Oppenheimer Cash Reserves

497 1 sai.htm SAI WITH FINANCIAL INFORMATION Oppenheimer Cash Reserves

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Oppenheimer Cash Reserves
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6803 S. Tucson Way, Centennial, Colorado 80112-3924
1.800.CALL OPP (225.5677)

Statement of Additional Information dated November 9, 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 November 9, 2007. It should be read together with the Prospectus, which
may be obtained by writing to the Fund's Transfer Agent, OppenheimerFunds Services, at P.O.
Box 5270, Denver, Colorado 80217, by calling the Transfer Agent at the toll-free number
shown above, or by downloading it from the OppenheimerFunds Internet website at
www.oppenheimerfunds.com.

Contents Page

About the Fund
Additional Information about the Fund's Investment Policies and Risks........2
The Fund's Investment Policies............................................2
Other Investment Strategies...............................................6
Other Investment Restrictions.............................................8
Disclosure of Portfolio Holdings..........................................9
How the Fund is Managed.....................................................13
Organization and History.................................................13
Board of Trustees and Oversight Committees...............................14
Trustees and Officers of the Fund........................................16
The Manager..............................................................24
Distribution and Service Plans..............................................27
Payments to Fund Intermediaries.............................................32
Performance of the Fund.....................................................37

About Your Account
How To Buy Shares...........................................................40
How To Sell Shares..........................................................47
How To Exchange Shares......................................................52
Dividends and Taxes.........................................................57
Additional Information About the Fund.......................................60

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

Appendix A: Ratings Definitions............................................A-1
Appendix B: OppenheimerFunds Special Sales Charge Arrangements and Waivers.B-1
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ABOUT THE FUND
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Additional Information About the Fund's Investment Policies and Risks

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

The Fund's Investment Policies. The Fund's objective is to seek the maximum current income
that is consistent with stability of principal. The Fund will not make investments with the
objective of seeking capital growth. However, the value of the securities held by the Fund
may be affected by changes in general interest rates. Because the current value of debt
securities varies inversely with changes in prevailing interest rates, if interest rates
increase after a security is purchased, that security would normally decline in value.
Conversely, if interest rates decrease after a security is purchased, its value would rise.
However, those fluctuations in value will not generally result in realized gains or losses
to the Fund since the Fund does not usually intend to dispose of securities prior to their
maturity. A debt security held to maturity is redeemable by its issuer at full principal
value plus accrued interest.

The Fund may sell securities prior to their maturity, to attempt to take advantage of
short-term market variations, or because of a revised credit evaluation of the issuer or
other considerations. The Fund may also do so to generate cash to satisfy redemptions of
Fund shares. In such cases, the Fund may realize a capital gain or loss on the security.

|X| Ratings of Securities -- Portfolio Quality, Maturity and Diversification. Under
Rule 2a-7 of the Investment Company Act of 1940 (the "Investment Company Act"), the Fund
uses the amortized cost method to value its portfolio securities to determine the Fund's
net asset value per share. Rule 2a-7 places restrictions on a money market fund's
investments. Under that Rule, the Fund may purchase only those securities that the Manager,
under Board-approved procedures, has determined have minimal credit risks and are "Eligible
Securities." The rating restrictions described in the Prospectus and this SAI do not apply
to banks in which the Fund's cash is kept.

An "Eligible Security" is one that has been rated in one of the two highest
short-term rating categories by any two "nationally-recognized statistical rating
organizations." That term is defined in Rule 2a-7 and they are referred to as "Rating
Organizations" in this SAI. If only one Rating Organization has rated that security, it
must have been rated in one of the two highest rating categories by that Rating
Organization. An unrated security that is judged by the Manager to be of comparable quality
to Eligible Securities rated by Rating Organizations may also be an "Eligible Security."

Rule 2a-7 permits the Fund to purchase any number of "First Tier Securities." These
are Eligible Securities that have been rated in the highest rating category for short-term
debt obligations by at least two Rating Organizations. If only one Rating Organization has
rated a particular security, it must have been rated in the highest rating category by that
Rating Organization. Comparable unrated securities may also be First Tier Securities.

Under Rule 2a-7, the Fund may invest only up to 5% of its total assets in "Second
Tier Securities." Those are Eligible Securities that are not "First Tier Securities." In
addition, the Fund may not invest more than:
o 5% of its total assets in the securities of any one issuer (other than the U.S.
government, its agencies or instrumentalities) or
o 1% of its total assets or $1 million (whichever is greater) in Second Tier Securities
of any one issuer.

Under Rule 2a-7, the Fund must maintain a dollar-weighted average portfolio maturity
of not more than 90 days, and the maturity of any single portfolio investment may not
exceed 397 days. The Board regularly reviews reports from the Manager to show the Manager's
compliance with the Fund's procedures and with the Rule.

If a security's rating is downgraded, the Manager or the Board of Trustees may have
to reassess the security's credit risk. If a security is downgraded, the Manager or the
Board of Trustees will promptly reassess whether the security continues to present minimal
credit risk, reassess the status of the security as an "eligible security," and take such
actions as is appropriate. If the Fund disposes of the security within five days of the
Manager learning of the downgrade, the Manager will provide the Board of Trustees with
subsequent notice of such downgrade. If a security is in default, or ceases to be an
Eligible Security, or is determined no longer to present minimal credit risks, the Board of
Trustees must determine whether it would be in the best interests of the Fund to dispose of
the security.

The Rating Organizations must be designated as nationally-recognized statistical
rating organizations by the Securities and Exchange Commission (the "SEC"). Appendix A to
this SAI contains descriptions of the rating categories of certain of those Rating
Organizations. Ratings at the time of purchase will determine whether securities may be
acquired under the restrictions described above.

|X| U.S. Government Securities. U.S. government securities are obligations issued
or guaranteed by the U.S. government or its agencies or instrumentalities. They include
Treasury Bills (which mature within one year of the date they are issued) and Treasury
Notes and Bonds (which are issued with longer maturities). All Treasury securities are
backed by the full faith and credit of the United States.

U.S. government agencies and instrumentalities that issue or guarantee securities
include, but are not limited to, the Federal Housing Administration, Farmers Home
Administration, Export-Import Bank of the United States, Small Business Administration,
Government National Mortgage Association, General Services Administration, Bank for
Cooperatives, Federal Home Loan Banks, Federal Home Loan Mortgage Corporation, Federal
Intermediate Credit Banks, Federal Land Banks, Maritime Administration, the Tennessee
Valley Authority and the District of Columbia Armory Board.

Securities issued or guaranteed by U.S. government agencies and instrumentalities are
not always backed by the full faith and credit of the United States. Some, such as
securities issued by the Federal National Mortgage Association ("Fannie Mae"), are backed
by the right of the agency or instrumentality to borrow from the Treasury. Others, such as
securities issued by the Federal Home Loan Mortgage Corporation ("Freddie Mac"), are
supported only by the credit of the instrumentality and not by the Treasury. If the
securities are not backed by the full faith and credit of the United States, the purchaser
must look principally to the agency issuing the obligation for repayment and may not be
able to assert a claim against the United States if the issuing agency or instrumentality
does not meet its commitment.

Among the U.S. government securities that may be purchased by the Fund are
"mortgage-backed securities" of Fannie Mae, Government National Mortgage Association
("Ginnie Mae") and Freddie Mac. Timely payment of principal and interest on Ginnie Mae
pass-through is guaranteed by the full faith and credit of the United States. These
mortgage-backed securities include "pass-through" securities and "participation
certificates." Both types of securities are similar, in that they represent pools of
mortgages that are assembled by a vendor who sells interests in the pool. Payments of
principal and interest by individual mortgagors are passed through to the holders of the
interests in the pool. Another type of mortgage-backed security is the "collateralized
mortgage obligation." It is similar to a conventional bond and is secured by groups of
individual mortgages.

|X| Time Deposits and Other Bank Obligations. The types of "banks" whose securities
the Fund may buy include commercial banks, savings banks, and savings and loan
associations, which may or may not be members of the Federal Deposit Insurance Corporation.
The Fund may also buy securities of "foreign banks" that are payable in U.S. dollars and
are:
o foreign branches of U.S. banks (which may be issuers of "Eurodollar" money market
instruments),
o U.S. branches and agencies of foreign banks (which may be issuers of "Yankee dollar"
instruments), or
o foreign branches of foreign banks.

The Fund may invest in fixed time deposits. These 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, the Fund's investments in time deposits that are
subject to penalties (other than time deposits maturing in less than 7 days) are subject to
the 10% investment limitation for investing in illiquid or restricted securities, set forth
in "Illiquid and Restricted Securities" in the Prospectus. The Fund will buy bank
obligations only from a domestic bank with total assets of at least $2.0 billion or from a
foreign bank with total assets of at least $30.0 billion. Those asset requirements apply
only at the time the obligations are acquired.

|X| Insured Bank Obligations. The Federal Deposit Insurance Corporation ("FDIC")
insures the deposits of banks and savings and loan associations up to $100,000 per
investor. Within the limits set forth in the Prospectus, the Fund may purchase bank
obligations that are fully insured as to principal by the FDIC. To remain fully insured as
to principal, these investments must currently be limited to $100,000 per bank. If the
principal amount and accrued interest together exceed $100,000, then the accrued interest
in excess of that $100,000 will not be insured.
|X| Bank Loan Participation Agreements. The Fund may invest in bank loan
participation agreements, subject to the investment limitation set forth in the Prospectus
as to investments in illiquid securities. Participation agreements provide an undivided
interest in a loan made by the bank issuing the participation interest in the proportion
that the buyer's investment bears to the total principal amount of the loan. Under this
type of arrangement, the issuing bank may have no obligation to the buyer other than to pay
principal and interest on the loan if and when received by the bank. Thus, the Fund must
look to the creditworthiness of the borrower, which is obligated to make payments of
principal and interest on the loan. If the borrower fails to pay scheduled principal or
interest payments, the Fund may experience a reduction in income.

|X| Asset-Backed Securities. These securities, issued by trusts and special purpose
corporations, are backed by pools of assets, primarily automobile and credit-card
receivables and home equity loans. They pass through the payments on the underlying
obligations to the security holders (less servicing fees paid to the originator or fees for
any credit enhancement). 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.

Payments of principal and interest passed through to holders of asset-backed
securities are typically supported by some form of credit enhancement, such as a letter of
credit, surety bond, limited guarantee by another entity or supported having a priority to
certain of the borrower's other securities. The degree of credit enhancement varies, and
generally applies to only a fraction of the asset-backed security's par value until
exhausted. If the credit enhancement of an asset-backed security held by the Fund has been
exhausted, and if any required payments of principal and interest are not made with respect
to the underlying loans, the Fund may experience losses or delays in receiving payment.

The risks of investing in asset-backed securities are ultimately dependent upon
payment of consumer loans by the individual borrowers. As a purchaser of an asset-backed
security, the Fund would generally have no recourse to the entity that originated the loans
in the event of default by a borrower. The underlying loans are subject to prepayments,
which shorten the weighted average life of asset-backed securities and may lower their
return, in the same manner prepayments of a pool of mortgage loans underlying
mortgage-backed securities may shorten the average life or lower the return of those
securities. However, asset-backed securities do not have the benefit of the same security
interest in the underlying collateral as do mortgage-backed securities.

|X| Repurchase Agreements. In a repurchase transaction, the Fund acquires 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. An "approved vendor" may be a U.S. commercial bank, the U.S. branch
of a foreign bank, or a broker-dealer which has been designated a primary dealer in
government securities. They must meet the credit requirements set by the Manager from time
to time.

The majority of these transactions run from day to day, and delivery pursuant to the
resale typically will occur within one to five days of the purchase. The Fund will not
enter into a repurchase agreement that will cause more than 10% of its net assets to be
subject to repurchase agreements maturing in more than seven days.

Repurchase agreements are considered "loans" under the Investment Company Act
collateralized by the underlying security. The Fund's repurchase agreements require that at
all times while the repurchase agreement is in effect, the collateral's value must equal or
exceed the repurchase price to fully collateralize the repayment obligation. Additionally,
the Manager will monitor the vendor's creditworthiness to confirm that the vendor is
financially sound and will continuously monitor the collateral's value. However, if the
vendor fails to pay the resale price on the delivery date, the Fund may incur costs in
disposing of the collateral and may experience losses if there is any delay in its ability
to do so.

Pursuant to an Exemptive Order issued by the SEC, the Fund, along with other
affiliated entities managed by the Manager may transfer uninvested cash balances into one
or more joint repurchase accounts. These balances are invested in one or more repurchase
agreements, secured by U.S. government securities. Securities 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 of the collateral may be subject to legal proceedings.

Other Investment Strategies

|X| Floating Rate/Variable Rate Obligations. The Fund may invest in instruments
with floating or variable interest rates. The interest rate on a floating rate obligation
is based on a stated prevailing market rate, such as a bank's prime rate, the 90-day U.S.
Treasury Bill rate, the rate of return on commercial paper or bank certificates of deposit,
or some other standard. The rate on the investment is adjusted automatically each time the
market rate is adjusted. The interest rate on a variable rate obligation is also based on a
stated prevailing market rate but is adjusted automatically at a specified interval of not
less than one year. Some variable rate or floating rate obligations in which the Fund may
invest have a demand feature entitling the holder to demand payment of an amount
approximately equal to the amortized cost of the instrument or the principal amount of the
instrument plus accrued interest at any time, or at specified intervals not exceeding 397
days. These notes may or may not be backed by bank letters of credit.

Variable rate demand notes may include master demand notes, which are obligations
that permit the Fund to invest fluctuating amounts in a note. The amount may change daily
without penalty, pursuant to direct arrangements between the Fund, as the note purchaser,
and the issuer of the note. The interest rates on these notes fluctuate from time to time.
The issuer of this type of obligation normally has a corresponding right in its discretion,
after a given period, to prepay the outstanding principal amount of the obligation plus
accrued interest. The issuer must give a specified number of days' notice to the holders of
those obligations. Generally, the changes in the interest rate on those 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 having the same maturity.

Because these types of obligations are direct lending arrangements between the note
purchaser and issuer of the note, these instruments generally will not be traded.
Generally, there is no established secondary market for these types of obligations,
although they are redeemable from the issuer at face value. Accordingly, where these
obligations are not secured by letters of credit or other credit support arrangements, the
Fund's right to redeem them is dependent on the ability of the note issuer to pay principal
and interest on demand. These types of obligations usually are not rated by credit rating
agencies. The Fund may invest in obligations that are not rated only if the Manager
determines at the time of investment that the obligations are of comparable quality to the
other obligations in which the Fund may invest. The Manager, on behalf of the Fund, will
monitor the creditworthiness of the issuers of the floating and variable rate obligations
in the Fund's portfolio on an ongoing basis.

|X| Loans of Portfolio Securities. To attempt to increase its income, the Fund may
lend its portfolio securities to brokers, dealers and other financial institutions. These
loans are limited to not more than 25% of the value of the Fund's total assets and are
subject to other conditions described below. There are some risks in lending securities.
The Fund could experience a delay in receiving additional collateral to secure a loan, or a
delay in recovering the loaned securities. The Fund presently does not intend to lend its
securities, but if it does, the value of securities loaned is not expected to exceed 5% of
the value of the Fund's total assets.

The Fund must receive collateral for a loan. Under current applicable regulatory
requirements (which are subject to change), on each business day the loan collateral must
be at least equal to the market value of the loaned securities. The collateral must consist
of cash, bank letters of credit, U.S. government securities or other cash equivalents in
which the Fund is permitted to invest. To be acceptable as collateral, letters of credit
must obligate a bank to pay amounts demanded by the Fund if the demand meets the terms of
the letter. Such terms and the issuing bank must be satisfactory to the Fund.

When it lends securities, the Fund receives from the borrower an amount equal to the
interest paid or the dividends declared on the loaned securities during the term of the
loan. It may also receive negotiated loan fees and the interest on the collateral
securities, less any finders', custodian bank, administrative or other fees the Fund pays
in connection with the loan. The Fund may share the interest it receives on the collateral
securities with the borrower as long as it realizes at least a minimum amount of interest
required by the lending guidelines established by its Board of Trustees.

The Fund will not lend its portfolio securities to any officer, Trustee, employee or
affiliate of the Fund or its Manager. The terms of the Fund's loans must meet certain tests
under the Internal Revenue Code and permit the Fund to reacquire loaned securities on five
business days notice or in time to vote on any important matter.

|X| Illiquid and Restricted Securities. Under the policies and procedures
established by the Fund's Board of Trustees, the Manager determines the liquidity of
certain of the Fund's investments. Investments may be illiquid because of the absence of an
active trading market, making it difficult to value them or dispose of them promptly at an
acceptable price. A restricted security is one that has a contractual restriction on its
resale or which cannot be sold publicly until it is registered under the Securities Act of
1933.

Illiquid securities the Fund can buy include issues that may be redeemed only by the
issuer upon more than seven days' notice or at maturity, repurchase agreements maturing in
more than seven days, fixed time deposits subject to withdrawal penalties which mature in
more than seven days, and other securities that cannot be sold freely due to legal or
contractual restrictions on resale. Contractual restrictions on the resale of illiquid
securities might prevent or delay their sale by the Fund at a time when such sale would be
desirable. Illiquid securities include repurchase agreements maturing in more than seven
days, or certain participation interests other than those with puts exercisable within
seven days.

There are restricted securities that are not illiquid that the Fund can buy. They
include certain master demand notes redeemable on demand, and short-term corporate debt
instruments that are not related to current transactions of the issuer and therefore are
not exempt from registration as commercial paper.

Other Investment Restrictions

|X| What Are "Fundamental Policies?" Fundamental policies are those policies that
the Fund has adopted to govern its investments that can be changed only by the vote of a
"majority" of the Fund's outstanding voting securities. Under the Investment Company Act, a
"majority" vote is defined as the vote of the holders of the lesser of:
o 67% or more of the shares present or represented by proxy at a shareholder meeting,
if the holders of more than 50% of the outstanding shares are present or
represented by proxy, or
o more than 50% of the outstanding shares.

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

|X| Does the Fund Have Additional Fundamental Policies? The following investment
restrictions are fundamental policies of the Fund:
o The Fund cannot invest in commodities or commodity contracts;
o The Fund cannot invest in real estate; however, the Fund may purchase debt securities
issued by companies which invest in real estate or interests therein;
o The Fund cannot purchase securities on margin or make short sales of securities;
o The Fund cannot invest in or hold securities of any issuer if those officers and
trustees or directors of the Fund or its Manager who beneficially own individually more
than1/2of 1% of the securities of such issuer together own more than 5% of the securities
of such issuer;
o The Fund cannot underwrite securities of other companies except insofar as the Fund
may be deemed an underwriter under the Securities Act of 1933 in connection with the
disposition of portfolio securities;
o The Fund cannot invest more than 5% of its total assets in securities of companies
that have operated less than three years, including the operations of predecessors;
o The Fund cannot issue "senior securities," but this does not prohibit certain
investment activities for which assets of the Fund are designated as segregated, or margin,
collateral or escrow arrangements are established, to cover the related obligations;
o With respect to 75% of its assets, the Fund cannot purchase securities issued or
guaranteed by any one issuer (except the U.S. Government or its agencies or
instrumentalities), if more than 5% of the Fund's total assets would be invested in
securities of that issuer or Fund would then own more than 10% of that issuer's voting
securities;
o The Fund cannot concentrate investments to the extent of 25% of its assets in any
industry, except for obligations of foreign banks or foreign branches of domestic banks,
time deposits, other bank obligations and U.S. government securities as described in the
Prospectus and SAI;
o The Fund cannot make loans, except that the Fund may purchase debt instruments and
repurchase agreements as described in the Prospectus and SAI, and the Fund may lend its
portfolio securities as described under "Loans of Portfolio Securities" in the SAI; or
o The Fund cannot borrow money in excess of 10% of the value of its total assets or
make any investment when borrowings exceed 5% of the value of its total assets; it may
borrow only as a temporary measure for extraordinary or emergency purposes; no assets of
the Fund may be pledged, mortgaged or assigned to secure a debt.

Unless the Prospectus or this SAI 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). 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.

|X| Does the Fund Have Additional Restrictions That Are Not "Fundamental" Policies?

The Fund has additional operating policies that are not "fundamental," and which can
be changed by the Board of Trustees without shareholder approval.

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 its semi-annual
and annual report to shareholders, its annual report or in its Statements of
Investments on Form N-Q. Those documents are publicly available at the SEC.

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

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

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

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

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

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

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

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

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

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

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

o Response to legal process in litigation matters, such as responses to subpoenas or in
class action matters where the Fund may be part of the plaintiff class (and
seeks recovery for losses on a security) or a defendant,
o Response to regulatory requests for information (the SEC, 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 Fund has
been made during the preceding year pursuant to these policies. The CCO shall report to
the Fund's Board any material violation of these policies and procedures and shall make
recommendations to the Board as to any amendments that the CCO believes are necessary
and desirable to carry out or improve these policies and procedures.

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

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

How the Fund Is Managed

Organization and History. The Fund is an open-end diversified management investment company
with an unlimited number of authorized shares of beneficial interest. The Fund was
organized as a Massachusetts business trust in 1988.

|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 or preemptive or
subscription rights. Shares may be voted in person or by proxy at shareholder meetings.

The Fund currently has four classes of shares: Class A, Class B, Class C, and Class
N. All classes invest in the same investment portfolio. Only retirement plans may purchase
Class N shares. Each class of shares:
o has its own dividends and distributions,
o pays certain expenses which may be different for the different classes,
o may have a different net asset value (although this is highly unlikely),
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
the vote of shareholders. Each share of the Fund represents an interest in the Fund
proportionately equal to the interest of each other share of the same class.

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

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

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

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

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

The Board of Trustees has an Audit Committee, a Review Committee and a Governance
Committee. Each Committee is comprised solely of Trustees who are not "interested persons"
under the Investment Company Act (the "Independent Trustees"). The members of the Audit
Committee are Edward L. Cameron (Chairman), George C. Bowen, Robert J. Malone and F.
William Marshall, Jr. The Audit Committee held 7 meetings during the Fund's fiscal year
ended July 31, 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)
reviewing certain reports from and meet periodically with the Fund's Chief Compliance
Officer; (v) maintaining a separate line of communication between the Fund's independent
Auditors and the Independent Trustees; (vi) reviewing the independence of the Fund's
independent Auditors; and (vii) pre-approving the provision of any audit or non-audit
services by the Fund's independent Auditors, including tax services, that are not
prohibited by the Sarbanes-Oxley Act, to the Fund, the Manager and certain affiliates of
the Manager.

The Review Committee is comprised solely of Independent Trustees. The members of the
Review Committee are Sam Freedman (Chairman), Jon S. Fossel and Beverly L. Hamilton. The
Review Committee held 5 meetings during the Fund's fiscal year ended July 31, 2007. Among
other duties, as set forth in the Review Committee's Charter, the Review Committee reports
and makes recommendations to the Board concerning the fees paid to the Fund's transfer
agent and the Manager and the services provided to the Fund by the transfer agent and the
Manager. The Review Committee also reviews the adequacy of the Fund's Code of Ethics, the
Fund's investment performance as well as the policies and procedures adopted by the Fund to
comply with Investment Company Act and other applicable law.

The Governance Committee is comprised solely of Independent Trustees. The members of
the Governance Committee are Robert J. Malone (Chairman), William Armstrong, Beverly L.
Hamilton and F. William Marshall, Jr. The Governance Committee held 4 meetings during the
Fund's fiscal year ended July 31, 2007. The Governance Committee has adopted a charter
setting forth its duties and responsibilities. Among other duties, the Governance Committee
reviews and oversees the Fund's governance guidelines, and the nomination of Trustees,
including Independent Trustees. The Governance Committee has adopted a process for
shareholder submission of nominees for board positions. Shareholders may submit names of
individuals, accompanied by complete and properly supported resumes, for the Governance
Committee's consideration by mailing such information to the Governance Committee in care
of the Fund. The Governance Committee may consider such persons at such time as it meets to
consider possible nominees. The Governance Committee, however, reserves sole discretion to
determine which candidates for Trustees and Independent Trustees it will recommend to the
Board and/or shareholders and it may identify candidates other than those submitted by
Shareholders. The Governance Committee may, but need not, consider the advice and
recommendation of the Manager and/or its affiliates in selecting nominees. The full Board
elects new Trustees except for those instances when a shareholder vote is required.

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

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

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

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

Messrs. Weiss, Gillespie, Murphy, Petersen, Szilagyi, Vandehey, Wixted and Zack, and
Mss. Wolf, Bloomberg and Ives who are officers of the Fund, hold the same offices with one
or more of the other Board II Funds. As of October 26, 2007, the Trustees and officers of
the Fund as a group owned of record or beneficially less than 1% of any class of shares of
the Fund. The foregoing statement does not reflect ownership of shares held of record by an
employee benefit plan for employees of the Manager, other than the shares beneficially
owned under that plan by the officers of the Board II Funds. In addition, none of the
Independent Trustees (nor any of their immediate family members), own securities of either
the Manager or Distributor or of any entity directly or indirectly controlling, controlled
by or under common control with the Manager or the Distributor of the Board II Funds.

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

---------------------------------------------------------------------------------------------
Independent Trustees
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Name, Position(s) Principal Occupation(s) During the Past 5 Dollar Aggregate
Dollar
Range of
Shares
Range of Beneficially
Shares Owned in
with the Fund, Years; Other Trusteeships/Directorships Held; Beneficially All
Length of Service, Number of Portfolios in the Fund Complex Owned in Supervised
Age Currently Overseen the Fund Funds
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
As of December 31, 2006
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
William L. President, Colorado Christian University None Over
Armstrong, (since 2006);Chairman of the following $100,000
Chairman of the private mortgage banking companies: Cherry
Board of Trustees Creek Mortgage Company (since 1991),
since 2003, Trustee Centennial State Mortgage Company (since
since 2000 1994), and The El Paso Mortgage Company
Age: 70 (since 1993); Chairman of the following
private companies: Ambassador Media
Corporation (since 1984) and Broadway
Ventures (since 1984); Director of the
following: Helmerich & Payne, Inc. (oil and
gas drilling/production company) (since
1992), Campus Crusade for Christ (since 1991)
and The Lynde and Harry Bradley Foundation,
Inc. (non-profit organization) (since 2002);
former Chairman of the following: Transland
Financial Services, Inc. (private mortgage
banking company) (1997-2003), Great Frontier
Insurance (insurance agency) (1995-2000),
Frontier Real Estate, Inc. (residential real
estate brokerage) (1994-2000) and Frontier
Title (title insurance agency) (1995-2000);
former Director of the following: UNUM
Provident (insurance company) (1991-2004),
Storage Technology Corporation (computer
equipment company) (1991-2003) and
International Family Entertainment
(television channel) (1992-1997); U.S.
Senator (January 1979-January 1991). Oversees
37 portfolios in the OppenheimerFunds complex.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
George C. Bowen, Assistant Secretary and Director of None Over
Trustee since 1998 Centennial Asset Management Corporation $100,000
Age: 71 (December 1991-April 1999); President,
Treasurer and Director of Centennial Capital
Corporation (June 1989-April 1999); Chief
Executive Officer and Director of MultiSource
Services, Inc. (March 1996-April 1999); Mr.
Bowen held several positions with the Manager
and with subsidiary or affiliated companies
of the Manager (September 1987-April 1999).
Oversees 37 portfolios in the
OppenheimerFunds complex.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Edward L. Cameron, Member of The Life Guard of Mount Vernon None Over
Trustee since 2000 (George Washington historical site) (since $100,000
Age: 69 June 2000); Director of Genetic ID, Inc.
(biotech company) (March 2001-May 2002);
Partner at PricewaterhouseCoopers LLP
(accounting firm) (July 1974-June 1999);
Chairman of Price Waterhouse LLP Global
Investment Management Industry Services Group
(accounting firm) (July 1994-June 1998).
Oversees 37 portfolios in the
OppenheimerFunds complex.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Jon S. Fossel, Director of UNUM Provident (insurance None Over
Trustee since 1990 company) (since June 2002); Director of $100,000
Age: 65 Northwestern Energy Corp. (public utility
corporation) (since November 2004); Director
of P.R. Pharmaceuticals (October 1999-October
2003); Director of Rocky Mountain Elk
Foundation (non-profit organization)
(February 1998-February 2003 and since
February 2005); Chairman and Director (until
October 1996) and President and Chief
Executive Officer (until October 1995) of the
Manager; President, Chief Executive Officer
and Director of the following: Oppenheimer
Acquisition Corp. ("OAC") (parent holding
company of the Manager), Shareholder
Services, Inc. and Shareholder Financial
Services, Inc. (until October 1995). Oversees
37 portfolios in the OppenheimerFunds complex.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Sam Freedman, Director of Colorado Uplift (charitable None Over
Trustee since 1996 organization) (since September 1984). Mr. $100,000
Age: 67 Freedman held several positions with the
Manager and with subsidiary or affiliated
companies of the Manager (until October
1994). Oversees 37 portfolios in the
OppenheimerFunds complex.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Beverly L. Trustee of Monterey Institute for None Over
Hamilton, Trustee International Studies (educational $100,000
since 2002 organization) (since February 2000); Board
Age: 61 Member of Middlebury College (educational
organization) (since December 2005); Director
of The California Endowment (philanthropic
organization) (since April 2002); Director
(February 2002-2005) and Chairman of Trustees
(since 2006) of the Community Hospital of
Monterey Peninsula; Director (October
1991-2005) and Vice Chairman (since 2006) of
American Funds' Emerging Markets Growth Fund,
Inc. (mutual fund); President of ARCO
Investment Management Company (February
1991-April 2000); Member of the investment
committees of The Rockefeller Foundation
(since 2001) and The University of Michigan
(since 2000); Advisor at Credit Suisse First
Boston's Sprout venture capital unit (venture
capital fund) (1994-January 2005); Trustee of
MassMutual Institutional Funds (investment
company) (1996-June 2004); Trustee of MML
Series Investment Fund (investment company)
(April 1989-June 2004); Member of the
investment committee of Hartford Hospital
(2000-2003); and Advisor to Unilever
(Holland) pension fund (2000-2003). Oversees
37 portfolios in the OppenheimerFunds complex.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
Robert J. Malone, Director of Jones International University None Over
Trustee since 2002 (educational organization) (since August $100,000
Age: 63 2005); Chairman, Chief Executive Officer and
Director of Steele Street State Bank
(commercial banking) (since August 2003);
Director of Colorado UpLIFT (charitable
organization) (since 1986); Trustee of the
Gallagher Family Foundation (non-profit
organization) (since 2000); Former Chairman
of U.S. Bank-Colorado (subsidiary of U.S.
Bancorp and formerly Colorado National Bank)
(July 1996-April 1999); Director of
Commercial Assets, Inc. (real estate
investment trust) (1993-2000); Director of
Jones Knowledge, Inc. (2001-July 2004); and
Director of U.S. Exploration, Inc. (oil and
gas exploration) (1997-February 2004).
Oversees 37 portfolios in the
OppenheimerFunds complex.
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
F. William Trustee of MassMutual Select Funds (formerly $1-$10,000 Over
Marshall, Jr., MassMutual Institutional Funds) (investment $100,000
Trustee since 2000 company) (since 1996) and MML Series
Age: 65 Investment Fund (investment company) (since
1996); Trustee (since 1987) and Chairman
(1994-2005) of the Investment Committee of
the Worcester Polytech Institute (private
university); President and Treasurer of the
SIS Funds (private charitable fund) (since
January 1999); Chairman of SIS & Family Bank,
F.S.B. (formerly SIS Bank) (commercial bank)
(January 1999-July 1999); and Executive Vice
President of Peoples Heritage Financial
Group, Inc. (commercial bank) (January
1999-July 1999). Oversees 39 portfolios in
the OppenheimerFunds complex.*
---------------------------------------------------------------------------------------------
* Includes two open-end investment companies: MassMutual Select Funds and MML Series
Investment Fund. In accordance with the instructions for SEC Form N-1A, for purposes of
this section only, MassMutual Select Funds and MML Series Investment Fund are included
in the "Fund Complex." The Manager does not consider MassMutual Select Funds and MML
Series Investment Fund to be part of the OppenheimerFunds' "Fund Complex" as that term
may be otherwise interpreted.

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

----------------------------------------------------------------------------------------------
Interested Trustee and Officer
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Name, Principal Occupation(s) During the Past 5 Years; Dollar Aggregate
Dollar
Range Of
Shares
Range of Beneficially
Position(s) Held Shares Owned in
with the Fund, Beneficially All
Length of Other Trusteeships/Directorships Held; Number of Owned in Supervised
Service, Age Portfolios in the Fund Complex Currently Overseen the Fund Funds
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
As of December 31, 2006
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
John V. Murphy, Chairman, Chief Executive Officer and Director None Over
Trustee, (since June 2001) and President (since September $100,000
President and 2000) of the Manager; President and director or
Principal trustee of other Oppenheimer funds; President and
Executive Director of OAC and of Oppenheimer Partnership
Officer since Holdings, Inc. (holding company subsidiary of the
2001 Manager) (since July 2001); Director of
Age: 58 OppenheimerFunds Distributor, Inc. (subsidiary of
the Manager) (since November 2001); Chairman and
Director of Shareholder Services, Inc. and of
Shareholder Financial Services, Inc. (transfer
agent subsidiaries of the Manager) (since July
2001); President and Director of OppenheimerFunds
Legacy Program (charitable trust program
established by the Manager) (since July 2001);
Director of the following investment advisory
subsidiaries of the Manager: OFI Institutional
Asset Management, Inc., Centennial Asset
Management Corporation, Trinity Investment
Management Corporation and Tremont Capital
Management, Inc. (since November 2001),
HarbourView Asset Management Corporation and OFI
Private Investments, Inc. (since July 2001);
President (since November 2001) and Director
(since July 2001) of Oppenheimer Real Asset
Management, Inc.; Executive Vice President of
Massachusetts Mutual Life Insurance Company (OAC's
parent company) (since February 1997); Director of
DLB Acquisition Corporation (holding company
parent of Babson Capital Management LLC) (since
June 1995); Member of the Investment Company
Institute's Board of Governors (since October 3,
2003); Chief Operating Officer of the Manager
(September 2000-June 2001); President and Trustee
of MML Series Investment Fund and MassMutual
Select Funds (open-end investment companies)
(November 1999-November 2001); Director of C.M.
Life Insurance Company (September 1999-August
2000); President, Chief Executive Officer and
Director of MML Bay State Life Insurance Company
(September 1999-August 2000); Director of Emerald
Isle Bancorp and Hibernia Savings Bank
(wholly-owned subsidiary of Emerald Isle Bancorp)
(June 1989-June 1998). Oversees 103 portfolios in
the OppenheimerFunds complex.
----------------------------------------------------------------------------------------------

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

-----------------------------------------------------------------------------------------
Other Officers of the Fund
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Name, Position(s) Principal Occupation(s) During Past 5 Years
Held with the Fund,
Length of Service, Age
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Barry D. Weiss, Vice President of the Manager (since July 2001) and of
Vice President and HarbourView Asset Management Corporation (since June 2003); an
Portfolio officer of 6 portfolios in the OppenheimerFunds complex.
Manager since 2001 Formerly Assistant Vice President and Senior Credit Analyst of
Age: 43 the Manager (February 2000-June 2001). Prior to joining the
Manager in February 2000, he was Associate Director, Structured
Finance, Fitch IBCA Inc. (April 1998 - February 2000).

-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Carol E. Wolf, Senior Vice President of the Manager (since June 2000) and of
Vice President and HarbourView Asset Management Corporation (since June 2003); an
Portfolio Manager officer of 6 portfolios in the OppenheimerFunds complex.
since 1998 Formerly Vice President of the Manager (June 1990 - June 2000).
Age: 55
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Mark S. Vandehey, Senior Vice President and Chief Compliance Officer of the
Vice President and Manager (since March 2004); Chief Compliance Officer of
Chief Compliance OppenheimerFunds Distributor, Inc., Centennial Asset Management
Officer since 2004 and Shareholder Services, Inc. (since March 2004); Vice
Age: 57 President of OppenheimerFunds Distributor, Inc., Centennial
Asset Management Corporation and Shareholder Services, Inc.
(since June 1983); Vice President and Director of Internal Audit
of the Manager (1997-February 2004). An officer of 103
portfolios in the OppenheimerFunds complex.
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer of the Manager (since March
Treasurer and 1999); Treasurer of the following: HarbourView Asset Management
Principal Financial & Corporation, Shareholder Financial Services, Inc., Shareholder
Accounting Officer Services, Inc., Oppenheimer Real Asset Management Corporation,
since 1999 and Oppenheimer Partnership Holdings, Inc. (since March 1999),
Age: 48 OFI Private Investments, Inc. (since March 2000),
OppenheimerFunds International Ltd. and OppenheimerFunds plc
(since May 2000), OFI Institutional Asset Management, Inc.
(since November 2000), and OppenheimerFunds Legacy Program
(since June 2003); Treasurer and Chief Financial Officer of OFI
Trust Company (trust company subsidiary of the Manager) (since
May 2000); Assistant Treasurer of the following: OAC (since
March 1999), Centennial Asset Management Corporation (March
1999-October 2003) and OppenheimerFunds Legacy Program (April
2000-June 2003); Principal and Chief Operating Officer of
Bankers Trust Company-Mutual Fund Services Division (March
1995-March 1999). An officer of 103 portfolios in the
OppenheimerFunds complex.
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Brian Petersen, Vice President of the Manager (since February 2007); Assistant
Assistant Treasurer Vice President of the Manager (August 2002-February 2007);
since 2004 Manager/Financial Product Accounting of the Manager (November
Age: 37 1998-July 2002). An officer of 103 portfolios in the
OppenheimerFunds complex
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Brian C. Szilagyi, Assistant Vice President of the Manager (since July 2004);
Assistant Treasurer Director of Financial Reporting and Compliance of First Data
since 2005 Corporation (April 2003-July 2004); Manager of Compliance of
Age: 37 Berger Financial Group LLC (May 2001-March 2003); Director of
Mutual Fund Operations at American Data Services, Inc.
(September 2000-May 2001). An officer of 103 portfolios in the
OppenheimerFunds complex.
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Robert G. Zack, Executive Vice President (since January 2004) and General
Vice President and Counsel (since March 2002) of the Manager; General Counsel and
Secretary since 2001 Director of the Distributor (since December 2001); General
Age: 59 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 103 portfolios in the
OppenheimerFunds complex.
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Lisa I. Bloomberg, Vice President and Associate Counsel of the Manager (since May
Assistant Secretary 2004); First Vice President (April 2001-April 2004), Associate
since 2004 General Counsel (December 2000-April 2004), Corporate Vice
Age: 39 President (May 1999-April 2001) and Assistant General Counsel
(May 1999-December 2000) of UBS Financial Services Inc.
(formerly, PaineWebber Incorporated). An officer of 103
portfolios in the OppenheimerFunds complex.
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Kathleen T. Ives, Vice President (since June 1998) and Senior Counsel and
Assistant Secretary Assistant Secretary (since October 2003) of the Manager; Vice
since 2001 President (since 1999) and Assistant Secretary (since October
Age: 42 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 103 portfolios in the OppenheimerFunds
complex.
-----------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------
Phillip S. Gillespie, Senior Vice President and Deputy General Counsel of the Manager
Assistant Secretary (since September 2004); First Vice President (2000-September
since 2004 2004), Director (2000-September 2004) and Vice President
Age: 43 (1998-2000) of Merrill Lynch Investment Management. An officer
of 103 portfolios in the OppenheimerFunds complex.
-----------------------------------------------------------------------------------------

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

-------------------------------------------------------------------------------
Trustee Name and Other Fund Aggregate Total Compensation
From Fund and Fund
Compensation from Complex Paid to
Position(s) (as applicable) Fund(1) Trustees(2)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
William L. Armstrong $1,079 $178,000
Chairman of the Board and
Governance Committee Member
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
George C. Bowen $758 $118,500
Audit Committee Member
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Edward L. Cameron $910 $136,000
Audit Committee Chairman
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Jon S. Fossel $759 $124,100
Review Committee Member
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Sam Freedman $826 $118,500
Review Committee Chairman
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Beverly Hamilton $758(3) $107,175
Review Committee Member and
Governance Committee Member
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Robert J. Malone $872 $134,868
Governance Committee Chairman
and Audit Committee Member
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
F. William Marshall, Jr.
Audit Committee Member and $758 $169,500(4)
Governance Committee Member
-------------------------------------------------------------------------------
1. "Aggregate Compensation from Fund" includes fees and deferred compensation, if any.
2. In accordance with SEC regulations, for purposes of this section only, "Fund Complex"
includes the Oppenheimer funds, the MassMutual Institutional Funds, the MassMutual
Select Funds and the MML Series Investment Fund, the investment adviser for which is the
indirect parent company of the Fund's Manager. The Manager does not consider MassMutual
Institutional Funds, MassMutual Select Funds and MML Series Investment Fund to be part
of the OppenheimerFunds' "Fund Complex" as that term may be otherwise interpreted. The
Manager also serves as the Sub-Advisor to the following: MassMutual Premier
International Equity Fund, MassMutual Premier Main Street Fund, MassMutual Premier
Strategic Income Fund, MassMutual Premier Capital Appreciation Fund, and MassMutual
Premier Global Fund.
3. Includes $758 deferred by Ms. Hamilton under "Deferred Compensation Plan" described
below.
4. Includes $62,500 compensation paid to Mr. Marshall for serving as a Trustee for Mass
Mutual Select Funds and MML Series Investment Fund.

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

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

|X| Major Shareholders. As of October 26, 2007 the only persons 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:

Orchard Trust CO LLC, FBO Oppen RecordKeeperPro, 8515 East Orchard Road,
Greenwood Village, CO 80111, which owned 27,484,535.966 Class N Shares (representing
11.46% of the Fund's Class N shares then outstanding).

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

Code of Ethics. 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 Fund does
not have a Code of Ethics since it is a money market fund.

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

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

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

-----------------------------------------------------------------------------
Fiscal Year ended 7/31 Management Fee Paid to OppenheimerFunds, Inc.
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2005 $3,302,388*
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2006 $3,525,290*
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2007 $3,725,199*
-----------------------------------------------------------------------------

* Effective December 6, 2002, the Manager agreed to limit the Fund's management fees to
0.40% of average net assets for each class. That expense limitation can be amended or
terminated at any time without advance notice. If the management fee had not been reduced,
the management fee paid for fiscal years 2005, 2006 and 2007 would have been $3,876,831,
$4,120,612 and $4,333,025 respectively.

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 by reason of good faith errors or omissions 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 Managers. The Fund's portfolio is managed by Barry D. Weiss and Carol E. Wolf
(each is referred to as a "Portfolio Manager" and collectively they are referred to as the
"Portfolio Managers"). They are the persons who are responsible for the day-to-day
management of the Fund's investments.

Other Accounts Managed. In addition to managing the Fund's investment
portfolio, each Portfolio Manager also manages other investment portfolios and other
accounts on behalf of the Manager or its affiliates. The following table provides
information regarding the other portfolios and accounts managed by each Portfolio Manager
as of July 31, 2007. No account has a performance-based advisory fee:

Portfolio Total Total Total
Assets in
Assets in Other Other
RegistereRegistered Pooled Pooled Assets
InvestmenInvestment InvestmentInvestment Other in Other
CompaniesCompanies Vehicles Vehicles AccountAccounts
Manager Managed Managed(1) Managed Managed* ManagedManaged(2)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
5 None None
Barry D. Weiss $26,939
None None
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Carol E. Wolf 5 $30,812 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 Managers also manage other funds and
accounts. Potentially, at times, those responsibilities could conflict with the
interests of the Fund. That may occur whether the investment strategies of the other
fund or account are the same as, or different from, the Fund's investment objectives
and strategies. For example, the Portfolio Managers may need to allocate investment
opportunities between the Fund and another fund or account having similar objectives
or strategies, or they may need to execute transactions for another fund or account
that could have a negative impact on the value of securities held by the Fund. Not
all funds and accounts advised by the Manager have the same management fee. If the
management fee structure of another fund or account is more advantageous to the
Manager than the fee structure of the Fund, the Manager could have an incentive to
favor the other fund or account. However, the Manager's compliance procedures and
Code of Ethics recognize the Manager's fiduciary obligations to treat all of its
clients, including the Fund, fairly and equitably, and are designed to preclude the
Portfolio Managers from favoring one client over another. It is possible, of course,
that those compliance procedures and the Code of Ethics may not always be adequate to
do so. At different times, the Fund's Portfolio Managers may manage other funds or
accounts with investment objectives and strategies that are similar to those of the
Fund, or may manage funds or accounts with investment objectives and strategies that
are different from those of the Fund.

Compensation of the Portfolio Managers. The Fund's Portfolio Managers are employed
and compensated by the Manager, not the Fund. Under the Manager's compensation
program for its portfolio managers and portfolio analysts, their compensation is
based primarily on the investment performance results of the funds and accounts they
manage, rather than on the financial success of the Manager. This is intended to
align the portfolio managers' and analysts' interests with the success of the funds
and accounts and their shareholders. The Manager's compensation structure is designed
to attract and retain highly qualified investment management professionals and to
reward individual and team contributions toward creating shareholder value. As of
July 31, 2007 the Portfolio Managers' compensation consisted of three elements: a
base salary, an annual discretionary bonus and eligibility to participate in
long-term awards of options and appreciation rights in regard to the common stock of
the Manager's holding company parent. Senior portfolio managers may also be eligible
to participate in the Manager's deferred compensation plan.

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

Ownership of Fund Shares. As of July 31, 2007, the Portfolio Managers
did not beneficially own any shares of the Fund.

|X| Portfolio Transactions. Portfolio decisions are based upon recommendations and
judgment of the Manager subject to the overall authority of the Board of Trustees. Most
purchases made by the Fund are principal transactions at net prices, so the Fund incurs
little or no brokerage costs. The Fund deals directly with the selling or purchasing
principal or market maker without incurring charges for the services of a broker on its
behalf unless the Manager determines that a better price or execution may be obtained by
using the services of a broker. Purchases of portfolio securities from underwriters include
a commission or concession paid by the issuer to the underwriter, and purchases from
dealers include a spread between the bid and asked prices.

The Fund seeks to obtain prompt execution of orders at the most favorable net price.
If dealers are used for portfolio transactions, transactions may be directed to dealers for
their execution and research services. The research services provided by a particular
broker may be useful only to one or more of the advisory accounts of the Manager and its
affiliates. Investment research received for the commissions of those other accounts may be
useful both to the Fund and one or more of such other accounts. Investment research
services may be supplied to the Manager by a third party at the instance of a broker
through which trades are placed. It may include information and analyses on particular
companies and industries as well as market or economic trends and portfolio strategy,
receipt of market quotations for portfolio evaluations, analytical software systems and
similar products and services. If a research service also assists the Manager in a
non-research capacity (such as bookkeeping or other administrative functions), then only
the percentage or component that provides assistance to the Manager in the investment
decision-making process may be paid in commission dollars.

The 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 obtain market information for the valuation of
securities held in the Fund's portfolio or being considered for purchase.

The Fund's policy of investing in short-term debt securities results in high
portfolio turnover and may increase the Fund's transaction costs. However, since brokerage
commissions, if any, are small, high turnover does not have an appreciable adverse effect
upon the income of the Fund.

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

--------------------------------------------------------------------------------
Concessions on
Concessions on Class B Concessions on Class C Class N Shares
Fiscal Year Shares Advanced by Shares Advanced by Advanced by
Ended 7/31: Distributor(1) Distributor(1) Distributor(1,2)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2005 $234,183 $152,267 $368,823
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2006 $160,709 $86,491 $268,756
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2007 $103,803 $32,983 $67,078
--------------------------------------------------------------------------------
1. The Distributor advances concession payments to dealers for certain sales of Class B,
Class C and Class N shares from its own resources at the time of sale.
2. The inception date of Class N shares was March 1, 2001.

--------------------------------------------------------------------------------
Fiscal Class A Class B Class C Class N
Contingent Contingent
Contingent Contingent Deferred Sales Deferred Sales
Year Deferred Sales Deferred Sales Charges Charges Retained
Ended Charges Retained Charges Retained Retained by by Distributor
7/31 by Distributor by Distributor Distributor
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2005 $14,385 $418,097 $66,809 $518,444
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2006 $8,907 $235,416 $46,418 $255,272
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2007 $5,094 $39,610 $5,955 $15,271
--------------------------------------------------------------------------------

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

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

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

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

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

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

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

|X|Class A Service Plan Fees. Under the Class A service plan, the Distributor currently uses the
fees it receives from the Fund to pay brokers, dealers and other financial institutions
(referred to as "recipients") for personal services and account maintenance services they
provide for their customers who hold Class A shares. The services include, among others,
answering customer inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and providing other
services at the request of the Fund or the Distributor. The Class A service plan permits
reimbursements to the Distributor at a rate of up to 0.20% of average annual net assets of
Class A shares. 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. The
Distributor makes payments to plan recipients periodically at an annual rate not to exceed
0.20% of the average annual net assets consisting of Class A shares held in the accounts of
the recipients or their customers.

For the fiscal year ended July 31, 2007 payments under the Class A Plan totaled $842,452, all
but $1,145 of which was paid by the Distributor to recipients. That included $105,839 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 quarter cannot be recovered
in subsequent periods. The Distributor may not use payments received under the Class A Plan
to pay any of its interest expenses, carrying charges, or other financial costs, or
allocation of overhead.

|X| Class B, Class C and Class N Distribution and Service Plan Fees. Under each
plan, service fees (if any) and distribution 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 for the service fee are similar to the services
provided under the Class A service plan, described above.

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

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

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

......The asset-based sales 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 charges 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, and
o bears the costs of sales literature, advertising and prospectuses (other than those
furnished to current shareholders) and state "blue sky" registration fees and
certain other distribution expenses,
o may not be able to adequately compensate dealers that sell Class B, Class C and Class
N shares without receiving payment under the plans and therefore may not be able
to offer such Classes for sale absent the plans,
o receives payments under the plans consistent with the service fees and asset-based
sales charges paid by other non-proprietary funds that charge 12b-1 fees,
o may use the payments under the plan to include the Fund in various third-party
distribution programs that may increase sales of Fund shares,
o may experience increased difficulty selling the Fund's shares if payments under the
plan are discontinued because most competitor funds have plans that pay dealers
for rendering distribution services as much or more than the amounts currently
being paid by the Fund, and
o may not be able to continue providing, at the same or at a lesser cost, the same
quality distribution sales efforts and services, or to obtain such services from
brokers and dealers, if the plan payments were to be discontinued.

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

The amount shown in the following table reflects a decrease in the asset-based sales
charge on Class B and Class C shares, from 0.75% to 0.50% of average daily net assets per
annum, effective January 1, 2003. The Fund may reinstate the full asset-based sales charge
permitted under each plan at any time without advance notice. The Distributor's sales
concession rates on Class B, Class C and Class N shares sold prior to January 20, 2003 were
higher than the current rates (shown on page 6 of the prospectus).

---------------------------------------------------------------------------------
Distribution Fees Paid to the Distributor for the Year Ended 7/31/07
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class: Total Amount Distributor's Distributor's
Unreimbursed
Aggregate Expenses as %
Payments Retained by Unreimbursed of Net Assets
Under Plan Distributor Expenses Under Plan of Class
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class B Plan $841,258(1) $841,258 $0 0.00%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class C Plan $1,136,961(2) $475,831 $0 0.00%
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class N Plan $1,169,720(3) $337,367 $7,311,886 2.88%
---------------------------------------------------------------------------------
1. Included $1,589 paid to an affiliate of the Distributor's parent company.
2. Included $28,483 paid to an affiliate of the Distributor's parent company.
3. Included $34,924 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
the 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:

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

Performance of the Fund

Explanation of Performance Terminology. The Fund uses a variety of terms to illustrate its
investment performance. Those terms include "yield," "compounded effective yield" and
"average annual total return." An explanation of how yields and 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 web site at www.oppenheimerfunds.com. The Fund's performance would have been lower
in the absence of the fee waivers described on page 6 of the Prospectus. Those fee waivers
may be withdrawn at any time.

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. If the fund shows total returns in addition to its yields, the
returns must be for the 1-, 5- and 10-year periods ending as of the most recent calendar
quarter prior to the publication of the advertisement (or its submission for publication).

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 comparisons with other investments:
o Yields and total returns measure the performance of a hypothetical account in the
Fund over various periods and do not show the performance of each shareholder's
account. Your account's performance will vary from the model performance data if
your dividends are received in cash, or you buy or sell shares during the period,
or you bought your shares at a different time than the shares used in the model.
o An investment in the Fund is not insured by the FDIC or any other government agency.
o The Fund's yield is not fixed or guaranteed and will fluctuate.
o Yields and total returns for any given past period represent historical performance
information and are not, and should not be considered, a prediction of future
yields or returns.

|X| Yields. The Fund's current yield is calculated for a seven-day period of time
as follows. First, a base period return is calculated for the seven-day period by
determining the net change in the value of a hypothetical pre-existing account having one
share at the beginning of the seven-day period. The change includes dividends declared on
the original share and dividends declared on any shares purchased with dividends on that
share, but such dividends are adjusted to exclude any realized or unrealized capital gains
or losses affecting the dividends declared. Next, the base period return is multiplied by
365/7 to obtain the current yield to the nearest hundredth of one percent.

The compounded effective yield for a seven-day period is calculated by
(1) adding 1 to the base period return (obtained as described above),
(2) raising the sum to a power equal to 365 divided by 7, and
(3) subtracting 1 from the result.

The yield as calculated above may vary for accounts less than approximately $100 in
value due to the effect of rounding off each daily dividend to the nearest full cent. The
calculation of yield under either procedure described above does not take into
consideration any realized or unrealized gains or losses on the Fund's portfolio securities
which may affect dividends. Therefore, the return on dividends declared during a period may
not be the same on an annualized basis as the yield for that period.

|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 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%
contingent deferred sales charge is deducted for returns for the one-year period. For Class
N shares, the 1% contingent deferred sales charge is deducted for returns for the one-year
period. Class N total returns may also be calculated for the periods prior to March 1, 2001
(the inception date for Class N shares), based on the Fund's Class A returns, adjusted to
reflect the higher Class N 12b-1 fees.

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

1/n
(ERV)
(---) - 1 = Annual Average Total Return
( 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

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

-------------------------------------------------------------------------------------------------
The Fund's Total Returns for the Periods Ended 7/31/07(5)
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
Class of Cumulative ------------------------------------------------------------------
Total Returns
--------- (10 years or
Shares life-of-class) Average Annual Total Returns
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
1-Year 5-Year 10-Year
(or (or
--------------- life-of-class) life-of-class)
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
After Without After Without After Without After Without Com-pounded
Effective
Yield
Yield (7
(7 days days
Sales Sales Sales Sales Sales Sales Sales Sales ended ended
Charge Charge Charge Charge Charge Charge Charge Charge 07/31/07)07/31/07)
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
Class 34.69% 34.69% 4.54% 4.54% 2.03% 2.03% 3.02% 3.02% 4.47% 4.57%
A(1)
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
Class 30.61%(2) 30.61%(2-0.71%(24.29% 1.44% 1.82% 2.71%(2) 2.71%(2)4.23% 4.32%
B(2)
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
Class 29.34%(3) 29.34%(33.22%(3)4.22% 1.78% 1.78% 2.61% 2.61% 4.15% 4.24%
C(3)
-------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------
Class 12.32%(4) 12.32%(43.28% 4.28% 1.83% 1.83% 1.83%(4) 1.83%(4)4.24% 4.33%
N(4)
-------------------------------------------------------------------------------------------------
1. Inception of Class A shares: 1/3/89.
2. Inception of Class B shares: 8/17/93. Because Class B convert to Class A shares 72
months after purchase, the 10-Year return for Class B uses Class A performance for the
period after conversion.
3. Inception of Class C shares: 12/1/93.
4. Inception of Class N Shares: 3/1/01.
5. The amounts shown in the table reflect a voluntary reduction in the management fee
for the Fund effective December 6, 2002, as well as a decrease in the asset-based sales
charge on Class B and Class C shares, from 0.75% to 0.50% of average daily net assets
per annum, effective January 1, 2003. The voluntary management fee waiver may be removed
at any time and the full asset-based sales charge permitted under each plan may be
reinstated at any time without advance notice. The Distributor's sales concession rates
on Class B, Class C and Class N shares sold prior to January 20, 2003 were higher than
the current rates (shown on page 6 of the Prospectus).

|X| Other Performance Comparisons. Yield information may be useful to investors in
reviewing the Fund's performance. The Fund may make comparisons between its yield and that
of other investments, by citing various indices such as The Bank Rate Monitor National
Index (provided by Bank Rate Monitor) which measures the average rate paid on bank money
market accounts, NOW accounts and certificates of deposits by the 100 largest banks and
thrifts in the top ten metro areas. When comparing the Fund's yield with that of other
investments, investors should understand that certain other investment alternatives such as
certificates of deposit, U.S. government securities, money market instruments or bank
accounts may provide fixed yields and may be insured or guaranteed.

From time to time, the Fund may include in its advertisements and sales literature
performance information about the Fund cited in other newspapers and periodicals, such as
The New York Times, which may include performance quotations from other sources.

From time to time, the Fund's Manager may publish rankings or ratings of the Manager
(or the Transfer Agent) or 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 investor/shareholder services by third parties may compare the
services of the Oppenheimer funds to those of other mutual fund families selected by the
rating
or ranking services. They may be based on the opinions of the rating or ranking service
itself, based on its research or judgment, or based on 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.

--------------------------------------------------------------------------------------------
A B O U T Y O U R A C C O U N T
--------------------------------------------------------------------------------------------

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 of the Fund
will be recorded as a book entry on the records of the Fund. The Fund will not issue or
re-register physical share certificates.

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

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 Class A 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.

Retirement Plans may purchase Class B shares of the Fund directly by establishing an
Asset Builder Plan. The minimum initial investment for Class B Asset Builder Plans is
$5,000 and the maximum initial investment is $500,000.

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 your 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.

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

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.

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 and 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.

|X| Alternative Sales Arrangements. As stated in the Prospectus, Class B, Class C and
Class N shares of the Fund may only be acquired by exchange of Class , Class C and Class N
shares, respectively, of other Oppenheimer funds or directly through qualified retirement
plans.

Investors should understand that the purpose and function of the deferred sales
charge and asset-based sales charge with respect to Class B, Class C and Class N shares are
the same as those of the initial sales charge with respect to Class A share of Oppenheimer
funds other than the money market funds. Any salesperson or other person entitled to
receive compensation for selling the Fund shares may receive different compensation with
respect to one class of shares than the other.

The Distributor will generally not accept any order in the amount of more than
$100,000 for Class B shares or $1 million or more for Class C shares on behalf of a single
investor (not including dealer "street name" or omnibus accounts). That is because
generally it will be more advantageous for that investor to purchase Class A shares of the
Fund.

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

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 value 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, SAIs and other materials for
current shareholders, fees to unaffiliated Trustees, custodian expenses, share issuance
costs, organization and start-up costs, interest, taxes and brokerage commissions, and
non-recurring expenses, such as litigation costs.

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

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

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

To access account documents electronically via eDocs Direct, please visit the Service
Center on our website at www.oppenheimerfunds.com 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 Value Per Share. The net asset value per share of each class of
shares of the Fund is 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.

The Fund's Board of Trustees has adopted the amortized cost method to value the
Fund's portfolio securities. Under the amortized cost method, a security is valued
initially at its cost and its valuation assumes a constant amortization of any premium or
accretion of any discount, regardless of the impact of fluctuating interest rates on the
market value of the security. This method does not take into consideration any unrealized
capital gains or losses on securities. While this method provides certainty in valuing
securities, in certain periods the value of a security determined by amortized cost may be
higher or lower than the price the Fund would receive if it sold the security.

The Fund's Board of Trustees has established procedures reasonably designed to
stabilize the Fund's net asset value at $1.00 per share. Those procedures include a review
of the Fund's portfolio holdings by the Board of Trustees, at intervals it deems
appropriate, to determine whether the Fund's net asset value calculated by using available
market quotations deviates from $1.00 per share based on amortized cost.

The Board of Trustees will examine the extent of any deviation between the Fund's net
asset value based upon available market quotations and amortized cost. If the Fund's net
asset value were to deviate from $1.00 by more than 0.5%, Rule 2a-7 requires the Board of
Trustees to consider what action, if any, should be taken. If they find that the extent of
the deviation may cause a material dilution or other unfair effects on shareholders, the
Board of Trustees will take whatever steps it considers appropriate to eliminate or reduce
the dilution, including, among others, withholding or reducing dividends, paying dividends
from capital or capital gains, selling portfolio instruments prior to maturity to realize
capital gains or losses or to shorten the average maturity of the portfolio, or calculating
net asset value per share by using available market quotations.

During periods of declining interest rates, the daily yield on shares of the Fund may
tend to be lower (and net investment income and dividends higher) than those of a fund
holding the identical investments as the Fund but which used a method of portfolio
valuation based on market prices or estimates of market prices. During periods of rising
interest rates, the daily yield of the Fund would tend to be higher and its aggregate value
lower than that of an identical portfolio using market price valuation.

How to Sell Shares

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

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

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

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

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

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 and Class N shares. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after the date of such
amendment, suspension or cessation.

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

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

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

Involuntary Redemptions. The Fund's Board of Trustees has the right to cause the
involuntary redemption of the shares held in any account if the aggregate net asset value
of those shares is less than $200 or such lesser amount as the Board may fix. The Board
will not cause the involuntary redemption of shares in an account if the aggregate net
asset value of such shares has fallen below the stated minimum solely as a result of market
fluctuations. If the Board exercises this right, it may also fix the requirements for any
notice to be given to the shareholders in question (not less than 30 days). The Board may
alternatively set requirements for the shareholder to increase the investment, or set other
terms and conditions so that the shares would not be involuntarily redeemed.

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

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

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

Participants (other than self-employed persons) 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 the 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 owner(s) on the redemption document 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
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 such plans at any time without
prior notice. Class B, Class C and Class N shareholders should not establish 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 applicable to such plans as stated below. These provisions may be
amended from time to time by the Fund and/or the Distributor. When adopted, any amendments
will automatically apply to existing Plans.

|X| Automatic Exchange Plans. Shareholders can authorize the Transfer Agent to
exchange a pre-determined amount of shares of the Fund for shares (of the same class) of
other Oppenheimer funds automatically on a monthly, quarterly, semi-annual or annual basis
under an Automatic Exchange Plan. The minimum amount that may be exchanged to each other
fund account is $50. Instructions should be provided on the OppenheimerFunds application or
signature-guaranteed instructions. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to Exchange Shares" in the
Prospectus and below in this 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 withdrawal 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 (the "Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. Neither the Transfer Agent nor the Fund 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 payments, according to the choice specified in writing by the
Planholder. Receipt of payment on the date selected cannot be guaranteed.

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

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

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

How to Exchange Shares

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

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

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

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

The following funds do not offer Class Y shares:
Limited Term New York Municipal Fund Oppenheimer Pennsylvania Municipal Fund
Oppenheimer AMT-Free Municipals Oppenheimer Principal Protected Main
Street Fund
Oppenheimer AMT-Free New York Municipals Oppenheimer Principal Protected Main
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 Fund Oppenheimer Rochester Massachusetts
Municipal Fund
Oppenheimer Dividend Growth Fund Oppenheimer Rochester Michigan
Municipal Fund
Oppenheimer Equity Income Fund, Inc. Oppenheimer Rochester Minnesota
Municipal Fund
Oppenheimer Gold & Special Minerals Fund Oppenheimer Rochester National
Municipals
Oppenheimer Institutional Money Market Oppenheimer Rochester North Carolina
Fund Municipal Fund
Oppenheimer Limited Term California Oppenheimer Rochester Ohio Municipal
Municipal Fund Fund
Oppenheimer Limited Term Municipal Fund Oppenheimer Rochester Virginia
Municipal Fund
Oppenheimer New Jersey 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, Class L and Class P
shares.
o Class B, Class C and Class N shares of Oppenheimer Cash Reserves are generally
available only by exchange from the same class of shares of other Oppenheimer funds
or through certain OppenheimerFunds-sponsored retirement 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 the 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 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
other Oppenheimer funds into which you may exchange shares. However, shareholders are
not permitted to exchange shares of other Oppenheimer funds for shares of Oppenheimer
Principal Protected Main Street Fund II until after the expiration of the warranty
period (3/3/2011).
o Shares of Oppenheimer Principal Protected Main Street Fund III may be exchanged at
net asset value for shares of the same class of any of the other Oppenheimer funds
into which you may exchange shares. However, shareholders are not permitted to
exchange shares of other Oppenheimer funds for shares of Oppenheimer Principal
Protected Main Street Fund III until after the expiration of the warranty period
(12/16/2011).
o Class A, Class B, Class C and Class N shares of Oppenheimer Developing Markets 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 that 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.
o Global Value Fund only offers Class A and Class Y shares. Class Y shares of that fund
may be acquired only by participants in certain group retirement plans that have an
agreement with the Distributor.

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

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

o When Class A shares of any Oppenheimer fund acquired by exchange of Class A shares
of any Oppenheimer fund purchased subject to a Class A contingent deferred sales charge are
redeemed within 18 months measured from the beginning of the calendar month of the initial
purchase of the exchanged Class A shares, the Class A contingent deferred sales charge is
imposed on the redeemed shares. Except, however, with respect to Class A shares of
Oppenheimer Rochester National Municipals and Rochester Fund Municipals acquired prior to
October 22, 2007, in which case the Class A contingent deferred sales charge is imposed on
the acquired shares if they are redeemed within 24 months measured from the beginning of
the calendar month of the initial purchase of the exchanged Class A shares.

o When Class A shares of Oppenheimer Rochester National Municipals and Rochester Fund
Municipals acquired prior to October 22, 2007, by exchange of Class A shares of any
Oppenheimer fund purchased subject to a Class A contingent deferred sales charge are
redeemed within 24 months of the beginning of the calendar month of the initial purchase of
the exchanged Class A shares, the Class A contingent deferred sales charge is imposed on
the redeemed shares.

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 this Fund 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 investor 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.

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

When you exchange some or all of your shares from one fund to another, any special
account features that are available in the new fund (such as an Asset Builder Plan or
Automatic Withdrawal Plan) will be switched to the new 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 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. The dividends and distributions paid by a
class of shares will vary from time to time depending on market conditions, the composition
of the Fund's portfolio, and expenses borne by the Fund or borne separately by a class.
Dividends are calculated in the same manner, at the same time, and on the same day for each
class of shares. However, dividends on Class B, Class C and Class N shares are expected to
be lower than dividends on Class A shares. That is because of the effect of the asset-based
sales charge on Class B, Class C and Class N shares.

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

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

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

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

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

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

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

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

|X| 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.

|X| 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.

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.

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

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

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

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

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

Additional Information About the Fund

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

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

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

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




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

--------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF OPPENHEIMER CASH RESERVES:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Cash Reserves (the "Fund"), including the statement of investments,
as of July 31, 2007, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

      We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Fund is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of July 31, 2007, by correspondence with the custodian
and brokers; where replies were not received from brokers, we performed other
auditing procedures. We believe that our audits provide a reasonable basis for
our opinion.

      In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Fund as of July 31, 2007, the results of its operations for the year then ended,
the changes in its net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in the period
then ended, in conformity with accounting principles generally accepted in the
United States of America.

DELOITTE & TOUCHE LLP

Denver, Colorado
September 13, 2007


STATEMENT OF INVESTMENTS  July 31, 2007
--------------------------------------------------------------------------------

                                                   PRINCIPAL              VALUE
                                                      AMOUNT         SEE NOTE 1
--------------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT--12.0%
--------------------------------------------------------------------------------
Abbey National
Treasury Services plc,
Stamford CT, 5.30%,
8/1/07                                        $   12,000,000   $     12,000,000
--------------------------------------------------------------------------------
Barclays US Funding
LLC, 5.32%, 10/22/07                               5,000,000          5,000,000
--------------------------------------------------------------------------------
Calyon, New York,
5.325%, 10/19/07                                  15,000,000         15,000,000
--------------------------------------------------------------------------------
Canadian Imperial
Bank of Commerce NY:
5.25%, 10/15/07                                    5,000,000          5,000,000
5.31%, 8/29/07                                    10,000,000         10,000,000
--------------------------------------------------------------------------------
Citibank NA:
5.30%, 8/2/07                                      8,000,000          8,000,000
5.32%, 10/25/07                                   10,000,000         10,000,000
--------------------------------------------------------------------------------
Skandinaviska Enskilda
Banken, New York:
5.30%, 8/16/07                                    15,000,000         15,000,000
5.31%, 8/21/07                                    10,000,000         10,000,000
--------------------------------------------------------------------------------
Societe General, New
York, 5.33%, 10/31/07                              8,000,000          8,000,000
--------------------------------------------------------------------------------
Svenska Handelsbanken
NY, 5.305%, 8/9/07                                 7,400,000          7,400,008
--------------------------------------------------------------------------------
Washington Mutual
Bank FA, 5.30%, 8/6/07                             4,000,000          4,000,000
--------------------------------------------------------------------------------
Westpac Banking Corp.,
New York, 5.32%,
10/10/07                                          10,000,000         10,000,000
                                                               -----------------
Total Certificates of
Deposit (Cost $119,400,008)                                         119,400,008

--------------------------------------------------------------------------------
DIRECT BANK OBLIGATIONS--21.2%
--------------------------------------------------------------------------------
Anglo Irish Bank Corp.,
5.255%, 10/26/07 1                                10,000,000          9,874,464
--------------------------------------------------------------------------------
Barclays US Funding LLC:
5.245%, 10/26/07                                   3,000,000          2,962,411
5.26%, 10/2/07                                    14,000,000         13,873,176
--------------------------------------------------------------------------------
Deutsche Bank Financial
LLC, 5.25%, 10/25/07                              10,000,000          9,876,042
--------------------------------------------------------------------------------
HBOS Treasury Services:
5.245%, 10/26/07                                  15,000,000         14,812,054
5.25%, 9/17/07                                    10,000,000          9,931,458
5.255%, 10/5/07                                    3,000,000          2,971,535

                                                   PRINCIPAL              VALUE
                                                      AMOUNT         SEE NOTE 1
--------------------------------------------------------------------------------
DIRECT BANK OBLIGATIONS Continued
--------------------------------------------------------------------------------
Nationwide Building Society:
5.25%, 10/22/07 1                             $   10,000,000   $      9,880,417
5.253%, 9/13/07 1                                 10,000,000          9,937,256
5.255%, 9/24/07 1                                  3,000,000          2,976,353
5.255%, 10/9/07 1                                  5,000,000          4,949,640
--------------------------------------------------------------------------------
Royal Bank of Scotland
plc, 5.41%, 7/21/08 2,3                           10,000,000         10,007,562
--------------------------------------------------------------------------------
Scotiabanc, Inc., 5.275%,
9/27/07 1                                         10,000,000          9,916,479
--------------------------------------------------------------------------------
Societe Generale
North America:
5.25%, 10/5/07                                    10,000,000          9,905,208
5.25%, 10/10/07                                   10,000,000          9,897,917
--------------------------------------------------------------------------------
St. George Bank Ltd.:
5.25%, 9/4/07 1                                   10,000,000          9,950,417
5.25%, 9/6/07 1                                    4,000,000          3,979,000
--------------------------------------------------------------------------------
Svenska Handelsbanken,
Inc., Series S, 5.23%,
8/6/07                                             8,000,000          7,994,189
--------------------------------------------------------------------------------
Swedbank AB, 5.23%,
8/17/07                                           15,000,000         14,965,133
--------------------------------------------------------------------------------
Swedbank Mortgage AB:
5.23%, 8/9/07                                      4,000,000          3,995,351
5.25%, 10/5/07                                     5,000,000          4,952,604
--------------------------------------------------------------------------------
UBS Finance
(Delaware) LLC:
5.23%, 8/6/07                                     10,000,000          9,992,736
5.25%, 10/17/07                                   15,000,000         14,831,563
--------------------------------------------------------------------------------
Westpac Banking Corp.,
5.25%, 10/18/07 1                                  8,000,000          7,909,000
                                                               -----------------
Total Direct Bank Obligations
(Cost $210,341,965)                                                 210,341,965

--------------------------------------------------------------------------------
SHORT-TERM NOTES--64.6%
--------------------------------------------------------------------------------
ASSET-BACKED SECURITIES--22.9%
Capital Auto
Receivables Asset Trust
2007-SN1 A-1, 5.32%,
6/16/08 3,4                                        6,503,291          6,503,291
--------------------------------------------------------------------------------
Chesham Finance LLC:
5.29%, 10/12/07                                   10,000,000          9,894,200
5.31%, 9/4/07                                      9,790,000          9,741,181
5.42%, 8/1/07                                      1,000,000          1,000,000


                         11 | OPPENHEIMER CASH RESERVES


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

                                                   PRINCIPAL              VALUE
                                                      AMOUNT         SEE NOTE 1
--------------------------------------------------------------------------------
ASSET-BACKED SECURITIES Continued
FCAR Owner Trust II:
5.27%, 10/15/07                               $   10,000,000   $      9,890,208
5.27%, 10/26/07                                   15,000,000         14,811,158
--------------------------------------------------------------------------------
Gemini Securitization Corp.:
5.255%, 10/23/07 1                                 7,000,000          6,915,190
5.28%, 8/16/07 1                                  10,500,000         10,476,900
5.30%, 8/27/07 1                                  10,000,000          9,962,119
--------------------------------------------------------------------------------
Gotham Funding Corp.,
5.30%, 8/7/07 1                                   11,000,000         10,990,283
--------------------------------------------------------------------------------
GOVCO, Inc., 5.27%,
9/25/07 1                                          2,000,000          1,983,897
--------------------------------------------------------------------------------
Grampian Funding LLC,
5.275%, 8/13/07 1                                 10,000,000          9,982,417
--------------------------------------------------------------------------------
Legacy Capital LLC:
5.28%, 9/5/07                                      5,000,000          4,974,333
5.29%, 8/10/07                                    15,700,000         15,679,237
5.38%, 8/2/07                                      7,000,000          6,998,960
--------------------------------------------------------------------------------
Mont Blanc Capital
Corp., 5.27%, 9/21/07 1                            7,405,000          7,349,716
--------------------------------------------------------------------------------
Perry Global Funding
LLC, Series A:
5.26%, 9/21/07 1                                  10,000,000          9,925,483
5.27%, 10/5/07 1                                   8,000,000          7,923,878
5.27%, 10/24/07 1                                  5,463,000          5,395,823
--------------------------------------------------------------------------------
Solitaire Funding LLC,
5.28%, 10/29/07 1                                 11,100,000         10,955,108
--------------------------------------------------------------------------------
St. Germain
Holdings, Inc.:
5.30%, 8/27/07 2                                   1,000,000            996,172
5.30%, 11/9/07 2                                  10,000,000          9,852,778
5.32%, 8/24/07 2                                  12,400,000         12,357,854
--------------------------------------------------------------------------------
Windmill Funding
Corp., 5.30%, 9/7/07 1                            13,300,000         13,227,552
--------------------------------------------------------------------------------
Yorktown Capital LLC,
5.285%, 8/29/07 1                                 20,000,000         19,917,789
                                                               -----------------
                                                                    227,705,527

--------------------------------------------------------------------------------
AUTO COMPONENTS--0.6%
S & S Firestone, Inc.,
5.43%, 8/1/07 3                                    6,175,000          6,175,000
--------------------------------------------------------------------------------
CAPITAL MARKETS--4.0%
Banc of America
Securities LLC, 5.35%,
8/1/07 3                                          15,000,000         15,000,000

                                                   PRINCIPAL              VALUE
                                                      AMOUNT         SEE NOTE 1
--------------------------------------------------------------------------------
CAPITAL MARKETS Continued
Lehman Brothers, Inc.,
5.313%, 8/1/07 3                              $    2,000,000   $      2,000,000
--------------------------------------------------------------------------------
Merrill Lynch & Co.,
Inc., Series C, 5.485%,
10/19/07 3                                         5,000,000          5,001,627
--------------------------------------------------------------------------------
Morgan Stanley, 5.23%,
8/3/07                                            18,000,000         17,994,770
                                                               -----------------
                                                                     39,996,397

--------------------------------------------------------------------------------
CHEMICALS--0.7%
BASF AG, 5.245%,
8/17/07 1                                          7,300,000          7,282,983
--------------------------------------------------------------------------------
COMMERCIAL BANKS--2.2%
Bank of America Corp.,
5.26%, 9/27/07                                    20,000,000         19,833,433
--------------------------------------------------------------------------------
J.P. Morgan Chase & Co.,
5.23%, 8/24/07 1                                   2,000,000          1,993,317
                                                               -----------------
                                                                     21,826,750

--------------------------------------------------------------------------------
COMMERCIAL FINANCE--0.8%
Madison Hotel
Investors I LLC, Series
2005A, 5.36%, 8/1/07 3                             7,545,000          7,545,000
--------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--0.1%
Warren Cnty., KY
Industrial Building
Revenue Bonds,
Pan-Ostan Co. Project,
Series 2006, 5.42%,
8/1/07 3                                           1,000,000          1,000,000
--------------------------------------------------------------------------------
CONSTRUCTION MATERIALS--0.3%
Nugent Sand Co.,
5.38%, 8/1/07 3                                    3,000,000          3,000,000
--------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--6.0%
General Electric
Capital Services, 5.24%,
9/14/07                                           20,000,000         19,871,911
--------------------------------------------------------------------------------
Greenwich Capital
Holdings, Inc., 5.338%,
11/15/07 3                                         8,000,000          8,000,000
--------------------------------------------------------------------------------
HSBC Finance Corp.:
5.23%, 8/10/07                                     3,500,000          3,495,424
5.26%, 9/17/07                                    10,500,000         10,427,894


                         12 | OPPENHEIMER CASH RESERVES


                                                   PRINCIPAL              VALUE
                                                      AMOUNT         SEE NOTE 1
--------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES Continued
Prudential Funding LLC:
5.24%, 8/15/07 4                              $    8,000,000   $      7,983,698
5.25%, 10/17/07 4                                 10,000,000          9,887,708
                                                               -----------------
                                                                     59,666,635

--------------------------------------------------------------------------------
ELECTRIC UTILITIES--0.3%
AL Incentives Finance
Authority Special
Obligation Bonds,
Series 1999-C, 5.32%,
8/2/07 3                                           2,815,000          2,815,000
--------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--0.5%
Premier Senior
Living LLC, Series 2007
A-H, 5.36%, 8/1/07 3                               2,700,000          2,700,000
--------------------------------------------------------------------------------
Ross Sinclaire Real
Estate Trust, 5.42%,
8/1/07 3                                           2,570,000          2,570,000
                                                               -----------------
                                                                      5,270,000

--------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--0.3%
Columbus, GA
Development Authority
Revenue Bonds, ECLA
Family Partnership LLP
Project, Series 2004,
5.37%, 8/1/07 3                                    2,995,000          2,995,000
--------------------------------------------------------------------------------
INSURANCE--3.4%
ING America Insurance
Holdings, Inc.:
5.23%, 8/9/07                                      1,100,000          1,098,722
5.255%, 9/6/07                                     7,000,000          6,963,215
5.255%, 10/19/07                                  12,000,000         11,861,618
--------------------------------------------------------------------------------
Jackson National Life
Global Funding, Series
2004-6, 5.41%,
8/15/07 3,4                                        5,000,000          5,000,000
--------------------------------------------------------------------------------
Metropolitan Life
Global Funding I,
Series 2003-5, 5.41%,
8/15/07 3,4                                        8,600,000          8,600,000
                                                               -----------------
                                                                     33,523,555

                                                   PRINCIPAL              VALUE
                                                      AMOUNT         SEE NOTE 1
--------------------------------------------------------------------------------
LEASING & FACTORING--3.0%
American Honda
Finance Corp.:
5.326%, 8/8/07 2,3                            $    8,000,000   $      8,000,000
5.33%, 9/26/07 2,3                                 5,500,000          5,500,000
5.39%, 11/15/07 2,3                                3,500,000          3,500,590
5.44%, 2/13/08 2,3                                10,000,000         10,009,288
--------------------------------------------------------------------------------
Luken-Woodlawn LLC,
Series 1998, 5.37%,
8/1/07 3                                           2,690,000          2,690,000
                                                               -----------------
                                                                     29,699,878

--------------------------------------------------------------------------------
MULTILINE RETAIL--0.6%
CAS Realty, Inc., Series
2004, 5.47%, 8/1/07 3                              6,300,000          6,300,000
--------------------------------------------------------------------------------
PERSONAL PRODUCTS--2.7%
Procter & Gamble
International Funding
SCA:
5.25%, 9/13/07 1                                  18,000,000         17,887,018
5.26%, 9/20/07 1                                   9,000,000          8,934,250
                                                               -----------------
                                                                     26,821,268

--------------------------------------------------------------------------------
REAL ESTATE--1.7%
Cain Capital
Investments LLC,
Series 2006, 5.44%,
8/1/07 3                                           3,630,000          3,630,000
--------------------------------------------------------------------------------
Donegal Crossing Assn.
LLC, Series 2002, 5.37%,
8/1/07 3                                          13,130,000         13,130,000
                                                               -----------------
                                                                     16,760,000

--------------------------------------------------------------------------------
SPECIAL PURPOSE FINANCIAL--14.5%
Cooperative Assn. of
Tractor Dealers, Inc.,
Series B:
5.26%, 8/3/07                                      1,023,000          1,022,701
5.32%, 8/16/07                                     7,000,000          6,984,483
--------------------------------------------------------------------------------
K2 (USA) LLC:
5.23%, 9/20/07                                    10,000,000          9,927,361
5.26%, 10/1/07                                    10,000,000          9,910,872
5.26%, 10/5/07                                     8,000,000          7,924,022
--------------------------------------------------------------------------------
LINKS Finance LLC:
8/6/07 2,3,5                                      11,000,000         10,997,800
8/15/07 2,3,5                                     10,000,000          9,997,000
5.32%, 12/20/07 2,3                                5,000,000          4,999,621


                         13 | OPPENHEIMER CASH RESERVES


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

                                                   PRINCIPAL              VALUE
                                                      AMOUNT         SEE NOTE 1
--------------------------------------------------------------------------------
SPECIAL PURPOSE FINANCIAL Continued
Parkland (USA) LLC:
5.33%, 12/12/07 2,3                           $    5,000,000   $      4,999,636
5.34%, 7/16/08 2,3                                13,000,000         12,998,757
--------------------------------------------------------------------------------
Premier Asset
Collateralized Entity
LLC, 5.30%, 9/17/07 2,3                           10,000,000         10,000,000
--------------------------------------------------------------------------------
RACERS Trust, Series
2004-6-MM, 5.37%,
8/22/07 3                                          2,500,000          2,500,000
--------------------------------------------------------------------------------
Sigma Finance, Inc.,
5.25%, 10/24/07                                   20,000,000         19,755,000
--------------------------------------------------------------------------------
Union Hamilton
Special Purpose
Funding LLC, 5.36%,
9/28/07 3                                         10,000,000         10,000,000
--------------------------------------------------------------------------------
ZAIS Levered Loan
Fund, Series 2006-1A
1, 5.43%, 1/2/08 3,4                              22,000,000         22,000,000
                                                               -----------------
                                                                    144,017,253
                                                               -----------------
Total Short-Term Notes
(Cost $642,400,246)                                                 642,400,246

--------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE
(COST $972,142,219)                                     97.8%       972,142,219
--------------------------------------------------------------------------------
OTHER ASSETS NET
OF LIABILITIES                                           2.2         21,781,223
                                              ----------------------------------
NET ASSETS                                             100.0%  $    993,923,442
                                              ==================================

FOOTNOTES TO STATEMENT OF INVESTMENTS

SHORT-TERM NOTES AND DIRECT BANK OBLIGATIONS ARE GENERALLY TRADED ON A DISCOUNT
BASIS; THE INTEREST RATE SHOWN IS THE DISCOUNT RATE RECEIVED BY THE FUND AT THE
TIME OF PURCHASE. OTHER SECURITIES NORMALLY BEAR INTEREST AT THE RATES SHOWN.

1. Security issued in an exempt transaction without registration under the
Securities Act of 1933. Such securities amount to $230,476,749, or 23.19% of the
Fund's net assets, and have been determined to be liquid pursuant to guidelines
adopted by the Board of Trustees.

2. Represents securities sold under Rule 144A, which are exempt from
registration under the Securities Act of 1933, as amended. These securities have
been determined to be liquid under guidelines established by the Board of
Trustees. These securities amount to $114,217,058 or 11.49% of the Fund's net
assets as of July 31, 2007.

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

4. Illiquid security. The aggregate value of illiquid securities as of July 31,
2007 was $59,974,697, which represents 6.03% of the Fund's net assets. See Note
4 of accompanying Notes.

5. When-issued security or forward commitment to be delivered and settled after
July 31, 2007. See Note 1 of accompanying Notes.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                         14 | OPPENHEIMER CASH RESERVES


STATEMENT OF ASSETS AND LIABILITIES  July 31, 2007
--------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
ASSETS
---------------------------------------------------------------------------------------------------------
Investments, at value (cost $972,142,219)--see accompanying statement of investments     $   972,142,219
---------------------------------------------------------------------------------------------------------
Cash                                                                                           1,452,000
---------------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of beneficial interest sold                                                            46,374,716
Interest                                                                                       1,785,335
Other                                                                                             67,984
                                                                                         ----------------
Total assets                                                                               1,021,822,254

---------------------------------------------------------------------------------------------------------
LIABILITIES
---------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased on a when-issued basis or forward commitment                            20,994,800
Shares of beneficial interest redeemed                                                         4,475,012
Dividends                                                                                        998,692
Payable to custodian                                                                             975,993
Transfer and shareholder servicing agent fees                                                    217,528
Distribution and service plan fees                                                               122,137
Shareholder communications                                                                        83,759
Trustees' compensation                                                                             2,678
Other                                                                                             28,213
                                                                                         ----------------
Total liabilities                                                                             27,898,812

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

NET ASSETS                                                                               $   993,923,442
                                                                                         ================

---------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
---------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest                                               $       993,876
---------------------------------------------------------------------------------------------------------
Additional paid-in capital                                                                   992,917,297
---------------------------------------------------------------------------------------------------------
Accumulated net investment income                                                                 12,597
---------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments                                                        (328)
                                                                                         ----------------
NET ASSETS                                                                               $   993,923,442
                                                                                         ================


                         15 | OPPENHEIMER CASH RESERVES


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

---------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
---------------------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets of $440,693,047 and
440,700,743 shares of beneficial interest outstanding)                                             $1.00
---------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $105,041,510 and 104,997,015 shares
of beneficial interest outstanding)                                                                $1.00
---------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $194,558,143 and 194,546,895 shares
of beneficial interest outstanding)                                                                $1.00
---------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $253,630,742 and 253,631,744 shares
of beneficial interest outstanding)                                                                $1.00

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                         16 | OPPENHEIMER CASH RESERVES


STATEMENT OF OPERATIONS  For the Year Ended July 31, 2007
--------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
---------------------------------------------------------------------------------------------------------
Interest                                                                                 $    50,300,466
---------------------------------------------------------------------------------------------------------
Other income                                                                                      52,927
                                                                                         ----------------
Total investment income                                                                       50,353,393

---------------------------------------------------------------------------------------------------------
EXPENSES
---------------------------------------------------------------------------------------------------------
Management fees                                                                                4,333,025
---------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A                                                                                          842,452
Class B                                                                                          841,258
Class C                                                                                        1,136,961
Class N                                                                                        1,169,720
---------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A                                                                                        1,359,232
Class B                                                                                          289,785
Class C                                                                                          501,889
Class N                                                                                          660,928
---------------------------------------------------------------------------------------------------------
Shareholder communications:
Class A                                                                                          147,933
Class B                                                                                           27,705
Class C                                                                                           22,630
Class N                                                                                            8,562
---------------------------------------------------------------------------------------------------------
Trustees' compensation                                                                             9,474
---------------------------------------------------------------------------------------------------------
Custodian fees and expenses                                                                        4,659
---------------------------------------------------------------------------------------------------------
Administration service fees                                                                        1,500
---------------------------------------------------------------------------------------------------------
Other                                                                                            205,587
                                                                                         ----------------
Total expenses                                                                                11,563,300
Less reduction to custodian expenses                                                              (1,370)
Less waivers and reimbursements of expenses                                                   (1,267,232)
                                                                                         ----------------
Net expenses                                                                                  10,294,698

---------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME                                                                         40,058,695

---------------------------------------------------------------------------------------------------------
NET REALIZED LOSS ON INVESTMENTS                                                                    (328)

---------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS                                     $    40,058,367
                                                                                         ================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                         17 | OPPENHEIMER CASH RESERVES


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

YEAR ENDED JULY 31,                                                                     2007           2006
------------------------------------------------------------------------------------------------------------
OPERATIONS
------------------------------------------------------------------------------------------------------------
Net investment income                                                          $  40,058,695   $ 29,400,708
------------------------------------------------------------------------------------------------------------
Net realized gain (loss)                                                                (328)         8,592
                                                                               -----------------------------
Net increase in net assets resulting from operations                              40,058,367     29,409,300

------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A                                                                          (19,249,071)   (14,063,245)
Class B                                                                           (4,707,545)    (4,190,546)
Class C                                                                           (6,271,095)    (4,082,163)
Class N                                                                           (9,830,986)    (7,087,474)
                                                                               -----------------------------
                                                                                 (40,058,697)   (29,423,428)
------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A                                                                               (4,116)            --
Class B                                                                               (1,033)            --
Class C                                                                               (1,348)            --
Class N                                                                               (2,095)            --
                                                                               -----------------------------
                                                                                      (8,592)            --

------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting
from beneficial interest transactions:
Class A                                                                           (4,873,110)    28,400,739
Class B                                                                          (44,528,421)     3,441,264
Class C                                                                           25,453,519     50,697,865
Class N                                                                           18,823,566     14,069,319
                                                                               -----------------------------
                                                                                  (5,124,446)    96,609,187

------------------------------------------------------------------------------------------------------------
NET ASSETS
------------------------------------------------------------------------------------------------------------
Total increase (decrease)                                                         (5,133,368)    96,595,059
------------------------------------------------------------------------------------------------------------
Beginning of period                                                              999,056,810    902,461,751
                                                                               -----------------------------
End of period (including accumulated net investment income
of $12,597 and $12,599, respectively)                                          $ 993,923,442   $999,056,810
                                                                               =============================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                         18 | OPPENHEIMER CASH RESERVES


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

CLASS A     YEAR ENDED JULY 31,                             2007        2006        2005        2004        2003
-------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
-------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                    $   1.00    $   1.00    $   1.00    $   1.00    $   1.00
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income                                        .04 1       .03 1       .01 1        -- 2       .01
Net realized gain (loss)                                      -- 2        --          --          -- 2        -- 2
                                                        -----------------------------------------------------------
Total from investment operations                             .04         .03         .01          -- 2       .01
-------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                        (.04)       (.03)       (.01)         -- 2      (.01)
Distributions from net realized gain                          -- 2        --          --          --          -- 2
                                                        -----------------------------------------------------------
Total dividends and/or distributions
to shareholders                                             (.04)       (.03)       (.01)         -- 2      (.01)
-------------------------------------------------------------------------------------------------------------------

Net asset value, end of period                          $   1.00    $   1.00    $   1.00    $   1.00    $   1.00
                                                        ===========================================================

-------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 3                                              4.54%       3.55%       1.44%       0.17%       0.54%
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)                $440,693    $445,571    $417,176    $385,393    $465,843
-------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                       $432,909    $403,664    $399,517    $405,288    $451,634
-------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income                                       4.45%       3.48%       1.46%       0.17%       0.53%
Total expenses                                              1.03%       1.10%       1.13%       1.22%       1.16%
Expenses after payments, waivers
and/or reimbursements and reduction
to custodian expenses                                       0.97%       0.99%       1.01%       0.99%       1.00%

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

2. Less than $0.005 per share.

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

4. Annualized for periods less than one full year.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                         19 | OPPENHEIMER CASH RESERVES


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

CLASS B     YEAR ENDED JULY 31,                             2007        2006        2005        2004        2003
-------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
-------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                    $   1.00    $   1.00    $   1.00    $   1.00    $   1.00
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income                                        .04 1       .03 1       .01 1        -- 2        -- 2
Net realized gain (loss)                                      -- 2        --          --          -- 2        -- 2
                                                        -----------------------------------------------------------
Total from investment operations                             .04         .03         .01          -- 2        -- 2
-------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                        (.04)       (.03)       (.01)         -- 2        -- 2
Distributions from net realized gain                          -- 2        --          --          --          -- 2
                                                        -----------------------------------------------------------
Total dividends and/or distributions
to shareholders                                             (.04)       (.03)       (.01)         -- 2        -- 2
-------------------------------------------------------------------------------------------------------------------

Net asset value, end of period                          $   1.00    $   1.00    $   1.00    $   1.00    $   1.00
                                                        ===========================================================

-------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 3                                              4.29%       3.29%       1.20%       0.11%       0.27%
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)                $105,041    $149,571    $146,132    $219,061    $316,750
-------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                       $112,029    $130,319    $175,995    $247,836    $385,078
-------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income                                       4.20%       3.21%       1.14%       0.10%       0.27%
Total expenses                                              1.52%       1.55%       1.56%       1.34%       1.37%
Expenses after payments, waivers
and/or reimbursements and reduction
to custodian expenses                                       1.21%       1.23%       1.24%       1.04%       1.27%

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

2. Less than $0.005 per share.

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

4. Annualized for periods less than one full year.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                         20 | OPPENHEIMER CASH RESERVES


CLASS C     YEAR ENDED JULY 31,                             2007        2006        2005        2004        2003
-------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
-------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                    $   1.00    $   1.00    $   1.00    $   1.00    $   1.00
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income                                        .04 1       .03 1       .01 1        -- 2        -- 2
Net realized gain (loss)                                      -- 2        --          --          -- 2        -- 2
                                                        -----------------------------------------------------------
Total from investment operations                             .04         .03         .01          -- 2        -- 2
-------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                        (.04)       (.03)       (.01)         -- 2        -- 2
Distributions from net realized gain                          -- 2        --          --          --          -- 2
                                                        -----------------------------------------------------------
Total dividends and/or distributions
to shareholders                                             (.04)       (.03)       (.01)         -- 2        -- 2
-------------------------------------------------------------------------------------------------------------------

Net asset value, end of period                          $   1.00    $   1.00    $   1.00    $   1.00    $   1.00
                                                        ===========================================================

-------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 3                                              4.22%       3.24%       1.16%       0.10%       0.25%
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)                $194,558    $169,106    $118,410    $109,083    $106,650
-------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                       $151,581    $126,260    $107,761    $ 97,058    $113,569
-------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income                                       4.14%       3.23%       1.20%       0.10%       0.24%
Total expenses                                              1.59%       1.67%       1.65%       1.39%       1.41%
Expenses after payments, waivers
and/or reimbursements and reduction
to custodian expenses                                       1.27%       1.28%       1.29%       1.05%       1.28%

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

2. Less than $0.005 per share.

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

4. Annualized for periods less than one full year.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                         21 | OPPENHEIMER CASH RESERVES


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

CLASS N     YEAR ENDED JULY 31,                             2007        2006        2005        2004        2003
-------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
-------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period                    $   1.00    $   1.00    $   1.00    $   1.00    $   1.00
-------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income                                        .04 1       .03 1       .01 1        -- 2        -- 2
Net realized gain (loss)                                      -- 2        --          --          -- 2        -- 2
                                                        -----------------------------------------------------------
Total from investment operations                             .04         .03         .01          -- 2        -- 2
-------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income                        (.04)       (.03)       (.01)         -- 2        -- 2
Distributions from net realized gain                          -- 2        --          --          --          -- 2
                                                        -----------------------------------------------------------
Total dividends and/or distributions
to shareholders                                             (.04)       (.03)       (.01)         -- 2        -- 2
-------------------------------------------------------------------------------------------------------------------

Net asset value, end of period                          $   1.00    $   1.00    $   1.00    $   1.00    $   1.00
                                                        ===========================================================

-------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 3                                              4.28%       3.26%       1.15%       0.10%       0.43%
-------------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands)                $253,631    $234,809    $220,744    $ 57,309    $ 52,350
-------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands)                       $234,641    $221,369    $143,516    $ 55,961    $ 49,145
-------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment income                                       4.19%       3.20%       1.47%       0.10%       0.41%
Total expenses                                              1.27%       1.35%       1.40%       1.39%       1.24%
Expenses after payments, waivers
and/or reimbursements and reduction
to custodian expenses                                       1.21%       1.26%       1.28%       1.06%       1.11%

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

2. Less than $0.005 per share.

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

4. Annualized for periods less than one full year.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                         22 | OPPENHEIMER CASH RESERVES


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

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

Oppenheimer Cash Reserves (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 the maximum current income that is
consistent with stability of principal. The Fund's investment advisor is
OppenheimerFunds, Inc. (the Manager).

      The Fund offers Class A, Class B, Class C and Class N shares. Class A
shares are sold at their offering price, which is the net asset value per share
without any initial 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.
All classes of shares have identical rights and voting privileges with respect
to the Fund in general and exclusive voting rights on matters that affect that
class alone. Earnings, net assets and net asset value per share may differ due
to each class having its own expenses, such as transfer and shareholder
servicing agent fees and shareholder communications, directly attributable to
that class. Class A, B, C and N have separate distribution and/or service plans.
Class B shares will automatically convert to Class A shares six years after the
date of purchase.

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

--------------------------------------------------------------------------------
SECURITIES VALUATION. As permitted under Rule 2a-7 of the Investment Company Act
of 1940, portfolio securities are valued on the basis of amortized cost, which
approximates market value. If amortized cost is determined not to approximate
market value, the fair value of the portfolio securities will be determined
under procedures approved by the Fund's Board of Trustees.

--------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED BASIS OR FORWARD COMMITMENT. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis or
forward commitment take place generally at least ten days or more after the
trade date. Normally the settlement date occurs within six months after the
trade date; however, the Fund may, from time to time, purchase securities whose
settlement date extends six months or more beyond trade date. During this
period, such securities do not earn interest, are subject to market fluctuation
and may increase or decrease in value prior to their delivery. The Fund
maintains internally designated assets with a market value equal to or greater
than the amount of its purchase commitments. The purchase of securities on a
when-issued basis or forward commitment may increase the volatility of the
Fund's net asset value to the extent the Fund executes such transactions while
remaining substantially fully invested. The Fund may also sell securities that
it purchased on a when-issued basis or forward commitment prior to settlement of
the original purchase. As of July 31, 2007, the Fund had purchased $20,994,800
of securities issued on a when-issued basis or forward commitment.


                         23 | OPPENHEIMER CASH RESERVES


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

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

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 to shareholders,
therefore, no federal income or excise tax provision is required.

The tax components of capital shown in the following table represent
distribution requirements the Fund must satisfy under the income tax
regulations, losses the Fund may be able to offset against income and gains
realized in future years for federal income tax purposes.

            UNDISTRIBUTED NET     UNDISTRIBUTED     ACCUMULATED LOSS
            INVESTMENT INCOME    LONG-TERM GAIN   CARRYFORWARD 1,2,3
            --------------------------------------------------------
            $1,015,540                      $--                 $328

1. As of July 31, 2007, the Fund had $328 of net capital loss carryforwards
available to offset future realized capital gains, if any, and thereby reduce
future taxable gain distributions. As of July 31, 2007, details of the capital
loss carryforwards were as follows:

            EXPIRING
            -------------------
            2015           $328

2. During the fiscal year ended July 31, 2007, the Fund did not utilize any
capital loss carryforward.

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

The tax character of distributions paid during the years ended July 31, 2007 and
July 31, 2006 was as follows:

                                          YEAR ENDED      YEAR ENDED
                                       JULY 31, 2007   JULY 31, 2006
            --------------------------------------------------------
            Distributions paid from:
            Ordinary income              $40,067,289   $  29,423,428

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


                         24 | OPPENHEIMER CASH RESERVES


--------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. Dividends and distributions to
shareholders, which are determined in accordance with income tax regulations,
are recorded on the ex-dividend date. Income distributions, if any, are declared
daily and paid monthly. Capital gain distributions, if any, are declared and
paid annually but may be paid at other times to maintain the net asset value per
share at $1.00.

--------------------------------------------------------------------------------
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 JULY 31, 2007         YEAR ENDED JULY 31, 2006
                                          SHARES            AMOUNT         SHARES            AMOUNT
----------------------------------------------------------------------------------------------------
CLASS A
Sold                                 412,807,416    $  412,807,416    408,488,912    $  408,488,912
Dividends and/or distributions
reinvested                            18,171,756        18,171,753     13,224,569        13,224,569
Redeemed                            (435,852,422)     (435,852,279)  (393,315,111)     (393,312,742)
                                    ----------------------------------------------------------------
Net increase (decrease)               (4,873,250)   $   (4,873,110)    28,398,370    $   28,400,739
                                    ================================================================


                         25 | OPPENHEIMER CASH RESERVES


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

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

                                                   YEAR ENDED JULY 31, 2007        YEAR ENDED JULY 31, 2006
                                                     SHARES          AMOUNT          SHARES          AMOUNT
------------------------------------------------------------------------------------------------------------
CLASS B
Sold                                             98,358,414   $  98,358,414     154,984,556   $ 154,984,556
Dividends and/or distributions reinvested         4,303,886       4,303,886       3,781,340       3,781,340
Redeemed                                       (147,190,704)   (147,190,721)   (155,326,716)   (155,324,632)
                                               -------------------------------------------------------------
Net increase (decrease)                         (44,528,404)  $ (44,528,421)      3,439,180   $   3,441,264
                                               =============================================================

------------------------------------------------------------------------------------------------------------
CLASS C
Sold                                            200,059,729   $ 200,059,729     199,817,601   $ 199,817,601
Dividends and/or distributions reinvested         5,899,619       5,899,619       3,772,209       3,772,209
Redeemed                                       (180,505,829)   (180,505,829)   (152,891,627)   (152,891,945)
                                               -------------------------------------------------------------
Net increase                                     25,453,519   $  25,453,519      50,698,183   $  50,697,865
                                               =============================================================

------------------------------------------------------------------------------------------------------------
CLASS N
Sold                                            160,915,111   $ 160,915,111     205,500,022   $ 205,500,022
Dividends and/or distributions reinvested         9,704,113       9,704,118       6,986,302       6,986,302
Redeemed                                       (151,795,658)   (151,795,663)   (198,417,011)   (198,417,005)
                                               -------------------------------------------------------------
Net increase                                     18,823,566   $  18,823,566      14,069,313   $  14,069,319
                                               =============================================================

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

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

                    FEE SCHEDULE
                    ----------------------------------------
                    Up to $250 million                0.500%
                    Next $250 million                 0.475
                    Next $250 million                 0.450
                    Next $250 million                 0.425
                    Over $1 billion                   0.400

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

--------------------------------------------------------------------------------
TRANSFER AGENT FEES. OppenheimerFunds Services (OFS), a division of the Manager,
acts as the transfer and shareholder servicing agent for the Fund. The Fund pays
OFS a per account fee. For the year ended July 31, 2007, the Fund paid
$2,828,832 to OFS for services to the Fund.

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


                         26 | OPPENHEIMER CASH RESERVES


--------------------------------------------------------------------------------
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 0.20% 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 these shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% on Class B
shares and Class C shares and for Class N shares, the Fund pays the Distributor
an annual service fee of 0.25% and an annual asset-based sales charge of 0.25%.
Effective January 1, 2003, the Fund decreased the asset-based sales charge on
Class B and Class C shares to 0.50% of average daily net assets per annum. The
Distributor is entitled to receive a service fee of 0.25% per year under each
plan, but the Board of Trustees has not authorized the Fund to pay the service
fees on Class B and Class C shares at this time. 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 June 30, 2007
Class N shares were $7,311,886. Fees incurred by the Fund under the plans are
detailed in the Statement of Operations.

--------------------------------------------------------------------------------
SALES CHARGES. Contingent deferred sales charges (CDSC) do not represent an
expense of the Fund. They are deducted from the proceeds of redemptions of Fund
shares prior to remittance. 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
                      CONTINGENT      CONTINGENT      CONTINGENT      CONTINGENT
                        DEFERRED        DEFERRED        DEFERRED        DEFERRED
                   SALES CHARGES   SALES CHARGES   SALES CHARGES   SALES CHARGES
                     RETAINED BY     RETAINED BY     RETAINED BY     RETAINED BY
YEAR ENDED           DISTRIBUTOR     DISTRIBUTOR     DISTRIBUTOR     DISTRIBUTOR
--------------------------------------------------------------------------------
July 31, 2007            $ 5,094        $ 39,610         $ 5,955        $ 15,271


                         27 | OPPENHEIMER CASH RESERVES


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

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

WAIVERS AND REIMBURSEMENTS OF EXPENSES. Effective December 6, 2002, the Manager
has agreed to limit the Fund's management fee to 0.40% of the Fund's average net
assets for each class of shares. As a result of this limitation the Fund was
reimbursed $607,826 for the year ended July 31, 2007. This expense limitation
can be amended or terminated at any time without advance notice.

      OppenheimerFunds Distributor, Inc. (OFDI) has voluntarily agreed to reduce
Class B and Class C Distribution and/or Service (12b-1) Fees it is entitled to
receive by 0.25% of the average annual net assets for each respective class of
shares. During the year ended July 31, 2007, OFDI waived $280,419 and $378,987
for Class B and Class C shares, respectively. This undertaking may be amended or
withdrawn at any time.

      Prior to April 28, 2003, OFS had voluntarily agreed to limit transfer and
shareholder servicing agent fees for all classes to 0.35% of average annual net
assets per class. Effective April 28, 2003, transfer agent fees for all classes
are limited to the lesser of 0.35% of average daily net assets or to an amount
necessary to allow each class of the Fund to maintain a 7-day yield of at least
approximately 0.10%. This undertaking may be amended or withdrawn at any time.

--------------------------------------------------------------------------------
4. ILLIQUID SECURITIES

As of July 31, 2007, investments in securities included issues that are
illiquid. A security may be considered illiquid if it lacks a readily available
market or if its valuation has not changed for a certain period of time. The
Fund will not invest more than 10% of its net assets (determined at the time of
purchase and reviewed periodically) in illiquid securities. Securities that are
illiquid are marked with the applicable footnote on the Statement of
Investments.

--------------------------------------------------------------------------------
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
July 31, 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, ("FASB") issued Statement of Financial Accounting
Standards ("SFAS") No. 157, FAIR VALUE MEASUREMENTS. This standard establishes a
single authoritative


                         28 | OPPENHEIMER CASH RESERVES


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
July 31, 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.


                         29 | OPPENHEIMER CASH RESERVES

                                            A-4
                                         Appendix A

                             Description of Securities Ratings

Below is a description  of the two highest  rating  categories  for Short Term Debt and Long
Term Debt by the "Nationally-Recognized  Statistical Rating Organizations" which the Manager
evaluates in  purchasing  securities  on behalf of the Fund.  The ratings  descriptions  are
based on information supplied by the ratings organizations to subscribers.

SHORT-TERM DEBT RATINGS.

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

The following  rating  designations  for commercial  paper (defined by Moody's as promissory
obligations  not having original  maturity in excess of nine months),  are judged by Moody's
to be investment grade, and indicate the relative repayment capacity of rated issuers:

Prime-1:  Superior  capacity  for  repayment.  Capacity  will  normally be  evidenced by the
following characteristics:  (a) leading market positions in well-established industries; (b)
high rates of return on funds  employed;  (c)  conservative  capitalization  structure  with
moderate reliance on debt and ample asset protection;  (d) broad margins in earning coverage
of fixed  financial  charges and high internal  cash  generation;  and (e)  well-established
access to a range of financial markets and assured sources of alternate liquidity.

Prime-2:  Strong  capacity  for  repayment.  This will  normally be evidenced by many of the
characteristics  cited above but to a lesser degree.  Earnings  trends and coverage  ratios,
while sound, will be more subject to variation. Capitalization characteristics,  while still
appropriate,  may be more  affected by external  conditions.  Ample  alternate  liquidity is
maintained.

      Moody's  ratings  for  state  and  municipal  short-term  obligations  are  designated
"Moody's Investment Grade" ("MIG").  Short-term notes which have demand features may also be
designated as "VMIG". These rating categories are as follows:

MIG  1/VMIG 1:  Denotes  superior  credit  quality.  Excellent  protection  is  afforded  by
established  cash flows,  highly  reliable  liquidity  support or  demonstrated  broad-based
access to the market for refinancing.

MIG 2/VMIG 2: Denotes  strong credit  quality.  Margins of protection are ample although not
as large as in the preceding group.

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

The following  ratings by Standard and Poor's for commercial  paper (defined by Standard and
Poor's as debt having an original  maturity of no more than 365 days) assess the  likelihood
of payment:

A-1:  Obligation  is rated in the  highest  category.  The  obligor's  capacity  to meet its
financial  commitment on the  obligation is strong.  Within this  category,  a plus (+) sign
designation  indicates the obligor's capacity to meet its financial  obligation is extremely
strong.

A-2:  Obligation  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.

Standard and Poor's ratings for Municipal Notes due in three years or less:

SP-1:  Strong capacity to pay principal and interest.  An issue determined to possess 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.

Standard and Poor's  assigns "dual  ratings" to all municipal debt issues that have a demand
or double feature as part of their provisions.  The first rating addresses the likelihood of
repayment of principal and interest as due, and the second rating  addresses only the demand
feature.  With short-term demand debt, Standard and Poor's note rating symbols are used with
the commercial paper symbols (for example, "SP-1+/A-1+").


Fitch, Inc. ("Fitch")

Fitch  assigns the  following  short-term  ratings to debt  obligations  that are payable on
demand or have  original  maturities  of generally up to three years,  including  commercial
paper, certificates of deposit, medium-term notes, and municipal and investment notes:

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.


Dominion Bond Rating Service Limited ("DBRS")

R-1: Short term debt rated "R-1 (high)" is of the highest credit  quality,  and indicates an
entity which possesses  unquestioned  ability to repay current liabilities as they fall due.
Entities rated in this category normally maintain strong liquidity  positions,  conservative
debt levels and profitability  which is both stable and above average.  Companies  achieving
an "R-1 (high)" rating are normally  leaders in  structurally  sound industry  segments with
proven track records,  sustainable  positive  future  results and no substantial  qualifying
negative  factors.  Given the extremely tough  definition  which DBRS has established for an
"R-1 (high)",  few entities are strong enough to achieve this rating.  Short term debt rated
"R-1 (middle)" is of superior  credit  quality and, in most cases,  ratings in this category
differ  from  "R-1  (high)"  credits  to only a small  degree.  Given  the  extremely  tough
definition  which DBRS has for the "R-1 (high)"  category  (which few  companies are able to
achieve),  entities rated "R-1 (middle)" are also considered  strong credits which typically
exemplify above average  strength in key areas of consideration  for debt protection.  Short
term debt rated "R-1 (low)" is of  satisfactory  credit  quality.  The overall  strength and
outlook for key  liquidity,  debt and  profitability  ratios is not normally as favorable as
with  higher  rating  categories,  but  these  considerations  are  still  respectable.  Any
qualifying  negative  factors  which  exist are  considered  manageable,  and the  entity is
normally of sufficient size to have some influence in its industry.

R-2:  Short term debt rated "R-2" is of adequate  credit quality and within the three subset
grades (high,  middle,  low),  debt  protection  ranges from having  reasonable  ability for
timely  repayment to a level which is considered only just adequate.  The liquidity and debt
ratios  of  entities  in the  "R-2"  classification  are not as strong as those in the "R-1"
category,  and the past and future trend may suggest some risk of  maintaining  the strength
of key ratios in these  areas.  Alternative  sources of  liquidity  support  are  considered
satisfactory;  however, even the strongest liquidity support will not improve the commercial
paper rating of the issuer.  The size of the entity may restrict  its  flexibility,  and its
relative  position  in the  industry  is not  typically  as  strong  as  the  "R-1  credit".
Profitability  trends,  past and future, may be less favorable,  earnings not as stable, and
there are often negative  qualifying  factors  present which could also make the entity more
vulnerable to adverse changes in financial and economic conditions.

LONG TERM DEBT RATINGS.

These ratings are relevant for  securities  purchased by the Fund with a remaining  maturity
of 397 days or less, or for rating issuers of short-term obligations.

Moody's

Bonds (including municipal bonds) are rated as follows:

Aaa:  Judged to be the best quality.  They carry the smallest  degree of investment risk and
are generally  referred to as "gilt edged." 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:  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.

      Moody's   applies   numerical   modifiers   "1",  "2"  and  "3"  in  its  "Aa"  rating
classification.  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.





Standard and Poor's

Bonds (including municipal bonds maturing beyond three years) are rated as follows:

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

AA:  Bonds rated "AA" differ from the highest  rated  obligations  only in small  degree.  A
strong capacity to meet its financial commitment on the obligation is very strong.


Fitch

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.

      Because bonds rated in the "AAA" and "AA" categories are not significantly  vulnerable
to foreseeable  future  developments,  short-term  debt of these issuers is generally  rated
"F-1+".









                                            B-12

                                         Appendix B

               OppenheimerFunds Special Sales Charge Arrangements and Waivers

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

For the purposes of some of the waivers  described below and in the Prospectus and Statement
of Additional  Information ("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(3)
         4) Group Retirement Plans(4)
         5) 403(b)(7) custodial plan accounts
         6) Individual Retirement Accounts ("IRAs"), including traditional IRAs, Roth IRAs,
            SEP-IRAs, SARSEPs or SIMPLE plans

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

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






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

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

      There is no  initial  sales  charge  on  purchases  of  Class A  shares  of any of the
Oppenheimer funds in the cases listed below. However,  these purchases may be subject to the
Class A  contingent  deferred  sales  charge if redeemed  within 18 months (24 months in the
case of shares of Oppenheimer  Rochester  National  Municipals and Rochester Fund Municipals
purchased  prior to  October  22,  2007) of the  beginning  of the  calendar  month of their
purchase,  as  described  in the  Prospectus  (unless a waiver  described  elsewhere in this
Appendix applies to the redemption).  Additionally,  on shares purchased under these waivers
that are subject to the Class A contingent  deferred sales charge,  the Distributor will pay
the applicable  concession  described in the Prospectus  under "Class A Contingent  Deferred
Sales Charge."(5) This waiver provision applies to:
|_|   Purchases of Class A shares aggregating $1 million or more.
|_|   Purchases of Class A shares,  prior to March 1, 2007,  by a  Retirement  Plan that was
         permitted  to purchase  such shares at net asset value but subject to a  contingent
         deferred  sales charge prior to March 1, 2001.  That included plans (other than IRA
         or 403(b)(7)  Custodial  Plans) that: 1) bought shares costing $500,000 or more, 2)
         had at the time of purchase 100 or more eligible  employees or total plan assets of
         $500,000  or more,  or 3)  certified  to the  Distributor  that it projects to have
         annual plan purchases of $200,000 or more.
|_|   Purchases by an OppenheimerFunds-sponsored Rollover IRA, if the purchases are made:
         1) through a broker,  dealer,  bank or registered  investment adviser that has made
            special arrangements with the Distributor for those purchases, or
         2) by a direct rollover of a distribution  from a qualified  Retirement Plan if the
            administrator  of that Plan has made special  arrangements  with the Distributor
            for those purchases.
|_|   Purchases  of  Class A shares  by  Retirement  Plans  that  have any of the  following
         record-keeping arrangements:
         1) The record  keeping is performed by Merrill  Lynch Pierce  Fenner & Smith,  Inc.
            ("Merrill  Lynch") on a daily  valuation  basis for the Retirement  Plan. On the
            date the plan sponsor signs the  record-keeping  service  agreement with Merrill
            Lynch,  the Plan must have $3  million  or more of its  assets  invested  in (a)
            mutual funds,  other than those  advised or managed by Merrill Lynch  Investment
            Management,  L.P.  ("MLIM"),  that are made available under a Service  Agreement
            between   Merrill  Lynch  and  the  mutual  fund's   principal   underwriter  or
            distributor,  and (b) funds  advised or managed by MLIM (the funds  described in
            (a) and (b) are referred to as "Applicable Investments").
         2) The record  keeping for the  Retirement  Plan is performed on a daily  valuation
            basis by a record  keeper  whose  services  are  provided  under a  contract  or
            arrangement  between the Retirement Plan and Merrill Lynch. On the date the plan
            sponsor signs the record keeping service  agreement with Merrill Lynch, the Plan
            must have $5 million or more of its assets  (excluding  assets invested in money
            market funds) invested in Applicable Investments.
         3) The record  keeping for a Retirement  Plan is handled under a service  agreement
            with Merrill  Lynch and on the date the plan sponsor signs that  agreement,  the
            Plan has 500 or more  eligible  employees  (as  determined  by the Merrill Lynch
            plan conversion manager).
II.






Waivers of Class A Sales Charges of Oppenheimer Funds
--------------------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

A.    Waivers for Redemptions in Certain Cases.

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


         12)      For  distributions  from  a  participant's   account  under  an  Automatic
            Withdrawal Plan after the participant  reaches age 59 1/2, as long as the aggregate
            value of the distributions does not exceed 10% of the account's value,  adjusted
            annually.
         13)      Redemptions  of Class B shares under an Automatic  Withdrawal  Plan for an
            account other than a Retirement  Plan,  if the  aggregate  value of the redeemed
            shares does not exceed 10% of the account's value, adjusted annually.
         14)      For distributions from 401(k) plans sponsored by broker-dealers  that have
            entered into a special arrangement with the Distributor allowing this waiver.
|_|   Redemptions  of Class B shares or Class C shares  under an Automatic  Withdrawal  Plan
         from an  account  other  than a  Retirement  Plan  if the  aggregate  value  of the
         redeemed shares does not exceed 10% of the account's value annually.

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

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

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

The initial and contingent  deferred sales charge rates and waivers for Class A, Class B and
Class C shares  described in the Prospectus or 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 Balanced Fund              Oppenheimer Quest International Value Fund,
   Inc.
   Oppenheimer Quest Opportunity Value Fund

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

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

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

A.    Reductions or Waivers of Class A Sales Charges.

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

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

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

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

      Purchases  made  under  this  arrangement  qualify  for the lower of either  the sales
charge  rate in the table  based on the number of members  of an  Association,  or the sales
charge rate that applies under the Right of Accumulation  described in the applicable fund's
Prospectus and 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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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









                                            C-2
--------------------------------------------------------------------------------------------
Oppenheimer Cash Reserves
--------------------------------------------------------------------------------------------

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
      Deloitte & Touche LLP
      555 Seventeenth Street
      Denver, Colorado 80202-3942

Counsel to the Fund
      Myer, Swanson, Adams & Wolf, P.C.
      1350 Lawrence Street, Suite 100
      Denver, Colorado 80204

Counsel to the Independent Trustees
      Bell, Boyd & Lloyd LLC
      70 West Madison Street, Suite 3100
      Chicago, Illinois 60602
      1234
PX0760.001.1107



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