                                  $ 118,894    $ 33,843
------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                                                         $  69,567    $ 10,159
------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income                                                                          1.74%       1.34%
Total expenses 5                                                                               1.30%       1.42%
Expenses after payments, waivers and/or
reimbursements and reduction to custodian expenses                                             1.22%       1.35%
------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                                                           1%          0% 6


1. For the period from September 27, 2005 (commencement of operations) to April
30, 2006.

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

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

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

5 Expenses including all underlying fund expenses were as follows:

      Year Ended April 30, 2007       2.04%
      Period Ended April 30, 2006     2.32%

6. Less than 0.005%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                 25 | OPPENHEIMER INTERNATIONAL DIVERSIFIED FUND



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



CLASS C     YEAR ENDED APRIL 30,                                                               2007        2006 1
------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                                                      $   11.77    $  10.00
------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2                                                                         .22         .04
Net realized and unrealized gain                                                               1.89        1.96
                                                                                          ------------------------
Total from investment operations                                                               2.11        2.00
------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                                                           (.23)       (.23)
Distributions from net realized gain                                                           (.01)         --
                                                                                          ------------------------
Total dividends and/or
distributions to shareholders                                                                  (.24)       (.23)
------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                                                            $   13.64    $  11.77
                                                                                          ========================

------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3                                                            18.14%      20.31%
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)                                                  $ 327,749    $ 84,529
------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                                                         $ 184,470    $ 24,928
------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income                                                                          1.81%       0.67%
Total expenses 5                                                                               1.19%       1.28%
Expenses after payments, waivers and/or reimbursements
and reduction to custodian expenses                                                            1.12%       1.21%
------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                                                           1%          0% 6


1. For the period from September 27, 2005 (commencement of operations) to April
30, 2006.

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

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

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

5. Expenses including all underlying fund expenses were as follows:

      Year Ended April 30, 2007       1.93%
      Period Ended April 30, 2006     2.18%

6. Less than 0.005%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                 26 | OPPENHEIMER INTERNATIONAL DIVERSIFIED FUND





CLASS N     YEAR ENDED APRIL 30,                                                               2007        2006 1
------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                                                      $   11.80     $ 10.00
------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2                                                                         .29         .10
Net realized and unrealized gain                                                               1.89        1.93
                                                                                          ------------------------
Total from investment operations                                                               2.18        2.03
------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                                                           (.27)       (.23)
Distributions from net realized gain                                                           (.01)         --
                                                                                          ------------------------
Total dividends and/or
distributions to shareholders                                                                  (.28)       (.23)
------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                                                            $   13.70     $ 11.80
                                                                                          ========================

------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3                                                            18.70%      20.66%
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)                                                  $  35,342     $ 5,989
------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                                                         $  17,382     $ 1,477
------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income                                                                          2.32%       1.61%
Total expenses 5                                                                               0.74%       0.79%
Expenses after payments, waivers and/or reimbursements
and reduction to custodian expenses                                                            0.67%       0.72%
------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                                                           1%          0% 6


1. For the period from September 27, 2005 (commencement of operations) to April
30, 2006.

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

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

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

5. Expenses including all underlying fund expenses were as follows:

      Year Ended April 30, 2007       1.48%
      Period Ended April 30, 2006     1.69%

6. Less than 0.005%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.





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



CLASS Y     YEAR ENDED APRIL 30,                                                              2007         2006 1
------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                                                      $  11.84      $ 10.00
------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income 2                                                                        .32          .09
Net realized and unrealized gain                                                              1.96         1.99
                                                                                         -------------------------
Total from investment operations                                                              2.28         2.08
------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                                                          (.31)        (.24)
Distributions from net realized gain                                                          (.01)          --
                                                                                         -------------------------
Total dividends and/or
distributions to shareholders                                                                 (.32)        (.24)
------------------------------------------------------------------------------------------------------------------
Net asset value, end of period                                                            $  13.80      $ 11.84
                                                                                         =========================

------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3                                                           19.51%       21.16%
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)                                                  $  4,881      $ 1,405
------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                                                         $  2,254      $   469
------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income                                                                         2.62%        1.41%
Total expenses 5                                                                              0.02%        0.08%
Expenses after payments, waivers and/or
reimbursements and reduction to custodian expenses                                           (0.05)% 6     0.01%
------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate                                                                          1%           0% 7


1. For the period from September 27, 2005 (commencement of operations) to April
30, 2006.

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

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

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

5. Expenses including all underlying fund expenses were as follows:

      Year Ended April 30, 2007       0.76%
      Period Ended April 30, 2006     0.98%

6. The amount of indirect expenses reimbursed for the class, including certain
management fees and all distribution related service plan fees incurred
indirectly, exceed the amount of the direct expenses it incurred.

7. Less than 0.005%.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.





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

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

Oppenheimer International Diversified Fund (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund's investment objective is to seek to achieve a high total
return through both capital appreciation and income. The Fund is a special type
of mutual fund known as a "fund of funds" because it invests in other mutual
funds. The Fund normally invests in a portfolio consisting of a target-weighted
allocation in Class A or Class Y shares of other Oppenheimer funds. The Fund's
investment advisor is OppenheimerFunds, Inc. (the "Manager").

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

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

--------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of each class of
shares based upon the net asset value of the applicable Underlying Funds. For
each Underlying Fund, the net asset value per share for a class of shares on a
"regular business day" is determined by dividing the value of the Underlying
Fund's net assets attributable to that class by the number of outstanding shares
of that class on that day. To determine net asset values, the Underlying Fund
assets 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 exchange or
market on which the security is principally traded, that security may be valued
by another method that the Underlying Fund's Board of Trustees/Directors
believes accurately reflects the fair value. Because some foreign securities
trade in markets and on exchanges that operate on weekends and U.S. holidays,
the values of some of the Underlying Fund's foreign investments may change on
days when investors cannot buy or redeem Underlying Fund shares.





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

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

      Short-term "money market type" debt securities with remaining maturities
of sixty days or less are valued at amortized cost (which approximates market
value).

--------------------------------------------------------------------------------
RISKS OF INVESTING IN THE UNDERLYING FUNDS. Each of the Underlying Funds in
which the Fund invests has its own investment risks, and those risks can affect
the value of the Fund's investments and therefore the value of the Fund's
shares. To the extent that the Fund invests more of its assets in one Underlying
Fund than in another, the Fund will have greater exposure to the risks of that
Underlying Fund.

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

--------------------------------------------------------------------------------
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         TAX PURPOSES
    ------------------------------------------------------------------------
    $ --              $ 10,729,226                 $ --        $ 150,469,439

1. During the fiscal year ended April 30, 2007, the Fund did not utilize any
capital loss carryforward.

2. During the fiscal year ended April 30, 2006, the Fund did not utilize any
capital loss carryforward.

Net investment income (loss) and net realized gain (loss) may differ for
financial statement and tax purposes. The character of dividends and
distributions made during the fiscal year from net investment income or net
realized gains may differ from their ultimate characterization for federal
income tax purposes. Also, due to timing of dividends and distributions, the
fiscal year in which amounts are distributed may differ from the fiscal year in
which the income or net realized gain was recorded by the Fund. Accordingly, the
following amounts have been reclassified for April 30, 2007. Net assets of the
Fund were unaffected by the reclassifications.

                                        REDUCTION TO            REDUCTION TO
                                         ACCUMULATED         ACCUMULATED NET
      INCREASE TO                     NET INVESTMENT           REALIZED GAIN
      PAID-IN CAPITAL                           LOSS        ON INVESTMENTS 3
      ----------------------------------------------------------------------
      $ 864,662                            $ 576,256             $ 1,440,918

3. $864,662, all of which was long-term capital gain, was distributed in
connection with Fund share redemptions.

The tax character of distributions paid during the years ended April 30, 2007
and April 30, 2006 was as follows:

                                               YEAR ENDED       PERIOD ENDED
                                           APRIL 30, 2007     APRIL 30, 2006
      ----------------------------------------------------------------------
      Distributions paid from:
      Ordinary income                        $ 15,965,334        $ 1,079,447
      Long-term capital gain                      821,395                 --
                                             -------------------------------
      Total                                  $ 16,786,729        $ 1,079,447
                                             ===============================

The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of April 30, 2007 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.





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

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

      Federal tax cost of securities          $ 1,026,508,461
                                              ===============
      Gross unrealized appreciation           $   150,493,493
      Gross unrealized depreciation                   (24,054)
                                              ---------------
      Net unrealized appreciation             $   150,469,439
                                              ===============

--------------------------------------------------------------------------------
TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan (the
"Plan") for the Fund's independent trustees. Benefits are based on years of
service and fees paid to each trustee during their period of service. The Plan
was frozen with respect to adding new participants effective December 31, 2006
(the "Freeze Date") and existing Plan Participants as of the Freeze Date will
continue to receive accrued benefits under the Plan. Active independent trustees
as of the Freeze Date have each elected a distribution method with respect to
their benefits under the Plan. During the year ended April 30, 2007, the Fund's
projected benefit obligations were increased by $32,112 and payments of $4,738
were made to retired trustees, resulting in an accumulated liability of $28,649
as of April 30, 2007.

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

--------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
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 APRIL 30, 2007   PERIOD ENDED APRIL 30, 2006 1,2
                               SHARES          AMOUNT           SHARES           AMOUNT
----------------------------------------------------------------------------------------

CLASS A
Sold                       40,127,094   $ 488,828,300       15,954,779    $ 174,923,126
Dividends and/or
distributions reinvested      720,026       9,137,132           59,487          613,903
Redeemed                   (5,717,795)    (69,046,142)        (530,333)      (5,738,383)
                           -------------------------------------------------------------
Net increase               35,129,325   $ 428,919,290       15,483,933    $ 169,798,646
                           =============================================================

----------------------------------------------------------------------------------------
CLASS B
Sold                        6,865,011   $  83,059,738        2,903,240    $  31,813,205
Dividends and/or
distributions reinvested      105,828       1,335,549           10,346          106,666
Redeemed                   (1,123,782)    (13,618,229)         (35,645)        (394,746)
                           -------------------------------------------------------------
Net increase                5,847,057   $  70,777,058        2,877,941    $  31,525,125
                           =============================================================



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

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



                            YEAR ENDED APRIL 30, 2007   PERIOD ENDED APRIL 30, 2006 1,2
                               SHARES          AMOUNT           SHARES           AMOUNT
----------------------------------------------------------------------------------------

CLASS C
Sold                       18,242,998   $ 221,816,907        7,231,052     $ 79,421,279
Dividends and/or
distributions reinvested      264,108       3,335,678           18,954          195,420
Redeemed                   (1,662,319)    (20,181,730)         (65,720)        (739,510)
                           -------------------------------------------------------------
Net increase               16,844,787   $ 204,970,855        7,184,286     $ 78,877,189
                           =============================================================

----------------------------------------------------------------------------------------
CLASS N
Sold                        2,373,233   $  28,971,297          523,141     $  5,813,469
Dividends and/or
distributions reinvested       33,340         422,418            1,258           12,979
Redeemed                     (333,707)     (4,103,339)         (16,770)        (191,734)
                           -------------------------------------------------------------
Net increase                2,072,866   $  25,290,376          507,629     $  5,634,714
                           =============================================================

----------------------------------------------------------------------------------------
CLASS Y
Sold                          272,301   $   3,467,364          119,418     $  1,313,165
Dividends and/or
distributions reinvested        4,632          59,010              275            2,842
Redeemed                      (42,036)       (504,806)          (1,081)         (12,180)
                           -------------------------------------------------------------
Net increase                  234,897   $   3,021,568          118,612     $  1,303,827
                           =============================================================


1. For the period from September 27, 2005 (commencement of operations) to April
30, 2006, for Class A, Class B, Class C, Class N and Class Y shares.

2. The Fund sold 10,000 Class A shares at a value of $100,000 and 100 shares of
each Class B, Class C, Class N and Class Y at a value of $1,000, $1,000, $1,000
and $1,000, respectively, to the Manager upon seeding of the Fund on August 25,
2005.

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

The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations and investments in IMMF, for the year ended April
30, 2007, were as follows:

                               PURCHASES                SALES
-------------------------------------------------------------
Investment securities      $ 745,406,606          $ 4,797,761

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

MANAGEMENT FEES. Under the investment advisory agreement, the Manager does not
charge a management fee, but rather collects indirect management fees from
investments in the Underlying Funds. The weighted indirect management fees
collected from the Underlying Funds, as a percent of average daily net assets of
the Fund for the year ended April 30, 2007 were 0.68%.

--------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS or the Transfer Agent), a
division of the Manager, acts as the transfer and shareholder servicing agent
for the Fund. The Fund pays OFS a per account fee. For the year ended April 30,
2007, the Fund paid $947,416 to OFS for services to the Fund.




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

--------------------------------------------------------------------------------
OFFERING AND ORGANIZATIONAL COSTS. The Manager paid all offering and
organizational costs associated with the registration and seeding of 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 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 determines its
uncompensated expenses under the plan at calendar quarter ends. The
Distributor's aggregate uncompensated expenses under the plan at March 31, 2007
for Class B, Class C and Class N shares were $1,919,298, $2,156,881 and
$222,866, 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
------------------------------------------------------------------------------------------

April 30, 2007    $ 1,608,968        $ 6,405      $ 128,695       $ 61,350          $ 458


--------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. The Manager has voluntarily agreed to a
total expense limitation on the aggregate amount of combined direct
(fund-of-funds level) and indirect expense so that as a percentage of average
daily net assets they will not exceed the following annual rates: 1.75%, 2.50%,
2.50% and 2.00%, for Class A, Class B, Class C and Class N, respectively. The
Manager may modify or terminate this undertaking at any time without notice to
shareholders.

      The Manager will waive fees and/or reimburse Fund expenses in amounts
equal to the indirect management fees incurred through the Fund's investment in
IMMF as well as indirect distribution related service plan fees incurred through
the Fund's investments in other Oppenheimer funds. During the year ended April
30, 2007, the Manager waived $1,620 for IMMF management fees and $491,011 for
distribution related service plan fees.

      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 PRONOUNCEMENTS

In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. 48 ("FIN 48"), ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES.
FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise's financial statements in accordance with FASB Statement No. 109,
ACCOUNTING FOR INCOME TAXES. FIN 48 requires the evaluation of tax positions
taken in the course of preparing the Fund's tax returns to determine whether it
is "more-likely-than-not" that tax positions taken in the Fund's tax return will
be ultimately sustained. A tax liability and expense must be recorded in respect
of any tax position that, in Management's judgment, will not be fully realized.
FIN 48 is effective for fiscal years beginning after December 15, 2006. As of
April 30, 2007, the Manager has evaluated the implications of FIN 48 and does
not currently anticipate a material impact to the Fund's financial statements.
The Manager will continue to monitor the Fund's tax positions prospectively for
potential future impacts.





      In September 2006, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS. This standard establishes a
single authoritative definition of fair value, sets out a framework for
measuring fair value and expands disclosures about fair value measurements. SFAS
No. 157 applies to fair value measurements already required or permitted by
existing standards. SFAS No. 157 is effective for financial statements issued
for fiscal years beginning after November 15, 2007, and interim periods within
those fiscal years. As of April 30, 2007, the Manager does not believe the
adoption of SFAS No. 157 will materially impact the financial statement amounts;
however, additional disclosures may be required about the inputs used to develop
the measurements and the effect of certain of the measurements on changes in net
assets for the period.

Appendix A

RATINGS DEFINITIONS

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

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

LONG-TERM RATINGS: BONDS AND PREFERRED STOCK ISSUER RATINGS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

N.R. Not rated.

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

Bond Investment Quality Standards

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

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

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

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

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

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

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

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

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

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

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

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

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

Investment Grade:

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

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

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

Speculative Grade:

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

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

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

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

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

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

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

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

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

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

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

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

D: Default. Denotes actual or imminent payment default.

[PG NUMBER]

Appendix B

OppenheimerFunds Special Sales Charge Arrangements and Waivers

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

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

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

Waivers that apply at the time shares are redeemed must be requested by the shareholder
and/or dealer in the redemption request.

I. Applicability of Class A Contingent Deferred Sales Charges in Certain Cases
--------------------------------------------------------------------------------------------

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

There is no initial sales charge on purchases of Class A shares of any of the
Oppenheimer funds in the cases listed below. However, these purchases may be subject to the
Class A contingent deferred sales charge if redeemed within 18 months (24 months in the
case of Oppenheimer Rochester National Municipals and Rochester Fund Municipals) of the
beginning of the calendar month of their purchase, as described in the Prospectus (unless a
waiver described elsewhere in this Appendix applies to the redemption). Additionally, on
shares purchased under these waivers that are subject to the Class A contingent deferred
sales charge, the Distributor will pay the applicable concession described in the
Prospectus under "Class A Contingent Deferred Sales Charge."(6) This waiver provision
applies to:
o Purchases of Class A shares aggregating $1 million or more.
o Purchases of Class A shares, prior to March 1, 2007, by a Retirement Plan that was
permitted to purchase such shares at net asset value but subject to a contingent
deferred sales charge prior to March 1, 2001. That included plans (other than IRA or
403(b)(7) Custodial Plans) that: 1) bought shares costing $500,000 or more, 2) had at
the time of purchase 100 or more eligible employees or total plan assets of $500,000
or more, or 3) certified to the Distributor that it projects to have annual plan
purchases of $200,000 or more.
o Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the purchases are made:
1) through a broker, dealer, bank or registered investment adviser that has made
special arrangements with the Distributor for those purchases, or
2) by a direct rollover of a distribution from a qualified Retirement Plan if the
administrator of that Plan has made special arrangements with the Distributor
for those purchases.
o Purchases of Class A shares by Retirement Plans that have any of the following
record-keeping arrangements:
1) The record keeping is performed by Merrill Lynch Pierce Fenner & Smith, Inc.
("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 the Class A Initial and Contingent Deferred Sales Charges for Certain
Purchasers.

Class A shares purchased by the following investors are not subject to any Class A sales
charges (and no concessions are paid by the Distributor on such purchases):
o The Manager or its affiliates.
o Present or former officers, directors, trustees and employees (and their "immediate
families") of the Fund, the Manager and its affiliates, and retirement plans
established by them for their employees. The term "immediate family" refers to one's
spouse, children, grandchildren, grandparents, parents, parents-in-law, brothers and
sisters, sons- and daughters-in-law, a sibling's spouse, a spouse's siblings, aunts,
uncles, nieces and nephews; relatives by virtue of a remarriage (step-children,
step-parents, etc.) are included.
o Registered management investment companies, or separate accounts of insurance
companies having an agreement with the Manager or the Distributor for that purpose.
o Dealers or brokers that have a sales agreement with the Distributor, if they purchase
shares for their own accounts or for retirement plans for their employees.
o Employees and registered representatives (and their spouses) of dealers or brokers
described above or financial institutions that have entered into sales arrangements
with such dealers or brokers (and which are identified as such to the Distributor) or
with the Distributor. The purchaser must certify to the Distributor at the time of
purchase that the purchase is for the purchaser's own account (or for the benefit of
such employee's spouse or minor children).
o Dealers, brokers, banks or registered investment advisors that have entered into an
agreement with the Distributor providing specifically for the use of shares of the
Fund in particular investment products made available to their clients. Those clients
may be charged a transaction fee by their dealer, broker, bank or advisor for the
purchase or sale of Fund shares.
o Investment advisors and financial planners who have entered into an agreement for
this purpose with the Distributor and who charge an advisory, consulting or other fee
for their services and buy shares for their own accounts or the accounts of their
clients.
o "Rabbi trusts" that buy shares for their own accounts, if the purchases are made
through a broker or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases.
o Clients of investment advisors or financial planners (that have entered into an
agreement for this purpose with the Distributor) who buy shares for their own
accounts may also purchase shares without sales charge but only if their accounts are
linked to a master account of their investment advisor or financial planner on the
books and records of the broker, agent or financial intermediary with which the
Distributor has made such special arrangements. Each of these investors may be
charged a fee by the broker, agent or financial intermediary for purchasing shares.
o Directors, trustees, officers or full-time employees of OpCap Advisors or its
affiliates, their relatives or any trust, pension, profit sharing or other benefit
plan which beneficially owns shares for those persons.
o Accounts for which Oppenheimer Capital (or its successor) is the investment advisor
(the Distributor must be advised of this arrangement) and persons who are directors
or trustees of the company or trust which is the beneficial owner of such accounts.
o A unit investment trust that has entered into an appropriate agreement with the
Distributor.
o Dealers, brokers, banks, or registered investment advisers that have entered into an
agreement with the Distributor to sell shares to defined contribution employee
retirement plans for which the dealer, broker or investment adviser provides
administration services.
o Retirement Plans and deferred compensation plans and trusts used to fund those plans
(including, for example, plans qualified or created under sections 401(a), 401(k),
403(b) or 457 of the Internal Revenue Code), in each case if those purchases are made
through a broker, agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases.
o A TRAC-2000 401(k) plan (sponsored by the former Quest for Value Advisors) whose
Class B or Class C shares of a Former Quest for Value Fund were exchanged for Class A
shares of that Fund due to the termination of the Class B and Class C TRAC-2000
program on November 24, 1995.
o A qualified Retirement Plan that had agreed with the former Quest for Value Advisors
to purchase shares of any of the Former Quest for Value Funds at net asset value,
with such shares to be held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, if that arrangement was consummated and share purchases commenced by
December 31, 1996.
o Effective March 1, 2007, purchases of Class A shares by a Retirement Plan that was
permitted to purchase such shares at net asset value but subject to a contingent
deferred sales charge prior to March 1, 2001. That included plans (other than IRA or
403(b)(7) Custodial Plans) that: 1) bought shares costing $500,000 or more, 2) had at
the time of purchase 100 or more eligible employees or total plan assets of $500,000
or more, or 3) certified to the Distributor that it projects to have annual plan
purchases of $200,000 or more.
o 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.

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

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

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

The Class A contingent deferred sales charge is also waived if shares that would otherwise
be subject to the contingent deferred sales charge are redeemed in the following cases:
o To make Automatic Withdrawal Plan payments that are limited annually to no more than
12% of the account value adjusted annually.
o Involuntary redemptions of shares by operation of law or involuntary redemptions of
small accounts (please refer to "Shareholder Account Rules and Policies," in the
applicable fund Prospectus).
o For distributions from Retirement Plans, deferred compensation plans or other
employee benefit plans for any of the following purposes:
1) Following the death or disability (as defined in the Internal Revenue Code) of
the participant or beneficiary. The death or disability must occur after the
participant's account was established.
2) To return excess contributions.
3) To return contributions made due to a mistake of fact.
o Hardship withdrawals, as defined in the plan.(7)
5) Under a Qualified Domestic Relations Order, as defined in the Internal Revenue
Code, or, in the case of an IRA, a divorce or separation agreement described in
Section 71(b) of the Internal Revenue Code.
6) To meet the minimum distribution requirements of the Internal Revenue Code.
7) To make "substantially equal periodic payments" as described in Section 72(t)
of the Internal Revenue Code.
8) For loans to participants or beneficiaries.
9) Separation from service.(8)
10) Participant-directed redemptions to purchase shares of a mutual fund
(other than a fund managed by the Manager or a subsidiary of the Manager) if
the plan has made special arrangements with the Distributor.
11) Plan termination or "in-service distributions," if the redemption
proceeds are rolled over directly to an OppenheimerFunds-sponsored IRA.
o For distributions from 401(k) plans sponsored by broker-dealers that have entered
into a special agreement with the Distributor allowing this waiver.
o For distributions from retirement plans that have $10 million or more in plan assets
and that have entered into a special agreement with the Distributor.
o For distributions from retirement plans which are part of a retirement plan product
or platform offered by certain banks, broker-dealers, financial advisors, insurance
companies or record keepers which have entered into a special agreement with the
Distributor.
o At the sole discretion of the Distributor, the contingent deferred sales charge may
be waived for redemptions of shares requested by the shareholder of record within 60
days following the termination by the Distributor of the selling agreement between
the Distributor and the shareholder of record's broker-dealer of record for the
account.

III. Waivers of Class B, Class C and Class N Sales Charges of Oppenheimer Funds
-----------------------------------------------------------------------------------------------

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

A. Waivers for Redemptions in Certain Cases.

The Class B, Class C and Class N contingent deferred sales charges will be waived for
redemptions of shares in the following cases:
o Shares redeemed involuntarily, as described in "Shareholder Account Rules and
Policies," in the applicable Prospectus.
o Redemptions from accounts other than Retirement Plans following the death or
disability of the last surviving shareholder. The death or disability must have
occurred after the account was established, and for disability you must provide
evidence of a determination of disability by the Social Security Administration.
o The contingent deferred sales charges are generally not waived following the death or
disability of a grantor or trustee for a trust account. The contingent deferred sales
charges will only be waived in the limited case of the death of the trustee of a
grantor trust or revocable living trust for which the trustee is also the sole
beneficiary. The death or disability must have occurred after the account was
established, and for disability you must provide evidence of a determination of
disability (as defined in the Internal Revenue Code).
o Distributions from accounts for which the broker-dealer of record has entered into a
special agreement with the Distributor allowing this waiver.
o At the sole discretion of the Distributor, the contingent deferred sales charge may
be waived for redemptions of shares requested by the shareholder of record within 60
days following the termination by the Distributor of the selling agreement between
the Distributor and the shareholder of record's broker-dealer of record for the
account.
o Redemptions of Class B shares held by Retirement Plans whose records are maintained
on a daily valuation basis by Merrill Lynch or an independent record keeper under a
contract with Merrill Lynch.
o Redemptions of Class C shares of Oppenheimer U.S. Government Trust from accounts of
clients of financial institutions that have entered into a special arrangement with
the Distributor for this purpose.
o Redemptions of Class C shares of an Oppenheimer fund in amounts of $1 million or more
requested in writing by a Retirement Plan sponsor and submitted more than 12 months
after the Retirement Plan's first purchase of Class C shares, if the redemption
proceeds are invested to purchase Class N shares of one or more Oppenheimer funds.
o Distributions(9) from Retirement Plans or other employee benefit plans for any of the
following purposes:
1) Following the death or disability (as defined in the Internal Revenue Code) of
the participant or beneficiary. The death or disability must occur after the
participant's account was established in an Oppenheimer fund.
2) To return excess contributions made to a participant's account.
3) To return contributions made due to a mistake of fact.
4) To make hardship withdrawals, as defined in the plan.(10)
5) To make distributions required under a Qualified Domestic Relations Order or,
in the case of an IRA, a divorce or separation agreement described in Section
71(b) of the Internal Revenue Code.
6) To meet the minimum distribution requirements of the Internal Revenue Code.
7) To make "substantially equal periodic payments" as described in Section 72(t)
of the Internal Revenue Code.
8) For loans to participants or beneficiaries.(11)
9) On account of the participant's separation from service.(12)
10) Participant-directed redemptions to purchase shares of a mutual fund
(other than a fund managed by the Manager or a subsidiary of the Manager)
offered as an investment option in a Retirement Plan if the plan has made
special arrangements with the Distributor.
11) Distributions made on account of a plan termination or "in-service"
distributions, if the redemption proceeds are rolled over directly to an
OppenheimerFunds-sponsored IRA.
12) For distributions from a participant's account under an Automatic
Withdrawal Plan after the participant reaches age 59 1/2, as long as the aggregate
value of the distributions does not exceed 10% of the account's value, adjusted
annually.
13) Redemptions of Class B shares under an Automatic Withdrawal Plan for an
account other than a Retirement Plan, if the aggregate value of the redeemed
shares does not exceed 10% of the account's value, adjusted annually.
14) For distributions from 401(k) plans sponsored by broker-dealers that have
entered into a special arrangement with the Distributor allowing this waiver.
o Redemptions of Class B shares or Class C shares under an Automatic Withdrawal Plan
from an account other than a Retirement Plan if the aggregate value of the redeemed
shares does not exceed 10% of the account's value annually.

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:
o Shares sold to the Manager or its affiliates.
o Shares sold to registered management investment companies or separate accounts of
insurance companies having an agreement with the Manager or the Distributor for that
purpose.
o Shares issued in plans of reorganization to which the Fund is a party.
o Shares sold to present or former officers, directors, trustees or employees (and
their "immediate families" as defined above in Section I.A.) of the Fund, the Manager
and its affiliates and retirement plans established by them for their employees.

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

The initial and contingent deferred sales charge rates and waivers for Class A, Class B and
Class C shares described in the Prospectus or SAI 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 Rising Dividends Fund, Inc.
Oppenheimer Small- & Mid- Cap Value Fund Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Balanced Fund Oppenheimer Quest International Value Fund,
Inc.

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

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

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

A. Reductions or Waivers of Class A Sales Charges.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

|_|

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

VI. Special Reduced Sales Charge for Former Shareholders of Advance America Funds, Inc.
--------------------------------------------------------------------------------------------

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

VII. Sales Charge Waivers on Purchases of Class M Shares of Oppenheimer Convertible
Securities Fund
--------------------------------------------------------------------------------------------

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

Oppenheimer International Diversified Fund

Internet Website
www.oppenheimerfunds.com

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

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

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

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

Independent Registered Public Accounting Firm
KPMG LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Mayer, Brown, Rowe & Maw LLP
1675 Broadway
New York, New York 10019

[GRAPHIC OMITTED][GRAPHIC OMITTED]

PX195.001.0807

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