OPPENHEIMER CORE BOND FUND

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OZbV6oq9a7NELboImL3NR4cRflHgNIphUx1o98hAfirku4JoY9hYD8wsvdyYAJ86 8CyGzFhBntrZuhzLDG2ryQ== 0000728889-08-000569.txt : 20080429 0000728889-08-000569.hdr.sgml : 20080429 20080429135642 ACCESSION NUMBER: 0000728889-08-000569 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20080429 DATE AS OF CHANGE: 20080429 EFFECTIVENESS DATE: 20080429 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER INTEGRITY FUNDS CENTRAL INDEX KEY: 0000701265 IRS NUMBER: 042509354 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-76547 FILM NUMBER: 08784489 BUSINESS ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 BUSINESS PHONE: 303768-3200 MAIL ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY STREET 2: 3RD FL CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 FORMER COMPANY: FORMER CONFORMED NAME: MASSMUTUAL INTEGRITY FUNDS DATE OF NAME CHANGE: 19910329 FORMER COMPANY: FORMER CONFORMED NAME: MASSMUTUAL LIQUID ASSETS TRUST DATE OF NAME CHANGE: 19880403 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPPENHEIMER INTEGRITY FUNDS CENTRAL INDEX KEY: 0000701265 IRS NUMBER: 042509354 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-03420 FILM NUMBER: 08784490 BUSINESS ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 BUSINESS PHONE: 303768-3200 MAIL ADDRESS: STREET 1: 6803 SOUTH TUCSON WAY STREET 2: 3RD FL CITY: CENTENNIAL STATE: CO ZIP: 80112-3924 FORMER COMPANY: FORMER CONFORMED NAME: MASSMUTUAL INTEGRITY FUNDS DATE OF NAME CHANGE: 19910329 FORMER COMPANY: FORMER CONFORMED NAME: MASSMUTUAL LIQUID ASSETS TRUST DATE OF NAME CHANGE: 19880403

0000701265 S000008824 Oppenheimer Core Bond Fund

C000024033 A

C000024034 B

C000024035 C

C000024036 N

C000024037 Y

485BPOS 1 body.htm COVER PAGE, PROSPECTUS, SAI, FINANCIALS, PART C OPPENHEIMER CORE BOND FUND

                                                      Registration No. 2-76547
                                                             File No. 811-3420

                                UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549

                                  FORM N-1A


REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                    [X]
Pre-Effective Amendment No.                                              [   ]
Post-Effective Amendment No. 48                                            [X]

                                    and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940            [X]
Amendment No. 49                                                           [X]

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                         Oppenheimer Integrity Funds
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              (Exact Name of Registrant as Specified in Charter)

            6803 South Tucson Way, Centennial, Colorado 80112-3924
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             (Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code:  (303) 768-3200

                             Robert G. Zack, Esq.
                            OppenheimerFunds, Inc.
Two World Financial Center, 225 Liberty Street, New York, New York 10281-1008
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                   (Name and Address of Agent for Service)

It is proposed that this filing will become effective (check appropriate box):
     [X]   immediately upon filing pursuant to paragraph (b)
     [   ] on April 29, 2008 pursuant to paragraph (b)
     [   ] 60 days after filing pursuant to paragraph (a)(1)
     [   ] on _______________ pursuant to paragraph (a)(1)
     [   ] 75 days after filing pursuant to paragraph (a)(2)
     [   ] on _______________ pursuant to paragraph (a)(2) of Rule 485.

If appropriate, check the following box:
     [   ] this post-effective amendment designates a new effective date for a
           previously filed post-effective amendment.

Oppenheimer
Core Bond Fund

Prospectus dated April 29, 2008

Oppenheimer Core Bond Fund is a mutual
fund that seeks total return. It
invests primarily in investment-grade
bonds and U.S. government securities.

This prospectus contains important
information about the Fund's
objective, investment policies,
strategies and risks. It also contains
important information about how to buy
and sell shares of the Fund and other
account features. Please read this
prospectus carefully before you invest
and keep it for future reference about
your account.

As with all mutual funds, the
Securities and Exchange Commission has
not approved or disapproved the Fund's
securities nor has it determined that
this prospectus is accurate or
complete. It is a criminal offense to
represent otherwise.

CONTENTS

ABOUT THE FUND

The Fund's Investment Objective and Principal Investment Strategies

Main Risks of Investing in the Fund

The Fund's Past Performance

Fees and Expenses of the Fund

About the Fund's Investments

How the Fund is Managed

ABOUT YOUR ACCOUNT

How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Class N Shares
Class Y Shares

Special Investor Services
AccountLink
PhoneLink
OppenheimerFunds Internet Website
Retirement Plans

How to Sell Shares
Checkwriting
By Mail
By Telephone

How to Exchange Shares

Shareholder Account Rules and Policies

Dividends, Capital Gains and Taxes

Financial Highlights

ABOUT THE FUND

The Fund's Investment Objective and Principal Investment Strategies

WHAT IS THE FUND'S INVESTMENT OBJECTIVE? The Fund seeks total return by
investing mainly in debt instruments.

WHAT DOES THE FUND MAINLY INVEST IN? As a non-fundamental policy (which will
not be changed without providing 60 days' notice to Fund shareholders), under
normal market conditions, the Fund invests at least 80% of its net assets
(plus borrowings for investment purposes) in investment grade debt
securities. Those investment-grade debt securities can include:

o domestic and foreign corporate debt obligations,
o domestic and foreign government bonds, including U.S. government
securities, and
o mortgage-related securities (including collateralized mortgage
obligations ("CMOs")) issued by private issuers.

In general, these debt securities are referred to as "bonds." The Fund's
investments in U.S. government securities include securities issued or
guaranteed by the U.S. government or its agencies or federally-chartered
corporate entities referred to as "instrumentalities." These include
mortgage-related U.S. government securities and CMOs. The Fund can invest in
money market instruments and other debt obligations. The Fund can invest up
to 20% of its total assets in high-yield debt securities that are below
investment-grade (commonly referred to as "junk bonds").

The Fund can also use derivative instruments, including futures, swaps,
CMOs and "structured" notes, to seek higher investment returns or to manage
investment risks. These investments are more fully explained in "About the
Fund's Investments", below.

There is no set allocation of the Fund's assets among the classes of
securities the Fund buys, but the Fund focuses mainly on U.S. government
securities and investment-grade debt securities. However, if market
conditions change, the Fund's portfolio managers might change the relative
allocation of the Fund's assets.

The Fund seeks to maintain an average effective portfolio duration
(discussed in "About the Fund's Investments", below) of three to six years
(measured on a dollar-weighted basis) to try to reduce the volatility of the
value of its securities portfolio. The Fund has no limitations on the range
of maturities of the debt securities in which it can invest and therefore may
hold bonds with short-, medium- or long-term maturities. Because of market
events and interest rate changes, the duration of the portfolio might not
meet that target at all times. The Fund's investment manager,
OppenheimerFunds, Inc. (the "Manager"), will attempt to maintain the overall
weighted average credit quality of the portfolio at a rating of "A-" (or
equivalent) or higher from any nationally recognized credit rating
organization.

HOW DO THE PORTFOLIO MANAGERS DECIDE WHAT SECURITIES TO BUY OR SELL? In
selecting securities for the Fund, the Fund's portfolio managers analyze the
overall investment opportunities and risks in different sectors of the debt
securities markets by focusing on business cycle analysis and relative values
between the corporate and government sectors. The portfolio managers' overall
strategy is to build a broadly diversified portfolio of corporate and
government bonds. The portfolio managers currently focus on the factors below
(which may vary in particular cases and may change over time), looking for:

o Debt securities in market sectors that offer attractive relative value,
o Investment-grade securities that offer more income than U.S. treasury
obligations with a good balance of risk and return,
o High income potential from different types of corporate and government
securities, and
o Broad portfolio diversification to help reduce the volatility of the
Fund's share prices.

The portfolio managers monitor individual issuers for changes in the
factors above and these changes may trigger a decision to sell a security.
Generally, the "total return" sought by the Fund consists of income earned on
the Fund's investments, plus capital appreciation, if any, which generally
arises from decreases in interest rates, improving credit fundamentals for a
particular sector or security, and managing pre-payment risks associated with
mortgage-related securities, as well as other techniques.

WHO IS THE FUND DESIGNED FOR? The Fund is designed for investors seeking
total return from a fund that invests primarily in investment-grade debt
securities but which can also hold high-yield, below investment grade debt
securities. Those investors should be willing to assume the credit risks of a
fund that typically invests a significant amount of its assets in
corporate-debt securities, and the changes in share prices that can occur
when interest rates change. The Fund is intended as a long-term investment,
not a short-term trading vehicle, and may be appropriate for a part of an
investor's retirement plan portfolio. The Fund is not a complete investment
program.

Main Risks of Investing in the Fund

All investments have risks to some degree. The Fund's investments are subject
to changes in value from a number of factors described below. They include
changes in general bond market movements in the U.S. and abroad (this is
referred to as "market risk"). There is also the risk that poor security
selection by the Manager will cause the Fund to underperform other funds
having similar objectives.

CREDIT RISK. Debt securities are subject to credit risk. Credit risk is the
risk that the issuer of a debt security might not make interest or principal
payments on the security as they become due. A downgrade in an issuer's
credit rating or other adverse news about an issuer can reduce the value of
that issuer's securities. Securities directly issued by the U.S. Treasury and
certain agencies that are backed by the full faith and credit of the U.S.
government have little credit risk, and securities issued by other agencies
of the U.S. government generally have low credit risks. Securities issued by
private issuers have greater credit risks. If an issuer fails to pay
interest, the Fund's income may be reduced. If an issuer fails to repay
principal, the value of that security and of the Fund's share prices may be
reduced.
o Special Risks of Lower-Grade Securities. Because the Fund can invest up
to 20% of its total assets in securities (including convertible
securities) below investment grade, the Fund's credit risks are greater
than those of funds that buy only investment grade securities.
Lower-grade debt securities may be subject to greater market
fluctuations and greater risks of loss of income and principal than
investment grade debt securities. Securities that are (or that have
fallen) below investment grade are exposed to a greater risk that the
issuers of those securities might not meet their debt obligations.
Those risks can reduce the Fund's share prices and the income it earns.
The market for lower-grade securities may be less liquid, especially
during times of economic distress, and therefore they may be harder to
value or to sell at an acceptable price.

INTEREST RATE RISK. Debt securities are subject to changes in value when
prevailing interest rates change. When interest rates fall, the values of
outstanding debt securities generally rise. When interest rates rise, the
values of outstanding debt securities generally fall, and those securities
may sell at a discount from their face amount. The magnitude of these
fluctuations is generally greater for securities having longer maturities
than for short-term securities. However, interest rate changes may have
different effects on the values of mortgage-related securities because of
prepayment risks, discussed below.

At times, the Fund may buy longer-term debt securities. When the
average effective duration of the Fund's portfolio is longer, its share
prices may fluctuate more when interest rates change. The Fund can buy
zero-coupon or "stripped" securities, which are particularly sensitive to
interest rate changes and the rate of principal payments (and prepayments).
These are derivative securities that have prices that may go up or down more
than other types of debt securities in response to interest rate changes. The
Fund's share prices can go up or down when interest rates change, because of
the effect of the change in the value of the Fund's investments. Also, if
interest rates fall, the Fund's investments in new securities at lower yields
will reduce the Fund's income.

PREPAYMENT RISK. Prepayment risk is the risk that the issuer of a security
can prepay the principal prior to the security's expected maturity. The
prices and yields of mortgage-related securities are determined, in part, by
assumptions about the cash flows from the rate of payments of the underlying
mortgages. Changes in interest rates may cause the rate of expected
prepayments of those mortgages to change. In general, prepayments increase
when general interest rates fall and decrease when general interest rates
rise.

The impact of prepayments on the price of a security may be difficult
to predict and may increase the volatility of the price. Interest-only and
principal-only "stripped" securities can be particularly volatile when
interest rates change. If the Fund buys mortgage-related securities at a
premium, accelerated prepayments on those securities could cause the Fund to
lose a portion of its principal investment represented by the premium the
Fund paid.

If prepayments of mortgages underlying a CMO occur faster than expected
when interest rates fall, the market value and yield of the CMO could be
reduced. If interest rates rise rapidly, prepayments may occur at slower
rates than expected, which could have the effect of lengthening the expected
duration of a short- or medium-term security. That could cause its value to
fluctuate more widely in response to changes in interest rates. In turn, this
could cause the value of the Fund's shares to fall more.

RISKS OF USING DERIVATIVE INVESTMENTS. The Fund can use derivatives to seek
higher investment returns or to manage investment risks (for example, hedging
against other portfolio investments). In general terms, a derivative
investment is an investment contract whose value depends on (or is derived
from) the value of an underlying asset, interest rate or index. Options,
futures, swaps, interest-only and principal-only securities, structured
notes, asset-backed securities and certain mortgage-related securities,
including CMOs, are examples of derivatives the Fund can use.

If the issuer of the derivative does not pay the amount due, the Fund
can lose money on the investment. Also, the underlying security or investment
on which the derivative is based, and the derivative itself, may not perform
the way the Manager expected it to perform. If that happens, the Fund may
suffer losses or realize less return than anticipated. Some derivatives may
be illiquid, making it difficult to value or to sell them at an acceptable
price. Derivatives also present the risk of leverage. Leverage exists when
an investor achieves the right to a return on a total investment amount that
exceeds the cash amount the investor contributed in making the investment.
The Fund's use of certain economically leveraged derivatives can result in a
loss substantially greater than the amount invested in the derivative itself.
Certain derivatives have the potential for unlimited loss, regardless of the
size of the initial investment. When the Fund uses derivatives for leverage,
a shareholder's investment in the Fund will tend to be more volatile,
resulting in larger gains or losses in response to the fluctuating prices of
the Fund's investments.

The Fund has limits on the amount of certain types of derivatives it
can hold. However, using derivatives can cause the Fund to lose money on its
investments and/or increase the volatility of its share prices.

HOW RISKY IS THE FUND OVERALL? The risks described above collectively form
the overall risk profile of the Fund, and can affect the value of the Fund's
investments, its investment performance and the prices of its shares.
Particular investments and investment strategies also have risks. These risks
mean that you can lose money by investing in the Fund. When you redeem your
shares, they may be worth more or less than what you paid for them. The share
price of the Fund will change daily based on changes in interest rates,
market prices of securities and market conditions, and in response to other
economic events. There is no assurance that the Fund will achieve its
investment objective.

Debt securities are subject to market, credit and interest rate risks
that can affect their values and the share prices of the Fund. Prepayment
risks of mortgage-backed securities can cause the Fund to reinvest proceeds
of its investments in lower-yielding securities. In the OppenheimerFunds
spectrum, the Fund generally has more risks than bond funds that focus
primarily on U. S. government securities, but the Fund's emphasis on
investment-grade securities may make its share prices less volatile than
high-yield bond funds or funds that focus on foreign bonds.

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An investment in the Fund is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
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The Fund's Past Performance

The bar chart and table below show one measure of the risks of investing in
the Fund, by showing changes in the Fund's performance (for its Class A
shares) from year to year for the last 10 calendar years and by showing how
the average annual total returns of the Fund's shares, both before and after
taxes, compare to those of broad-based market indices. The after-tax returns
for the other classes of shares will vary.

The after-tax returns are shown for Class A shares only and are
calculated using the historical highest individual federal marginal income
tax rates in effect during the periods shown, and do not reflect the impact
of state or local taxes. In certain cases, the figure representing "Return
After Taxes on Distributions and Sale of Fund Shares" may be higher than the
other return figures for the same period. A higher after-tax return results
when a capital loss occurs upon redemption and translates into an assumed tax
deduction that benefits the shareholder. The after-tax returns are calculated
based on certain assumptions mandated by regulation and your actual after-tax
returns may differ from those shown, depending on your individual tax
situation. The after-tax returns set forth below are not relevant to
investors who hold their Fund shares through tax-deferred arrangements such
as 401(k) plans or IRAs or to institutional investors not subject to tax. The
Fund's past investment performance, before and after taxes, is not
necessarily an indication of how the Fund will perform in the future.

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

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

For the period from 01/1/08 through 03/31/08, the cumulative return before
taxes for Class A shares was -3.14%.

During the period shown in the bar chart, the highest return (not annualized)
before taxes for a calendar quarter was 4.97% (3rd Qtr 02) and the lowest
return (not annualized) before taxes for a calendar quarter was -2.33% (2nd
Qtr 04).

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Average Annual Total Returns 5 Years 10 Years
for the periods ended (or life of (or life of
December 31, 2007 1 Year class, if less) class, if less)

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Class A Shares (inception

4/15/88) -0.47% 3.47% 4.38%
Return Before Taxes -2.15% 1.92% 2.24%
Return After Taxes on -0.33% 2.05% 2.38%
Distributions
Return After Taxes on
Distributions and Sale of
Fund Shares

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Class B Shares (inception -1.37% 3.35% 4.42%

5/3/93)
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Class C Shares (inception 2.60% 3.70% 4.10%

7/11/95)
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Class N Shares (inception 3.12% 4.19% 4.94%

3/1/01)
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Class Y Shares (inception 4.80% 4.84% 5.36%

4/27/98)
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Lehman Brothers Credit Index 5.11% 4.84% 6.05%
(reflects no deduction for 6.01%(1)
fees, expenses or taxes) 6.19%(2)

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Lehman Brothers Aggregate 6.97% 4.42% 5.97%
Bond Index (reflects no 5.57%(1)
deduction for fees, expenses 5.96%(2)

or taxes)
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Citigroup Broad Investment 7.22% 4.55% 6.02%
Grade Bond Index (reflects no 5.64%(1)
deduction for fees, expenses 6.00%(2)

or taxes)
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1. From 2/28/01.
2. From 4/30/98.

The Fund's average annual total returns include applicable sales charges: for
Class A, the current maximum initial sales charge of 4.75%; for Class B, the
contingent deferred sales charge of 5% (1-year) and 2% (5-years); and for
Class C and Class N, the 1% contingent deferred sales charge for the 1-year
period. There is no sales charge for Class Y shares. Because Class B shares
convert to Class A shares 72 months after purchase, Class B "life-of-class"
performance does not include any contingent deferred sales charge and uses
Class A performance for the period after conversion. The returns measure the
performance of a hypothetical account and assume that all dividends and
capital gains distributions have been reinvested in additional shares. The
performance of the Fund's shares is compared to Class A shares is compared to
the Lehman Brothers Aggregate Bond Index, a broad-based index of government
agencies and corporate debt, the Citigroup Broad Investment Grade Index, an
index of investment grade corporate and U.S. government bonds; and the Lehman
Brothers Credit Index, an index of non-convertible U.S. investment grade
corporate bonds. The indices' performance includes reinvestment of income but
does not reflect transaction costs, fees, expenses or taxes. The Fund's
investments vary from those in the indices.

Fees and Expenses of the Fund

The following tables are provided to help you understand the fees and
expenses you may pay if you buy and hold shares of the Fund. The Fund pays a
variety of expenses directly for management of its assets, administration,
distribution of its shares and other services. Those expenses are subtracted
from the Fund's assets to calculate the Fund's net asset values per share.
All shareholders therefore pay those expenses indirectly. Shareholders pay
other transaction expenses directly, such as sales charges. The numbers below
are based on the Fund's expenses during its fiscal year ended December 31,
2007.

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Shareholder Fees (charges paid directly from your investment):
- --------------------------------------------------------------------------------------
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Class A Class B Class C Class N Class Y
Shares Shares Shares Shares Shares
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Maximum Sales Charge 4.75% None None None None
(Load) on purchases (as
% of offering price)
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Maximum Deferred Sales
Charge (Load) (as % of
the lower of the
original offering price None(1) 5%(2) 1%(3) 1%(4) None
or redemption proceeds)
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Annual Fund Operating Expenses (deducted from Fund assets):
(% of average daily net assets)

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Class A Class B Class C Class N Class Y
Shares Shares Shares Shares Shares
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Management Fees 0.44% 0.44% 0.44% 0.44% 0.44%

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Distribution and/or 0.25% 1.00% 1.00% 0.50% None
Service (12b-1) Fees

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Acquired Fund Fees and 0.01% 0.01% 0.01% 0.01% 0.01%

Expenses
- ----------------------------------------------------------------------------------
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Other Expenses 0.19% 0.35% 0.22% 0.32% 0.04%

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Total Annual Operating 0.89% 1.80% 1.67% 1.27% 0.49%
Expenses

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Expenses may vary in future years. "Other Expenses" include transfer agent
fees, custodial fees, and accounting and legal expenses that the Fund pays.
The "Other Expenses" in the table are based on, among other things, the fees
the Fund would have paid if the transfer agent had not waived a portion of
its fee under a voluntary undertaking to the Fund to limit these fees to
0.35% of average daily net assets per fiscal year for all classes. For the
Fund's fiscal year ended December 31, 2007, the transfer agent fees did not
exceed the expense limitation described above. The Fund also receives certain
credits from the Fund's custodian that, during the fiscal year, reduced its
custodial expenses for all share classes by 0.01% of average daily net
assets. Effective March 1, 2004, the Manager has voluntarily undertaken to
limit the "Total Annual Operating Expenses" for all classes of shares so the
total expenses, as percentages of average daily net assets, will not exceed
the following annual rates: 0.90% for Class A shares; 1.65% for Class B and
Class C shares, respectively; 1.15% for Class N shares and 0.65% for Class Y
shares. The Manager's voluntary undertakings to waive fees and/or reimburse
expenses may be amended or withdrawn at any time without notice to
shareholders.

The Manager will also waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's investment
in Oppenheimer Institutional Money Market Fund. Pursuant to this waiver, for
the fiscal year ended December 31, 2007, the Manager waived fees or
reimbursed Fund expenses totaling 0.01% for each share class.

After all waivers, reimbursements and credits, the actual "Other Expenses"
and "Total Annual Operating Expenses" for each class as a percentage of
average daily net assets were 0.18% and 0.87% for Class A shares, 0.20% and
1.64% for Class B shares, 0.20% and 1.64% for Class C shares, and 0.20% and
1.14% for the Class N shares, and 0.03% and 0.47% for Class Y shares.

1. A Class A contingent deferred sales charge may apply to redemptions of
investments of $1 million or more or to certain retirement plan
redemptions. See "How to Buy Shares" for details.
2. Applies to redemptions in the first year after purchase. The contingent
deferred sales charge gradually declines from 5% to 1% during years one
through six and is eliminated after that.
3. Applies to shares redeemed within 12 months of purchase.
4. Applies to shares redeemed within 18 months of a retirement plan's
first purchase of Class N shares.

EXAMPLES. The following examples are intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
examples assume that you invest $10,000 in a class of shares of the Fund for
the time periods indicated and reinvest your dividends and distributions.

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

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If shares are redeemed: 1 Year 3 Years 5 Years 10 Years
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Class A Shares $562 $747 $947 $1,524

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Class B Shares $685 $871 $1,183 $1,668*

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Class C Shares $271 $531 $915 $1,992

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Class N Shares $230 $405 $701 $1,543

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Class Y Shares $50 $158 $275 $617

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If shares are not 1 Year 3 Years 5 Years 10 Years
redeemed:
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Class A Shares $562 $747 $947 $1,524

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Class B Shares $185 $571 $983 $1,668*

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Class C Shares $171 $531 $915 $1,992

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Class N Shares $130 $405 $701 $1,543

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Class Y Shares $50 $158 $275 $617

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In the first example, expenses include the initial sales charge for Class A
and the applicable Class B, Class C and Class N contingent deferred sales
charges. In the second example, the Class A expenses include the sales
charge, but Class B, Class C and Class N expenses do not include contingent
deferred sales charges. There is no sales charge on Class Y shares.
* Class B expenses for years 7 through 10 are based on Class A expenses
since Class B shares automatically convert to Class A shares 72 months
after purchase.

About the Fund's Investments

THE FUND'S PRINCIPAL INVESTMENT POLICIES AND RISKS. The allocation of the
Fund's portfolio among the different types of investments will vary over time
based upon the evaluation of economic and market trends. The Fund's portfolio
might not always include all of the different types of investments described
below. The Statement of Additional Information contains more detailed
information about the Fund's investment policies and risks.

The Manager tries to reduce risks by carefully researching securities
before they are purchased. The Fund attempts to reduce its exposure to market
risks by diversifying its investments, that is, by not holding a substantial
amount of securities of any one issuer and by not investing too great a
percentage of the Fund's assets in any one company. Also, the Fund does not
concentrate 25% or more of its investments in any one industry.

However, changes in the overall market prices of securities and any
income they may pay can occur at any time. The share price and yield of the
Fund will change daily based on changes in market prices of securities and
market conditions, and in response to other economic events.

In selecting debt securities and evaluating their yield potential and
credit risk, the Manager does not rely solely on ratings by rating
organizations but evaluates business and economic factors affecting an issuer
as well. The debt securities the Fund buys may be rated by nationally
recognized rating organizations such as Moody's Investors Service or Standard
& Poor's Rating Services, or they may be unrated securities assigned an
equivalent rating by the Manager. "Investment-grade" rated securities are
those in the four highest rating categories of national ratings
organizations. A description of those ratings definitions is included in
Appendix A to the Statement of Additional Information.
U.S. Government Securities. Not all of the U.S. government securities the

Fund buys are backed by the full faith and credit of the U.S.
government as to payment of interest and repayment of principal. Some
are backed by the right of the entity to borrow from the U.S. Treasury.
Others are backed only by the credit of the instrumentality. All of
these different types of securities described below are generally
referred to as "U.S. government securities" in this prospectus.

o U.S. Treasury Obligations. These include Treasury bills (having
maturities of one year or less when issued), Treasury notes (having
maturities of more than one year and up to ten years when issued), and
Treasury bonds (having maturities of more than ten years when issued).
Treasury securities are backed by the full faith and credit of the
United States as to timely payments of interest and repayments of
principal. The Fund can buy U. S. Treasury securities that have been
"stripped" of their coupons and zero-coupon securities described below.
o Obligations Issued or Guaranteed by U.S. Government Agencies or
Instrumentalities. These include direct obligations and
mortgage-related securities that have different levels of credit
support from the U.S. government. Some are supported by the full faith
and credit of the U.S. government, such as Government National Mortgage
Association ("Ginnie Mae") pass-through mortgage certificates. Some are
supported by the right of the issuer to borrow from the U.S. Treasury
under certain circumstances, such as Federal National Mortgage
Association bonds ("Fannie Maes") and Federal Home Loan Mortgage
Corporation obligations ("Freddie Macs").
o Mortgage-Related U.S. Government Securities. These include interests in
pools of residential or commercial mortgages, in the form of CMOs and
other "pass-through" mortgage securities. CMOs that are U.S. government
securities have collateral to secure payment of interest and principal.
They may be issued in different series with different interest rates
and maturities. The collateral is either in the form of mortgage
pass-through certificates issued or guaranteed by a U.S. agency or
instrumentality or mortgage loans insured by a U.S. government agency.
The Fund can have substantial amounts of its assets invested in
mortgage-related U.S. government securities. CMOs and other types of
mortgage-related securities may be considered to be derivative
investments.

The prices and yields of CMOs are determined, in part, by assumptions
about the cash flows from the rate of payments of the underlying
mortgages. Changes in interest rates may cause the rate of expected
prepayments of those mortgages to change. These prepayment risks can
make the prices of CMOs very volatile when interest rates change. That
volatility will affect the Fund's share prices.
Other Debt Securities. While the Fund invests primarily in investment-grade
debt securities, it is not required to dispose of debt securities that
fall below investment grade after the Fund buys them. However, the
portfolio managers will monitor those holdings to determine whether the
Fund should sell them. While securities rated "Baa" by Moody's or "BBB"
by S&P are considered "investment grade," they have some speculative
characteristics.

While investment-grade securities are subject to risks of non-payment
of interest and principal, in general, higher-yielding lower-grade
bonds, whether rated or unrated, have greater risks than
investment-grade securities. There may be less of a market for them and
therefore they may be harder to value and sell at an acceptable price.
These risks can reduce the Fund's share prices and the income it earns.
The Fund's Portfolio "Duration" Strategy. The "maturity" of a security (the
date when its principal repayment is due) differs from effective
duration, which attempts to measure the expected volatility of a
security's price.

The Fund measures the duration of its entire portfolio of securities on
a dollar-weighted basis, to try to maintain an average effective
duration of its portfolio of three to six years under normal market
conditions (that is, when financial markets are not in an unstable or
volatile state). However, duration cannot be relied on as an exact
prediction of future volatility. There can be no assurance that the
Fund will achieve its targeted portfolio duration at all times.

Duration calculations rely on a number of assumptions and variables
based on the historic performance of similar securities. Therefore,
duration can be affected by unexpected economic events or conditions
relating to a particular security. In the case of CMOs, duration
calculations are based on historic rates of prepayments of underlying
mortgages. If the mortgages underlying the Fund's investments are
prepaid more rapidly or more slowly than expected, the duration
calculation for that security may not be correct.
Foreign Securities. The Fund typically invests a portion of its assets in
foreign debt securities. The Fund can buy debt securities issued by
foreign governments or companies. The Fund can buy securities of
governments and companies in both developed markets and emerging
markets. Debt securities issued or guaranteed by a foreign government
or its agencies might not be backed by the "full faith and credit" of
the government.

The Fund's foreign debt investments can be denominated in U.S. dollars
or in foreign currencies. However, the Fund may not invest more than
20% of its net assets in foreign debt securities. The Fund will buy
foreign currency only in connection with the purchase and sale of
foreign securities and not for speculation.
o Risks of Foreign Investing. While foreign securities offer special
investment opportunities, there are also special risks that can reduce
the Fund's share prices and returns. The change in value of a foreign
currency against the U.S. dollar will result in a change in the U.S.
dollar value of securities denominated in that foreign currency.
Currency rate changes can also affect the distributions the Fund makes
from the income it receives from foreign securities as foreign currency
values change against the U.S. dollar. Foreign investing can result in
higher transaction and operating costs for the Fund. Foreign issuers
are not subject to the same accounting and disclosure requirements that
U.S. companies are subject to.

The value of foreign investments may be affected by exchange control
regulations, currency devaluation, expropriation or nationalization of
a company's assets, foreign taxes, delays in settlement of
transactions, changes in governmental economic or monetary policy in
the U.S. or abroad, or other political and economic factors. These
risks could cause the prices of foreign securities to fall and
therefore could depress the Fund's share prices.

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

Special Risks of Emerging Markets. The Fund can buy securities in emerging
and developing markets, which present risks not found in more mature
markets. Those securities may be more difficult to sell at an
acceptable price and their prices may be more volatile than securities
of issuers in more developed markets. Settlements of trades may be
subject to greater delays so that the Fund might not receive the sale
proceeds of a security on a timely basis.

Emerging markets might have less developed trading markets and
exchanges, and less developed legal and accounting systems. Investments
may be subject to greater risks of government restrictions on
withdrawing the sales proceeds of securities from the country.
Economies of developing countries may be more dependent on relatively
few industries that may be highly vulnerable to local and global
changes. Governments may be more unstable and present greater risks of
nationalization or restrictions on foreign ownership of stocks of local
companies. These investments may be substantially more volatile than
securities of issuers in the U.S. and other developed countries and may
be very speculative.

Derivative Investments and Strategies. The Fund can invest in a number of
different kinds of "derivative" investments to manage investment risk or
to seek higher investment returns. In the broadest sense, option
contracts, futures contracts, forward contracts, swap contracts,
interest-only and principal-only securities, structured notes,
asset-backed securities, and CMOs may be considered "derivative
investments."

Hedging. The Fund may use derivative investments to hedge against other
portfolio investments or risks in the Fund's portfolio. These are
referred to as "hedging instruments." o The Fund could buy and sell

hedging instruments for a number of purposes. It might hedge to try to
manage its exposure to changing securities prices, to establish a position
in the market as a temporary substitute for purchasing individual
securities, or to manage its exposure to changing interest rates. Buying
futures and call options would tend to increase the Fund's exposure to the
securities markets. Forward contracts can be used to try to manage foreign
currency risks on the Fund's foreign investments.

There are also special risks in particular hedging strategies. If the
Manager used a hedging instrument at the wrong time or judged market
conditions incorrectly, the strategy could reduce the Fund's return,
possibly substantially. For example, when the Fund writes a put, there is
a risk that the Fund may be required to buy the underlying security at a
disadvantageous price. The Fund could also experience losses if the prices
of its futures and options positions were not properly correlated with the
hedged investment or if it could not close out a position because of an
illiquid market. Other hedging strategies (for example, options
transactions) involve the payment of premiums and can increase portfolio
turnover.

o Credit Default Swaps. The Fund may enter into credit default swaps. A
credit default swap enables an investor to buy or sell protection against
a credit event, such as an issuer's failure to make timely payments of
interest or principal, bankruptcy or restructuring. The terms of the
instrument are generally negotiated by the Fund and the swap counterparty.

If the Fund buys credit protection using a credit default swap, the Fund
will make fixed payments to the counterparty. If a credit event occurs,
the Fund will deliver the defaulted bonds underlying the swap and the swap
counterparty will pay the par amount of the bonds. If the Fund sells
credit protection using a credit default swap, the Fund will receive fixed
payments from the counterparty. If a credit event occurs, the Fund will
pay the par amount of the defaulted bonds underlying the swap and the swap
counterparty will deliver the bonds. If the swap is on a basket of
securities, the notional amount of the swap is reduced by the par amount
of the defaulted bonds, and the fixed payments are then made on the
reduced notional amount.

Credit default swaps are subject to counterparty credit risk (if the
counterparty fails to meet its obligations). They are subject to the risk
that the Fund will not properly assess the cost of the instrument. If the
Fund is selling credit protection, there is a risk that a credit event
will occur and that the Fund will have to pay par value on defaulted
bonds. If the Fund is buying credit protection, there is a risk that no
credit event will occur and the Fund will receive no benefit for the
premium paid.

o "Structured" Notes. The Fund can buy "structured" notes, which are
specially designed derivative debt investments whose payments of principal
or interest payments are linked to the value of a security, interest rate,
index (such as a currency or securities index), asset or other economic
variable. The terms of the instrument may be "structured" by the purchaser
(the Fund) and the borrower issuing the note.

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

o Asset-Backed Securities. The Fund can buy asset-backed securities,
which are fractional interests in pools of loans collateralized by the
loans or other assets or receivables. They are issued by trusts and
special purpose corporations that pass the income from the underlying pool
to the buyer of the interest. These securities are subject to the risk of
default by the issuer as well as by the borrowers of the underlying loans
in the pool, as well as interest rate and prepayment risks. Neither the
Fund nor the Manager selects the loans or other assets that are included
in the pools or the collateral backing those pools.

Portfolio Turnover. The Fund can engage in active and frequent trading to try
to achieve its objective, and may have a high portfolio turnover rate
of over 100% annually. Increased portfolio turnover creates higher
brokerage and transaction costs for the Fund (and may reduce
performance). However, most of the Fund's portfolio transactions are
principal trades that do not entail brokerage fees. If the Fund
realizes capital gains when it sells its portfolio investments, it must
generally pay those gains out to shareholders, increasing their taxable
distributions. The Financial Highlights table at the end of this
prospectus shows the Fund's portfolio turnover rates during recent
fiscal years.

CAN THE FUND'S INVESTMENT OBJECTIVE AND POLICIES CHANGE? The Fund's Board of
Trustees can change non-fundamental investment policies without shareholder
approval, although significant changes will be described in amendments to
this prospectus. Fundamental policies cannot be changed without the approval
of a majority of the Fund's outstanding voting shares. The Fund's investment
objective is a fundamental policy. Investment restrictions that are
fundamental policies are listed in the Statement of Additional Information.
An investment policy is not fundamental unless this prospectus or the
Statement of Additional Information says that it is. The Fund's policy to
invest at least 80% of its net assets (plus borrowings) in investment grade
bonds is not a fundamental policy; however, it cannot be changed without 60
days, prior notice to shareholders.

OTHER INVESTMENT STRATEGIES. To seek its objective, the Fund can use the
investment techniques and strategies described below. The Manager might not
always use all of them. These techniques have risks, although some are
designed to help reduce overall investment or market risks.

Forward Rolls. The Fund may enter into "forward rolls" (also referred to as
"mortgage dollar rolls") transactions with respect to mortgage-related
securities. In this type of transaction, the Fund sells a
mortgage-related security to a buyer and simultaneously agrees to
repurchase a similar security at a later date at a set price.

During the period between the sale and the repurchase, the Fund will
not be entitled to receive interest and principal payments on the
securities that have been sold. It is possible that the market value of
the securities the Fund sells may decline below the price at which the
Fund is obligated to repurchase securities, or that the counterparty
might default in its obligation.

Zero-Coupon and "Stripped" Securities. Some of the debt securities the Fund
buys are zero-coupon bonds that pay no interest. They are issued at a
substantial discount from their face value. They may be securities
issued by the U.S. government or private issuers. "Stripped" securities
are the separate income or principal components of a debt security.
Some CMOs or other mortgage-related securities may be stripped, with
each component having a different proportion of principal or interest
payments. One class might receive all the interest and the other all
the principal payments.

Zero-coupon and stripped securities are subject to greater fluctuations
in price from interest rate changes than typical debt securities that
pay interest on a regular basis. The Fund may have to pay out the
imputed income on zero-coupon securities without receiving the cash
currently. Stripped securities are particularly sensitive to changes in
interest rates.

The values of interest-only and principal-only mortgage-related
securities are very sensitive to changes in interest rates and
prepayments of underlying mortgages. The market for these securities
may be limited, making it difficult for the Fund to value or to sell
its holdings at an acceptable price.

Preferred Stock. Unlike common stock, preferred stock typically has a stated
dividend rate. Preferred stock dividends may be cumulative (they remain
a liability of the company until they are paid) or non-cumulative. When
interest rates rise, the value of preferred stock having a fixed
dividend rate tends to fall. The right to payment of dividends on
preferred stock is generally subordinate to the rights of a
corporation's debt securities.

Private-Issuer Securities. The Fund can invest in securities issued by
private issuers that do not offer the credit backing of the U.S.
government. These include multi-class debt or pass-through certificates
secured by mortgage loans. They may be issued by banks, savings and
loans, mortgage bankers or special trusts. The Fund can buy other types
of asset-backed securities collateralized by loans or other assets or
receivables. Private-issuer mortgage-backed securities are subject to
the credit risks of the issuers (as well as the interest rate risks and
prepayment risks discussed above). There is the risk that private
issuers may not make timely payment of interest or repay principal when
due, although in some cases those payment obligations may be supported
by insurance or guarantees.

Illiquid and Restricted Securities. Investments may be illiquid because they
do not have an active trading market, making it difficult to value them
or dispose of them promptly at an acceptable price. Restricted
securities may have terms that limit their resale to other investors or
may require registration under applicable securities laws before they
may be sold publicly. The Fund will not invest more than 15% of its net
assets in illiquid or restricted securities. Certain restricted
securities that are eligible for resale to qualified institutional
purchasers may not be subject to that limit. The Manager monitors
holdings of illiquid securities on an ongoing basis to determine whether
to sell any holdings to maintain adequate liquidity.

Short-Term Debt Securities. The Fund can buy high-quality, short-term money
market instruments, including obligations of the U.S. Government and
its agencies, short-term corporate debt obligations, bank certificates
of deposit and bankers' acceptances, and commercial paper, which are
short-term, negotiable promissory notes of companies.

Investments in Oppenheimer Institutional Money Market Fund. The Fund can
invest its free cash balances in Class E shares of Oppenheimer
Institutional Money Market Fund, to provide liquidity or for defensive
purposes. The Fund invests in Oppenheimer Institutional Money Market
Fund rather than purchasing individual short-term investments to try to
seek a higher yield than it could obtain on its own. Oppenheimer
Institutional Money Market Fund is a registered open-end management
investment company, regulated as a money market fund under the
Investment Company Act of 1940, as amended and is part of the
Oppenheimer Family of Funds. It invests in a variety of short-term,
high-quality, dollar-denominated money market instruments issued by the
U.S. government, domestic and foreign corporations, other financial
institutions, and other entities. Those investments may have a higher
rate of return than the investments that would be available to the Fund
directly. At the time of an investment, the Manager cannot always
predict what the yield of the Oppenheimer Institutional Money Market
Fund will be because of the wide variety of instruments that fund holds
in its portfolio. The return on those investments may, in some cases,
be lower than the return that would have been derived from other types
of investments that would provide liquidity. As a shareholder, the Fund
will be subject to its proportional share of the expenses of
Oppenheimer Institutional Money Market Fund's Class E shares, including
its advisory fee. However, the Manager will waive a portion of the
Fund's advisory fee to the extent of the Fund's share of the advisory
fee paid to the Manager by Oppenheimer Institutional Money Market Fund.

Investments by "Funds of Funds." Class Y shares of the Fund are offered as an
investment to certain Oppenheimer funds that act as "funds of funds."
The Fund's Board of Trustees has approved making the Fund's shares
available as an investment for those funds. From time to time, those
funds of funds may invest significant portions of their assets in
shares of the Fund, and may own a significant amount of the Fund's
outstanding shares or outstanding Class Y shares. Those funds of funds
typically use asset allocation strategies under which they may increase
or reduce the amount of their investments in the Fund frequently, and
may do so on a daily basis during volatile market conditions. If the
size of those purchases and redemptions of the Fund's shares were
significant relative to the size of the Fund's assets, the Fund could
be required to purchase or sell portfolio securities, increasing its
transaction costs and possibly reducing its performance for all share
classes. For a further discussion of the possible effects of frequent
trading in the Fund's shares, please refer to the section titled "Are
There Limitations on Frequent Purchases, Redemptions and Exchanges?" in
this prospectus.

Temporary Defensive and Interim Investments. For temporary defensive purposes
in times of adverse or unstable market, economic or political
conditions, the Fund can invest up to 100% of its assets in investments
that may be inconsistent with the Fund's principal investment
strategies. Generally the Fund would invest in shares of Oppenheimer
Institutional Money Market Fund or in the types of money market
instruments described above or in other short-term U.S. government
securities. The Fund might also hold these types of securities as
interim investments pending the investment of proceeds from the sale of
Fund shares or the sale of Fund portfolio securities or to meet
anticipated redemptions of Fund shares. To the extent the Fund invests
in these securities, it might not achieve its investment objective.

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

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

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

How the Fund Is Managed

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

The Manager has been an investment adviser since 1960. The Manager and
its subsidiaries and controlled affiliates managed more than $240 billion in
assets as of March 31, 2008, including other Oppenheimer funds with more than
6 million shareholder accounts. The Manager is located at Two World Financial
Center, 225 Liberty Street, 11th Floor, New York, New York 10281-1008.

Advisory Fees. Under the Investment Advisory Agreement, the Fund pays the
Manager an advisory fee, calculated on the daily net assets of the
Fund, at an annual rate that declines on additional assets as the Fund
grows: 0.50% of the first $1 billion of average annual net assets of
the Fund and 0.35% of average annual net assets in excess of $1
billion. Prior to March 27, 2006, the following advisory fees were in
place: 0.60% of the first $200 million of average annual net assets of
the Fund, 0.57% of the next $200 million, 0.54% of the next $200
million, 0.51% of the next $200 million, 0.45% of the next $200 million
and 0.35% of average annual net assets in excess of $1 billion. The
Fund's management fee for its last fiscal year ended December 31, 2007
was 0.44% of average annual net assets for each class of shares.

A discussion regarding the basis for the Board of Trustees' approval of
the Fund's investment advisory contract is available in the Fund's
Annual Report to shareholders for the year ended December 31, 2007.

Portfolio Managers. The Fund's portfolio is managed by a team of investment
professionals including Angelo Manioudakis, Benjamin J. Gord, Geoffrey
Caan, Antulio N. Bomfim, and Thomas Swaney, who are primarily
responsible for the day-to-day management of the Fund's investments.

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

Mr. Gord has been a Vice President and portfolio manager of the Fund and
a Vice President of the Manager since April 2002. He is also a
portfolio manager of other portfolios in the OppenheimerFunds complex.
Mr. Gord was an Executive Director and a senior fixed income analyst at
Miller, Anderson & Sherrerd, a division of Morgan Stanley Investment
Management from April 1992 through March 2002.

Mr. Caan has been a Vice President and portfolio manager of the Fund and
a Vice President of the Manager since August 2003. He is also a
portfolio manager of other portfolios in the OppenheimerFunds complex.
Mr. Caan was a Vice President of ABN AMRO N.A., Inc. from June 2002
through August 2003, and a Vice President of Zurich Scudder Investments
from January 1999 through June 2002.

Mr. Bomfim has been a Vice President and portfolio manager of the Fund
and a Vice President of the Manager since October 2003. He is also a
portfolio manager of other portfolios in the OppenheimerFunds complex.
Mr. Bomfim was a Senior Economist at the Board of Governors of the
Federal Reserve System from June 1992 to October 2003.

Mr. Swaney has been a portfolio manager of the Fund and a Vice President
of the Manager since April 2006. He is also a portfolio manager of
other portfolios in the OppenheimerFunds complex. Mr. Swaney was a
senior analyst of the Manager's High Grade Investment Team from June
2002 to March 2006. Prior to joining the Manager in June 2002, Mr.
Swaney was a senior fixed income analyst at Miller, Anderson & Sherrerd,
a division of Morgan Stanley Investment Management from May 1998 through
May 2002.

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

ABOUT YOUR ACCOUNT

How to Buy Shares

You can buy shares several ways, as described below. The Fund's Distributor,
OppenheimerFunds Distributor, Inc., may appoint servicing agents to accept
purchase (and redemption) orders. The Distributor, in its sole discretion,
may reject any purchase order for the Fund's shares.

Buying Shares Through Your Dealer. You can buy shares through any dealer,
broker or financial institution that has a sales agreement with the
Distributor. Your dealer will place your order with the Distributor on
your behalf. A broker or dealer may charge a processing fee for that
service. Your account information will be shared with the dealer you
designate as the dealer of record for the account.
Buying Shares Through the Distributor. Complete an OppenheimerFunds new
account application and return it with a check payable to
"OppenheimerFunds Distributor, Inc." Mail it to P.O. Box 5270, Denver,
Colorado 80217. If you do not list a dealer on the application, Class A
shares are your only purchase option. The Distributor will act as your
agent in buying Class A shares. However, we recommend that you discuss
your investment with a financial adviser before you make a purchase to
be sure that the Fund is appropriate for you. 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 Class B, Class C or Class N
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.
o Paying by Federal Funds Wire. Shares purchased through the Distributor
may be paid for by Federal Funds wire. The minimum wire purchase is
$2,500. Before sending a wire, call the Distributor's Wire Department
at 1.800.225.5677 to notify the Distributor of the wire and to receive
further instructions.
o Buying Shares Through OppenheimerFunds AccountLink. With AccountLink,
you can pay for shares by electronic funds transfers from your bank
account. Shares are purchased for your account by a transfer of money
from your bank account through the Automated Clearing House (ACH)
system. You can provide share purchase instructions automatically,
under an Asset Builder Plan, described below, or by telephone
instructions using OppenheimerFunds PhoneLink, also described below.
Please refer to "AccountLink," below for more details.
o Buying Shares Through Asset Builder Plans. You may purchase shares of
the Fund automatically from your account at a bank or other financial
institution under an Asset Builder Plan with AccountLink. Details are
in the Asset Builder application and the Statement of Additional
Information.

WHAT IS THE MINIMUM AMOUNT YOU MUST INVEST? In most cases, you can buy Fund
shares with a minimum initial investment of $1,000 and make additional
investments at any time with as little as $50. There are reduced minimums
available under the following special investment plans:
o If you establish one of the many types of retirement plan accounts that
OppenheimerFunds offers, more fully described below under "Special
Investor Services," you can start your account with as little as $500.
o By using an Asset Builder Plan or Automatic Exchange Plan (details are
in the Statement of Additional Information), or government allotment
plan, you can make an initial investment for as little as $500. The
minimum subsequent investment is $50, except that for any account
established under one of these plans prior to November 1, 2002, the
minimum additional investment will remain $25.
o A minimum initial investment of $250 applies to certain fee based
programs that have an agreement with the Distributor. The minimum
subsequent investment for those programs is $50.
o The minimum investment requirement does not apply to reinvesting
dividends from the Fund or other Oppenheimer funds (a list of them
appears in the Statement of Additional Information, or you can ask your
dealer or call the Transfer Agent), or reinvesting distributions from
unit investment trusts that have made arrangements with the Distributor.

o The minimum purchase amounts listed do not apply to omnibus accounts.

AT WHAT PRICE ARE SHARES SOLD? Shares are sold at their offering price which
is the net asset value per share plus any initial sales charge that applies.
The offering price that applies to a purchase order is based on the next
calculation of the net asset value per share that is made after the
Distributor receives the purchase order at its offices in Colorado, or after
any agent appointed by the Distributor receives the order. Your financial
adviser can provide you with more information regarding the time you must
submit your purchase order and whether the adviser is an authorized agent for
the receipt of purchase orders.

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

The net asset value per share for a class of shares on a "regular
business day" is determined by dividing the value of the Fund's net
assets attributable to that class by the number of shares of that class
outstanding on that day. To determine net asset values, the Fund assets
are valued primarily on the basis of current market quotations. If
market quotations are not readily available or do not accurately
reflect fair value for a security (in the Manager's judgment) or if a
security's value has been materially affected by events occurring after
the close of the market on which the security is principally traded,
that security may be valued by another method that the Board of
Trustees believes accurately reflects the fair value. Because some
foreign securities trade in markets and on exchanges that operate on
weekends and U.S. holidays, the values of some of the Fund's foreign
investments may change on days when investors cannot buy or redeem Fund
shares.

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

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

The Manager believes that foreign securities values may be affected by
volatility that occurs in U.S. markets on a trading day after the close
of foreign securities markets. The Manager's fair valuation procedures
therefore include a procedure whereby foreign securities prices may be
"fair valued" to take those factors into account.

The Offering Price. To receive the offering price for a particular day, the
Distributor or its designated agent must receive your order, in proper
form as described in this prospectus, by the time the NYSE closes that
day. If your order is received on a day when the NYSE is closed or
after it has closed, the order will receive the next offering price
that is determined after your order is received.
Buying Through a Dealer. If you buy shares through an authorized dealer, your
dealer must receive the order by the close of the NYSE for you to
receive that day's offering price. If your order is received on a day
when the NYSE is closed or after it is closed, the order will receive
the next offering price that is determined.

- ------------------------------------------------------------------------------
WHAT CLASSES OF SHARES DOES THE FUND OFFER? The Fund offers investors five
different classes of shares. The different classes of shares represent
investments in the same portfolio of securities, but the classes are subject
to different expenses and will likely have different share prices. When you
buy shares, be sure to specify the class of shares. If you do not choose a
class, your investment will be made in Class A shares.
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------

- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Class A Shares. If you buy Class A shares, you pay an initial sales charge
(on investments up to $1 million for regular accounts or lesser amounts
for certain retirement plans). The amount of that sales charge will
vary depending on the amount you invest. The sales charge rates are
listed in "How Can You Buy Class A Shares?" below.
- ------------------------------------------------------------------------------
Class B Shares. If you buy Class B shares, you pay no sales charge at the
time of purchase, but you will pay an annual asset-based sales charge.
If you sell your shares within 6 years of buying them, you will
normally pay a contingent deferred sales charge. That contingent
deferred sales charge varies depending on how long you own your shares,
as described in "How Can You Buy Class B Shares?" below.
- ------------------------------------------------------------------------------
Class C Shares. If you buy Class C shares, you pay no sales charge at the
time of purchase, but you will pay an annual asset-based sales charge.
If you sell your shares within 12 months of buying them, you will
normally pay a contingent deferred sales charge of 1.0%, as described
in "How Can You Buy Class C Shares?" below.
- ------------------------------------------------------------------------------
Class N Shares. If you buy Class N shares (available only through certain
retirement plans), you pay no sales charge at the time of purchase, but
you will pay an annual asset-based sales charge. If you sell your
shares within 18 months of the retirement plan's first purchase of
Class N shares, you may pay a contingent deferred sales charge of 1.0%,
as described in "How Can You Buy Class N Shares?" below.
Class Y Shares. Class Y shares are offered only to certain institutional
investors that have a special agreement with the Distributor.

WHICH CLASS OF SHARES SHOULD YOU CHOOSE? Once you decide that the Fund is an
appropriate investment for you, the decision as to which class of shares is
best suited to your needs depends on a number of factors that you should
discuss with your financial adviser. Some factors to consider are how much
you plan to invest and how long you plan to hold your investment. If your
goals and objectives change over time and you plan to purchase additional
shares, you should re-evaluate those factors to see if you should consider
another class of shares. The Fund's operating costs that apply to a class of
shares and the effect of the different types of sales charges on your
investment will vary your investment results over time.

The discussion below is not intended to be investment advice or a
recommendation, because each investor's financial considerations are
different. The discussion below assumes that you will purchase only one class
of shares and not a combination of shares of different classes. Of course,
these examples are based on approximations of the effects of current sales
charges and expenses projected over time, and do not detail all of the
considerations in selecting a class of shares. You should analyze your
options carefully with your financial adviser before making that choice.

How Long Do You Expect to Hold Your Investment? While future financial needs
cannot be predicted with certainty, knowing how long you expect to hold
your investment will assist you in selecting the appropriate class of
shares. Because of the effect of class-based expenses, your choice will
also depend on how much you plan to invest. For example, the reduced
sales charges available for larger purchases of Class A shares may,
over time, offset the effect of paying an initial sales charge on your
investment, compared to the effect over time of higher class-based
expenses on shares of Class B, Class C or Class N. For retirement plans
that qualify to purchase Class N shares, Class N shares will generally
be more advantageous than Class B and Class C shares.

o Investing for the Shorter Term. While the Fund is meant to be a
long-term investment, if you have a relatively short-term investment
horizon (that is, you plan to hold your shares for not more than six
years), you should most likely invest in Class A or Class C shares
rather than Class B shares. That is because of the effect of the Class
B contingent deferred sales charge if you redeem within six years, as
well as the effect of the Class B asset-based sales charge on the
investment return for that class in the short-term. Class C shares
might be the appropriate choice (especially for investments of less
than $100,000), because there is no initial sales charge on Class C
shares, and the contingent deferred sales charge does not apply to
amounts you sell after holding them one year.

However, if you plan to invest more than $100,000 for the shorter term,
then as your investment horizon increases toward six years, Class C
shares might not be as advantageous as Class A shares. That is because
the annual asset-based sales charge on Class C shares will have a
greater impact on your account over the longer term than the reduced
front-end sales charge available for larger purchases of Class A
shares.

If you invest $1 million or more, in most cases Class A shares will be
the most advantageous choice, no matter how long you intend to hold
your shares. The Distributor normally will not accept purchase orders
of more than $100,000 of Class B shares or $1 million or more of Class
C shares from a single investor. Dealers or other financial
intermediaries purchasing shares for their customers in omnibus
accounts are responsible for compliance with those limits.

o Investing for the Longer Term. If you are investing less than $100,000
for the longer-term, for example for retirement, and do not expect to
need access to your money for seven years or more, Class B shares may
be appropriate.

Are There Differences in Account Features That Matter to You? Some account
features may not be available to Class B, Class C and Class N
shareholders. Other features may not be advisable (because of the
effect of the contingent deferred sales charge) for Class B, Class C
and Class N shareholders. Therefore, you should carefully review how
you plan to use your investment account before deciding which class of
shares to buy.

Additionally, the dividends payable to Class B, Class C and Class N
shareholders will be reduced by the additional expenses borne by those
classes that are not borne by Class A or Class Y shares, such as the
Class B, Class C and Class N asset-based sales charge described below
and in the Statement of Additional Information. Also, checkwriting is
not available on Class Y accounts or accounts subject to a contingent
deferred sales charge.

How Do Share Classes Affect Payments to Your Broker? A financial adviser may
receive different compensation for selling one class of shares than for
selling another class. It is important to remember that Class B, Class
C and Class N contingent deferred sales charges and asset-based sales
charges have the same purpose as the front-end sales charge on sales of
Class A shares: to compensate the Distributor for concessions and
expenses it pays to dealers and financial institutions for selling
shares. The Distributor may pay additional compensation from its own
resources to securities dealers or financial institutions based upon
the value of shares of the Fund held by the dealer or financial
institution for its own account or for its customers.

HOW CAN YOU BUY CLASS A SHARES? Class A shares are sold at their offering
price, which is normally net asset value plus an initial sales charge.
However, in some cases, described below, purchases are not subject to an
initial sales charge, and the offering price will be the net asset value. In
other cases, reduced sales charges may be available, as described below or in
the Statement of Additional Information. Out of the amount you invest, the
Fund receives the net asset value to invest for your account.

The sales charge varies depending on the amount of your purchase. A
portion of the sales charge may be retained by the Distributor or allocated
to your dealer as a concession. The Distributor reserves the right to reallow
the entire concession to dealers. The current sales charge rates and
concessions paid to dealers and brokers are as follows:

------------------------------------------------------------------------------
Front-End Sales Front-End Sales Concession As a
Charge As a
Charge As a Percentage of
Percentage of Net Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Less than $50,000 4.75% 4.98% 4.00%
------------------------------------------------------------------------------
------------------------------------------------------------------------------
$50,000 or more but 4.50% 4.71% 3.75%
less than $100,000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
$100,000 or more but 3.50% 3.63% 2.75%
less than $250,000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
$250,000 or more but 2.50% 2.56% 2.00%
less than $500,000
------------------------------------------------------------------------------
------------------------------------------------------------------------------
$500,000 or more but 2.00% 2.04% 1.60%
less than $1 million
------------------------------------------------------------------------------
Due to rounding, the actual sales charge for a particular transaction may be
higher or lower than the rates listed above.

SPECIAL SALES CHARGE ARRANGEMENTS AND WAIVERS. Appendix C to the Statement of
Additional Information details the conditions for the waiver of sales charges
that apply in certain cases, and the special sales charge rates that apply to
purchases of shares of the Fund by certain groups, or under specified
retirement plan arrangements or in other special types of transactions. To
receive a waiver or special sales charge rate, you must advise the
Distributor or financial intermediary when purchasing shares or the Transfer
Agent or financial intermediary when redeeming shares that a special
condition applies.

CAN YOU REDUCE CLASS A SALES CHARGES? You and your spouse may be eligible to
buy Class A shares of the Fund at reduced sales charge rates set forth in the
table above under the Fund's "Right of Accumulation" or a "Letter of Intent."
The Fund reserves the right to modify or to cease offering these programs at
any time.

o Right of Accumulation. To qualify for the reduced Class A sales charge
that would apply to a larger purchase than you are currently making (as
shown in the table above), you can add the value of shares you or your
spouse currently own or purchases you are currently making to the value
of your Class A share purchase. You may count Class A, Class B and
Class C shares of the Fund and other Oppenheimer funds and Class A,
Class B, Class C, Class G and Class H units in advisor sold Section 529
plans, for which the Manager or the Distributor serves as the Program
Manager or Program Distributor. Your Class A shares of Oppenheimer
Money Market Fund, Inc. or Oppenheimer Cash Reserves on which you have
not paid a sales charge will not be counted for this purpose. In
totaling your holdings, you may count shares held in your individual
accounts (including IRAs, 403(b) plans and advisor sold Section 529
plans), your joint accounts with your spouse, or accounts you or your
spouse hold as trustees or custodians on behalf of your children who
are minors. A fiduciary can count all shares purchased for a trust,
estate or other fiduciary account that has multiple accounts (including
employee benefit plans for the same employer and Single K Plans for the
benefit of a sole proprietor).

If you are buying shares directly from the Fund, you must inform the Distributor
of your eligibility and holdings at the time of your purchase in order to
qualify for the Right of Accumulation. If you are buying shares through your
financial intermediary you must notify your intermediary of your eligibility for
the Right of Accumulation at the time of your purchase. You must notify the
Distributor or your financial intermediary of any qualifying 529 plan holdings.

To count eligible shares held in accounts at other firms, you may be requested
to provide the Distributor or your financial intermediary with a copy of all
account statements showing current holdings of the Fund, other eligible
Oppenheimer funds or qualifying 529 plans, as described above. To determine
which Class A sales charge rate you qualify for on your current purchase, the
Distributor or intermediary through which you are buying shares will calculate
the value of your eligible shares based on their current offering price.
o Letters of Intent. You may also qualify for reduced Class A sales
charges by submitting a Letter of Intent to the Distributor. A Letter
of Intent is a written statement of your intention to purchase a
specified value of Class A, Class B or Class C shares of the Fund or
other Oppenheimer funds or Class A, Class B, Class C, Class G and Class
H unit purchases in advisor sold Section 529 plans, for which the
Manager or Distributor serves as the Program Manager or Program
Distributor over a 13-month period. Purchases of Class N shares or
Class Y shares, purchases made by reinvestment of dividends or capital
gains distributions, purchases of Class A shares under the
"reinvestment privilege" described below, and purchases of Class A
shares of Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash
Reserves on which a sales charge has not been paid, will not be counted
as "qualified purchases" for satisfying the terms of a Letter. You must
notify the Distributor or your financial intermediary of any qualifying
529 plan holdings.

The total amount of your intended purchases will determine the reduced
sales charge rate that will apply to your Class A share purchases of
the Fund during the 13-month period. If you do not complete the
purchases outlined in the Letter of Intent, the front-end sales charge
you paid on your purchases will be recalculated to reflect the actual
value of shares you purchased. A certain portion of your shares will be
held in escrow by the Fund's Transfer Agent for this purpose. Please
refer to "How to Buy Shares - Letters of Intent" in the Fund's
Statement of Additional Information for more complete information. You
may also be able to apply the Right of Accumulation to these purchases.

Other Special Sales Charge Arrangements and Waivers. The Fund and the
Distributor offer other opportunities to purchase shares without front-end or
contingent deferred sales charges under the programs described below. The
Fund reserves the right to amend or discontinue these programs at any time
without prior notice.

o Dividend Reinvestment. Dividends and/or capital gains distributions
received by a shareholder from the Fund may be reinvested in shares
of the Fund or any of the other Oppenheimer funds into which shares
of the Fund may be exchanged without a sales charge, at the net
asset value per share in effect on the payable date. You must notify
the Transfer Agent or financial intermediary to elect this option
and must have an existing account in the fund selected for
reinvestment.

o Exchanges of Shares. Shares of the Fund may be exchanged for shares of
certain other Oppenheimer funds at net asset value per share at the
time of exchange, without sales charge, and shares of the Fund can
be purchased by exchange of shares of certain other Oppenheimer
funds on the same basis. Please refer to "How to Exchange Shares" in
this prospectus and in the Statement of Additional Information for
more details, including a discussion of circumstances in which sales
charges may apply on exchanges.

o Reinvestment Privilege. Within six months of a redemption of certain
Class A and Class B shares, the proceeds may be reinvested in Class
A shares of the Fund, or any of the other Oppenheimer funds into
which shares of the Fund may be exchanged, without a sales charge.
This privilege applies to redemptions of Class A shares that were
subject to an initial sales charge or Class A or Class B shares that
were subject to a contingent deferred sales charge when redeemed.
The investor must ask the Transfer Agent or his or her financial
intermediary for that privilege at the time of reinvestment and must
identify the account from which the redemption was made. This
reinvestment privilege does not apply to reinvestment purchases made
through automatic investment options.

o Other Special Reductions and Waivers. The Fund and the Distributor
offer additional arrangements to reduce or eliminate front-end sales
charges or to waive contingent deferred sales charges for certain
types of transactions and for certain categories of investors
(primarily retirement plans that purchase shares in special programs
through the Distributor). These are described in greater detail in
Appendix C to the Statement of Additional Information. The Fund's
Statement of Additional Information may be ordered by calling
1.800.225.5677 or may be accessed through the OppenheimerFunds
website, at www.oppenheimerfunds.com (under the heading "I Want To,"
follow the hyperlink "Access Fund Documents" and click on the icon
in the column "SAI" next to the Fund's name). A description of these
waivers and special sales charge arrangements is also available for
viewing on the OppenheimerFunds website (under the heading "Fund
Information," click on the hyperlink "Sales Charge Waivers"). To
receive a waiver or special sales charge rate under these programs,
the purchaser must notify the Distributor (or other financial
intermediary through which shares are being purchased) at the time
of purchase, or must notify the Transfer Agent at the time of
redeeming shares for waivers that apply to contingent deferred sales
charges.

Class A Contingent Deferred Sales Charge. There is no initial sales charge on
Class A share purchases totaling $1 million or more of one or more of the
Oppenheimer funds. However, those Class A shares may be subject to a 1.0%
contingent deferred sales charge if they are redeemed within an 18-month
"holding period" measured from the beginning of the calendar month of their
purchase (except for shares in certain retirement plans, described below).
That sales charge will be calculated on the lesser of the original net asset
value of the redeemed shares or the aggregate net asset value of the redeemed
shares at the time of redemption.

The Class A contingent deferred sales charge does not apply to shares
purchased by the reinvestment of dividends or capital gain distributions and
will not exceed the aggregate amount of the concessions the Distributor pays
on all of your purchases of Class A shares, of all Oppenheimer funds, that
are subject to the contingent deferred sales charge.

The Distributor pays concessions from its own resources equal to 1.0% of
Class A purchases of $1 million or more (other than purchases by certain
retirement plans). The concession will not be paid on shares purchased by
exchange or shares that were previously subject to a front-end sales charge
and dealer concession.

o Class A Purchases by Certain Retirement Plans. There is no
initial sales charge on purchases of Class A shares of the Fund by
certain retirement plans that have $1 million or more in plan assets
or that are part of a retirement plan or platform offered by banks,
broker-dealers, financial advisors, insurance companies or
recordkeepers. There is no contingent deferred sales charge on
redemptions of any group retirement plan shares purchased after
March 1, 2007, or certain retirement plan shares offered through
banks, broker-dealers, financial advisors, insurance companies or
recordkeepers.

Until March 1, 2007, the Distributor paid a concession from its own
resources on purchases by certain group retirement plans that were
established prior to March 1, 2001 ("grandfathered retirement
plans"). Shares purchased in grandfathered retirement plans prior to
March 1, 2007 will continue to be subject to the contingent deferred
sales charge if they are redeemed within 18 months after purchase.
Beginning March 1, 2007, the Distributor will not pay a concession
on new share purchases by retirement plans (except plans that have
$5 million or more in plan assets) and no new group retirement plan
purchases will be subject to the contingent deferred sales charge,
including purchases in grandfathered retirement plans. For shares
purchased prior to March 1, 2007, the concession for grandfathered
retirement plans was 0.75% of the first $2.5 million of purchases
plus 0.25% of purchases in excess of $2.5 million. Effective March
1, 2007, the concession for grandfathered retirement accounts is
0.25%.

For retirement plans that have $5 million or more in plan assets
within the first six months from the time the account was
established, the Distributor may pay dealers of record concessions
equal to 0.25% of the purchase price of Class A shares from its own
resources at the time of sale. Those payments are subject to certain
exceptions described in "Retirement Plans" in the Statement of
Additional Information.

HOW CAN YOU BUY CLASS B SHARES? Class B shares are sold at net asset value
per share without an initial sales charge. However, if Class B shares are
redeemed within six years from the beginning of the calendar month of their
purchase, a contingent deferred sales charge will be deducted from the
redemption proceeds. The Class B contingent deferred sales charge is paid to
compensate the Distributor for its expenses of providing distribution-related
services to the Fund in connection with the sale of Class B shares.

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

- -------------------------------------------------------------------------------
Years Since Beginning of Month in Contingent Deferred Sales Charge on
Which Purchase Order was Accepted Redemptions in That Year
(As % of Amount Subject to Charge)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
0 - 1 5.0%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
1 - 2 4.0%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2 - 3 3.0%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
3 - 4 3.0%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
4 - 5 2.0%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
5 - 6 1.0%
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
More than 6 None
- -------------------------------------------------------------------------------
In the table, a "year" is a 12-month period. In applying the contingent
deferred sales charge, all purchases are considered to have been made on the
first regular business day of the month in which the purchase was made.

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

HOW CAN YOU BUY CLASS C SHARES? Class C shares are sold at net asset value
per share without an initial sales charge. However, if Class C shares are
redeemed within a holding period of 12 months from the beginning of the
calendar month of their purchase, a contingent deferred sales charge of 1.0%
will be deducted from the redemption proceeds. The Class C contingent
deferred sales charge is paid to compensate the Distributor for its expenses
of providing distribution-related services to the Fund in connection with the
sale of Class C shares.

HOW CAN YOU BUY CLASS N SHARES? Class N shares are offered for sale to
retirement plans (including IRAs and 403(b) plans) that purchase $500,000 or
more of Class N shares of one or more Oppenheimer funds or to group
retirement plans (which do not include IRAs and 403(b) plans) that have
assets of $500,000 or more or 100 or more eligible participants. See
"Availability of Class N shares" in the Statement of Additional Information
for other circumstances where Class N shares are available for purchase.

Class N shares are sold at net asset value without an initial sales
charge. A contingent deferred sales charge of 1.0% will be imposed upon the
redemption of Class N shares, if:
o The group retirement plan is terminated or Class N shares of all
Oppenheimer funds are terminated as an investment option of the plan
and Class N shares are redeemed within 18 months after the plan's first
purchase of Class N shares of any Oppenheimer fund, or
o With respect to an IRA or 403(b) plan, Class N shares are redeemed
within 18 months of the plan's first purchase of Class N shares of any
Oppenheimer fund.

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

WHO CAN BUY CLASS Y SHARES? Class Y shares are sold at net asset value per
share without a sales charge directly to institutional investors that have
special agreements with the Distributor for this purpose. They may include
insurance companies, registered investment companies, employee benefit plans
and Section 529 plans, among others. Individual investors cannot buy Class Y
shares directly.

An institutional investor that buys Class Y shares for its customers'
accounts may impose charges on those accounts. The procedures for buying,
selling, exchanging and transferring the Fund's other classes of shares
(other than the time those orders must be received by the Distributor or
Transfer Agent at their Colorado office) and the special account features
available to investors buying those other classes of shares do not apply to
Class Y shares. Instructions for buying, selling, exchanging or transferring
Class Y shares must be submitted by the institutional investor, not by its
customers for whose benefit the shares are held.

DISTRIBUTION AND SERVICE (12b-1) PLANS.

Service Plan for Class A Shares. The Fund has adopted a Service Plan for
Class A shares that reimburses the Distributor for a portion of the
costs of providing services to Class A shareholder accounts. The Fund
makes these payments quarterly, based on an annual rate of up to 0.25%
of the average annual net assets of Class A shares of the Fund. The
Distributor currently uses all of those fees to pay dealers, brokers,
banks and other financial institutions for providing personal service
and maintenance of accounts of their customers that hold Class A
shares.

Prior to March 1, 2007, the Distributor paid the first year's service
fee in advance for shares purchased in grandfathered retirement plans
and it retained the service fee from the Fund with respect to those
shares during the first year after their purchase. After the shares
were held by a grandfathered retirement plan for a year, the
Distributor paid the ongoing service fee to the dealer of record on a
periodic basis. For shares purchased in grandfathered plans on or after
March 1, 2007, the Distributor does not make any payment in advance and
does not retain the service fee for the first year.

Distribution and Service Plans for Class B, Class C and Class N Shares. The
Fund has adopted Distribution and Service Plans for Class B, Class C
and Class N shares to pay the Distributor for its services and costs in
distributing Class B, Class C and Class N shares and servicing
accounts. Under the plans, the Fund pays the Distributor an annual
asset-based sales charge of 0.75% on Class B and Class C shares and
0.25% on Class N shares. The Distributor also receives a service fee of
0.25% per year under the Class B, Class C and Class N plans.

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

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

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

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

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

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

For Class C shares purchased through the OppenheimerFunds
Record(k)eeper Pro program, the Distributor will pay the Class C
asset-based sales charge to the dealer of record in the first year
after the purchase of such shares in lieu of paying the dealer a sales
concession at the time of purchase. The Distributor will use the
service fee it receives from the Fund on those shares to reimburse
FASCore, LLC for providing personal services to the Class C accounts
holding those shares.

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

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

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

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

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

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

Special Investor Services

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

You may purchase shares by telephone only after your account has been
established. To purchase shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1.800.225.5677. The purchase payment
will be debited from your bank account.

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

PHONELINK. PhoneLink is the OppenheimerFunds automated telephone system that
enables shareholders to perform a number of account transactions
automatically using a touch-tone phone. PhoneLink may be used on
already-established Fund accounts after you obtain a Personal Identification
Number (PIN), by calling the PhoneLink number, 1.800.225.5677.
Purchasing Shares. You may purchase shares in amounts up to $100,000 by
phone, by calling 1.800.225.5677. You must have established AccountLink
privileges to link your bank account with the Fund to pay for these
purchases.
Exchanging Shares. With the OppenheimerFunds Exchange Privilege, described
below, you can exchange shares automatically by phone from your Fund
account to another OppenheimerFunds account you have already
established by calling the special PhoneLink number.
Selling Shares. You can redeem shares by telephone automatically by calling
the PhoneLink number and the Fund will send the proceeds directly to
your AccountLink bank account. Please refer to "How to Sell Shares,"
below for details.

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

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

AUTOMATIC WITHDRAWAL AND EXCHANGE PLANS. The Fund has several plans that
enable you to sell shares automatically or exchange them to another
OppenheimerFunds account on a regular basis. Please call the Transfer Agent
or consult the Statement of Additional Information for details.

RETIREMENT PLANS. You may buy shares of the Fund for your retirement plan
account. If you participate in a plan sponsored by your employer, the plan
trustee or administrator must buy the shares for your plan account. The
Distributor also offers a number of different retirement plans that
individuals and employers can use:
Individual Retirement Accounts (IRAs). These include regular IRAs, Roth IRAs,
SIMPLE IRAs and rollover IRAs.
SEP-IRAs. These are Simplified Employee Pension Plan IRAs for small business
owners or self-employed individuals.
403(b)(7) Custodial Plans. These are tax-deferred plans for employees of
eligible tax-exempt organizations, such as schools, hospitals and
charitable organizations.
401(k) Plans. These are special retirement plans for businesses.
Pension and Profit-Sharing Plans. These plans are designed for businesses and
self-employed individuals.
Please call the Distributor for OppenheimerFunds retirement plan
documents, which include applications and important plan information.

How to Sell Shares

You can sell (redeem) some or all of your shares on any regular business day.
Your shares will be sold at the next net asset value calculated after your
order is received by the Distributor or your authorized financial
intermediary, in proper form (which means that it must comply with the
procedures described below) and is accepted by the Transfer Agent. The Fund
lets you sell your shares by writing a letter, by wire, by using the Fund's
checkwriting privilege, by telephone or on the internet. You can also set up
Automatic Withdrawal Plans to redeem shares on a regular basis. If you have
questions about any of these procedures, and especially if you are redeeming
shares in a special situation, such as due to the death of the owner or from
a retirement plan account, please call the Transfer Agent first, at
1.800.225.5677, for assistance.

Certain Requests Require a Signature Guarantee. To protect you and the Fund
from fraud, the following redemption requests must be in writing and
must include a signature guarantee (although there may be other
situations that also require a signature guarantee):
o You wish to redeem more than $100,000 and receive a check.
o The redemption check is not payable to all shareholders listed on the
account statement.
o The redemption check is not sent to the address of record on your
account statement,
o Shares are being transferred to a Fund account with a different owner
or name.
o Shares are being redeemed by someone (such as an Executor) other than
the owners.

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

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

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

CHECKWRITING. To write checks against your Fund account, request that
privilege on your account application, or contact the Transfer Agent for
signature cards. They must be signed (with a signature guarantee) by all
owners of the account and returned to the Transfer Agent so that checks can
be sent to you to use. Shareholders with joint accounts can elect in writing
to have checks paid over the signature of one owner. If you previously signed
a signature card to establish checkwriting in another Oppenheimer fund,
simply call 1.800.225.5677 to request checkwriting for an account in this
Fund with the same registration as the other account.
o Checks can be written to the order of whomever you wish, but may not be
cashed at the bank the checks are payable through or the Fund's
custodian bank.
o Checkwriting privileges are not available for Class Y accounts or
accounts holding shares that are subject to a contingent deferred sales
charge.
o Checkwriting privileges are not available for shares that are held in a
retirement account.

All checks must be written for at least $500. Checks will not be accepted
if they are written for less than $500, including existing checks that
indicate a $100 minimum.

o Checks cannot be paid if they are written for more than your account
value. Remember, your shares fluctuate in value and you should not
write a check close to the total account value.
o You may not write a check that would require the Fund to redeem shares
that were purchased by check or Asset Builder Plan payments within the
prior 10 days.

Don't use your checks if you changed your Fund account number, until you
receive new checks.

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

Use the following address for regular
mail:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
Use one of the following addresses for courier or
express mail:
Prior to October 10, 2008: On or after October 10,
2008:
OppenheimerFunds Services OppenheimerFunds Services
10200 East Girard Avenue 12100 East Iliff Avenue
Building D Suite 300
Denver, Colorado 80231 Aurora, Colorado 80014

HOW DO YOU SELL SHARES BY TELEPHONE? You and your dealer representative of
record may also sell your shares by telephone. To receive the redemption
price calculated on a particular regular business day, your call must be
received by the Transfer Agent by the close of the NYSE that day, which is
normally 4:00 p.m. Eastern time, but may be earlier on some days. You may not
redeem shares held in an OppenheimerFunds-sponsored qualified retirement plan
account or under a share certificate by telephone.
o To redeem shares through a service representative or automatically on
PhoneLink, call 1.800.225.5677.
Whichever method you use, you may have a check sent to the address on
the account statement, or, if you have linked your Fund account to your bank
account on AccountLink, you may have the proceeds sent to that bank account.

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

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

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

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

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

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

Contingent deferred sales charges are not charged when you exchange
shares of the Fund for shares of other Oppenheimer funds. However, if you
exchange them within the applicable contingent deferred sales charge holding
period, the holding period will carry over to the fund whose shares you
acquire. Similarly, if you acquire shares of this Fund by exchanging shares
of another Oppenheimer fund that are still subject to a contingent deferred
sales charge holding period, that holding period will carry over to this Fund.

How to Exchange Shares

If you want to change all or part of your investment from one Oppenheimer
fund to another, you can exchange your shares for shares of the same class of
another Oppenheimer fund that offers the exchange privilege. For example, you
can exchange Class A shares of the Fund only for Class A shares of another
fund. To exchange shares, you must meet several conditions:

o Shares of the fund selected for exchange must be available for sale in
your state of residence.
o The selected fund must offer the exchange privilege.
o You must meet the minimum purchase requirements for the selected fund.
o Generally, exchanges may be made only between identically registered
accounts, unless all account owners send written exchange instructions
with a signature guarantee.
o Before exchanging into a fund, you must obtain its prospectus and
should read it carefully.

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

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

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

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

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

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

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

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

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

ARE THERE LIMITATIONS ON FREQUENT PURCHASES, REDEMPTIONS AND EXCHANGES?

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

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

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

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

o Exchanges of Client Accounts by Financial Advisers. The Fund and the
Transfer Agent permit dealers and financial intermediaries to submit
exchange requests on behalf of their customers (unless that authority
has been revoked). A fund or the Transfer Agent may limit or refuse
exchange requests submitted by financial intermediaries if, in the
Transfer Agent's judgment, exercised in its discretion, the exchanges
would be disruptive to any of the funds involved in the transaction.

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

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

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

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

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

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

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

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

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

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

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

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

Shareholder Account Rules and Policies

More information about the Fund's policies and procedures for buying, selling
and exchanging shares is contained in the Statement of Additional Information.
A $12 annual "Minimum Balance Fee" is assessed on each Fund account with a
value of less than $500. The fee is automatically deducted from each
applicable Fund account annually in September. See the Statement of
Additional Information to learn how you can avoid this fee and for
circumstances under which this fee will not be assessed.
The offering of shares may be suspended during any period in which the
determination of net asset value is suspended, and the offering may be
suspended by the Board of Trustees at any time the Board believes it is
in the Fund's best interest to do so.
Telephone transaction privileges for purchases, redemptions or exchanges may
be modified, suspended or terminated by the Fund at any time. The Fund
will provide you notice whenever it is required to do so by applicable
law. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone
privileges apply to each owner of the account and the dealer
representative of record for the account unless the Transfer Agent
receives cancellation instructions from an owner of the account.
The Transfer Agent will record any telephone calls to verify data concerning
transactions and has adopted other procedures to confirm that telephone
instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. The Transfer Agent and the
Fund will not be liable for losses or expenses arising out of telephone
instructions reasonably believed to be genuine.
Redemption or transfer requests will not be honored until the Transfer Agent
receives all required documents in proper form. From time to time, the
Transfer Agent in its discretion may waive certain of the requirements
for redemptions stated in this prospectus.
Dealers that perform account transactions for their clients by participating
in NETWORKING through the National Securities Clearing Corporation are
responsible for obtaining their clients' permission to perform those
transactions, and are responsible to their clients who are shareholders
of the Fund if the dealer performs any transaction erroneously or
improperly.
The redemption price for shares will vary from day to day because the value
of the securities in the Fund's portfolio fluctuates. The redemption
price, which is the net asset value per share, will normally differ for
each class of shares. The redemption value of your shares may be more
or less than their original cost.
Payment for redeemed shares ordinarily is made in cash. It is forwarded by
check, or through AccountLink or by Federal Funds wire (as elected by
the shareholder) within seven days after the Transfer Agent receives
redemption instructions in proper form. However, under unusual
circumstances determined by the Securities and Exchange Commission,
payment may be delayed or suspended. For accounts registered in the
name of a broker-dealer, payment will normally be forwarded within
three business days after redemption.
The Transfer Agent may delay processing any type of redemption payment as
described under "How to Sell Shares" for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much
as 10 days from the date the shares were purchased. That delay may be
avoided if you purchase shares by Federal Funds wire or certified check.
Involuntary redemptions of small accounts may be made by the Fund if the
account value has fallen below $1,000 for reasons other than the fact
that the market value of shares has dropped. In some cases, involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
Shares may be "redeemed in kind" under unusual circumstances (such as a lack
of liquidity in the Fund's portfolio to meet redemptions). This means
that the redemption proceeds will be paid with liquid securities from
the Fund's portfolio. If the Fund redeems your shares in kind, you may
bear transaction costs and will bear market risks until such time as
such securities are converted into cash.
Federal regulations may require the Fund to obtain your name, your date of
birth (for a natural person), your residential street address or
principal place of business and your Social Security Number, Employer
Identification Number or other government issued identification when
you open an account. Additional information may be required in certain
circumstances or to open corporate accounts. The Fund or the Transfer
Agent may use this information to attempt to verify your identity. The
Fund may not be able to establish an account if the necessary
information is not received. The Fund may also place limits on account
transactions while it is in the process of attempting to verify your
identity. Additionally, if the Fund is unable to verify your identity
after your account is established, the Fund may be required to redeem
your shares and close your account.
"Backup withholding" of federal income tax may be applied against taxable
dividends, distributions and redemption proceeds (including exchanges)
if you fail to furnish the Fund your correct, certified Social Security
or Employer Identification Number when you sign your application, or if
you under-report your income to the Internal Revenue Service.
To avoid sending duplicate copies of materials to households, the Fund will
mail only one copy of each prospectus, annual and semi-annual report
and annual notice of the Fund's privacy policy to shareholders having
the same last name and address on the Fund's records. The consolidation
of these mailings, called householding, benefits the Fund through
reduced mailing expense.

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

Dividends, Capital Gains and Taxes

DIVIDENDS. The Fund intends to declare dividends separately for each class of
shares from net investment income each regular business day and pay those
dividends monthly. Daily dividends will not be declared or paid on newly
purchased shares until Federal Funds are available to the Fund from the
purchase payment for shares. Dividends and distributions paid to Class A and
Class Y shares will generally be higher than dividends for Class B, Class C
and Class N shares, which normally have higher expenses than Class A and
Class Y shares. The Fund has no fixed dividend rate and cannot guarantee that
it will pay any dividends or distributions.

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

WHAT CHOICES DO YOU HAVE FOR RECEIVING DISTRIBUTIONS? When you open your
account, specify on your application how you want to receive your dividends
and distributions. You have four options:
Reinvest All Distributions in the Fund. You can elect to reinvest all
dividends and capital gains distributions in additional shares of the
Fund.
Reinvest Dividends or Capital Gains. You can elect to reinvest some
distributions (dividends, short-term capital gains or long-term capital
gains distributions) in the Fund while receiving the other types of
distributions by check or having them sent to your bank account through
AccountLink.
Receive All Distributions in Cash. You can elect to receive a check for all
dividends and capital gains distributions or have them sent to your
bank through AccountLink.

Reinvest Your Distributions in Another OppenheimerFunds Account. You can
reinvest all distributions in the same class of shares of another
Oppenheimer fund, if that fund is available for exchanges and if you
have an account established in that fund.

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

Every year the Fund will send you and the Internal Revenue Service a
statement showing the amount of any taxable distribution you received in the
previous year. Any long-term capital gains will be separately identified in
the tax information the Fund sends you after the end of the calendar year.

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

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

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

Financial Highlights

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

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

CLASS A YEAR ENDED DECEMBER 31, 2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.23 $ 10.24 $ 10.44 $ 10.38 $ 10.14
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .50 1 .47 1 .42 1 .38 1 .35
Net realized and unrealized gain (loss) (.05) .01 (.18) .12 .24
------------------------------------------------------------------
Total from investment operations .45 .48 .24 .50 .59
- --------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.39) (.49) (.44) (.44) (.35)
Tax return of capital distribution (.11) -- -- -- --
------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.50) (.49) (.44) (.44) (.35)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.18 $ 10.23 $ 10.24 $ 10.44 $ 10.38
==================================================================

- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 4.49% 4.84% 2.35% 4.90% 5.87%
- --------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 954,825 $ 670,012 $ 488,889 $ 344,205 $ 382,966
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 779,234 $ 566,159 $ 423,182 $ 353,046 $ 382,420
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.89% 4.66% 4.12% 3.63% 3.39%
Total expenses 0.88% 4 0.96% 4 1.06% 1.10% 1.10%
Expenses after waivers, payments and/or
reimbursements and reduction to custodian expenses 0.87% 0.90% 0.90% 0.93% 1.10%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 89% 5 107% 5 98% 5 94% 5 111%

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

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

3. Annualized for periods less than one full year.

4. Total expenses including indirect expenses from affiliated fund were as
follows:

Year Ended December 31, 2007 0.89%
Year Ended December 31, 2006 0.96%

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

PURCHASE TRANSACTIONS SALE TRANSACTIONS
--------------------------------------------------------------------------
Year Ended December 31, 2007 $2,990,658,315 $2,928,450,309
Year Ended December 31, 2006 $2,924,444,249 $2,991,206,014
Year Ended December 31, 2005 $3,609,072,810 $3,584,424,906
Year Ended December 31, 2004 $3,447,306,025 $3,473,854,068

CLASS B YEAR ENDED DECEMBER 31, 2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.23 $ 10.23 $ 10.44 $ 10.37 $ 10.13
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .42 1 .40 1 .35 1 .30 1 .27
Net realized and unrealized gain (loss) (.06) .01 (.20) .13 .24
------------------------------------------------------------------
Total from investment operations .36 .41 .15 .43 .51
- --------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.31) (.41) (.36) (.36) (.27)
Tax return of capital distribution (.11) -- -- -- --
------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.42) (.41) (.36) (.36) (.27)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.17 $ 10.23 $ 10.23 $ 10.44 $ 10.37
==================================================================

- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 3.60% 4.17% 1.50% 4.21% 5.05%
- --------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 99,282 $ 116,230 $ 125,069 $ 148,445 $ 197,774
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 106,727 $ 118,240 $ 135,296 $ 167,685 $ 216,853
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.13% 3.92% 3.37% 2.86% 2.61%
Total expenses 1.79% 4 1.86% 4 1.91% 1.91% 1.87%
Expenses after waivers, payments and/or
reimbursements and reduction to
custodian expenses 1.64% 1.65% 1.65% 1.69% 1.87%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 89% 5 107% 5 98% 5 94% 5 111%

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

3. Annualized for periods less than one full year.

4. Total expenses including indirect expenses from affiliated fund were as
follows:

Year Ended December 31, 2007 1.80%
Year Ended December 31, 2006 1.86%

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

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

CLASS C YEAR ENDED DECEMBER 31, 2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.24 $ 10.24 $ 10.45 $ 10.39 $ 10.14
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .42 1 .40 1 .35 1 .30 1 .27
Net realized and unrealized gain (loss) (.06) .01 (.20) .12 .25
------------------------------------------------------------------
Total from investment operations .36 .41 .15 .42 .52
- --------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.31) (.41) (.36) (.36) (.27)
Tax return of capital distribution (.11) -- -- -- --
------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.42) (.41) (.36) (.36) (.27)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.18 $ 10.24 $ 10.24 $ 10.45 $ 10.39
==================================================================

- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 3.60% 4.16% 1.49% 4.12% 5.18%
- --------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 194,071 $ 149,440 $ 109,207 $ 84,696 $ 90,583
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 172,144 $ 126,593 $ 94,742 $ 86,020 $ 96,361
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.12% 3.92% 3.37% 2.87% 2.64%
Total expenses 1.66% 4 1.76% 4 1.86% 1.87% 1.84%
Expenses after waivers, payments and/or
reimbursements and reduction to
custodian expenses 1.64% 1.65% 1.65% 1.68% 1.84%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 89% 5 107% 5 98% 5 94% 5 111%

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

3. Annualized for periods less than one full year.

4. Total expenses including indirect expenses from affiliated fund were as
follows:

Year Ended December 31, 2007 1.67%
Year Ended December 31, 2006 1.76%

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

CLASS N YEAR ENDED DECEMBER 31, 2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.23 $ 10.23 $ 10.44 $ 10.37 $ 10.13
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .47 1 .45 1 .40 1 .35 1 .31
Net realized and unrealized gain (loss) (.06) .01 (.19) .13 .24
------------------------------------------------------------------
Total from investment operations (.36) .46 .21 .48 .55
- --------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.36) (.46) (.42) (.41) (.31)
Tax return of capital distribution (.11) -- -- -- --
------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.47) (.46) (.42) (.41) (.31)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.17 $ 10.23 $ 10.23 $ 10.44 $ 10.37
==================================================================

- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 4.11% 4.68% 1.99% 4.71% 5.51%
- --------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 84,017 $ 58,232 $ 35,836 $ 25,580 $ 17,732
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 70,555 $ 46,672 $ 30,274 $ 21,411 $ 15,338
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.62% 4.42% 3.87% 3.38% 3.03%
Total expenses 1.26% 4 1.35% 4 1.47% 1.51% 1.50%
Expenses after waivers, payments and/or
reimbursements and reduction to
custodian expenses 1.14% 1.15% 1.15% 1.20% 1.44%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 89% 5 107% 5 98% 5 94% 5 111%

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

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

3. Annualized for periods less than one full year.

4. Total expenses including indirect expenses from affiliated fund were as
follows:

Year Ended December 31, 2007 1.27%
Year Ended December 31, 2006 1.35%

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

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

CLASS Y YEAR ENDED DECEMBER 31, 2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.22 $ 10.22 $ 10.43 $ 10.36 $ 10.12
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .53 1 .51 1 .45 1 .41 1 .39
Net realized and unrealized gain (loss) (.05) .01 (.19) .13 .24
------------------------------------------------------------------
Total from investment operations .48 .52 .26 .54 .63
- --------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.43) (.52) (.47) (.47) (.39)
Tax return of capital distribution (.11) -- -- -- --
------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.54) (.52) (.47) (.47) (.39)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.16 $ 10.22 $ 10.22 $ 10.43 $ 10.36
==================================================================

- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 4.80% 5.29% 2.50% 5.30% 6.35%
- --------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 824,678 $ 435,311 $ 171,323 $ 38,190 $ 43,215
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 617,403 $ 309,558 $ 91,172 $ 45,333 $ 38,398
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 5.28% 5.03% 4.39% 3.92% 3.80%
Total expenses 0.48% 4 0.55% 4 0.76% 0.64% 0.63%
Expenses after waivers, payments and/or
reimbursements and reduction to
custodian expenses 0.47% 0.55% 0.65% 0.64% 0.63%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 89% 5 107% 5 98% 5 94% 5 111%

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

3. Annualized for periods less than one full year.

4. Total expenses including indirect expenses from affiliated fund were as
follows:

Year Ended December 31, 2007 0.49%
Year Ended December 31, 2006 0.55%

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

INFORMATION AND SERVICES

For More Information on Oppenheimer Core Bond Fund
The following additional information about the Fund is available without
charge upon request:

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

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

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

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

Information about the Fund including the Statement of Additional Information
can be reviewed and copied at the Securities and Exchange Commission's Public
Reference Room in Washington, D.C. Information on the operation of the Public
Reference Room may be obtained by calling the Securities and Exchange
Commission at 1.202.551.8090. Reports and other information about the Fund
are available on the EDGAR database on the Securities and Exchange
Commission's Internet website at www.sec.gov. Copies may be obtained after
payment of a duplicating fee by electronic request at the Securities and
Exchange Commission's e-mail address: publicinfo@sec.gov or by writing to the
Securities and Exchange Commission 's Public Reference Section, Washington,
D.C. 20549-0102.

No one has been authorized to provide any information about the Fund or to
make any representations about the Fund other than what is contained in this
prospectus. This prospectus is not an offer to sell shares of the Fund, nor a
solicitation of an offer to buy shares of the Fund, to any person in any
state or other jurisdiction where it is unlawful to make such an offer.

The Fund's shares are distributed by: [logo] OppenheimerFunds
Distributor, Inc.
The Fund's SEC File No.: 811-3420

PR0285.001.0408
Printed on recycled paper

Appendix to Prospectus of
Oppenheimer Core Bond Fund

Graphic material included in the Prospectus of Oppenheimer Core Bond
Fund (the "Fund") under the heading "Annual Total Returns (Class A) (as of
12/31 each year)":

A bar chart will be included in the Prospectus of the Fund depicting
the annual total returns of a hypothetical investment in Class A shares of
the Fund for each of the last ten calendar years, without deducting sales
charges. Set forth below are the relevant data points that will appear in the
bar chart:

-----------------------------------------------
Calendar Year Ended Annual Total Returns
-----------------------------------------------
-----------------------------------------------

-----------------------------------------------
-----------------------------------------------
12/31/98 5.61%
-----------------------------------------------
-----------------------------------------------
12/31/99 -1.65%
-----------------------------------------------
-----------------------------------------------
12/31/00 5.80%
-----------------------------------------------
-----------------------------------------------
12/31/01 7.05%
-----------------------------------------------
-----------------------------------------------
12/31/02 10.06%
-----------------------------------------------
-----------------------------------------------
12/31/03 5.87%
-----------------------------------------------
-----------------------------------------------
12/31/04 4.90%
-----------------------------------------------
-----------------------------------------------
12/31/05 2.35%
-----------------------------------------------
-----------------------------------------------
12/31/06 4.84%
-----------------------------------------------
-----------------------------------------------

12/31/07 4.49%

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Oppenheimer Core Bond Fund

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

Statement of Additional Information dated April 29, 2008

This Statement of Additional Information is not a Prospectus. This
document contains additional information about the Fund and supplements
information in the Prospectus dated April 29, 2008. It should be read
together with the Prospectus. You can obtain the Prospectus by writing to the
Fund's Transfer Agent, OppenheimerFunds Services, at P.O. Box 5270, Denver,
Colorado 80217, or by calling the Transfer Agent at the toll-free number
shown above, or by downloading it from the OppenheimerFunds Internet website
at www.oppenheimerfunds.com.

Contents
Page
About the Fund
Additional Information About the Fund's Investment Policies and Risks... 2
The Fund's Investment Policies...................................... 2
Other Investment Techniques and Strategies.......................... 12
Other Investment Restrictions....................................... 32
Disclosure of Portfolio Holdings.................................... 33
How the Fund is Managed................................................. 37
Organization and History............................................ 37
Board of Trustees and Oversight Committees.......................... 39
Trustees and Officers of the Fund................................... 40
The Manager......................................................... 48
Brokerage Policies of the Fund.......................................... 53
Distribution and Service Plans.......................................... 56
Payments to Fund Intermediaries......................................... 60
Performance of the Fund................................................. 64

About Your Account
How to Buy Shares....................................................... 71
How to Sell Shares...................................................... 81
How to Exchange Shares.................................................. 87
Dividends, Capital Gains and Taxes...................................... 91
Additional Information About the Fund................................... 95

Financial Information About the Fund
Report of Independent Registered Public Accounting Firm................. 97
Financial Statements.................................................... 98

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

37
ABOUT THE FUND

Additional Information About the Fund's Investment Policies and Risks

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

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

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

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

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

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

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

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

The Fund would take a short position in a credit default swap
(the "unfunded swap") against a long portfolio position to decrease exposure
to specific high yield issuers. If the Fund takes a short position in the
credit default swap, and there is a credit event (including bankruptcy,
failure to timely pay interest or principal, or a restructuring), the Fund
will deliver the defaulted bonds and the swap counterparty will pay the par
amount of the bonds. An associated risk is adverse pricing when purchasing
bonds to satisfy the delivery obligation. If the swap is on a basket of
securities, the notional amount of the swap is reduced by the par amount of
the defaulted bond, and the fixed payments are then made on the reduced
notional amount.

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

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

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

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

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

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

"Lower-grade" debt securities are those rated below "investment grade,"
which means they have a rating lower than "Baa" by Moody's or lower than
"BBB" by Standard &amp; Poor's or Fitch, Inc. or similar ratings by other rating
organizations. If they are unrated, and are determined by the Manager to be
of comparable quality to debt securities rated below investment grade, they
are considered part of the Fund's portfolio of lower-grade securities.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

|X| Floating Rate and Variable Rate Obligations. Variable rate obligations
may have a demand feature that allows the Fund to tender the obligation to
the issuer or a third party prior to its maturity. The tender may be at par
value plus accrued interest, according to the terms of the obligations.

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

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

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

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

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

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

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

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

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

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

In a repurchase transaction, the Fund buys a security from, and
simultaneously resells it to, an approved vendor for delivery on an
agreed-upon future date. The resale price exceeds the purchase price by an
amount that reflects an agreed-upon interest rate effective for the period
during which the repurchase agreement is in effect. Approved vendors include
U.S. commercial banks, U.S. branches of foreign banks, or broker-dealers that
have been designated as primary dealers in government securities. They must
meet credit requirements set by the Manager from time to time.

The majority of these transactions run from day to day, and delivery
pursuant to the resale typically occurs within one to five days of the
purchase. Repurchase agreements having a maturity beyond seven days are
subject to the Fund's limits on holding illiquid investments. The Fund will
not enter into a repurchase agreement that causes more than 15% of its net
assets to be subject to repurchase agreements having a maturity beyond seven
days. There is no limit on the amount of the Fund's net assets that may be
subject to repurchase agreements having maturities of seven days or less for
defensive purposes.

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

Pursuant to an Exemptive Order issued by the Securities and Exchange
Commission (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 that
are pledged as collateral for repurchase agreements are held by a custodian
bank until the agreements mature. Each joint repurchase arrangement requires
that the market value of the collateral be sufficient to cover payments of
interest and principal; however, in the event of default by the other party
to the agreement, retention or sale of the collateral may be subject to legal
proceedings.

Investment in Other Investment Companies. The Fund can also invest in the
securities of other investment companies, which can include open-end funds,
closed-end funds and unit investment trusts, subject to the limits set forth
in the Investment Company Act that apply to those types of investments. For
example, the Fund can invest in Exchange-Traded Funds, which are typically
open-end funds or unit investment trusts, listed on a stock exchange. The
Fund might do so as a way of gaining exposure to the segments of the equity
or fixed-income markets represented by the Exchange-Traded Funds' portfolio,
at times when the Fund may not be able to buy those portfolio securities
directly.

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

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

The Fund may also acquire restricted securities through private
placements. Those securities have contractual restrictions on their public
resale. Those restrictions may make it more difficult to value them, and
might limit the Fund's ability to dispose of the securities and might lower
the amount the Fund could realize upon the sale.

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

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

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

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

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

|X| Investments in Equity Securities. Under normal market conditions the
Fund can invest a portion of assets in common stocks, preferred stocks,
warrants (which might be acquired as part of a "unit" of securities that
includes debt securities) and convertible debt securities, which in some
cases are considered "equity equivalents." However, it does not currently
anticipate investing significant amounts of its assets in equity securities
as part of its normal investment strategy. Certain equity securities may be
selected because they may provide dividend income.

o Risks of Investing in Stocks. Stocks fluctuate in price, and their
short-term volatility at times may be great. To the extent that the Fund
invests in equity securities, the value of the Fund's portfolio will be
affected by changes in the stock markets. Market risk can affect the Fund's
net asset value per share, which will fluctuate as the values of the Fund's
portfolio securities change. The prices of individual stocks do not all move
in the same direction uniformly or at the same time. Different stock markets
may behave differently from each other.

Other factors can affect a particular stock's price, such as poor
earnings reports by the issuer, loss of major customers, major litigation
against the issuer, or changes in government regulations affecting the issuer
or its industry.

The Fund can invest in securities of large companies and mid-size
companies, but may also buy stocks of small companies, which may have more
volatile stock prices than large companies.

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

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

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

|X| Rights and Warrants. Warrants basically are options to purchase equity
securities at specific prices valid for a specific period of time. Their
prices do not necessarily move parallel to the prices of the underlying
securities. Rights are similar to warrants, but normally have a short
duration and are distributed directly by the issuer to its shareholders.
Rights and warrants have no voting rights, receive no dividends and have no
rights with respect to the assets of the issuer.

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

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

|X| Loans of Portfolio Securities. The Fund may lend its portfolio
securities pursuant to Securities Lending Guidelines approved by the Fund's
Board of Trustees. It may do so to try to provide income or to raise cash for
liquidity purposes. These loans are limited to not more than 25% of the value
of the Fund's net assets.

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

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

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

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

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

o Bank Obligations. The Fund can buy time deposits, certificates of
deposit and bankers' acceptances. They must be:
o obligations issued or guaranteed by a domestic bank (including
a foreign branch of a domestic bank) having total assets of at
least U.S. $1 billion, or
o obligations of a foreign bank with total assets of at least U.S. $1
billion.

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

o Commercial Paper. The Fund can invest in commercial paper if it is
rated within the top three rating categories of Standard &amp; Poor's and Moody's
or other rating organizations.

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

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

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

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

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

|X| Derivatives. The Fund can invest in a variety of derivative investments
for speculative (seeking higher returns) or hedging (managing investment
risk) purposes. Some derivative investments the Fund can use are the hedging
instruments described below in this SAI.

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

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

|X| Hedging. The Fund can use hedging instruments although it is not
obligated to use them in seeking its objective. To attempt to protect against
declines in the market value of the Fund's portfolio, to permit the Fund to
retain unrealized gains in the value of portfolio securities which have
appreciated, or to facilitate selling securities for investment reasons, the
Fund could:

o sell futures contracts,
o buy puts on futures or on securities, or
o write covered calls on securities or futures. Covered calls may also be
used to increase the Fund's income, but the Manager does not
expect to engage extensively in that practice.

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

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

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

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

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

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

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

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

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

o Writing Covered Call Options. The Fund can write (that is, sell)
covered calls. If the Fund sells a call option, it must be covered. That
means the Fund must own the security subject to the call while the call is
outstanding, or the call may be covered by segregating liquid assets to
enable the Fund to satisfy its obligations if the call is exercised.

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

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

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

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

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

The Fund may also write calls on a futures contract without owning the
futures contract or securities deliverable under the contract. To do so, at
the time the call is written, the Fund must cover the call by identifying on
it books an equivalent dollar amount of liquid assets. The Fund will identify
additional liquid assets on its books to cover the call if the value of the
identified assets drops below 100% of the current value of the future.
Because of this asset coverage requirement, in no circumstances would the
Fund's receipt of an exercise notice as to that future require the Fund to
deliver a futures contract. It would simply put the Fund in a short futures
position, which is permitted by the Fund's hedging policies.

o Writing Put Options. The Fund can sell put options on securities,
broadly-based securities indices, foreign currencies and futures. A put
option on securities gives the purchaser the right to sell, and the writer
the obligation to buy, the underlying investment at the exercise price during
the option period.

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

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

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

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

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

o Purchasing Calls and Puts. The Fund can purchase calls on securities,
broadly-based securities indices, foreign currencies and futures. It may do
so to protect against the possibility that the Fund's portfolio will not
participate in an anticipated rise in the securities market. When the Fund
buys a call (other than in a closing purchase transaction), it pays a
premium. The Fund then has the right to buy the underlying investment from a
seller of a corresponding call on the same investment during the call period
at a fixed exercise price.

The Fund benefits only if it sells the call at a profit or if, during
the call period, the market price of the underlying investment is above the
sum of the call price plus the transaction costs and the premium paid for the
call and the Fund exercises the call. If the Fund does not exercise the call
or sell it (whether or not at a profit), the call will become worthless at
its expiration date. In that case the Fund will have paid the premium but
lost the right to purchase the underlying investment.

The Fund can buy puts on securities, broadly-based securities indices,
foreign currencies and futures, whether or not it owns the underlying
investment. When the Fund purchases a put, it pays a premium and, except as
to puts on indices, has the right to sell the underlying investment to a
seller of a put on a corresponding investment during the put period at a
fixed exercise price.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Fund could also use forward contracts to lock in the U.S. dollar
value of portfolio positions. This is called a "position hedge." When the
Fund believes that foreign currency might suffer a substantial decline
against the U.S. dollar, it could enter into a forward contract to sell an
amount of that foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in that foreign currency. When the
Fund believes that the U.S. dollar might suffer a substantial decline against
a foreign currency, it could enter into a forward contract to buy that
foreign currency for a fixed dollar amount. Alternatively, the Fund could
enter into a forward contract to sell a different foreign currency for a
fixed U.S. dollar amount if the Fund believes that the U.S. dollar value of
the foreign currency to be sold pursuant to its forward contract will fall
whenever there is a decline in the U.S. dollar value of the currency in which
portfolio securities of the Fund are denominated. That is referred to as a
"cross hedge."

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

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

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

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

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

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

o Interest Rate Swap Transactions. The Fund can enter into interest rate
swap agreements. In an interest rate swap, the Fund and another party
exchange their right to receive or their obligation to pay interest on a
security. For example, they might swap the right to receive floating rate
payments for fixed rate payments. Also, the Fund will identify on its book
liquid assets (such as cash or U.S. government securities) to cover any
amounts it could owe under swaps that exceed the amounts it is entitled to
receive, and it will adjust that amount daily, as needed.

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

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

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

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

Transactions in options by the Fund are subject to limitations
established by the option exchanges. The exchanges limit the maximum number
of options that may be written or held by a single investor or group of
investors acting in concert. Those limits apply regardless of whether the
options were written or purchased on the same or different exchanges or are
held in one or more accounts or through one or more different exchanges or
through one or more brokers. Thus, the number of options that the Fund may
write or hold may be affected by options written or held by other entities,
including other investment companies having the same adviser as the Fund (or
an adviser that is an affiliate of the Fund's adviser). The exchanges also
impose position limits on futures transactions. An exchange may order the
liquidation of positions found to be in violation of those limits and may
impose certain other sanctions.

Under the Investment Company Act, when the Fund purchases a future, it
must maintain liquid assets in an amount equal to the market value of the
securities underlying the future, less the margin deposit applicable to it.

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

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

Under the Internal Revenue Code, the following gains or losses are
treated as ordinary income or loss:
(1) gains or losses attributable to fluctuations in exchange rates that
occur between the time the Fund accrues interest or other
receivables or accrues expenses or other liabilities denominated in
a foreign currency and the time the Fund actually collects such
receivables or pays such liabilities, and
(2) gains or losses attributable to fluctuations in the value of a foreign
currency between the date of acquisition of a debt security
denominated in a foreign currency or foreign currency forward
contracts and the date of disposition.

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

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

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

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

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.

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

o The Fund cannot concentrate its investments (that means it cannot
invest 25% or more of its total assets) in any one industry. Gas, water,
electric and telephone utilities are considered to be separate industries for
this purpose.

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

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

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

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

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

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

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 and investments in illiquid
securities). The Fund need not sell securities to meet the percentage limits
if the value of the investment increases in proportion to the size of the
Fund.

|X| Does the Fund Have Additional Restrictions That Are Not "Fundamental"
Policies? The Fund has an additional operating policy that is not
"fundamental," and which can be changed by the Board of Trustees without
shareholder approval:

o The Fund cannot invest in the securities of other registered investment
companies or registered unit investment trusts in reliance on sub-paragraph
(F) or (G) of section 12(d)(1) of the Investment Company Act.

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

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

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

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

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

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

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

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

o Employees of the Fund's Manager, Distributor and Transfer Agent who
need to have access to such information (as determined by senior
officers of such entity),
o The Fund's independent registered public accounting firm,
o Members of the Fund's Board and the Board's legal counsel,
o The Fund's custodian bank,

o A proxy voting service designated by the Fund and its Board,
o Rating/ranking organizations (such as Lipper and Morningstar),
o Portfolio pricing services retained by the Manager to provide portfolio
security prices, and

o Dealers, to obtain bids (price quotations if securities are not priced
by the Fund's regular pricing services).

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

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

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

o Brokers and dealers to obtain bids or bid and asked prices (if
securities held by the Fund are not priced by the Fund's regular
pricing services)

o Dealers to obtain price quotations where the Fund is not identified as
the owner.

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

o Response to legal process in litigation matters, such as responses to
subpoenas or in class action matters where the Fund may be part
of the plaintiff class (and seeks recovery for losses on a
security) or a defendant,

o Response to regulatory requests for information (the SEC, 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 then-current policy on
approved methods for communicating confidential information.

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

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

ABG Securities Fortis Securities Nomura Securities
ABN AMRO Fox-Pitt, Kelton Oppenheimer &amp; Co.
AG Edwards Friedman, Billing, Oscar Gruss

Ramsey

Allen &amp; Co Gabelli OTA
American Technology Research Garp Research Pacific Crest Securities
Auerbach Grayson Gartner Piper Jaffray Inc.
Avondale George K Baum &amp; Co. Portales Partners
Banc of America Securities Goldman Sachs Punk Ziegel &amp; Co
Barra Howard Weil Raymond James
BB&amp;T HSBC RBC
Bear Stearns ISI Group Reuters
Belle Haven ITG RiskMetrics/ISS
Bloomberg Janco Robert W. Baird
BMO Capital Markets Janney Montgomery Roosevelt &amp; Cross
BNP Paribas Jefferies Russell
Brean Murray JMP Securities Sandler O'Neil
Brown Brothers JNK Securities Sanford C. Bernstein
Buckingham Research Group Johnson Rice &amp; Co Scotia Capital Markets
Canaccord Adams JP Morgan Securities Sidoti
Caris &amp; Co. Kaufman Brothers Simmons
CIBC World Markets Keefe, Bruyette &amp; Woods Sander Morris Harris
Citigroup Global Markets Keijser Securities Societe Generale
CJS Securities Kempen &amp; Co. USA Inc. Soleil Securities Group
Cleveland Research Kepler Equities/Julius Standard &amp; Poors
Baer Sec
Cogent KeyBanc Capital Markets Stanford Group
Collins Stewart Lazard Freres &amp; Co State Street Bank
Cowen &amp; Company Leerink Swan Stephens, Inc.
Craig-Hallum Capital Group Lehman Brothers Stifel Nicolaus
LLC
Credit Agricole Cheuvreux Loop Capital Markets Stone &amp; Youngberg
N.A. Inc.
Credit Suisse Louise Yamada Tech Strategas Research
Research
Daiwa Securities MainFirst Bank AG Sungard
Davy Makinson Cowell US Ltd Suntrust Robinson
Humphrey
Deutsche Bank Securities McAdmas Wright SWS Group
Dougherty Markets Merrill Lynch Think Equity Partners
Dowling Miller Tabak Thomas Weisel Partners
Empirical Research Mizuho Securities Thomson Financial
Enskilda Securities Moodys Research UBS
Exane BNP Paribas Morgan Stanley Wachovia Securities
Factset Natexis Bleichroeder Wedbush
Fidelity Capital Markets Ned Davis Research Group Weeden
First Albany Needham &amp; Co William Blair
Fixed Income Securities

How the Fund is Managed

Organization and History The Fund, a series of Oppenheimer Integrity Funds
(referred to as the "Trust"), is an open-end, diversified management investment
company with an unlimited number of authorized shares of beneficial interest.
The Trust was established in 1982 as MassMutual Liquid Assets Trust. The Fund
was reorganized from a closed-end investment company called MassMutual Income
Investors, Inc. into a series of the Trust on April 15, 1988. The Fund and the
Trust were originally managed by Massachusetts Mutual Life Insurance Company,
the Manager's indirect parent company. On March 29, 1991, the Manager became the
Fund's investment adviser, and the Trust changed its name to Oppenheimer
Integrity Funds. The Fund was then called Oppenheimer Investment Grade Bond Fund
and changed its name to Oppenheimer Bond Fund on July 10, 1995. On January 21,
2005, the Fund changed its name from Oppenheimer Bond Fund to Oppenheimer Core
Bond Fund.

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

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

o has its own dividends and distributions,

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

o will generally have a different net asset value,

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

o votes as a class on matters that affect that class alone.

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

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

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

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

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

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

The Board of Trustees has an Audit Committee, a Review Committee and a
Governance Committee. Each committee is comprised solely of Trustees who are not
"interested persons" under the Investment Company Act (the "Independent
Trustees"). The members of the Audit Committee are George C. Bowen (Chairman),
Edward L.Cameron, Robert J. Malone and F. William Marshall, Jr. The Audit
Committee held 5 meetings during the Fund's fiscal year ended December 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 Funds' Chief Compliance
Officer; (v) maintaining a separate line of communication between the Fund's
independent Auditors and the Independent Trustees; (vi) reviewing the
independence of the Fund's independent Auditors; and (vii) pre-approving the
provision of any audit or non-audit services by the Fund's independent Auditors,
including tax services, that are not prohibited by the Sarbanes-Oxley Act, to
the Fund, the Manager and certain affiliates of the Manager.

The members of the Review Committee are Sam Freedman (Chairman), Jon S.
Fossel, Richard F. Grabish and Beverly L. Hamilton. The Review Committee held 4
meetings during the Fund's fiscal year ended December 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 Codes of Ethics, the Fund's investment performance as
well as the policies and procedures adopted by the Fund to comply with the
Investment Company Act and other applicable law.

The Governance Committee is comprised solely of Independent Trustees. The
members of the Governance Committee are Robert J. Malone (Chairman), William
Armstrong, Edward L. Cameron, Beverly L. Hamilton and F. William Marshall, Jr.
The Governance Committee held 3 meetings during the Fund's fiscal year ended
December 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, the adequacy of the
Fund's Code of Ethics and the nomination of Trustees, including Independent
Trustees. The Governance Committee has adopted a process for shareholder
submission of nominees for board positions. Shareholders

may submit names of Oppenheimer individuals, accompanied Protected Trust 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 Messrs. Murphy and Grabish, each
of the Trustees is an Independent Trustee. All of the Trustees are also trustees
or directors of the following Oppenheimer/Centennial funds (referred to as
"Board II Funds") except for Mr. Grabish, who serves as Trustee for only the
following funds: Centennial California Tax Exempt Trust, Centennial Government
Trust, Centennial Money Market Trust, Centennial New York Tax Exempt Trust,
Centennial Tax Exempt Trust, Oppenheimer Core Bond Fund, Oppenheimer
Limited-Term Government Fund, Panorama Series Fund, Inc., Oppenheimer Principal
Protected Trust, Oppenheimer Principal Protected Trust II, Oppenheimer Principal
Protected Trust III, Oppenheimer Senior Floating Rate Fund, Oppenheimer
Portfolio Series Fixed Income Active Allocation Fund and Oppenheimer Master Loan
Fund, LLC:

Oppenheimer Capital Income
Fund Principal
Oppenheimer Cash Reserves Oppenheimer Principal
Protected Trust II
Oppenheimer Principal Protected
Oppenheimer Champion Income Fund Trust III
Oppenheimer Commodity Strategy Total Oppenheimer Senior Floating Rate
Return Fund Fund
Oppenheimer Equity Fund, Inc. Oppenheimer Strategic Income Fund
Oppenheimer Integrity Funds Oppenheimer Variable Account Funds
Oppenheimer International Bond Fund Panorama Series Fund, Inc.
Oppenheimer Limited-Term Government Fund
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
Oppenheimer Master Loan Fund, LLC

Centennial New York Tax Exempt

Oppenheimer Municipal Fund Trust
Oppenheimer Portfolio Series Fixed Income
Active Allocation Fund Centennial Tax Exempt Trust

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

Messrs. Bomfim, Caan, Gord, Manioudakis, Swaney, Gillespie, Murphy,
Petersen, Szilagyi, Vandehey, Wixted and Zack and Mss. Bloomberg and Ives,
who are officers of the Fund, hold the same offices with one or more of the
other Board II Funds. As of April 4, 2008 the Trustees and officers of the
Fund, as a group, owned of record or beneficially less than 1% of any class
of shares of the Fund. The foregoing statement does not reflect ownership of
shares held of record by an employee benefit plan for employees of the
Manager, other than the shares beneficially owned under that plan by the
officers of the Board II Funds. In addition, none of the Independent Trustees
(nor any of their immediate family members) owns securities of either the
Manager or the Distributor or of any entity directly or indirectly
controlling, controlled by or under common control with the Manager or the
Distributor of the Board II Funds.

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

- ---------------------------------------------------------------------------------------------
Independent Trustees
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
Name, Position(s) 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, 2007

- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
William L. President, Colorado Christian University None Over
Armstrong, (since 2006); Chairman, Cherry Creek Mortgage $100,000
Chairman of the Company (since 1991), Chairman, Centennial
Board of Trustees State Mortgage Company (since 1994),

since 2003, Trustee Chairman, The El Paso Mortgage Company (since
since 1999 1993); Chairman, Ambassador Media Corporation
Age: 71 (since 1984); Chairman, Broadway Ventures
(since 1984); Director of Helmerich &amp; Payne,
Inc. (oil and gas drilling/production
company) (since 1992), Campus Crusade for
Christ (non-profit) (since 1991); Former
Director, The Lynde and Harry Bradley
Foundation, Inc. (non-profit organization)
(2002-2006); former Chairman of: Transland
Financial Services, Inc. (private mortgage
banking company) (1997-2003), Great Frontier
Insurance (1995-2000), Frontier Real Estate,
Inc. (residential real estate brokerage)
(1994-2000) and Frontier Title (title
insurance agency) (1995-2000); former
Director of the following: UNUMProvident
(insurance company) (1991-2004), Storage
Technology Corporation (computer equipment
company) (1991-2003) and International Family
Entertainment (television channel)
(1992-1997); U.S. Senator (January
1979-January 1991). Oversees 39 portfolios in
the OppenheimerFunds complex.

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

George C. Bowen, Assistant Secretary and Director of $10,001-50,00Over
Trustee since 2001 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 39 portfolios in the
OppenheimerFunds complex.

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

Edward L. Cameron, Member of The Life Guard of Mount Vernon None Over
Trustee since 2001 (George Washington historical site) (June $100,000
Age: 69 2000 - June 2006); Partner of
PricewaterhouseCoopers LLP (accounting firm)
(July 1974-June 1999); Chairman of Price
Waterhouse LLP Global Investment Management
Industry Services Group (financial services
firm) (July 1994-June 1998). Oversees 39
portfolios in the OppenheimerFunds complex.

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

Jon S. Fossel, Director of UNUMProvident (insurance company) None Over
Trustee since 1990 (since June 2002); Director of Northwestern $100,000
Age: 66 Energy Corp. (public utility corporation)
(since November 2004); Director of P.R.
Pharmaceuticals (October 1999-October 2003);
Director of Rocky Mountain Elk Foundation
(non-profit organization) (February
1998-February 2003 and February 2005-February
2007); Chairman and Director (until October
1996) and President and Chief Executive
Officer (until October 1995) of the Manager;
President, Chief Executive Officer and
Director of the following: Oppenheimer
Acquisition Corp. ("OAC") (parent holding
company of the Manager), Shareholders
Services, Inc. and Shareholder Financial
Services, Inc. (until October 1995). Oversees
39 portfolios in the OppenheimerFunds complex.

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

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 39 portfolios in the
OppenheimerFunds complex.

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

Beverly L. Hamilton, Trustee of Monterey Institute for None None
Trustee since 2002 International Studies (educational
Age: 61 organization) (since February 2000); Board
Member of Middlebury College (educational
organization) (since December 2005); Director
of The California Endowment (philanthropic
organization) (since April 2002); Director
(February 2002-2005) and Chairman of Trustees
(2006-2007) of the Community Hospital of
Monterey Peninsula; Director (October
1991-2005) and Vice Chairman (since 2006) of
American Funds' Emerging Markets Growth Fund,
Inc. (mutual fund); President of ARCO
Investment Management Company (February
1991-April 2000); Member of the investment
committees of The Rockefeller Foundation
(2001-2006) and The University of Michigan
(since 2000); Advisor at Credit Suisse First
Boston's Sprout venture capital unit (venture
capital fund) (1994-January 2005); Trustee of
MassMutual Institutional Funds (investment
company) (1996-June 2004); Trustee of MML
Series Investment Fund (investment company)
(April 1989-June 2004); Member of the
investment committee of Hartford Hospital
(2000-2003); and Advisor to Unilever
(Holland) pension fund (2000-2003). Oversees
39 portfolios in the OppenheimerFunds complex.

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

Robert J. Malone, Board of Directors of Opera Foundation None Over
Trustee since 2002 (non-profit organization) (since March 2008); $100,000
Age: 63 Director of Jones Knowledge, Inc. (since
2006); Director of Jones International
University (educational organization) (since
August 2005); Chairman, Chief Executive
Officer and Director of Steele Street Bank &amp;
Trust (commercial banking) (since August
2003); Director of Colorado UpLIFT
(charitable organization) (since 1986);
Trustee of the Gallagher Family Foundation
(non-profit organization) (since 2000);
Former Chairman of U.S. Bank-Colorado
(subsidiary of U.S. Bancorp and formerly
Colorado National Bank) (July 1996-April
1999); Director of Commercial Assets, Inc.
(real estate investment trust) (1993-2000);
Director of Jones Knowledge, Inc. (2001-July
2004); and Director of U.S. Exploration, Inc.
(oil and gas exploration) (1997-February
2004). Oversees 39 portfolios in the
OppenheimerFunds complex.

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

F. William Trustee of MassMutual Select Funds (formerly None Over
Marshall, Jr., MassMutual Institutional Funds) (investment $100,000
Trustee since 2001 company) (since 1996) and MML Series
Age: 65 Investment Fund (investment company) (since
1996); Trustee of Worcester Polytech
Institute (since 1985); Chairman (since 1994)
of the Investment Committee of the Worcester
Polytech Institute (private university);
President and Treasurer of the SIS Funds
(private charitable fund) (since January
1999); Chairman of SIS &amp; Family Bank, F.S.B.
(formerly SIS Bank) (commercial bank)
(January 1999-July 1999); and Executive Vice
President of Peoples Heritage Financial
Group, Inc. (commercial bank) (January
1999-July 1999). Oversees 41 portfolios in
the OppenheimerFunds complex.*

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

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

* 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.

The address of Mr. Grabish is 6803 S. Tucson Way, Centennial, Colorado
80112-3924. Mr. Grabish serves for an indefinite term, or until his
resignation, retirement, death or removal. Mr. Grabish is an "Interested
Trustee" because of his prior affiliation with A.G. Edwards &amp; Sons, Inc., a
broker/dealer that sells shares of the Trust.

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

Interested Trustee

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

Name, Position(s) Principal Occupation(s) During the Past 5 Dollar Aggregate
Dollar
Range Of
Shares
Range of Beneficially
Shares Owned in
Held with the Years; Other Trusteeships/Directorships Held; Beneficially All
Trust, Length of Number of Portfolios in the Fund Complex Owned in Supervised
Service, Age Currently Overseen the Trust Funds

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

As of December 31, 2007

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

Richard F. Grabish, Formerly Senior Vice President and Assistant None None
Trustee since 2008 Director of Sales and Marketing (March
Age: 59 1997-December 2007), Director (March
1987-December 2007) and Manager of Private
Client Services (June 1985-June 2005) of A.G.
Edwards &amp; Sons, Inc. (broker/dealer and
investment firm); Chairman and Chief
Executive Officer of A.G. Edwards Trust
Company, FSB (March 2001-December 2007);
President and Vice Chairman of A.G. Edwards
Trust Company, FSB (investment adviser)
(April 1987-March 2001); President of A.G.
Edwards Trust Company, FSB (investment
adviser) (June 2005-December 2007). Oversees
17 portfolios in the OppenheimerFunds complex.

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

Mr. Murphy is an "Interested Trustee" because he is affiliated with the
Manager by virtue of his positions as an officer and director of the Manager,
and as a shareholder of its parent company. The address of Mr. Murphy is Two
World Financial Center, 225 Liberty Street, 11th Floor, New York, New York
10281-1008. Mr. Murphy serves as a Trustee for an indefinite term, or until
his resignation, retirement, death or removal. He serves as an officer for an
indefinite term, which would end: (a) upon the request of the Board, (b) if
he is no longer an officer of the Manager., (c) if a material change in his
duties occurs that are inconsistent with a position as officer the Fund, or
(d) upon his resignation, retirement, 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 below) 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, 2007

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

John V. Murphy, Chairman, Chief Executive Officer and Director of None Over
Trustee, the Manager (since June 2001); President of the $100,000
President and Manager (September 2000-February 2007); President
Principal and director or trustee of other Oppenheimer
Executive funds; President and Director of Oppenheimer
Officer since Acquisition Corp. ("OAC") (the Manager's parent
2001 holding company) and of Oppenheimer Partnership
Age: 58 Holdings, Inc. (holding company subsidiary of the
Manager) (since July 2001); Director of
OppenheimerFunds Distributor, Inc. (subsidiary of
the Manager) (November 2001-December 2006);
Chairman and Director of Shareholder Services,
Inc. and of Shareholder Financial Services, Inc.
(transfer agent subsidiaries of the Manager)
(since July 2001); President and Director of
OppenheimerFunds Legacy Program (charitable trust
program established by the Manager) (since July
2001); Director of the following investment
advisory subsidiaries of the Manager: OFI
Institutional Asset Management, Inc., Centennial
Asset Management Corporation, Trinity Investment
Management Corporation and Tremont Capital
Management, Inc. (since November 2001),
HarbourView Asset Management Corporation and OFI
Private Investments, Inc. (since July 2001);
President (since November 2001) and Director
(since July 2001) of Oppenheimer Real Asset
Management, Inc.; Executive Vice President of
Massachusetts Mutual Life Insurance Company (OAC's
parent company) (since February 1997); Director of
DLB Acquisition Corporation (holding company
parent of Babson Capital Management LLC) (since
June 1995); Chairman (since October 2007) and
Member of the Investment Company Institute's Board
of Governors (since October 2003). Oversees 106
portfolios in the OppenheimerFunds complex.

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

The addresses of the officers in the chart below are as follows: for Messrs.
Bomfim, Caan, Gord, Manioudakis, Swaney, Gillespie and Zack and Ms.
Bloomberg, Two World Financial Center, 225 Liberty Street, New York, New York
10281-1008, for Messrs. Petersen, Szilagyi, Vandehey and Wixted and Ms. Ives,
6803 S. Tucson Way, Centennial, Colorado 80112-3924. Each officer serves for
an indefinite term, which would end: (a) upon the request of the Board, (b)
if he or she is no longer an officer of the Manager., (c) if a material
change in his or her duties occurs that are inconsistent with a position as
officer the Fund, or (d) upon his or her resignation, retirement, 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
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------

Antulio Bomfim, Vice President of the Manager since October 2003; Vice President
Vice President and of the Fund since January 2004. Senior Economist at the Board
Portfolio Manager of Governors of the Federal Reserve System (June 1992-October
since 2003 2003). A portfolio manager and an officer of 12 portfolios in
Age: 41 the OppenheimerFunds complex.

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

Geoffrey Caan, Vice President and Portfolio Manager of the Manager since
Vice President and August 2003; Vice President of the Fund since August 2003. Vice
Portfolio Manager President of ABN AMRO NA, Inc. (June 2002-August 2003); Vice
since 2003 President of Zurich Scudder Investments (January 1999-June
Age: 39 2002). A portfolio manager and officer of 12 portfolios in the

OppenheimerFunds complex.

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

Benjamin J. Gord, Vice President of the Manager and of HarbourView Asset
Vice President and Management Corporation since April 2002 and of OFI Institutional
Portfolio Manager Asset Management, Inc. since June 2002; Vice President of the
since 2002 Fund since 2004. Executive Director and senior fixed income
Age: 45 analyst at Morgan Stanley Asset Management/Miller Anderson &amp;
Sherrerd (April 1992-March 2002). A portfolio manager and
officer of 12 portfolios in the OppenheimerFunds complex.

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

Angelo Manioudakis, Senior Vice President of the Manager and of HarbourView Asset
Senior Vice President Management Corporation since April 2002, and of OFI
and Portfolio Manager Institutional Asset Management, Inc. since June 2002; Vice
since 2002 President of Oppenheimer Real Asset Management, Inc. since
Age: 41 November 2006; Senior Vice President of the Fund since April
2002. Executive Director and portfolio manager for Morgan
Stanley Asset Management/Miller, Anderson &amp; Sherrerd) (August
1993-April 2002). A portfolio manager and officer of 16
portfolios in the OppenheimerFunds complex.

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

Thomas Swaney Vice President of the Manager since April 2006; Vice President
Vice President and of the Fund since April 2006; Senior analyst on high grade
Portfolio Manager investment team (June 2002-March 2006). Senior fixed income
since 2006 analyst at Morgan Stanley Asset Management/Miller Anderson &amp;
Age: 35 Sherrerd (May 1998-May 2002). A portfolio manager and officer of
12 portfolios in the OppenheimerFunds complex.

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); Former Vice President and Director of
Internal Audit of the Manager (1997-February 2004). An officer
of 106 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 &amp; Corporation, Shareholder Financial Services, Inc., Shareholder
Accounting Officer Services, Inc., Oppenheimer Real Asset Management, Inc. and
since 1999 Oppenheimer Partnership Holdings, Inc. (since March 1999), OFI
Age: 48 Private Investments, Inc. (since March 2000), OppenheimerFunds
International Ltd. and OppenheimerFunds plc (since May 2000),
OFI Institutional Asset Management, Inc. (since November 2000),
and OppenheimerFunds Legacy Program (charitable trust program
established by the Manager) (since June 2003); Treasurer and
Chief Financial Officer of OFI Trust Company (trust company
subsidiary of the Manager) (since May 2000); Assistant Treasurer
of the following: OAC (since March 1999), Centennial Asset
Management Corporation (March 1999-October 2003) and
OppenheimerFunds Legacy Program (April 2000-June 2003). An
officer of 106 portfolios in the OppenheimerFunds complex.

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

Brian S. 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 106 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: 38 Berger Financial Group LLC (May 2001-March 2003). An officer of
106 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). An officer of 106
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) of UBS Financial
Age: 40 Services, Inc. An officer of 106 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 106 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: 44 (1998-2000) of Merrill Lynch Investment Management. An officer
of 106 portfolios in the OppenheimerFunds complex.

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

|X| Remuneration of the Officers and Trustees. The officers and Mr. Murphy,
who are affiliated with the Manager, receive no salary or fee from the Fund.
The Independent Trustees and Mr. Grabish 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 December 31, 2007.
The total compensation from the Fund and fund complex represents compensation
received for serving as a Trustee and member of a committee (if applicable)
of the Boards of the Fund and other funds in the OppenheimerFunds complex
during the calendar year ended December 31, 2007.

- ----------------------------------------------------------------------------------
Name of Trustee and Other Fund Aggregate Compensation Total Compensation
From the Fund and

From the Fund((1)) Fund Complex((2))
Fiscal year ended Year ended
Position(s) (as applicable) December 31, 2007 December 31, 2007

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

William L. Armstrong $5,144 $228,062

Chairman of the Board and
Governance Committee Member
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------

Robert G. Avis(6) $1,623 $79,000

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

George C. Bowen $3,555 $158,000
Audit Committee Chair

- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Edward L. Cameron

Audit Committee Member and
Governance Committee Member $4,266 $189,600

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

Jon S. Fossel $3,621 $161,423

Review Committee Member
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------

Sam Freedman $4,023 $178,277

Review Committee Chairman
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------

Richard Grabish(5) None $14,732

Review Committee Member
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------

Beverly Hamilton $3,555(3) $158,000
Review Committee Member and
Governance Committee Member

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

Robert J. Malone $4,088 $181,700
Governance Committee Chairman
and
Audit Committee Member

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

F. William Marshall, Jr.
Audit Committee Member and $3,555 $239,664((4))
Governance Committee Member

- ----------------------------------------------------------------------------------
1. "Aggregate Compensation From the Fund" includes fees and deferred
compensation, if any.
2. In accordance with SEC regulations, for purposes of this section only,
"Fund Complex" includes the Oppenheimer funds, the MassMutual
Institutional Funds, the MassMutual Select Funds and the MML Series
Investment Fund, the investment adviser for which is the indirect parent
company of the Fund's Manager. The Manager also serves as the Sub-Advisor
to the following: MassMutual Premier International Equity Fund, MassMutual
Premier Main Street Fund, MassMutual Premier Strategic Income Fund,
MassMutual Premier Capital Appreciation Fund, and MassMutual Premier
Global Fund. The Manager does not consider MassMutual Institutional Funds,
MassMutual Select Funds and MML Series Investment Fund to be part of the
OppenheimerFunds' "Fund Complex" as that term may be otherwise interpreted.

3. Includes $3,555deferred by Ms. Hamilton under the "Compensation
Deferral Plan" described below.
4. Includes $81,664 compensation paid to Mr. Marshall for serving as a
Trustee for MassMutual Select Funds and MML Series Investment Fund.
Mr. Grabish serves as Trustee for only the following funds: Centennial
California Tax Exempt Trust, Centennial Government Trust, Centennial Money
Market Trust, Centennial New York Tax Exempt Trust, Centennial Tax Exempt
Trust Oppenheimer Core Bond Fund, Oppenheimer Limited Term Government
Fund, Panorama Series Fund, Inc., Oppenheimer Principal Protected Trust,
Oppenheimer Principal Protected Trust II, Oppenheimer Principal Protected
Trust III, Oppenheimer Senior Floating Rate Fund, Oppenheimer Portfolio
Series Fixed Income Active Allocation Fund and Oppenheimer Master Loan
Fund, LLC.
6. Mr. Avis retired as of May 31, 2007.

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

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

|X| Major Shareholders. As of April 4, 2008, the only persons or entities
who owned of record or were known by the Fund to own beneficially 5% or more
of any class of the Fund's outstanding shares were:

Charles Schwab &amp; Co. Inc., Special Custody Account for the Exclusive Benefit
of Customers, Attn: Mutual Funds, 101 Montgomery Street, San Francisco, CA
94101-4122 which owned 6,115,228.869 Class A shares (6.30% of the Class A
shares then outstanding).

New Mexico Savings Plan - SE, Ages 12-14 Years Portfolio, Attn: Amy Sullivan
C/O OppenheimerFunds, P.O. Box 5270, Denver, CO 80217-5270 which owned
5,311,146.139 Class A shares (5.47% of the Class A shares then outstanding).

MLPF&amp;S For The Sole Benefit Of Its Customers, Attn: Fund Admn, 4800 Deer Lake
Drive E., Floor 3, Jacksonville, FL 32246-6484 which owned 4,877,251.954 of
the Class A shares (5.03% of the Class A shares then outstanding).

MLPF&amp;S For The Sole Benefit Of Its Customers, Attn: Fund Admn, 4800 Deer Lake
Drive E., Floor 3, Jacksonville, FL 32246-6484 which owned 2,191,698.227 of
the Class C shares (11.09% of the Class C shares then outstanding).

MLPF&amp;S For The Sole Benefit Of Its Customers, Attn: Fund Admn, 4800 Deer Lake
Drive E., Floor 3, Jacksonville, FL 32246-6484 which owned 2,491,069.590 of
the Class N shares (28.45% of the Class N shares then outstanding).

Orchard Trust Company LLC, FBO Oppenheimer Record Keeper Pro, 8515 E. Orchard
Road, Greenwood Village, CO 80111-500 which owned 873,622.661 Class N shares
(9.97% of the Class N shares then outstanding).

Oppenheimer Portfolio Series, Active Allocation, Attn: FPA Trade Settle
(2-FA), 6803 S. Tucson Way, Centennial, CO 80112-3924 which owned
29,692,337.904 Class Y shares (30.72% of the Class Y shares then outstanding).

Oppenheimer Portfolio Series, Moderate Investor, Attn: FPA Trade Settle
(2-FA), 6803 S. Tucson Way, Centennial, CO 80112-3924 which owned
19,817,504.116 Class Y shares (22.81% of the Class Y shares then outstanding).

Oppenheimer Portfolio Series, Conservator Investor, Attn: FPA Trade Settle
(2-FA), 6803 S. Tucson Way, Centennial, CO 80112-3924 which owned
13,040,260.849 Class Y shares (15.01% of the Class Y shares then outstanding).

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

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

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

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

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

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

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

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

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

- --------------------------------------------------------------------------------
Fiscal Year ended 12/31: Management Fees Paid to OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2005 $4,290,641
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2006 $5,649,818
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

2007 $7,604,231

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

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

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

Until March 1991, Massachusetts Mutual Life Insurance Company was the
Fund's investment adviser. The Manager became the Fund's investment adviser
March 28, 1991, and the Manager engaged MassMutual as sub-adviser from
March 28, 1991 until July 10, 1995.

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

Other Accounts Managed. In addition to managing the
Portfolios' investments, the portfolio managers also manage other investment
portfolios and accounts. The following table provides information regarding
the other portfolios and accounts managed by the portfolio managers as of
December 31, 2007. No account has a performance-based advisory fee:

Portfolio Registered Total Other Total Other Total
Assets in
tAssets in Other
Registered Pooled Pooled Assets
Investmen Investment InvestmentInvestment in Other )
Companies Companies Vehicles Vehicles AccountsAccounts
Manager Managed Managed(1) Managed Managed(1) Managed Managed(1,2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Angelo 15 $12,913.0 0 $0 6 $811.0

Manioudakis
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Benjamin J. Gord 17 $26,967.0 7 $318.0 7 $703.0

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

Geoffrey Caan 17 $26,967.0 7 $318.0 7 $703.0

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

Antulio Bomfim 17 $26,967.0 7 $318.0 7 $703.0

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

Thomas Swaney 17 $26,967.0 7 $318.0 7 $703.0

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

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

Compensation of the Portfolio Managers. The Fund's Portfolio Managers
are employed and compensated by the Manager, not the Fund. Under the
Manager's compensation program for its portfolio managers and portfolio
analysts, 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
investors. 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
December 31, 2006, each Portfolio Manager's compensation consisted primarily
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.

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, to help the Manager attract and retain talent.
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
benchmark selected by management. The Lipper benchmark with respect to the
Fund is Lipper - Intermediate Investment Grade Debt Funds. Other factors
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 serve to reduce potential conflicts of interest between the Fund
and other funds and accounts managed by the Portfolio Managers. The
compensation structure of other portfolios managed by the Portfolio Managers
is different from the compensation structure of the Fund, described above. A
portion of the Portfolio Managers' compensation with regard to those
portfolios may, under certain circumstances, include an amount based in part
on the amount of the portfolios' management fee.

Ownership of Fund Shares. As of December 31, 2007,
the Portfolio Managers beneficially owned shares of the Fund as follows:

----------------------------------------------------------
Portfolio Manager Range of Shares
Beneficially
Owned in the Fund
----------------------------------------------------------
----------------------------------------------------------
Angelo Manioudakis $1-$10,000
----------------------------------------------------------
----------------------------------------------------------

Benjamin J. Gord $1-$10,000

----------------------------------------------------------
----------------------------------------------------------
Geoffrey Caan $1-$10,000
----------------------------------------------------------
----------------------------------------------------------

Antulio N. Bomfim $50,001-$100,000

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

Thomas Swaney $10,001-$50,000

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

Brokerage Policies of the Fund

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

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

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

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

Most securities purchases made by the Fund are in principal
transactions at net prices. The Fund usually 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.
Therefore, the Fund does not incur substantial brokerage costs. Portfolio
securities purchased from underwriters include a commission or concession
paid by the issuer to the underwriter in the price of the security. Portfolio
securities purchased from dealers include a spread between the bid and asked
price. In an option transaction, the Fund ordinarily uses the same broker for
the purchase or sale of the option and any transaction in the investment to
which the option relates.

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

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

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

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

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

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

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

During the fiscal years ended December 31, 2005, 2006 and 2007, the
Fund paid the total brokerage commissions indicated in the chart below.
During the fiscal year ended December 31, 2007, the Fund did not execute any
transactions through or pay any commissions to firms that provide research
services.

- -------------------------------------------------------------------------
Fiscal Year Ended 12/31 Total Brokerage Commissions Paid by the
Fund*
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
2005 N/A
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
2006 N/A
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------

2007 $183,335

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

Distribution and Service Plans

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

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

- -------------------------------------------
Fiscal Aggregate Class A
Front-End
Year Front-End Sales Sales Charges
Ended Charges on Retained by

12/31: Class A Shares Distributor*

- -------------------------------------------
- -------------------------------------------
2005 $1,686,240 $525,061
- -------------------------------------------
- -------------------------------------------
2006 $1,912,538 $578,248
- -------------------------------------------
- -------------------------------------------

2007 $2,169,792 $638,041

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

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

- -----------------------------------------------------------------------------
Fiscal Concessions on Concessions on Concessions on Concessions on
Year Class A Shares Class B Shares Class C Shares Class N Shares
Ended Advanced by Advanced by Advanced by Advanced by

12/31: Distributor(1) Distributor(1) Distributor(1) Distributor*

- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
2005 $115,061 $449,283 $241,862 $71,991
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
2006 $167,456 $360,917 $180,306 $32,548
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------

2007 $275,952 $350,486 $248,124 $37,271

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

* The Distributor advances concession payments to financial intermediaries
for certain sales of Class A shares and for sales of Class B, Class C
and Class N shares from its own resources at the time of sale.

- ------------------------------------------------------------------------------
Fiscal Class A Class B Class C Class N
Contingent Contingent Contingent
Year Deferred Sales Deferred Sales Contingent Deferred Sales
Ended Charges Charges Deferred Sales Charges
12/31: Retained by Retained by Charges Retained Retained by
Distributor Distributor by Distributor Distributor
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
2005 $1,136 $418,007 $17,923 $19,749
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
2006 $7,802 $332,533 $16,575 $5,807
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------

2007 $35,800 $211,021 $18,648 $2,833

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

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

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

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

For the fiscal year ended December 31, 2007 payments under the Class A
plan totaled $1,917,656, of which $1,991 was retained by the Distributor
under the arrangement described above, regarding grandfathered retirement
accounts, and included $149,292 paid to an affiliate of the Distributor's
parent company. Any unreimbursed expenses the Distributor incurs with respect
to Class A shares in any fiscal year cannot be recovered in subsequent years.
The Distributor may not use payments received under the Class A plan to pay
any of its interest expenses, carrying charges, or other financial costs, or
allocation of overhead.

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

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

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

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

The asset-based sales charge on Class B, Class C and Class N shares
allow investors to buy shares without a front-end sales charge while allowing
the Distributor to compensate dealers that sell those shares. The Fund pays
the asset-based sales charge to the Distributor for its services rendered in
distributing Class B, Class C and Class N shares. The payments are made to
the Distributor in recognition that the Distributor:

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

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

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

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

o may not be able to adequately compensate dealers that sell Class B, Class C
and Class N shares without receiving payment under the plans and therefore
may not be able to offer such Classes for sale absent the plans,

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

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

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

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

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

- --------------------------------------------------------------------------------
Distribution and Service Fees Paid to the Distributor for the Fiscal Year

Ended December 31, 2007

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Class: Total Payments Amount Distributor's Distributor's
Aggregate Unreimbursed
Unreimbursed Expenses as %
Retained by Expenses Under of Net Assets
Under Plan Distributor Plan of Class
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Class B Plan $1,066,081 $829,447(1) $2,132,824 2.15%

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

Class C Plan $1,720,037 $356,690(2) $3,019,679 1.56%

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

Class N Plan $352,395 $107,087(3) $1,215,790 1.45%

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

1. Includes $17,460 paid to an affiliate of the Distributor's parent
company.
2. Includes $70,312 paid to an affiliate of the Distributor's parent
company.
3. Includes $12,628 paid to an affiliate of the Distributor's parent
company.

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

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

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

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

o depending on the share class that the investor selects, contingent
deferred sales charges or initial front-end sales charges, all
or a portion of which front-end sales charges are payable by
the Distributor to financial intermediaries (see "About Your
Account" in the Prospectus);
o ongoing asset-based payments attributable to the share class selected,
including fees payable under the Fund's distribution and/or
service plans adopted under Rule 12b-1 under the Investment
Company Act, which are paid from the Fund's assets and
allocated to the class of shares to which the plan relates (see
"About the Fund -- Distribution and Service Plans" above);

o shareholder servicing payments for providing omnibus accounting,
recordkeeping, networking, sub-transfer agency or other
administrative or shareholder services, including retirement
plan and 529 plan administrative services fees, which are paid
from the assets of a Fund as reimbursement to the Manager or
Distributor for expenses they incur on behalf of the Fund.

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

o These types of payments may reflect compensation for marketing support,
support provided in offering the Fund or other Oppenheimer
funds through certain trading platforms and programs,
transaction processing or other services;

o The Manager and Distributor each may also pay other compensation to the
extent the payment is not prohibited by law or by any
self-regulatory agency, such as FINRA. Payments are made based
on the guidelines established by the Manager and Distributor,
subject to applicable law.

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

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

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

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

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

For the year ended December 31, 2007, the following financial
intermediaries that are broker-dealers offering shares of the Oppenheimer and
Centennial funds, and/or their respective affiliates, received revenue
sharing or similar distribution-related payments from the Manager or the
Distributor for marketing or program support:
Legend Equities Corp.

1st Global Capital Co.

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

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

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

Performance of the Fund

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

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

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

o Yields and total returns measure the performance of a hypothetical
account in the Fund over various periods and do not show the
performance of each shareholder's account. Your account's
performance will vary from the model performance data if your
dividends are received in cash, or you buy or sell shares during the
period, or you bought your shares at a different time and price than
the shares used in the model.
o The Fund's performance returns may not reflect the effect of taxes on
dividends and capital gains distributions.

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

o The principal value of the Fund's shares, its yields and total returns
are not guaranteed and normally will fluctuate on a daily basis.
o When an investor's shares are redeemed, they may be worth more or less
than their original cost.

o Yields and total returns for any given past period represent historical
performance information and are not, and should not be considered, a
prediction of future yields or returns.

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

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

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

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

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

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

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

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

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

The maximum offering price for Class A shares includes the current
maximum initial sales charge. The maximum offering price for Class B, Class C
and Class N shares is the net asset value per share, without considering the
effect of contingent deferred sales charges. There is no sales charge on
Class Y shares. The Class A dividend yield may also be quoted without
deducting the maximum initial sales charge.

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

The Fund's Yields for the 30-Day Periods Ended 12/31/07

- --------------------------------------------------------------------
- --------------------------------------------------------------------
Class of Standardized Yield Dividend Yield
Shares
- --------------------------------------------------------------------
- --------------------------------------------------------------------
Without After Without After
Sales Sales Sales Sales
Charge Charge Charge Charge
- --------------------------------------------------------------------
- --------------------------------------------------------------------

Class A 4.88% 4.64% 5.08% 4.84%

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

Class B 4.11% N/A 4.28% N/A

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

Class C 4.14% N/A 4.31% N/A

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

Class N 4.61% N/A 4.80% N/A

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

Class Y 5.28% N/A 5.49% N/A

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

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

In calculating total returns for Class A shares, the current
maximum sales charge of 4.75% (as a percentage of the offering price) is
deducted from the initial investment ("P" in the formula below) (unless the
return is shown without sales charge, as described below). For Class B
shares, payment of the applicable contingent deferred sales charge is
applied, depending on the period for which the return is shown: 5.0% in the
first year, 4.0% in the second year, 3.0% in the third and fourth years, 2.0%
in the fifth year, 1.0% in the sixth year and none thereafter. For Class C
shares, the 1.0% contingent deferred sales charge is deducted for returns for
the one-year period. For Class N shares, the 1.0% contingent deferred sales
charge is deducted for returns for the one-year period, and total returns for
the periods prior to 03/01/01 (the inception date for Class N shares) are
based on the Fund's Class A returns, adjusted to reflect the higher Class N
12b-1 fees. There is no sales charge on Class Y shares.

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

ERV l/n - 1 = Average Annual Total
Return

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

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

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

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

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:

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

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

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

The Fund's Total Returns for the Periods Ended 12/31/07

- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Class of Cumulative Total
Returns (10
years or
Shares life-of-class) Average Annual Total Returns
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
1-Year 5-Years 10-Years
(or life of (or life of
class if less) class if less)
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
After Without After Without After Without After Without
Sales Sales Sales Sales Sales Sales Sales Sales
Charge Charge Charge Charge Charge Charge Charge Charge
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------

Class 53.56% 61.21% -0.47% 4.49% 3.47% 4.48% 4.38% 4.89%

A(1)
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Class

B(2) 54.19% 54.19% -1.37% 3.60% 3.35% 3.70% 4.42% 4.42%

- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------
Class

C(3) 49.42% 49.42% 2.60% 3.60% 3.70% 3.70% 4.10% 4.10%

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

Class 39.03% 39.03% 3.12% 4.11% 4.19% 4.19% 4.94% 4.94%

N(4)
- ---------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------

Class 65.77% 65.77% 4.80% 4.80% 4.84% 4.84% 5.36% 5.36%

Y(5)
- ---------------------------------------------------------------------------------

1. Inception of Class A: 4/15/88
2. Inception of Class B: 5/3/93
3. Inception of Class C: 7/11/95
4. Inception of Class N: 3/1/01
5. Inception of Class Y: 4/27/98

- -----------------------------------------------------------------------------
Average Annual Total Returns for Class A(1) Shares (After Sales Charge)

For the Periods Ended 12/31/07

- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
1-Year 5-Years 10-Years
(or life of (or life of
class if less) class if less)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------

After Taxes on Distributions -2.15% 1.92% 2.24%

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

After Taxes on -0.33% 2.05% 2.38%

Distributions and
Redemption of Fund Shares
- -----------------------------------------------------------------------------
1. Inception of Class A: 4/15/88

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

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

|X| Morningstar Ratings. From time to time the Fund may publish the star
rating of the performance of its classes of shares by Morningstar, Inc.
("Morningstar"), an independent mutual fund monitoring service. Morningstar
rates mutual funds in their specialized market sector. The Fund is rated
among intermediate-term bond funds.

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

|X| Performance Rankings and Comparisons by Other Entities and
Publications. From time to time the Fund may include in its advertisements
and sales literature performance information about the Fund cited in
newspapers and other periodicals such as The New York Times, The Wall Street
Journal, Barron's, or similar publications. That information may include
performance quotations from other sources, including Lipper and Morningstar.
The performance of the Fund's classes of shares may be compared in
publications to the performance
of various market indices or other investments, and averages, performance
rankings or other benchmarks prepared by recognized mutual fund statistical
services.

Investors may also wish to compare the returns on the Fund's share
classes to the return on fixed-income investments available from banks and
thrift institutions. Those include certificates of deposit, ordinary
interest-paying checking and savings accounts, and other forms of fixed or
variable time deposits, and various other instruments such as Treasury bills.
However, the Fund's returns and share price are not guaranteed or insured by
the FDIC or any other agency and will fluctuate daily, while bank depository
obligations may be insured by the FDIC and may provide fixed rates of return.
Repayment of principal and payment of interest on Treasury securities is
backed by the full faith and credit of the U.S. government.

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

From time to time the Fund may include in its advertisements and sales
literature the total return performance of a hypothetical investment account
that includes shares of the Fund and other Oppenheimer funds. The combined
account may be part of an illustration of an asset allocation model or
similar presentation. The account performance may combine total return
performance of the Fund and the total return performance of other Oppenheimer
funds included in the account. Additionally, from time to time, the Fund's
advertisements and sales literature may include, for illustrative or
comparative purposes, statistical data or other information about general or
specific market and economic conditions. That may include, for example,
o information about the performance of certain securities or commodities

markets or segments of those markets,
o information about the performance of the economies of particular
countries or regions,
o the earnings of companies included in segments of particular
industries, sectors, securities markets, countries or regions,
o the availability of different types of securities or offerings of
securities,
o information relating to the gross national or gross domestic product of
the United States or other countries or regions,
o comparisons of various market sectors or indices to demonstrate
performance, risk, or other characteristics of the Fund.

ABOUT YOUR ACCOUNT

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.

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

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

Oppenheimer AMT-Free Municipals Oppenheimer New Jersey Municipal Fund
Oppenheimer AMT-Free New York Municipals Oppenheimer Pennsylvania Municipal Fund
Oppenheimer Balanced Fund Oppenheimer Portfolio Series:
Oppenheimer Baring China Fund Active Allocation Fund
Oppenheimer Baring Japan Fund Equity Investor Fund
Oppenheimer Baring SMA International Fund Conservative Investor Fund
Oppenheimer Core Bond Fund Moderate Investor Fund
Oppenheimer California Municipal Fund

Oppenheimer Portfolio Series Fixed
Income Active Allocation Fund
Oppenheimer 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 Equity Fund, Inc. Municipal Fund
Oppenheimer Rochester Massachusetts

Oppenheimer Equity Income Fund, Inc. Municipal Fund
Oppenheimer Rochester Michigan

Oppenheimer Global Fund Municipal Fund
Oppenheimer Rochester Minnesota

Oppenheimer Global Opportunities Fund Municipal Fund
Oppenheimer Rochester National
Oppenheimer Global Value Fund Municipals

Oppenheimer Rochester North Carolina

Oppenheimer Gold &amp; Special Minerals Fund Municipal Fund

Oppenheimer Rochester Ohio Municipal

Oppenheimer International Bond Fund Fund
Oppenheimer International Diversified Oppenheimer Rochester Virginia
Fund Municipal Fund
Oppenheimer International Growth Fund Oppenheimer Select Value Fund
Oppenheimer International Small Company
Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer International Value Fund Oppenheimer Small- &amp; Mid- Cap Value Fund
Oppenheimer Limited Term California
Municipal Fund Oppenheimer SMA Core Bond Fund
Oppenheimer Limited-Term Government Fund Oppenheimer SMA International Bond Fund
Oppenheimer Limited Term Municipal Fund Oppenheimer Strategic Income Fund
Oppenheimer Main Street Fund Oppenheimer U.S. Government Trust
Oppenheimer Main Street Opportunity Fund Oppenheimer Value Fund
Oppenheimer Main Street Small Cap Fund Limited-Term New York Municipal Fund
Oppenheimer MidCap Fund Rochester Fund Municipals

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

Letter of Intent. Under a Letter of Intent (a "Letter"), you may be able to
reduce the sales charge rate that applies to your purchases of Class A shares
if you purchase Class A, Class B or Class C shares of the Fund or other
Oppenheimer funds or Class A, Class B, Class C, Class G and Class H units
purchases in adviser sold Section 529 plans, for which the Manager or the
Distributor serves as the Program Manager or Program Distributor. A Letter is
an investor's statement in writing to the Distributor of his or her intention
to purchase a specified value of those shares or units during a 13-month
period (the "Letter period"), which begins on the date of the investor's
first share purchase following the establishment of the Letter. The sales
charge on each purchase of Class A shares during the Letter period will be at
the rate that would apply to a single lump-sum purchase of shares in the
amount intended to be purchased. In submitting a Letter, the investor makes
no commitment to purchase shares. However, if the investor does not fulfill
the terms of the Letter within the Letter period, he or she agrees to pay the
additional sales charges that would have been applicable to the purchases
that were made. The investor agrees that shares equal in value to 2% of the
intended purchase amount will be held in escrow by the Transfer Agent for
that purpose, as described in "Terms of Escrow" below. It is the
responsibility of the dealer of record and/or the investor to advise the
Distributor about the Letter when placing purchase orders during the Letter
period. The investor must also notify the Distributor or his or her financial
intermediary of any qualifying 529 plan holdings.

To determine whether an investor has fulfilled the terms of a Letter,
the Transfer Agent will count purchases of "qualified" Class A, Class B and
Class C shares and Class A, Class B, Class C, Class G and Class H units
during the Letter period. Purchases of Class N or Class Y shares, purchases
made by reinvestment of dividends or capital gains distributions from the
Fund or other Oppenheimer funds, purchases of Class A shares with redemption
proceeds under the Reinvestment Privilege, and purchases of Class A shares of
Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves on which a
sales charge has not been paid do not count as "qualified" shares for
satisfying the terms of a Letter. An investor will also be considered to have
fulfilled the Letter if the value of the investor's total holdings of
qualified shares on the last day of the Letter period, calculated at the net
asset value on that day, equals or exceeds the intended purchase amount.

If the terms of the Letter are not fulfilled within the Letter period, the
concessions previously paid to the dealer of record for the account and the
amount of sales charge retained by the Distributor will be adjusted on the
first business day following the expiration of the Letter period to reflect
the sales charge rates that are applicable to the actual total purchases.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

|X| Availability of Class N Shares. In addition to the description of
the types of retirement plans which may purchase Class N shares contained in
the prospectus, Class N shares also are offered to the following:
o to all rollover IRAs (including SEP IRAs and SIMPLE IRAs),
o to all rollover contributions made to Individual 401(k) plans,
Profit-Sharing Plans and Money Purchase Pension Plans,
o to all direct rollovers from OppenheimerFunds-sponsored Pinnacle and
Ascender retirement plans,
o to all trustee-to-trustee IRA transfers,
o to all 90-24 type 403(b) transfers,

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

o to Retirement Plans qualified under Sections 401(a) or 401(k) of the
Internal Revenue Code, the recordkeeper or the plan sponsor for
which has entered into a special agreement with the Distributor,
o to Retirement Plans of a plan sponsor where the aggregate assets of all
such plans invested in the Oppenheimer funds is $500,000 or more,
o to Retirement Plans with at least 100 eligible employees or $500,000 or
more in plan assets,
o to OppenheimerFunds-sponsored Ascender 401(k) plans that pay for the
purchase with the redemption proceeds of Class A shares of one or
more Oppenheimer funds, and
o to certain customers of broker-dealers and financial advisors that are
identified in a special agreement between the broker-dealer or
financial advisor and the Distributor for that purpose.

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

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

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

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

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

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

Listed below are certain cases in which the Fund has elected, in its
discretion, not to assess the Fund Account Fees. These exceptions are subject
to change:
o 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 in Networking level 1 and 3 accounts;

o Accounts held under the Oppenheimer Legacy Program and/or holding
certain Oppenheimer Variable Account Funds;
o Omnibus accounts holding shares pursuant to the Pinnacle, Ascender,
Custom Plus, Record(k)eeper Pro and Pension Alliance Retirement
Plan programs; and
o A fund account that falls below the $500 minimum solely due to market
fluctuations within the 12-month period preceding the date the
fee is deducted.

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

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

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

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

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

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

? Securities Valuation. The Fund's Board of Trustees has
established procedures for the valuation of the Fund's securities. In general
those procedures are as follows:

o Equity securities traded on a U.S. securities exchange are valued as
follows:
(1) if last sale information is regularly reported, they are valued at the
last reported sale price on the principal exchange on which
they are traded, on that day, or

(2) if last sale information is not available on a valuation date, they are
valued at the last reported sale price preceding the valuation
date if it is within the spread of the closing "bid" and
"asked" prices on the valuation date or, if not, at the
closing "bid" price on the valuation date.

o Equity securities traded on a foreign securities exchange generally are
valued in one of the following ways:
(1) at the last sale price available to the pricing service approved by the
Board of Trustees, or
(2) at the last sale price obtained by the Manager from the report of the
principal exchange on which the security is traded at its last
trading session on or immediately before the valuation date, or

(3) at the mean between the "bid" and "asked" prices obtained from the
principal exchange on which the security is traded or, on the
basis of reasonable inquiry, from two market makers in the
security.
o Long-term debt securities having a remaining maturity in excess of 60
days are valued based on the mean between the "bid" and "asked" prices
determined by a portfolio pricing service approved by the Fund's Board of
Trustees or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry.
o The following securities are valued at the mean between the "bid" and
"asked" prices determined by a pricing service approved by the Fund's Board
of Trustees or obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry:

(1) debt instruments that have a maturity of more than 397 days when issued,
(2) debt instruments that had a maturity of 397 days or less when issued
and have a remaining maturity of more than 60 days, and
(3) non-money market debt instruments that had a maturity of 397 days or
less when issued and which have a remaining maturity of 60
days or less.
o The following securities are valued at cost, adjusted for amortization
of premiums and accretion of discounts:
(1) money market debt securities held by a non-money market fund that had a
maturity of less than 397 days when issued that have a
remaining maturity of 60 days or less, and
(2) debt instruments held by a money market fund that have a remaining
maturity of 397 days or less.

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

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

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

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

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

How to Sell Shares

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

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

In choosing to take advantage of the Checkwriting privilege, by signing
the account application or by completing a Checkwriting card, each individual
who signs:
(1) for individual accounts, represents that they are the registered
owner(s) of the shares of the Fund in that account;
(2) for accounts for corporations, partnerships, trusts and other entities,
represents that they are an officer, general partner, trustee or
other fiduciary or agent, as applicable, duly authorized to act on
behalf of the registered owner(s);

(3) authorizes the Fund, its Transfer Agent and any bank through which the
Fund's drafts (checks) are payable to pay all checks drawn on the
Fund account of such person(s) and to redeem a sufficient amount of
shares from that account to cover payment of each check;

(4) specifically acknowledges that if they choose to permit checks to be
honored if there is a single signature on checks drawn against joint
accounts, or accounts for corporations, partnerships, trusts or
other entities, the signature of any one signatory on a check will
be sufficient to authorize payment of that check and redemption from
the account, even if that account is registered in the names of more
than one person or more than one authorized signature appears on the
Checkwriting card or the application, as applicable;

(5) understands that the Checkwriting privilege may be terminated or
amended at any time by the Fund and/or the Fund's bank; and

(6) acknowledges and agrees that neither the Fund nor its bank shall incur
any liability for that amendment or termination of checkwriting
privileges or for redeeming shares to pay checks reasonably believed
by them to be genuine, or for returning or not paying checks that
have not been accepted for any reason.

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

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

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

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

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

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

Involuntary Redemptions. The Fund's Board of Trustees has the right to cause
the involuntary redemption of the shares held in any account if the aggregate
net asset value of those shares is less than $1,000 or such lesser amount as
the Board may fix. The Board will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of such shares has
fallen below the stated minimum solely as a result of market fluctuations. If
the Board exercises this right, it may also fix the requirements for any
notice to be given to the shareholders in question (not less than 30 days).
The Board may alternatively set requirements for the shareholder to increase
the investment, or set other terms and conditions so that the shares would
not be involuntarily redeemed.

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

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

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

(1) state the reason for the distribution;

(2) state the owner's awareness of tax penalties if the distribution is
premature; and
(3) conform to the requirements of the plan and the Fund's other redemption
requirements.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How to Exchange Shares

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

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

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

The following funds do not offer Class N shares:
Limited Term New York Municipal Fund Oppenheimer Rochester Arizona
Municipal Fund
Oppenheimer AMT-Free Municipals Oppenheimer Rochester Maryland
Municipal Fund
Oppenheimer AMT-Free New York 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 Limited Term California Oppenheimer Rochester National
Municipal Fund Municipals
Oppenheimer Limited Term Municipal Fund Oppenheimer Rochester North Carolina

Municipal Fund

Oppenheimer Money Market Fund, Inc. Oppenheimer Rochester Ohio Municipal
Fund
Oppenheimer New Jersey Municipal Fund Oppenheimer Rochester Virginia
Municipal Fund
Oppenheimer Principal Protected Main Oppenheimer Senior Floating Rate Fund
Street Fund II
Oppenheimer Pennsylvania Municipal Fund Rochester Fund Municipals

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 &amp; 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 and Class C shares of Oppenheimer Cash Reserves are generally
available only by exchange from the same class of shares of other
Oppenheimer funds or through OppenheimerFunds-sponsored 401(k) plans.

o Class M shares of Oppenheimer Convertible Securities Fund may be
exchanged only for Class A shares of other Oppenheimer funds and may be
acquired by exchange only by current Class M shareholders of
Oppenheimer Convertible Securities Fund and only for Class A shares of
Oppenheimer Money Market Fund, Inc. or Oppenheimer Cash Reserves.
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 certain money market funds purchased without a sales charge
may be exchanged for shares of Oppenheimer funds offered with a sales
charge upon payment of the sales charge.

o Shares of the Fund acquired by reinvestment of dividends or
distributions from any of the other Oppenheimer funds or from any unit
investment trust for which reinvestment arrangements have been made
with the Distributor may be exchanged at net asset value for shares of
the same class of any of the other Oppenheimer funds into which you may
exchange shares.
o Shares of Oppenheimer Principal Protected Main Street Fund may be
exchanged at net asset value for shares of the same class of any of the
other Oppenheimer funds into which you may exchange shares. However,
shareholders are not permitted to exchange shares of other Oppenheimer
funds for shares of Oppenheimer Principal Protected Main Street Fund
until after the expiration of the warranty period (8/5/2010).
o Shares of Oppenheimer Principal Protected Main Street Fund II may be
exchanged at net asset value for shares of the same class of any of the
other Oppenheimer funds into which you may exchange shares. However,
shareholders are not permitted to exchange shares of other Oppenheimer
funds for shares of Oppenheimer Principal Protected Main Street Fund II
until after the expiration of the warranty period (3/3/2011).
o Shares of Oppenheimer Principal Protected Main Street Fund III may be
exchanged at net asset value for shares of the same class of any of the
other Oppenheimer funds into which you may exchange shares. However,
shareholders are not permitted to exchange shares of other Oppenheimer
funds for shares of Oppenheimer Principal Protected Main Street Fund
III until after the expiration of the warranty period (12/16/2011).

o Class A, Class B, Class C and Class N shares of Oppenheimer Developing
Markets Fund may be acquired by exchange only to group retirement plans
holding shares pursuant to the Pinnacle or RecordKeeper Pro programs or
with a minimum initial investment of $50,000. An existing shareholder
of that 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- &amp; Mid-Cap Value Fund may be
acquired only by group retirement plans with a minimum initial
investment of $50,000. Existing shareholders may make additional
exchanges into that fund with as little as $50.
o Oppenheimer 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 and by present or former officers, directors, trustees and
employees (and their eligible family members) of the Fund, the Manager
and its affiliates, its parent company and the subsidiaries of its
parent company, and retirement plans established for the benefit of
such individuals.

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

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

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

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

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

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

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

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

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

|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
fund account unless you tell the Transfer Agent not to do so.

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

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

Dividends, Capital Gains and Taxes

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

If a dividend check or a check representing an automatic withdrawal
payment is returned to the Transfer Agent by the Postal Service as
undeliverable, it will be reinvested in shares of the Fund. Returned checks
for the proceeds of other redemptions will be invested in shares of
Oppenheimer Money Market Fund, Inc. Reinvestment will be made as promptly as
possible after the return of such checks to the Transfer Agent. Unclaimed
accounts may be subject to state escheatment laws, and the Fund and the
Transfer Agent will not be liable to shareholders or their representatives
for compliance with those laws in good faith.

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

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

|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, and other taxable
ordinary income, net of expenses) and capital gain net income (that is, the
excess of net long-term capital gains over net short-term capital losses)
that it distributes to shareholders. That qualification enables the Fund to
"pass through" its income and realized capital gains to shareholders without
having to pay tax on them. This avoids a "double tax" on that income and
capital gains, since shareholders normally will be taxed on the dividends and
capital gains they receive from the Fund (unless their Fund shares are held
in a retirement account or the shareholder is otherwise exempt from tax).

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

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

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

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

|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.

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

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

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

Investment income that may be received by the Fund from sources within
foreign countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Fund to a reduced rate of, or exemption from, taxes on such
income. The Fund may be subject to U.S. Federal income tax, and an interest
charge, on certain distributions or gains from the sale of shares of a
foreign company considered to be a PFIC, even if those amounts are paid out
as dividends to shareholders. To avoid imposition of the interest charge, the
Fund may elect to "mark to market" all PFIC shares that it holds at the end
of each taxable year. In that case, any increase or decrease in the value of
those shares would be recognized as ordinary income or as ordinary loss (but
only to the extent of previously recognized "mark-to-market" gains).

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

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

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

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

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

|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 or his or her financial intermediary and must have an
existing account in the fund selected for reinvestment. Otherwise the
shareholder first must obtain a prospectus for that fund and an application
from the Distributor to establish an account. Dividends and/or distributions
from shares of certain other Oppenheimer funds may be invested in shares of
this Fund on the same basis.

Additional Information About the Fund

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

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

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

Independent Registered Public Accounting Firm. Deloitte &amp; Touche LLP serves
as the independent registered public accounting firm for the Fund. Deloitte &amp;
Touche LLP audits the Fund's financial statements and performs other related
audit services. Deloitte &amp; 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 &amp; 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 CORE BOND FUND:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Core Bond Fund (the "Fund"), a series of Oppenheimer Integrity
Funds, including the statement of investments, as of December 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 December 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 December 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.

/s/ Deloitte $amp; Touche LLP
DELOITTE $amp; TOUCHE LLP

Denver, Colorado
February 13, 2008

STATEMENT OF INVESTMENTS December 31, 2007
- --------------------------------------------------------------------------------

PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

ASSET-BACKED SECURITIES--4.9%
- ------------------------------------------------------------------------------------------------------------------------------------
Ace Securities Corp. Home Equity Loan Trust Series 2005-HE7, Asset-Backed
Pass-Through Certificates, Series 2005-HE7, Cl. A2B, 5.045%, 11/25/35 1 $ 1,491,086 $ 1,485,100
- ------------------------------------------------------------------------------------------------------------------------------------
Aesop Funding II LLC, Automobile Asset-Backed Certificates, Series 2005-1A,
Cl. A2, 5.009%, 4/20/09 1,2 640,000 639,947
- ------------------------------------------------------------------------------------------------------------------------------------
Argent Securities Trust 2004-W8, Asset-Backed Pass-Through Certificates,
Series 2004-W8, Cl. A2, 5.345%, 5/25/34 1 3,925,924 3,698,581
- ------------------------------------------------------------------------------------------------------------------------------------
Argent Securities Trust 2006-W5, Asset-Backed Pass-Through Certificates,
Series 2006-W5, Cl. A2B, 4.965%, 5/26/36 1 3,380,000 3,292,972
- ------------------------------------------------------------------------------------------------------------------------------------
Capital One Prime Auto Receivables Trust, Automobile Asset-Backed
Certificates, Series 2005-1, Cl. A4, 5.048%, 4/15/11 1 21,500,000 21,421,936
- ------------------------------------------------------------------------------------------------------------------------------------
Centex Home Equity Loan Trust 2005-D, Asset-Backed Certificates, Series
2005-D, Cl. AV2, 5.135%, 10/25/35 1 945,322 943,972
- ------------------------------------------------------------------------------------------------------------------------------------
Centex Home Equity Loan Trust 2006-A, Asset-Backed Certificates, Series
2006-A, Cl. AV2, 4.965%, 5/16/36 1 4,220,000 4,147,121
- ------------------------------------------------------------------------------------------------------------------------------------
Chase Funding Trust 2003-2, Mtg. Loan Asset-Backed Certificates, Series
2003-2, Cl. 2A2, 5.145%, 2/25/33 1 1,787,072 1,767,326
- ------------------------------------------------------------------------------------------------------------------------------------
Citibank Credit Card Issuance Trust, Credit Card Receivable Nts., Series
2003-C4, Cl. C4, 5%, 6/10/15 460,000 433,332
- ------------------------------------------------------------------------------------------------------------------------------------
Citigroup Mortgage Loan Trust, Inc. 2005-WF2, Asset-Backed Pass-Through
Certificates, Series 2005-WF2, Cl. AF2, 4.922%, 8/25/35 1 143,090 142,757
- ------------------------------------------------------------------------------------------------------------------------------------
Citigroup Mortgage Loan Trust, Inc. 2006-WFH3, Asset-Backed Pass-Through
Certificates, Series 2006-WFH3, Cl. A2, 4.965%, 10/31/36 1 2,300,000 2,190,654
- ------------------------------------------------------------------------------------------------------------------------------------
CWABS Asset-Backed Certificates Trust 2002-4, Asset-Backed Certificates,
Series 2002-4, Cl. A1, 5.605%, 2/25/33 1 48,808 43,707
- ------------------------------------------------------------------------------------------------------------------------------------
CWABS Asset-Backed Certificates Trust 2005-11, Asset-Backed Certificates,
Series 2005-11, Cl. AF2, 4.657%, 2/25/36 2,790,000 2,773,214
- ------------------------------------------------------------------------------------------------------------------------------------
CWABS Asset-Backed Certificates Trust 2005-16, Asset-Backed Certificates,
Series 2005-16, Cl. 2AF2, 5.382%, 5/25/36 1 4,980,000 4,799,961
- ------------------------------------------------------------------------------------------------------------------------------------
CWABS Asset-Backed Certificates Trust 2005-17, Asset-Backed Certificates:
Series 2005-17, Cl. 1AF1, 5.096%, 5/25/36 1 390,089 389,503
Series 2005-17, Cl. 1AF2, 5.363%, 5/25/36 1 970,000 962,573
- ------------------------------------------------------------------------------------------------------------------------------------
CWABS Asset-Backed Certificates Trust 2006-25, Asset-Backed Certificates,
Series 2006-25, Cl. 2A2, 4.985%, 12/25/29 1 3,020,000 2,826,722
- ------------------------------------------------------------------------------------------------------------------------------------
First Franklin Mortgage Loan Trust 2005-FF10, Mtg. Pass-Through
Certificates, Series 2005-FF10, Cl. A3, 5.075%, 11/25/35 1 4,160,876 4,134,611
- ------------------------------------------------------------------------------------------------------------------------------------
First Franklin Mortgage Loan Trust 2006-FF10, Mtg. Pass-Through
Certificates, Series 2006-FF10, Cl. A3, 4.955%, 7/25/36 1 3,550,000 3,385,412
- ------------------------------------------------------------------------------------------------------------------------------------
First Franklin Mortgage Loan Trust 2006-FF5, Mtg. Pass-Through Certificates,
Series 2006-FF5, Cl. 2A1, 4.915%, 5/15/36 1 746,789 738,805
- ------------------------------------------------------------------------------------------------------------------------------------
First Franklin Mortgage Loan Trust 2006-FF9, Mtg. Pass-Through Certificates,
Series 2006-FF9, Cl. 2A2, 4.975%, 7/7/36 1 1,820,000 1,737,334
- ------------------------------------------------------------------------------------------------------------------------------------
Honda Auto Receivables Owner Trust, Automobile Receivable Obligations,
Series 2005-2, Cl. A4, 4.15%, 10/15/10 4,000,000 3,988,127

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

PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

ASSET-BACKED SECURITIES Continued
- ------------------------------------------------------------------------------------------------------------------------------------
Household Home Equity Loan Trust, Home Equity Loan Pass-Through
Certificates:
Series 2005-3, Cl. A1, 5%, 1/20/35 1 $ 1,385,610 $ 1,354,111
Series 2006-4, Cl. A2V, 5.059%, 3/20/36 1 1,120,000 1,055,302
- ------------------------------------------------------------------------------------------------------------------------------------
Lehman XS Trust, Mtg. Pass-Through Certificates:
Series 2005-10, Cl. 2A3B, 5.55%, 1/25/36 1,574,372 1,577,201
Series 2005-2, Cl. 2A1B, 5.18%, 8/25/35 1 1,018,536 1,021,702
Series 2005-4, Cl. 2A1B, 5.17%, 10/25/35 895,641 897,043
- ------------------------------------------------------------------------------------------------------------------------------------
Litigation Settlement Monetized Fee Trust, Asset-Backed Certificates,
Series 2001-1A, Cl. A1, 8.33%, 4/25/31 3 1,176,973 1,173,677
- ------------------------------------------------------------------------------------------------------------------------------------
MBNA Credit Card Master Note Trust, Credit Card Receivables, Series
2003-C7, Cl. C7, 6.378%, 3/15/16 1 4,380,000 4,237,598
- ------------------------------------------------------------------------------------------------------------------------------------
NC Finance Trust, CMO Pass-Through Certificates, Series 1999-I, Cl. ECFD,
0.491%, 1/25/29 3,17 1,750,658 297,612
- ------------------------------------------------------------------------------------------------------------------------------------
Option One Mortgage Loan Trust, Asset-Backed Certificates, Series
2006-2, Cl. 2A2, 4.965%, 7/1/36 1 11,300,000 11,003,541
- ------------------------------------------------------------------------------------------------------------------------------------
Popular ABS Mortgage Pass-Through Trust 2005-6, Mtg. Pass-Through
Certificates, Series 2005-6, Cl. A3, 5.68%, 1/25/36 1 1,520,000 1,507,018
- ------------------------------------------------------------------------------------------------------------------------------------
RAMP Series 2006-RS4 Trust, Mtg. Asset-Backed Pass-Through
Certificates, Series 2006-RS4, Cl. A1, 4.945%, 7/25/36 1 873,358 857,762
- ------------------------------------------------------------------------------------------------------------------------------------
Specialty Underwriting $amp; Residential Finance Trust, Home Equity
Asset-Backed Obligations, Series 2005-BC3, Cl. A2B, 5.115%, 6/25/36 1 3,258,369 3,248,833
- ------------------------------------------------------------------------------------------------------------------------------------
Structured Asset Investment Loan Trust, Mtg. Pass-Through Certificates:
Series 2006-2, Cl. A1, 4.925%, 4/25/36 1 1,368,551 1,359,472
Series 2006-BNC3, Cl. A2, 4.905%, 9/25/36 1 3,973,375 3,882,301
- ------------------------------------------------------------------------------------------------------------------------------------
Structured Asset Securities Corp., Mtg. Pass-Through Certificates:
Series 2002-AL1, Cl. B2, 3.45%, 2/25/32 2,332,149 1,850,415
Series 2005-4XS, Cl. 3A1, 5.18%, 3/26/35 437,268 437,755
- ------------------------------------------------------------------------------------------------------------------------------------
Tobacco Settlement Authority, Asset-Backed Securities, Series 2001-A,
6.79%, 6/1/10 1,045,000 1,066,391
- ------------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Home Equity Asset-Backed Securities 2006-2 Trust, Home
Equity Asset-Backed Certificates, Series 2006-2, Cl. A2, 4.965%, 7/25/36 1 3,530,000 3,440,371
-----------------
Total Asset-Backed Securities (Cost $109,820,203) 106,211,772

- ------------------------------------------------------------------------------------------------------------------------------------
MORTGAGE-BACKED OBLIGATIONS--85.2%
- ------------------------------------------------------------------------------------------------------------------------------------
GOVERNMENT AGENCY--55.5%
- ------------------------------------------------------------------------------------------------------------------------------------
FHLMC/FNMA/SPONSORED--55.4%
Fannie Mae Trust 2004-W9, Pass-Through Certificates, Trust 2004-W9,
Cl. 2A2, 7%, 2/25/44 1,476,876 1,566,836
- ------------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
4.50%, 5/15/19 22,933,974 22,555,393
5%, 6/15/33-8/15/33 11,770,862 11,505,190
5.50%, 5/1/34 10,020,978 10,013,619

PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

FHLMC/FNMA/SPONSORED Continued
Federal Home Loan Mortgage Corp.: Continued
6%, 5/15/18-3/15/33 $ 9,606,814 $ 9,812,497
6.50%, 4/15/18-4/15/34 7,286,770 7,552,550
7%, 7/15/21-3/15/35 13,126,946 13,763,443
8%, 4/15/16 519,939 551,571
9%, 4/14/17-5/15/25 149,519 161,054
12.50%, 5/15/14 804 931
13.50%, 12/15/10 1,370 1,523
- ------------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., CMO Gtd. Multiclass Mtg.
Participation Certificates:
Series 2046, Cl. G, 6.50%, 4/15/28 3,548,997 3,709,140
Series 2410, Cl. PF, 6.008%, 2/15/32 1 4,827,717 4,940,540
Series 2423, Cl. MC, 7%, 3/15/32 3,355,329 3,545,003
Series 2453, Cl. BD, 6%, 5/15/17 1,295,599 1,338,902
- ------------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., CMO Gtd. Real Estate Mtg.
Investment Conduit Multiclass Pass-Through Certificates, Series 2681,
Cl. B, 5%, 9/15/23 3,233,000 3,153,424
- ------------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Gtd. Real Estate Mtg. Investment
Conduit Multiclass Pass-Through Certificates:
Series 151, Cl. F, 9%, 5/15/21 30,394 30,343
Series 1590, Cl. IA, 6.113%, 10/15/23 1 4,903,583 4,966,317
Series 2006-11, Cl. PS, 6.728%, 3/25/36 1 2,734,173 3,034,864
Series 2034, Cl. Z, 6.50%, 2/15/28 40,781 42,412
Series 2043, Cl. ZP, 6.50%, 4/15/28 3,534,157 3,672,812
Series 2053, Cl. Z, 6.50%, 4/15/28 43,983 45,946
Series 2055, Cl. ZM, 6.50%, 5/15/28 51,717 53,476
Series 2063, Cl. PG, 6.50%, 6/15/28 2,868,341 2,978,474
Series 2075, Cl. D, 6.50%, 8/15/28 567,599 592,715
Series 2080, Cl. Z, 6.50%, 8/15/28 1,510,607 1,576,023
Series 2145, Cl. MZ, 6.50%, 4/15/29 1,016,118 1,062,720
Series 2148, Cl. ZA, 6%, 4/15/29 2,065,381 2,106,052
Series 2195, Cl. LH, 6.50%, 10/15/29 2,354,375 2,439,168
Series 2326, Cl. ZP, 6.50%, 6/15/31 859,836 900,399
Series 2399, Cl. PG, 6%, 1/15/17 1,380,862 1,431,245
Series 2426, Cl. BG, 6%, 3/15/17 8,153,382 8,436,213
Series 2427, Cl. ZM, 6.50%, 3/15/32 4,497,412 4,712,457
Series 2461, Cl. PZ, 6.50%, 6/15/32 4,752,193 4,967,181
Series 2463, Cl. F, 6.028%, 6/15/32 1 7,373,046 7,573,836
Series 2500, Cl. FD, 5.528%, 3/15/32 1 356,571 356,962
Series 2526, Cl. FE, 5.428%, 6/15/29 1 550,134 548,771
Series 2551, Cl. FD, 5.428%, 1/15/33 1 426,374 428,265
Series 2676, Cl. KY, 5%, 9/15/23 4,548,000 4,423,740
Series 2764, Cl. UG, 5%, 3/15/34 8,661,000 8,043,953
Series 3025, Cl. SJ, 6.316%, 8/15/35 1 1,112,327 1,265,696
Series 3094, Cl. HS, 5.949%, 6/15/34 1 1,662,408 1,813,626
Series 3138, Cl. PA, 5.50%, 2/15/27 19,907,427 20,145,130

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

PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

FHLMC/FNMA/SPONSORED Continued
Federal Home Loan Mortgage Corp., Interest-Only Stripped Mtg.-Backed
Security:
Series 176, Cl. IO, 4.874%, 6/1/26 4 $ 660,748 $ 152,392
Series 183, Cl. IO, 3.44%, 4/1/27 4 2,233,825 510,353
Series 184, Cl. IO, 9.132%, 12/1/26 4 1,140,878 259,312
Series 192, Cl. IO, 8.228%, 2/1/28 4 278,429 67,572
Series 200, Cl. IO, 7.301%, 1/1/29 4 335,364 77,940
Series 2003-26, Cl. IK, 9.508%, 4/25/33 4 3,297,949 689,986
Series 206, Cl. IO, (9.58)%, 12/1/29 4 360,136 78,677
Series 2130, Cl. SC, 3.254%, 3/15/29 4 739,945 71,697
Series 2134, Cl. SB, 9.271%, 3/15/29 4 797,306 74,697
Series 216, Cl. IO, 9.04%, 12/1/31 4 1,351,363 327,435
Series 224, Cl. IO, 5.643%, 3/1/33 4 3,916,472 919,348
Series 2422, Cl. SJ, 15.036%, 1/15/32 4 3,575,525 330,655
Series 243, Cl. 6, 15.199%, 12/15/32 4 2,424,456 511,475
Series 2493, Cl. S, 8.271%, 9/15/29 4 207,281 18,831
Series 2796, Cl. SD, (2.107)%, 7/15/26 4 1,180,706 104,614
Series 2802, Cl. AS, 5.232%, 4/15/33 4 4,033,224 272,257
Series 2920, Cl. S, (4.791)%, 1/15/35 4 4,767,860 339,065
Series 3000, Cl. SE, 11.917%, 7/15/25 4 7,132,657 382,586
Series 3110, Cl. SL, 24.356%, 2/15/26 4 2,141,037 109,418
- ------------------------------------------------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp., Principal-Only Stripped
Mtg.-Backed Security:
Series 176, Cl. PO, 5.97%, 6/1/26 5 282,395 232,963
Series 192, Cl. PO, 7.631%, 2/1/28 5 278,429 220,199
- ------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn.:
4.50%, 5/25/18-8/25/20 79,372,328 78,116,232
4.50%, 1/1/22 6 5,445,000 5,359,922
5%, 12/25/17-3/25/34 156,437,648 155,614,855
5%, 1/1/22-11/25/33 6 103,972,800 102,628,579
5.50%, 12/25/18-5/25/34 150,173,886 150,375,606
5.50%, 1/1/22-1/1/37 6 110,511,000 110,621,156
6%, 5/25/20-11/1/33 61,817,360 63,031,714
6%, 1/1/22 6 19,276,000 19,724,765
6.50%, 6/25/17-11/25/31 35,313,013 36,626,309
6.50%, 1/1/37 6 44,334,000 45,573,978
7%, 1/25/09-4/1/37 15,367,899 16,134,871
7.50%, 2/25/08-8/25/33 11,612,083 12,426,897
8%, 8/25/17 1,502 1,515
8.50%, 7/25/32 50,598 54,507
- ------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn. Grantor Trust, CMO, Trust 2002-T1,
Cl. A2, 7%, 11/25/31 1,707,562 1,800,851
- ------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates:
Trust 1992-34, Cl. G, 8%, 3/25/22 20,117 21,061
Trust 1993-104, Cl. ZB, 6.50%, 7/25/23 1,021,074 1,057,391
Trust 1993-215, Cl. ZQ, 6.50%, 11/25/23 7 4,029,967 4,174,293
Trust 1993-87, Cl. Z, 6.50%, 6/25/23 423,862 437,252

PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn., Gtd. Real Estate Mtg. Investment
Conduit Pass-Through Certificates: Continued
Trust 1996-35, Cl. Z, 7%, 7/25/26 $ 155,632 $ 159,073
Trust 1998-58, Cl. PC, 6.50%, 10/25/28 1,664,359 1,723,459
Trust 1998-61, Cl. PL, 6%, 11/25/28 2,089,617 2,144,186
Trust 1999-54, Cl. LH, 6.50%, 11/25/29 2,909,541 3,057,666
Trust 1999-60, Cl. PG, 7.50%, 12/25/29 10,700,699 11,163,114
Trust 2001-50, Cl. NE, 6%, 8/25/30 525 523
Trust 2001-51, Cl. OD, 6.50%, 10/25/31 2,635,770 2,743,127
Trust 2001-70, Cl. LR, 6%, 9/25/30 200,607 201,259
Trust 2001-74, Cl. QE, 6%, 12/25/31 11,211,326 11,476,977
Trust 2001-82, Cl. ZA, 6.50%, 1/25/32 1,822,283 1,860,800
Trust 2002-16, Cl. PG, 6%, 4/25/17 2,224,000 2,308,652
Trust 2002-56, Cl. FN, 5.865%, 7/25/32 1 1,940,760 1,989,872
Trust 2002-9, Cl. PC, 6%, 3/25/17 7,844,753 8,117,924
Trust 2003-130, Cl. CS, 4.37%, 12/25/33 1 8,137,621 7,694,973
Trust 2003-17, Cl. EQ, 5.50%, 3/25/23 6,305,000 6,368,791
Trust 2003-21, Cl. FK, 5.265%, 3/25/33 1 719,704 724,143
Trust 2003-23, Cl. EQ, 5.50%, 4/25/23 8,316,000 8,331,287
Trust 2003-28, Cl. KG, 5.50%, 4/25/23 1,492,000 1,501,731
Trust 2003-84, Cl. GC, 4.50%, 5/25/15 11,330,000 11,342,398
Trust 2003-84, Cl. PW, 3%, 6/25/22 1,388,805 1,379,883
Trust 2004-101, Cl. BG, 5%, 1/25/20 2,603,000 2,611,651
Trust 2005-100, Cl. BQ, 5.50%, 11/25/25 2,450,000 2,461,282
Trust 2005-104, Cl. MC, 5.50%, 12/25/25 12,330,000 12,285,046
Trust 2005-109, Cl. AH, 5.50%, 12/25/25 10,000,000 9,910,998
Trust 2005-31, Cl. PB, 5.50%, 4/25/35 2,480,000 2,460,170
Trust 2005-59, Cl. NQ, 4.713%, 5/25/35 1 3,050,202 3,050,603
Trust 2005-71, Cl. DB, 4.50%, 8/25/25 1,260,000 1,194,665
Trust 2006-44, Cl. OA, 5.50%, 12/25/26 7,759,770 7,842,626
Trust 2006-46, Cl. SW, 6.362%, 6/25/36 1 2,596,350 2,848,989
Trust 2006-50, Cl. KS, 6.362%, 6/25/36 1 3,672,447 3,908,996
Trust 2006-50, Cl. SA, 6.362%, 6/25/36 1 3,437,418 3,663,727
Trust 2006-50, Cl. SK, 6.362%, 6/25/36 1 2,600,405 2,766,266
Trust 2006-57, Cl. PA, 5.50%, 8/25/27 8,815,668 8,908,871
Trust 2006-64, Cl. MD, 5.50%, 7/25/36 2,753,828 2,733,699
- ------------------------------------------------------------------------------------------------------------------------------------
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed
Security:
Trust 2001-15, Cl. SA, 19.031%, 3/17/31 4 1,361,889 135,305
Trust 2001-65, Cl. S, 12.568%, 11/25/31 4 4,578,353 591,320
Trust 2001-81, Cl. S, 3.759%, 1/25/32 4 577,701 62,221
Trust 2002-12, Cl. SB, 14.559%, 7/25/31 4 922,836 88,954
Trust 2002-2, Cl. SW, 14.971%, 2/25/32 4 1,036,337 128,476
Trust 2002-38, Cl. IO, (0.904)%, 4/25/32 4 378,548 39,805
Trust 2002-41, Cl. S, 17.236%, 7/25/32 4 3,923,416 429,017
Trust 2002-47, Cl. NS, 2.917%, 4/25/32 4 1,434,073 157,996
Trust 2002-5, Cl. SD, 8.837%, 2/25/32 4 676,168 77,613
Trust 2002-51, Cl. S, 3.07%, 8/25/32 4 1,316,795 147,881
Trust 2002-52, Cl. SD, (0.559)%, 9/25/32 4 1,472,421 239,690

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

PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn., Interest-Only Stripped Mtg.-Backed
Security: Continued
Trust 2002-60, Cl. SY, 14.281%, 4/25/32 4 $ 894,958 $ 31,159
Trust 2002-75, Cl. SA, 13.682%, 11/25/32 4 3,671,735 413,889
Trust 2002-77, Cl. IS, 2.758%, 12/18/32 4 644,933 108,224
Trust 2002-77, Cl. SH, 5.025%, 12/18/32 4 759,489 74,889
Trust 2002-84, Cl. SA, 14.525%, 12/25/32 4 913,091 106,026
Trust 2002-89, Cl. S, 14.738%, 1/25/33 4 5,769,223 626,686
Trust 2002-9, Cl. MS, 4.207%, 3/25/32 4 47,214 5,103
Trust 2003-118, Cl. S, 9.838%, 12/25/33 4 8,684,610 1,492,715
Trust 2003-14, Cl. OI, 8.765%, 3/25/33 4 8,631,083 1,976,183
Trust 2003-33, Cl. SP, 9.123%, 5/25/33 4 5,553,206 720,942
Trust 2003-4, Cl. S, 12.217%, 2/25/33 4 1,782,281 217,394
Trust 2003-52, Cl. NS, 7.228%, 6/25/23 4 28,459,078 2,850,060
Trust 2004-54, Cl. DS, (2.056)%, 11/25/30 4 302,399 24,304
Trust 2005-105, Cl. S, 17.377%, 12/25/35 4 9,218,925 678,803
Trust 2005-19, Cl. SA, 1.225%, 3/25/35 4 16,297,487 1,158,908
Trust 2005-40, Cl. SA, 0.846%, 5/25/35 4 2,961,841 203,805
Trust 2005-6, Cl. SE, 3.326%, 2/25/35 4 3,414,464 296,355
Trust 2005-71, Cl. SA, 9.977%, 8/25/25 4 5,948,701 462,833
Trust 2005-83, Cl. SL, 11.659%, 10/25/35 4 11,919,716 871,697
Trust 2005-87, Cl. SE, 12.247%, 10/25/35 4 21,906,966 1,528,280
Trust 2005-87, Cl. SG, 13.837%, 10/25/35 4 17,226,755 1,614,174
Trust 2006-119, Cl. MS, 22.78%, 12/25/36 4 9,671,848 731,383
Trust 2006-33, Cl. SP, 15.444%, 5/25/36 4 13,474,400 1,244,539
Trust 2006-34, Cl. SK, 14.651%, 5/25/36 4 18,820,539 1,726,331
Trust 222, Cl. 2, 14.433%, 6/1/23 4 2,295,656 543,687
Trust 240, Cl. 2, 17.308%, 9/1/23 4 2,796,161 642,924
Trust 247, Cl. 2, 14.164%, 10/1/23 4 191,207 50,523
Trust 252, Cl. 2, 14.3%, 11/1/23 4 2,023,194 499,077
Trust 254, Cl. 2, 8.508%, 1/1/24 4 3,490,640 863,316
Trust 2682, Cl. TQ, 12.29%, 10/15/33 4 5,242,464 402,229
Trust 273, Cl. 2, 13.126%, 8/1/26 4 512,025 116,264
Trust 2981, Cl. BS, 12.367%, 5/15/35 4 9,735,891 727,714
Trust 301, Cl. 2, 5.703%, 4/1/29 4 1,319,732 296,624
Trust 303, Cl. IO, (3.377)%, 11/1/29 4 158,118 37,749
Trust 319, Cl. 2, 10.717%, 2/1/32 4 802,247 186,362
Trust 321, Cl. 2, 8.867%, 4/1/32 4 3,314,530 768,261
Trust 322, Cl. 2, 16.524%, 4/1/32 4 4,272,910 1,011,365
Trust 324, Cl. 2, 5.85%, 7/1/32 4 2,629,560 602,862
Trust 331, Cl. 9, 11.319%, 2/1/33 4 8,433,566 2,090,961
Trust 334, Cl. 15, 8.69%, 2/1/33 4 5,175,958 1,211,166
Trust 334, Cl. 17, 23.16%, 2/1/33 4 263,882 60,919
Trust 339, Cl. 7, 9.534%, 7/1/33 4 9,085,923 2,147,141
Trust 342, Cl. 2, 6.625%, 9/1/33 4 1,594,878 373,417
Trust 344, Cl. 2, 5.109%, 12/1/33 4 42,706,902 9,792,427
Trust 345, Cl. 9, 8.864%, 1/1/34 4 5,661,125 1,346,928
Trust 354, Cl. 2, 5.133%, 11/1/34 4 13,733,095 3,316,028
Trust 362, Cl. 12, 9.377%, 8/1/35 4 9,242,787 2,139,462
Trust 362, Cl. 13, 9.359%, 8/1/35 4 5,124,810 1,176,865

PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

FHLMC/FNMA/SPONSORED Continued
Federal National Mortgage Assn., Principal-Only Stripped Mtg.-Backed
Security:
Trust 1993-184, Cl. M, 5.606%, 9/25/23 5 $ 696,400 $ 569,162
Trust 324, Cl. 1, 6.135%, 7/1/32 5 656,621 538,253
-----------------
1,195,065,711

- ------------------------------------------------------------------------------------------------------------------------------------
GNMA/GUARANTEED--0.1%
Government National Mortgage Assn.:
5.625%, 8/8/25-8/8/27 1 22,339 22,461
7%, 7/29/09 4,305 4,385
8.50%, 8/15/17-12/29/17 221,733 239,281
9%, 3/1/09-6/29/09 4,762 4,905
10.50%, 12/29/17-5/29/21 17,302 20,186
11%, 11/8/19 37,287 42,635
12%, 5/29/14 282 332
- ------------------------------------------------------------------------------------------------------------------------------------
Government National Mortgage Assn., Interest-Only Stripped
Mtg.-Backed Security:
Series 2001-21, Cl. SB, 8.513%, 1/16/27 4 1,419,145 142,819
Series 2002-15, Cl. SM, 6.07%, 2/16/32 4 1,495,276 230,593
Series 2002-41, Cl. GS, 19.353%, 6/16/32 4 1,135,193 290,410
Series 2002-76, Cl. SY, 6.441%, 12/16/26 4 724,607 70,477
Series 2004-11, Cl. SM, 1.748%, 1/17/30 4 242,111 39,241
Series 2006-47, Cl. SA, 31.192%, 8/16/36 4 17,524,199 1,381,927
-----------------
2,489,652

- ------------------------------------------------------------------------------------------------------------------------------------
NON-AGENCY--29.7%
- ------------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL--13.9%
Asset Securitization Corp., Commercial Interest-Only Stripped Mtg.-Backed
Security, Series 1997-D4, Cl. PS1, 2.706%, 4/14/29 4 13,797,762 564,607
- ------------------------------------------------------------------------------------------------------------------------------------
Banc of America Commercial Mortgage, Inc., Commercial Mtg.
Pass-Through Certificates:
Series 2005-3, Cl. A2, 4.501%, 7/10/43 3,580,000 3,538,159
Series 2006-5, Cl. A2, 5.348%, 10/10/11 6,320,000 6,347,058
- ------------------------------------------------------------------------------------------------------------------------------------
Banc of America Funding Corp., CMO Pass-Through Certificates, Series
2004-2, Cl. 2A1, 6.50%, 7/20/32 1,760,357 1,790,339
- ------------------------------------------------------------------------------------------------------------------------------------
Banc of America Mortgage Securities, Inc., CMO Pass-Through Certificates,
Series 2004-8, Cl. 5A1, 6.50%, 5/25/32 1,557,946 1,587,816
- ------------------------------------------------------------------------------------------------------------------------------------
Bear Stearns Commercial Mortgage Securities Trust 2007-PW18-PW18,
Commercial Mtg. Pass-Through Certificates, Series PW18, Cl. A2, 5.613%,
6/1/50 17,675,000 17,854,512
- ------------------------------------------------------------------------------------------------------------------------------------
Bear Stearns Commercial Mortgage Securities, Inc., Commercial Mtg.
Obligations, Series 2003-T10, Cl. A1, 4%, 3/13/40 142,663 140,461
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Lease Funding Securitization LP, Interest-Only Corporate-Backed
Pass-Through Certificates, Series 1997-CTL1, (6.902)%, 6/22/24 4 4,568,105 135,746

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

PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

COMMERCIAL Continued
Citigroup Mortgage Loan Trust, Inc. 2006-WF1, Asset-Backed
Pass-Through Certificates, Series 2006-WF1, Cl. A2B, 5.536%, 3/1/36 $ 1,150,000 $ 1,149,759
- ------------------------------------------------------------------------------------------------------------------------------------
Citigroup/Deutsche Bank 2007-CD4 Commercial Mortgage Trust,
Commercial Mtg. Pass-Through Certificates:
Series 2007-CD4, Cl. A2B, 5.205%, 12/11/49 7,620,000 7,618,797
Series 2007-CD4, Cl. A4, 5.322%, 12/1/49 8 9,110,000 9,100,342
- ------------------------------------------------------------------------------------------------------------------------------------
CitiMortgage Alternative Loan Trust 2006-A5:
Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series
2006-A5, Cl. 1A1, 5.265%, 10/25/36 1 13,367,013 12,680,030
Real Estate Mtg. Investment Conduit Pass-Through Certificates, Series
2006-A5, Cl. 1A13, 5.315%, 10/25/36 1 7,009,531 6,853,751
- ------------------------------------------------------------------------------------------------------------------------------------
Deutsche Alt-A Securities Mortgage Loan Trust, Mtg. Pass-Through
Certificates:
Series 2006-AB2, Cl. A7, 5.961%, 6/25/36 2,249,252 2,248,850
Series 2006-AB3, Cl. A7, 6.36%, 7/1/36 747,602 748,219
Series 2006-AB4, Cl. A1A, 6.005%, 10/25/36 7,634,970 7,634,567
- ------------------------------------------------------------------------------------------------------------------------------------
DLJ Commercial Mortgage Corp., Commercial Mtg. Pass-Through
Certificates, Series 1998-CF2, Cl. A1B, 6.24%, 11/12/31 4,112,103 4,133,178
- ------------------------------------------------------------------------------------------------------------------------------------
First Horizon Alternative Mortgage Securities Trust 2004-FA2, Mtg.
Pass-Through Certificates, Series 2004-FA2, Cl. 3A1, 6%, 1/25/35 3,581,303 3,447,202
- ------------------------------------------------------------------------------------------------------------------------------------
First Horizon Alternative Mortgage Securities Trust 2007-FA2, Mtg.
Pass-Through Certificates, Series 2007-FA2, Cl. 1A1, 5.50%, 4/25/37 4,015,909 3,967,137
- ------------------------------------------------------------------------------------------------------------------------------------
First Union National Bank/Lehman Brothers/Bank of America Commercial
Mtg. Trust, Pass-Through Certificates, Series 1998-C2, Cl. A2, 6.56%, 11/18/35 3,018,393 3,016,328
- ------------------------------------------------------------------------------------------------------------------------------------
GE Capital Commercial Mortgage Corp., Commercial Mtg. Obligations:
Series 2003-C1, Cl. A2, 4.093%, 1/10/38 215,000 213,356
Series 2004-C3, Cl. A2, 4.433%, 7/10/39 1,850,000 1,843,575
Series 2005-C3, Cl. A2, 4.853%, 7/10/45 2,250,000 2,242,238
- ------------------------------------------------------------------------------------------------------------------------------------
Greenwich Capital Commercial Funding Corp., Commercial Mtg.
Pass-Through Certificates:
Series 2005-GG3, Cl. A2, 4.305%, 8/10/42 2,000,000 1,976,127
Series 2005-GG5, Cl. A2, 5.117%, 4/10/37 6,378,000 6,393,115
Series 2007-GG9, Cl. A2, 5.381%, 3/10/39 17,310,000 17,417,099
- ------------------------------------------------------------------------------------------------------------------------------------
GS Mortgage Securities Corp. II, Commercial Mtg. Obligations, Series
2006-GG8, Cl. A2, 5.479%, 11/10/39 1 10,380,000 10,491,961
- ------------------------------------------------------------------------------------------------------------------------------------
GSR Mortgage Loan Trust 2005-4F, CMO, Series 2005-4F, Cl. 6A1, 6.50%,
2/25/35 9,282,505 9,394,280
- ------------------------------------------------------------------------------------------------------------------------------------
JPMorgan Chase Commercial Mortgage Securities Corp., Commercial Mtg.
Pass-Through Certificates:
Series 2005-LDP2, Cl. A2, 4.575%, 7/15/42 860,000 851,190
Series 2005-LDP4, Cl. A2, 4.79%, 10/15/42 3,566,000 3,544,350
Series 2006-CB14, Cl. A4, 5.481%, 12/12/44 9,520,000 9,646,824
Series 2007-LD12, Cl. A2, 5.827%, 2/15/51 4,480,000 4,575,575
Series 2007-LDPX, Cl. A2S, 5.305%, 1/15/49 6,640,000 6,649,677

PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

COMMERCIAL Continued
JPMorgan Chase Commercial Mortgage Securities Trust 2005-LDP2,
Commercial Mtg. Pass-Through Certificates, Series 2005-LDP2, Cl. AM,
4.78%, 7/1/42 $ 6,600,000 $ 6,221,558
- ------------------------------------------------------------------------------------------------------------------------------------
JPMorgan Commercial Mortgage Finance Corp., Commercial Mtg.
Pass-Through Certificates, Series 2000-C9, Cl. A2, 7.77%, 10/15/32 4,431,688 4,630,461
- ------------------------------------------------------------------------------------------------------------------------------------
LB-UBS Commercial Mortgage Trust, Commercial Mtg. Pass-Through
Certificates:
Series 2005-C5, Cl. A2, 4.885%, 9/15/30 2,700,000 2,695,959
Series 2006-C1, Cl. A2, 5.084%, 2/11/31 10,240,000 10,257,395
Series 2007-C1, Cl. A2, 5.318%, 1/15/12 13,940,000 14,007,596
Series 2007-C1, Cl. A4, 5.424%, 2/11/40 7,740,000 7,788,469
- ------------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Commercial Conduit Mortgage Trust, Interest-Only
Stripped Mtg.-Backed Security, Series 1998-C1, Cl. IO, 1.434%, 2/18/30 4 4,539,525 117,543
- ------------------------------------------------------------------------------------------------------------------------------------
Lehman Structured Securities Corp., CMO, Series 2002-GE1, Cl. A, 2.514%,
7/26/24 3 181,969 140,116
- ------------------------------------------------------------------------------------------------------------------------------------
Mastr Alternative Loan Trust, CMO Pass-Through Certificates:
Series 2004-6, Cl. 10A1, 6%, 7/25/34 2,113,708 2,093,406
Series 2004-9, Cl. A3, 4.70%, 8/25/34 1 57,747 57,542
- ------------------------------------------------------------------------------------------------------------------------------------
Mastr Asset Securitization Trust 2006-3, Mtg. Pass-Through Certificates,
Series 2006-3, Cl. 2A1, 5.239%, 10/25/36 1 21,522,438 21,205,385
- ------------------------------------------------------------------------------------------------------------------------------------
Nomura Asset Securities Corp., Commercial Mtg. Pass-Through Certificates,
Series 1998-D6, Cl. A1B, 6.59%, 3/15/30 5,784,200 5,798,037
- ------------------------------------------------------------------------------------------------------------------------------------
Prudential Mortgage Capital Co. II LLC, Commercial Mtg. Pass-Through
Certificates, Series PRU-HTG 2000-C1, Cl. A2, 7.306%, 10/6/15 182,000 193,005
- ------------------------------------------------------------------------------------------------------------------------------------
RALI Series 2003-QS1 Trust, Mtg. Asset-Backed Pass-Through Certificates,
Series 2003-QS1, Cl. A2, 5.75%, 1/25/33 1,292,303 1,285,886
- ------------------------------------------------------------------------------------------------------------------------------------
RALI Series 2007-QS6 Trust, Mtg. Asset-Backed Pass-Through Certificates,
Series 2007-QS6, Cl. A114, 5.75%, 4/25/37 5,485,305 5,422,237
- ------------------------------------------------------------------------------------------------------------------------------------
Residential Asset Securitization Trust 2006-A9CB, CMO Pass-Through
Certificates, Series 2006-A9CB, Cl. A5, 6%, 9/25/36 5,756,394 5,745,781
- ------------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Inc., Interest-Only Commercial
Mtg. Pass-Through Certificates, Series 1999-C1, Cl. X, (5.456)%, 5/18/32 4 172,540,333 265,850
- ------------------------------------------------------------------------------------------------------------------------------------
Wachovia Bank Commercial Mortgage Trust 2005-C17, Commercial Mtg.
Pass-Through Certificates, Series 2005-C17, Cl. A2, 4.782%, 3/15/42 3,830,000 3,813,560
- ------------------------------------------------------------------------------------------------------------------------------------
Wachovia Bank Commercial Mortgage Trust 2006-C29, Commercial Mtg.
Pass-Through Certificates, Series 2006-C29, Cl. A2, 5.272%, 11/15/48 2,146,000 2,151,022
- ------------------------------------------------------------------------------------------------------------------------------------
WaMu, Mtg. Pass-Through Certificates:
Series 2003-AR9, Cl. 2A, 4.047%, 9/25/33 1 6,321,620 6,285,346
Series 2006-AR8, Cl. 2A1, 6.133%, 8/25/36 1 18,818,842 18,815,426
- ------------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage-Backed Securities 2004-V Trust, Mtg. Pass-Through
Certificates, Series 2004-V, Cl. 1A1, 3.836%, 10/1/34 1 11,500,434 11,383,176
-----------------
300,170,981

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

PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

MANUFACTURED HOUSING--1.5%
Wells Fargo Mortgage-Backed Securities 2006-AR12 Trust, Mtg.
Pass-Through Certificates, Series 2006-AR12, Cl. 2A1, 6.102%, 9/25/36 1 $ 14,697,682 $ 14,730,120
- ------------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage-Backed Securities 2006-AR2 Trust, Mtg. Pass-Through
Certificates, Series 2006-AR2, Cl. 2A5, 5.10%, 3/25/36 1 17,073,965 16,947,337
-----------------
31,677,457

- ------------------------------------------------------------------------------------------------------------------------------------
MULTIFAMILY--8.8%
Banc of America Mortgage Securities, Inc., CMO Pass-Through Certificates:
Series 2003-E, Cl. 2A2, 4.35%, 6/25/33 1 10,137,125 10,100,505
Series 2005-F, Cl. 2A3, 4.716%, 7/25/35 1 12,097,816 12,004,159
- ------------------------------------------------------------------------------------------------------------------------------------
Bear Stearns ARM Trust 2006-4, Mtg. Pass-Through Certificates, Series
2006-4, Cl. 2A1, 5.802%, 10/25/36 1 6,770,362 6,822,386
- ------------------------------------------------------------------------------------------------------------------------------------
Citigroup Mortgage Loan Trust, Inc. 2006-AR5, Mtg. Pass-Through
Certificates, Series 2006-AR5, Cl. 1A3A, 5.894%, 7/25/36 1 5,081,369 5,126,564
- ------------------------------------------------------------------------------------------------------------------------------------
Countrywide Alternative Loan Trust, CMO:
Series 2004-28CB, Cl. 2A4, 5.75%, 1/25/35 10,018,000 9,576,220
Series 2008-85CB, Cl. 2A3, 5.50%, 2/25/36 7,710,000 7,323,490
- ------------------------------------------------------------------------------------------------------------------------------------
Countrywide Home Loans Servicing LP, Mtg. Pass-Through Certificates:
Series 2003-46, Cl. 1A2, 4.122%, 1/19/34 1 8,671,453 8,777,644
Series 2005-HYB1, Cl. 5A1, 4.995%, 3/25/35 1 12,185,295 11,907,318
Series 2007-HY1, Cl. 1A1, 5.695%, 4/25/37 1 12,361,352 12,414,913
- ------------------------------------------------------------------------------------------------------------------------------------
GMAC Mortgage Corp. Loan Trust, Mtg. Pass-Through Certificates:
Series 2004-J4, Cl. A7, 5.50%, 9/25/34 7,166,000 6,858,991
Series 2005-AR4, Cl. 2A1, 5.292%, 7/19/35 1 13,542,118 13,588,938
- ------------------------------------------------------------------------------------------------------------------------------------
GSR Mortgage Loan Trust 2005-AR7, Mtg. Pass-Through Certificates,
Series 2005-AR7, Cl. 3A1, 5.152%, 11/25/35 1 20,119,974 20,103,999
- ------------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Mortgage Investors Trust 2007-2, Mtg. Pass-Through
Certificates, Series 2007-2, Cl. 2A1, 6.007%, 6/25/37 1 16,447,025 16,538,263
- ------------------------------------------------------------------------------------------------------------------------------------
WaMu, Mtg. Pass-Through Certificates, Series 2005-AR8, Cl. 2AB1,
5.115%, 7/25/45 1 73,499 73,340
- ------------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage-Backed Securities 2006-AR2 Trust, Mtg.
Pass-Through Certificates, Series 2006-A R2, Cl. 2A3, 5.10%, 3/1/36 12,854,143 12,847,578
- ------------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage-Backed Securities 2004-AA Trust, Mtg.
Pass-Through Certificates, Series 2004-AA, Cl. 2A, 4.993%, 12/25/34 1 4,010,168 3,954,153
- ------------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage-Backed Securities 2004-S Trust, Mtg. Pass-Through
Certificates, Series 2004-S, Cl. A1, 3.54%, 9/25/34 1 3,326,127 3,275,436
- ------------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage-Backed Securities 2005-AR2 Trust, Mtg.
Pass-Through Certificates, Series 2005-AR2, Cl. 2A2, 4.547%, 3/25/35 1 2,609,580 2,588,730
- ------------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage-Backed Securities 2005-AR4 Trust, Mtg.
Pass-Through Certificates, Series 2005-AR4, Cl. 2A2, 4.524%, 4/25/35 1 4,097,193 4,064,236
- ------------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage-Backed Securities 2006-AR10 Trust, Mtg.
Pass-Through Certificates:
Series 2006-AR10, Cl. 2A1, 5.646%, 7/25/36 1 6,267,986 6,314,963
Series 2006-AR10, Cl. 4A1, 5.56%, 7/25/36 1 8,125,263 8,171,089

PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

MULTIFAMILY Continued
Wells Fargo Mortgage-Backed Securities 2006-AR2 Trust, Mtg.
Pass-Through Certificates, Series 2006-AR2. Cl. 2A6, 5.10%, 3/25/36 1 $ 3,247,983 $ 3,223,895
- ------------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage-Backed Securities 2006-AR6 Trust, Mtg.
Pass-Through Certificates, Series 2006-AR6, Cl. 3A1, 5.093%, 3/25/36 1 3,647,072 3,631,600
-----------------
189,288,410

- ------------------------------------------------------------------------------------------------------------------------------------
OTHER--0.2%
JPMorgan Mortgage Trust, CMO Pass-Through Certificates, Series
2005-S2, Cl. 3A1, 6.756%, 2/25/32 1 3,968,602 4,034,858
- ------------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VI, Inc., Interest-Only Stripped
Mtg.-Backed Security, Series 1987-3, Cl. B, 62.025%, 10/23/17 4 8,386 1,040
- ------------------------------------------------------------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VI, Inc., Principal-Only Stripped
Mtg.-Backed Security, Series1987-3, Cl. A, 1.026%, 10/23/17 5 12,411 11,562
-----------------
4,047,460

- ------------------------------------------------------------------------------------------------------------------------------------
RESIDENTIAL--5.3%
Chase Mortgage Finance Trust Series 2005-S1, Multiclass Mtg.
Pass-Through Certificates, Series 2005-S1, Cl. 1A5, 5.50%, 5/25/35 4,500,000 4,424,711
- ------------------------------------------------------------------------------------------------------------------------------------
Countrywide Alternative Loan Trust, CMO:
Series 2005-18CB, Cl. A8, 5.50%, 5/25/36 9,396,000 9,067,871
Series 2005-J1, Cl. 3A1, 6.50%, 8/25/32 6,625,324 6,769,378
Series 2005-J3, Cl. 3A1, 6.50%, 9/25/34 3,577,168 3,589,354
- ------------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Mortgage Loan Trust 2006-AR, Mtg. Pass-Through
Certificates, Series 2006-AR, Cl. 5A3, 5.427%, 6/25/36 1 4,750,000 4,771,948
- ------------------------------------------------------------------------------------------------------------------------------------
RALI Series 2006-QS13 Trust, Mtg. Asset-Backed Pass-Through Certificates,
Series 2006-QS13, Cl. 1A8, 6%, 9/25/36 4,203,399 4,201,622
- ------------------------------------------------------------------------------------------------------------------------------------
RALI Series 2006-QS5 Trust, Mtg. Asset-Backed Pass-Through Certificates,
Series 2006-QS5, Cl. 2A2, 6%, 4/25/08 3,080,980 3,077,538
- ------------------------------------------------------------------------------------------------------------------------------------
STARM Mortgage Loan Trust 2007-S1, Mtg. Pass-Through Certificates,
Series 2007-S1, Cl. 3A1, 5.004%, 8/1/22 1 19,673,970 19,406,527
- ------------------------------------------------------------------------------------------------------------------------------------
WaMu, Mtg. Pass-Through Certificates:
Series 2006-AR12, Cl. 2A1, 5.75%, 10/25/36 1 18,311,475 18,200,618
Series 2007-HY6, Cl. 2A1, 5.702%, 6/25/37 1 12,382,821 12,227,532
- ------------------------------------------------------------------------------------------------------------------------------------
Washington Mutual Mortgage Loan Trust, Mtg. Pass-Through Certificates,
2007-A, Cl. 1A8, 6%, 2/25/37 15,697,359 15,746,030
- ------------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage-Backed Securities 2006-AR5 Trust, Mtg.
Pass-Through Certificates, Series 2006-AR5, Cl. 2A2, 5.535%, 4/1/36 1 8,098,511 7,360,818
- ------------------------------------------------------------------------------------------------------------------------------------
Wells Fargo Mortgage-Backed Securities 2003-6 Trust, Mtg. Pass-Through
Certificates, Series 2003-6, Cl. 1A1, 5%, 6/25/18 6,821,124 6,786,529
-----------------
115,630,476
-----------------
Total Mortgage-Backed Obligations (Cost $1,809,761,270) 1,838,370,147

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

PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

U.S. GOVERNMENT OBLIGATIONS--0.3%
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Bonds, STRIPS, 3.862%, 2/15/13 8,9 $ 1,520,000 $ 1,270,580
- ------------------------------------------------------------------------------------------------------------------------------------
U.S. Treasury Nts., 4.25%, 9/30/12 8 5,950,000 6,160,576
-----------------
Total U.S. Government Obligations (Cost $7,171,075) 7,431,156

- ------------------------------------------------------------------------------------------------------------------------------------
CORPORATE BONDS AND NOTES--17.1%
- ------------------------------------------------------------------------------------------------------------------------------------
Albertson's, Inc., 8% Sr. Unsec. Debs., 5/1/31 6,950,000 7,085,330
- ------------------------------------------------------------------------------------------------------------------------------------
Barclays Bank plc, 6.278% Perpetual Bonds 10 23,090,000 20,131,709
- ------------------------------------------------------------------------------------------------------------------------------------
Belo Corp., 8% Sr. Unsec. Unsub. Nts., 11/1/08 12,195,000 12,306,535
- ------------------------------------------------------------------------------------------------------------------------------------
Buckeye Partners LP, 4.625% Sr. Nts., 7/15/13 7,560,000 7,265,871
- ------------------------------------------------------------------------------------------------------------------------------------
Caesars Entertainment, Inc., 7.50% Sr. Unsec. Nts., 9/1/09 3 7,245,000 7,700,471
- ------------------------------------------------------------------------------------------------------------------------------------
Capmark Financial Group, Inc., 5.875% Nts., 5/10/12 2 6,985,000 5,534,076
- ------------------------------------------------------------------------------------------------------------------------------------
Centex Corp., 5.80% Sr. Unsec. Nts., 9/15/09 6,190,000 5,703,379
- ------------------------------------------------------------------------------------------------------------------------------------
Chancellor Media CCU, 8% Sr. Unsec. Nts., 11/1/08 5,130,000 5,303,368
- ------------------------------------------------------------------------------------------------------------------------------------
CIT Group Funding Co. of Canada, 4.65% Sr. Unsec. Nts., 7/1/10 5,029,000 4,785,441
- ------------------------------------------------------------------------------------------------------------------------------------
Citigroup, Inc., 8.30% Jr. Sub. Bonds, 12/21/57 1 3,860,000 4,042,014
- ------------------------------------------------------------------------------------------------------------------------------------
Clear Channel Communications, Inc., 6.25% Nts., 3/15/11 6,350,000 5,750,795
- ------------------------------------------------------------------------------------------------------------------------------------
Countrywide Home Loans, Inc., 3.25% Nts., Series L, 5/21/08 8 3,775,000 3,411,637
- ------------------------------------------------------------------------------------------------------------------------------------
Cox Enterprises, Inc., 4.375% Nts., 5/1/08 2 10,245,000 10,212,913
- ------------------------------------------------------------------------------------------------------------------------------------
CSC Holdings, Inc., 7.25% Sr. Unsec. Nts., 7/15/08 7,080,000 7,106,550
- ------------------------------------------------------------------------------------------------------------------------------------
D.R. Horton, Inc., 8% Sr. Nts., 2/1/09 5,694,000 5,536,020
- ------------------------------------------------------------------------------------------------------------------------------------
Delhaize America, Inc., 9% Unsub. Debs., 4/15/31 4,083,000 4,741,082
- ------------------------------------------------------------------------------------------------------------------------------------
Dillard's, Inc., 6.625% Unsec. Nts., 11/15/08 3 4,070,000 4,064,913
- ------------------------------------------------------------------------------------------------------------------------------------
Eastman Kodak Co., 3.625% Nts., Series A, 5/15/08 4,675,000 4,628,250
- ------------------------------------------------------------------------------------------------------------------------------------
EchoStar DBS Corp., 5.75% Sr. Unsec. Nts., 10/1/08 9,370,000 9,381,713
- ------------------------------------------------------------------------------------------------------------------------------------
El Paso Corp., 6.50% Sr. Unsec. Nts., 6/1/08 1,170,000 1,181,110
- ------------------------------------------------------------------------------------------------------------------------------------
Equus Cayman Finance Ltd., 5.50% Unsub. Nts., 9/12/08 2 1,780,000 1,779,379
- ------------------------------------------------------------------------------------------------------------------------------------
Ford Motor Credit Co., 9.75% Sr. Unsec. Nts., 9/15/10 8 15,830,000 15,113,693
- ------------------------------------------------------------------------------------------------------------------------------------
Gap, Inc. (The), 10.05% Unsub. Nts., 12/15/08 1 530,000 549,875
- ------------------------------------------------------------------------------------------------------------------------------------
General Motors Acceptance Corp., 8% Bonds, 11/1/31 7,415,000 6,235,058
- ------------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Capital, Inc. (The), 6.345% Sub. Bonds, 2/15/34 8 17,505,000 15,856,677
- ------------------------------------------------------------------------------------------------------------------------------------
HBOS plc, 6.413% Sub. Perpetual Bonds, Series A 2,10 30,900,000 25,213,844
- ------------------------------------------------------------------------------------------------------------------------------------
HSBC Finance Capital Trust IX, 5.911% Nts., 11/30/35 1 22,900,000 21,221,453
- ------------------------------------------------------------------------------------------------------------------------------------
Hyundai Motor Manufacturing Alabama LLC, 5.30% Sr. Unsec. Nts., 12/19/08 2 3,145,000 3,156,561
- ------------------------------------------------------------------------------------------------------------------------------------
IPALCO Enterprises, Inc., 8.375% Sr. Sec. Nts., 11/14/08 1,3 1,535,000 1,569,538
- ------------------------------------------------------------------------------------------------------------------------------------
Kaneb Pipe Line Operating Partnership LP, 5.875% Sr. Unsec. Nts., 6/1/13 6,075,000 6,189,398
- ------------------------------------------------------------------------------------------------------------------------------------
Lennar Corp., 7.625% Sr. Unsec. Nts., 3/1/09 8 6,355,000 6,056,251
- ------------------------------------------------------------------------------------------------------------------------------------
Liberty Media Corp., 7.875% Sr. Nts., 7/15/09 2,625,000 2,678,130
- ------------------------------------------------------------------------------------------------------------------------------------
Liberty Media LLC, 7.75% Sr. Nts., 7/15/09 9,495,000 9,739,107

PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

CORPORATE BONDS AND NOTES Continued
- ------------------------------------------------------------------------------------------------------------------------------------
MBIA, Inc., 5.70% Sr. Unsec. Unsub. Nts., 12/1/34 7 $ 4,160,000 $ 3,309,613
- ------------------------------------------------------------------------------------------------------------------------------------
MetLife, Inc., 6.40% Jr. Unsec. Sub. Bonds, 12/15/66 1 16,930,000 15,564,646
- ------------------------------------------------------------------------------------------------------------------------------------
MGM Mirage, Inc., 6% Sr. Sec. Nts., 10/1/09 11,840,000 11,840,000
- ------------------------------------------------------------------------------------------------------------------------------------
Monongahela Power Co., 7.36% Unsec. Nts., Series A, 1/15/10 7,977,000 8,409,856
- ------------------------------------------------------------------------------------------------------------------------------------
Morton International, Inc., 9.75% Credit Sensitive Nts., 6/1/20 1 85,000 111,764
- ------------------------------------------------------------------------------------------------------------------------------------
NCR Corp., 7.125% Sr. Unsec. Unsub. Nts., 6/15/09 6,495,000 6,714,947
- ------------------------------------------------------------------------------------------------------------------------------------
Orion Network Systems, Inc., 12.50% Sr. Unsub. Disc. Nts., 1/15/07 3,11 200,000 2
- ------------------------------------------------------------------------------------------------------------------------------------
PF Export Receivables Master Trust, 3.748% Sr. Nts., Series B, 6/1/13 2 1,160,664 1,144,928
- ------------------------------------------------------------------------------------------------------------------------------------
Popular North America, Inc.:
3.875% Sr. Bonds, Series E, 10/1/08 5,450,000 5,398,781
4.70% Nts., 6/30/09 6,799,000 6,734,382
- ------------------------------------------------------------------------------------------------------------------------------------
Prudential Holdings LLC, 8.695% Bonds, Series C, 12/18/23 2 9,165,000 11,003,774
- ------------------------------------------------------------------------------------------------------------------------------------
Prudential Insurance Co. of America, 8.30% Nts., 7/1/25 2 8,725,000 10,314,172
- ------------------------------------------------------------------------------------------------------------------------------------
Pulte Homes, Inc., 4.875% Nts., 7/15/09 4,465,000 4,157,527
- ------------------------------------------------------------------------------------------------------------------------------------
Qwest Corp., 5.625% Unsec. Nts., 11/15/08 3 729,000 729,000
- ------------------------------------------------------------------------------------------------------------------------------------
Real Time Data Co., 11% Disc. Nts., 5/31/09 3,11,12 476,601 --
- ------------------------------------------------------------------------------------------------------------------------------------
SLM Corp.:
3.95% Nts., Series A, 8/15/08 1,780,000 1,737,308
4% Nts., 1/15/09 6,926,000 6,673,921
- ------------------------------------------------------------------------------------------------------------------------------------
Standard Pacific Corp., 5.125% Sr. Unsec. Unsub. Nts., 4/1/09 8 3,565,000 2,834,175
- ------------------------------------------------------------------------------------------------------------------------------------
TEPPCO Partners LP, 6.125% Nts., 2/1/13 3,060,000 3,191,063
- ------------------------------------------------------------------------------------------------------------------------------------
Tribune Co., 5.50% Nts., Series E, 10/6/08 3 5,370,000 5,081,363
- ------------------------------------------------------------------------------------------------------------------------------------
Univision Communications, Inc., 3.875% Sr. Unsec. Nts., 10/15/08 1,795,000 1,761,344
- ------------------------------------------------------------------------------------------------------------------------------------
Valero Logistics Operations LP, 6.05% Nts., 3/15/13 2,712,000 2,775,241
- ------------------------------------------------------------------------------------------------------------------------------------
Westar Energy, Inc., 7.125% Sr. Unsec. Nts., 8/1/09 7,494,000 7,734,993
-----------------
Total Corporate Bonds and Notes (Cost $380,562,268) 368,454,941

SHARES
- ------------------------------------------------------------------------------------------------------------------------------------

COMMON STOCKS--0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Chesapeake Energy Corp. (Cost $9) 181 7,095

UNITS
- ------------------------------------------------------------------------------------------------------------------------------------

RIGHTS, WARRANTS AND CERTIFICATES--0.0%
- ------------------------------------------------------------------------------------------------------------------------------------
Long Distance International, Inc. Wts., Exp. 4/13/08 3,13 150 --
- ------------------------------------------------------------------------------------------------------------------------------------
Pathmark Stores, Inc. Wts., Exp. 9/19/10 3,13 2,028 71
-----------------
Total Rights, Warrants and Certificates (Cost $5,577) 71

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

SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------------------

INVESTMENT COMPANIES--2.5%
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Institutional Money Market Fund, Cl. E, 5.03% 14,15
(Cost $52,911,646) 52,911,646 $ 52,911,646
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments, at Value (excluding Investments Purchased with
Cash Collateral from Securities Loaned) (Cost $2,360,232,048) 2,373,386,828

PRINCIPAL
AMOUNT
- ------------------------------------------------------------------------------------------------------------------------------------

INVESTMENTS PURCHASED WITH CASH COLLATERAL FROM SECURITIES LOANED--1.3% 16
- ------------------------------------------------------------------------------------------------------------------------------------
Five Finance, Inc., 4.38%, 1/2/08 $ 2,999,928 2,999,928
- ------------------------------------------------------------------------------------------------------------------------------------
Protective Life Insurance Co., 5.16%, 1/29/08 2,000,000 2,000,000
- ------------------------------------------------------------------------------------------------------------------------------------
Undivided interest of 1.99% in joint repurchase agreement (Principal
Amount/Value $1,000,000,000, with a maturity value of $1,000,250,000)
with Bank of America NA, 4.50%, dated 12/31/07, to be repurchased at
$19,945,354 on 1/2/08, collateralized by U.S. Agency Mortgages, 5%, 5/1/35,
with a value of $1,020,000,000 19,940,369 19,940,369
- ------------------------------------------------------------------------------------------------------------------------------------
Whitehawk CDO Funding Corp., 5.04%, 3/17/08 3,000,000 3,000,000
-----------------
Total Investments Purchased with Cash Collateral from Securities Loaned
(Cost $27,940,297) 27,940,297

- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $2,388,172,345) 111.3% 2,401,327,125
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (11.3) (244,454,145)
------------------------------------
NET ASSETS 100.0% $ 2,156,872,980
====================================

INDUSTRY CLASSIFICATIONS ARE UNAUDITED

FOOTNOTES TO STATEMENT OF INVESTMENTS

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

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 $68,999,594 or 3.20% of the Fund's net
assets as of December 31, 2007.

3. Illiquid security. The aggregate value of illiquid securities as of December
31, 2007 was $20,756,763, which represents 0.96% of the Fund's net assets. See
Note 8 of accompanying Notes.

4. Interest-Only Strips represent the right to receive the monthly interest
payments on an underlying pool of mortgage loans. These securities typically
decline in price as interest rates decline. Most other fixed income securities
increase in price when interest rates decline. The principal amount of the
underlying pool represents the notional amount on which current interest is
calculated. The price of these securities is typically more sensitive to changes
in prepayment rates than traditional mortgage-backed securities (for example,
GNMA pass-throughs). Interest rates disclosed represent current yields based
upon the current cost basis and estimated timing and amount of future cash
flows. These securities amount to $60,205,794 or 2.79% of the Fund's net assets
as of December 31, 2007.

5. Principal-Only Strips represent the right to receive the monthly principal
payments on an underlying pool of mortgage loans. The value of these securities
generally increases as interest rates decline and prepayment rates rise. The
price of these securities is typically more volatile than that of coupon-bearing
bonds of the same maturity. Interest rates disclosed represent current yields
based upon the current cost basis and estimated timing of future cash flows.
These securities amount to $1,572,139 or 0.07% of the Fund's net assets as of
December 31, 2007.

6. When-issued security or delayed delivery to be delivered and settled after
December 31, 2007. See Note 1 of accompanying Notes.

7. All or a portion of the security is held in collateralized accounts to cover
initial margin requirements on open futures contracts. The aggregate market
value of such securities is $4,460,514. See Note 6 of accompanying Notes.

8. Partial or fully-loaned security. See Note 9 of accompanying Notes.

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

10. This bond has no contractual maturity date, is not redeemable and
contractually pays an indefinite stream of interest. Rate reported represents
the current interest rate for this variable rate security.

11. Issue is in default. See Note 1 of accompanying Notes.

12. Interest or dividend is paid-in-kind, when applicable.

13. Non-income producing security.

14. Rate shown is the 7-day yield as of December 31, 2007.

15. Is or was an affiliate, as defined in the Investment Company Act of 1940, at
or during the period ended December 31, 2007, by virtue of the Fund owning at
least 5% of the voting securities of the issuer or as a result of the Fund and
the issuer having the same investment adviser. Transactions during the period in
which the issuer was an affiliate are as follows:

SHARES GROSS GROSS SHARES
DECEMBER 31, 2006 ADDITIONS REDUCTIONS DECEMBER 31, 2007
- ----------------------------------------------------------------------------------------------------

Oppenheimer Institutional
Money Market Fund, Cl. E 67,486,873 1,076,035,420 1,090,610,647 52,911,646

DIVIDEND
VALUE INCOME
- ----------------------------------------------------------------------------------------------------

Oppenheimer Institutional Money Market Fund, Cl. E $ 52,911,646 $4,729,851

16. The security/securities have been segregated to satisfy the forward
commitment to return the cash collateral received in securities lending
transactions upon the borrower's return of the securities loaned. See Note 9 of
accompanying Notes.

17. Short-fall security.

- ---------------------------------------------------------------------------------------------------------------------------------
FUTURES CONTRACTS AS OF DECEMBER 31, 2007 ARE AS FOLLOWS:
- ---------------------------------------------------------------------------------------------------------------------------------
UNREALIZED
NUMBER OF EXPIRATION APPRECIATION
CONTRACT DESCRIPTION BUY/SELL CONTRACTS DATE VALUE (DEPRECIATION)
- ---------------------------------------------------------------------------------------------------------------------------------

U.S. Long Bonds Buy 2,208 3/19/08 $256,956,000 $ (1,620,615)
U.S. Treasury Nts., 2 yr. Sell 1,928 3/31/08 405,362,000 63,381
U.S. Treasury Nts., 5 yr. Sell 437 3/31/08 48,192,906 (42,851)
U.S. Treasury Nts., 10 yr. Sell 9 3/19/08 1,020,516 (10,658)
---------------
$ (1,610,743)
===============

- ---------------------------------------------------------------------------------------------------------------------------------
CREDIT DEFAULT SWAPS AS OF DECEMBER 31, 2007 ARE AS FOLLOWS:
- ---------------------------------------------------------------------------------------------------------------------------------
PAY/
NOTIONAL RECEIVE PREMIUM
SWAP BUY/SELL AMOUNT FIXED TERMINATION PAID/
COUNTERPARTY REFERENCE ENTITY CREDIT PROTECTION (000S) RATE DATE (RECEIVED) VALUE
- ---------------------------------------------------------------------------------------------------------------------------------

Barclays Bank plc:
Beazer Homes USA, Inc. Sell $ 1,690 2.1000% 6/20/08 $ -- $ (90,389)
Capmark Financial Group, Inc. Sell 3,950 1.0000 6/20/12 -- (787,273)
CDX.NA.IG.9 Index Sell 38,560 0.6000 12/20/12 (240,958) (283,385)
CDX.NA.IG.9 Index Sell 19,275 0.6000 12/20/12 (145,096) (141,656)
Countrywide Home Loans, Inc. Sell 5,980 0.7500 9/20/08 -- (876,642)
Dillard's, Inc. Sell 3,610 1.9000 12/20/08 -- (23,850)
General Mills, Inc. Sell 3,390 0.4000 12/20/12 -- (4,266)
iStar Financial, Inc. Sell 5,555 4.4000 12/20/12 -- 96,167

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

- ---------------------------------------------------------------------------------------------------------------------------------
CREDIT DEFAULT SWAPS: Continued
- ---------------------------------------------------------------------------------------------------------------------------------
PAY/
NOTIONAL RECEIVE PREMIUM
SWAP BUY/SELL CREDIT AMOUNT FIXED TERMINATION PAID/
COUNTERPARTY REFERENCE ENTITY PROTECTION (000S) RATE DATE (RECEIVED) VALUE
- ---------------------------------------------------------------------------------------------------------------------------------

Barclays Bank plc: Continued
Lehman Brothers Holdings, Inc. Sell $ 8,735 0.4900% 9/20/10 $ -- $ (221,320)
Merrill Lynch $amp; Co., Inc. Sell 18,610 0.6800 9/20/08 -- (158,397)
Six Flags, Inc. Sell 4,885 8.2500 12/20/08 -- (68,848)
Toys "R" Us, Inc. Sell 4,370 1.4500 9/20/08 -- (86,926)
- ---------------------------------------------------------------------------------------------------------------------------------
Credit Suisse International:
ArvinMeritor, Inc. Sell 6,980 1.5500 9/20/08 -- (86,503)
Freescale Semiconductor, Inc. Sell 3,600 0.6000 3/20/08 -- (14,991)
Freescale Semiconductor, Inc. Sell 4,100 0.7500 3/20/08 -- (15,523)
Intelsat Ltd. Sell 4,600 3.4500 9/20/08 -- (25,333)
Quebecor World, Inc. Sell 5,125 2.6000 9/20/08 -- (461,122)
Rite Aid Corp. Sell 6,565 0.8750 6/20/08 -- (146,916)
Saks, Inc. Sell 7,380 2.0000 9/20/08 -- (22,723)
The Goodyear Tire $amp; Rubber Co. Sell 7,205 1.5500 9/20/08 -- 15,723
TXU Corp. Sell 1,680 5.9100 12/20/12 -- 48,611
TXU Corp. Sell 1,620 6.0500 12/20/12 -- 55,682
TXU Corp. Sell 1,685 6.0000 12/20/12 -- 48,761
Univision Communications, Inc. Sell 1,840 0.7500 3/20/08 -- (5,302)
- ---------------------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG:
ABX.HE.AA.06-2 Index Sell 2,000 0.1700 5/25/46 (239,981) (762,306)
Allied Waste North America, Inc. Sell 1,830 2.0000 9/20/09 -- (8,912)
Allied Waste North America, Inc. Sell 3,020 2.0000 9/20/09 -- (14,707)
Capital One Bank Buy 6,035 1.7000 12/20/12 -- 106,601
Capital One Bank Buy 3,210 1.8000 12/20/12 -- 41,165
CDX.NA.HY.8 Index Sell 4,130 2.7500 6/20/12 (284,282) (205,085)
CDX.NA.HY.8 Index Sell 3,885 2.7500 6/20/12 (337,186) (192,919)
CDX.NA.HY.8 Index Sell 3,885 2.7500 6/20/12 (235,204) (192,919)
CDX.NA.HY.8 Index Sell 1,995 2.7500 6/20/12 (160,528) (99,066)
CDX.NA.IG.9 Index Sell 77,960 0.6000 12/20/12 (469,803) (587,812)
CDX.NA.IG.9 Index Sell 38,975 0.6000 12/20/12 (222,078) (293,868)
Centex Corp. Sell 1,765 1.5500 9/20/09 -- (79,796)
CIT Group, Inc. Sell 850 5.0000 12/20/08 -- 5,285
Countrywide Home Loans, Inc. Sell 5,180 3.2500 9/20/08 -- (671,485)
Dillard's, Inc. Sell 2,055 0.7500 9/20/08 -- (37,354)
Georgia-Pacific Corp. Sell 7,075 1.7500 9/20/08 -- 44,785
Intelsat Ltd. Sell 1,830 2.8500 9/20/08 -- (11,254)
iStar Financial, Inc. Sell 5,320 3.0000 12/20/08 -- (97,645)
iStar Financial, Inc. Sell 880 4.3200 12/20/12 -- 9,883
iStar Financial, Inc. Sell 320 4.5000 12/20/12 -- 6,721
iStar Financial, Inc. Sell 9,140 2.9250 12/20/08 -- (174,339)
Lehman Brothers Holdings, Inc. Sell 9,920 1.4100 9/20/08 -- 1,770
Levi Strauss $amp; Co. Sell 2,965 0.9000 9/20/08 -- (31,866)
Levi Strauss $amp; Co. Sell 3,920 1.0000 9/20/08 -- (39,207)
MBIA, Inc. Sell 2,670 4.9000 12/20/12 -- (121,707)
MBIA, Inc. Sell 4,340 0.5200 9/20/08 -- (253,458)
MBIA, Inc. Sell 4,350 0.6000 9/20/08 -- (251,771)
Merrill Lynch $amp; Co., Inc. Sell 3,610 1.8500 6/20/08 -- 11,642

PAY/
NOTIONAL RECEIVE PREMIUM
SWAP BUY/SELL CREDIT AMOUNT FIXED TERMINATION PAID/
COUNTERPARTY REFERENCE ENTITY PROTECTION (000S) RATE DATE (RECEIVED) VALUE
- ---------------------------------------------------------------------------------------------------------------------------------

Deutsche Bank AG: Continued
Owens-Illinois, Inc. Sell $ 3,880 1.2500% 9/20/08 $ -- $ 8,573
Tenet Healthcare Corp. Sell 6,900 1.6000 3/20/09 -- (172,047)
The Bear Stearns Cos., Inc. Sell 18,130 2.3500 9/20/08 -- 37,348
Washington Mutual, Inc. Sell 5,895 4.5000 12/20/08 -- (31,450)
Washington Mutual, Inc. Sell 1,195 4.5000 12/20/08 -- (6,375)
- ---------------------------------------------------------------------------------------------------------------------------------
Goldman Sachs Capital Markets LP:
ABX.HE.AA.06-2 Index Sell 2,680 0.1700 5/25/46 (1,058,537) (1,018,337)
ABX.HE.AA.06-2 Index Sell 730 0.1700 5/25/46 (60,146) (277,383)
Amkor Technology, Inc. Sell 620 2.6500 9/20/08 -- 5,360
Capmark Financial Group, Inc. Sell 4,595 0.9500 6/20/12 -- (914,548)
Citigroup, Inc. Sell 6,105 1.2500 9/20/08 -- (155,673)
D.R. Horton, Inc. Sell 2,490 4.2100 12/20/08 -- (2,686)
Dole Food Co., Inc. Sell 7,090 3.8800 9/20/08 -- (31,916)
First Data Corp. Sell 4,365 1.1500 9/20/08 -- (31,477)
General Mills, Inc. Sell 6,860 0.3800 12/20/12 -- (1,889)
iStar Financial, Inc. Sell 1,445 3.9500 12/20/12 -- 1,017
K. Hovnanian Enterprises, Inc. Sell 3,185 6.7500 9/20/08 -- (250,353)
Merrill Lynch $amp; Co., Inc. Sell 8,170 1.8500 6/20/08 -- 27,658
Pulte Homes, Inc. Sell 7,100 2.7500 9/20/09 -- (223,313)
Quebecor World, Inc. Sell 2,130 3.0000 9/20/08 -- (161,054)
Sara Lee Corp. Buy 5,975 0.4190 9/20/12 -- (20,734)
Six Flags, Inc. Sell 315 10.8500 12/20/08 -- 2,148
Smurfit-Stone Container
Enterprises, Inc. Sell 7,175 1.4500 9/20/08 -- 1,558
Standard Pacific Corp. Sell 3,865 6.6250 9/20/08 -- (395,481)
- ---------------------------------------------------------------------------------------------------------------------------------
Lehman Brothers Special Financing, Inc.:
ABX.HE.AA.06-2 Index Sell 990 0.1700 5/25/46 (242,494) (375,654)
Capital One Bank Buy 3,635 1.8000 12/20/12 -- 58,332
Dole Food Co., Inc. Sell 1,320 3.4500 9/20/08 -- (4,168)
D.R. Horton, Inc. Sell 7,430 4.2000 12/20/08 -- (3,611)
General Mills, Inc. Sell 4,915 0.4000 12/20/12 -- (2,156)
Georgia-Pacific LLC Sell 800 0.8000 12/20/08 -- (4,457)
Harrah's Operating Co., Inc. Sell 2,620 2.6000 12/20/08 -- (20,221)
Levi Strauss $amp; Co. Sell 1,400 1.7500 9/20/08 -- (3,597)
Morgan Stanley Sell 18,645 0.6400 9/20/08 -- (79,318)
Nortel Networks Corp. Sell 1,135 1.8500 9/20/08 -- (2,791)
Residential Capital LLC Sell 5,000 5.0000 6/20/08 (650,000) (547,221)
Rite Aid Corp. Sell 1,750 3.3000 9/20/08 -- (21,949)
Saks, Inc. Sell 1,100 2.2000 12/20/08 -- (2,360)
The Bear Stearns Cos., Inc. Sell 3,100 2.1000 9/20/08 -- 1,208
Toys "R" Us, Inc. Sell 1,400 3.3000 9/20/08 -- (9,244)
Tribune Co. Sell 2,390 7.3500 12/20/08 -- (117,301)
Univision Communications, Inc. Sell 860 3.0000 12/20/08 -- (5,303)
Univision Communications, Inc. Sell 7,420 3.0000 12/20/08 -- (28,015)
Washington Mutual, Inc. Sell 2,785 4.4000 12/20/08 -- (25,367)

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

- -----------------------------------------------------------------------------------------------------------------------------------
CREDIT DEFAULT SWAPS: Continued
- -----------------------------------------------------------------------------------------------------------------------------------
PAY/
NOTIONAL RECEIVE PREMIUM
SWAP BUY/SELL CREDIT AMOUNT FIXED TERMINATION PAID/
COUNTERPARTY REFERENCE ENTITY PROTECTION (000S) RATE DATE (RECEIVED) VALUE
- -----------------------------------------------------------------------------------------------------------------------------------

Morgan Stanley Capital Services, Inc:
ABX.HE.AA.06-2 Index Sell $ 600 0.1700% 5/25/46 $ (47,935) $ (227,669)
ABX.HE.AA.06-2 Index Sell 1,240 0.1700 5/25/46 (123,994) (465,119)
Beazer Homes USA, Inc. Sell 4,840 2.1500 6/20/08 -- (224,130)
CDX.NA.IG.9 Index Sell 24,160 0.6000 12/20/12 (191,276) (182,967)
Clear Channel
Communications, Inc. Sell 450 6.3000 9/20/12 -- 16,761
Countrywide Home Loans, Inc. Sell 4,080 0.7500 9/20/08 -- (538,425)
Countrywide Home Loans, Inc. Sell 11,880 0.4200 6/20/09 -- (2,417,240)
Dow Jones
CDX.NA.IG.HVOL.7 Index Sell 17,000 0.7500 12/20/11 (64,344) (662,672)
First Data Corp. Sell 2,675 1.3500 9/20/08 -- (18,590)
Ford Motor Co. Sell 4,900 6.0500 12/20/17 -- (415,385)
Ford Motor Co. Sell 6,445 7.1500 12/20/16 -- (182,743)
Ford Motor Co. Sell 3,065 7.0500 12/20/16 -- (101,174)
General Motors Corp. Sell 2,860 5.0500 12/20/17 -- (330,958)
General Motors Corp. Sell 3,250 5.8000 12/20/16 -- (235,178)
General Motors Corp. Sell 3,440 5.7500 12/20/16 -- (257,180)
Harrah's Operating Co., Inc. Sell 5,585 2.2000 9/20/08 -- (30,732)
Inco Ltd. Buy 3,670 0.6300 3/20/17 -- (18,557)
Inco Ltd. Buy 3,660 0.7000 3/20/17 -- (37,650)
Intelsat Ltd. Sell 650 2.7500 12/20/08 -- (8,673)
J.C. Penney Co., Inc. Sell 5,215 1.3000 12/20/17 -- (206,012)
J.C. Penney Co., Inc. Sell 4,665 1.0700 12/20/17 -- (262,027)
K. Hovnanian Enterprises, Inc. Sell 1,950 1.8500 6/20/08 -- (133,371)
K. Hovnanian Enterprises, Inc. Sell 1,950 1.8500 6/20/08 -- (133,371)
Kohl's Corp. Buy 7,745 0.8700 12/20/17 -- 129,594
Kohl's Corp. Buy 6,995 0.6600 12/20/17 -- 229,033
Lennar Corp. Sell 7,820 2.9000 12/20/08 -- (297,700)
Residential Capital LLC Sell 1,095 5.0000 6/20/08 (147,825) (131,712)
Residential Capital LLC Sell 1,525 5.0000 6/20/08 (221,125) (183,434)
Residential Capital LLC Sell 2,800 5.0000 6/20/08 (406,000) (336,798)
Residential Capital LLC Sell 10,585 6.1200 9/20/08 -- (1,730,851)
Sara Lee Corp. Buy 1,510 0.3900 9/20/12 -- (5,624)
Sara Lee Corp. Buy 7,680 0.4180 9/20/12 -- (36,114)
Toys "R" Us, Inc. Sell 2,605 2.5500 9/20/08 -- (28,038)
Tribune Co. Sell 4,225 1.0000 6/20/08 -- (190,338)
Vale Overseas Ltd. Sell 3,670 1.1000 3/20/17 -- (64,256)
Vale Overseas Ltd. Sell 3,660 1.1700 3/20/17 -- (45,391)
---------------------------
$(5,548,792) $(21,724,983)
===========================

- ------------------------------------------------------------------------------------------------------------------
INTEREST RATE SWAPS AS OF DECEMBER 31, 2007 ARE AS FOLLOWS:
- ------------------------------------------------------------------------------------------------------------------
SWAP NOTIONAL PAID BY RECEIVED BY TERMINATION
COUNTERPARTY AMOUNT THE FUND THE FUND DATE VALUE
- ------------------------------------------------------------------------------------------------------------------

Three-Month
Credit Suisse International $ 19,780,000 USD BBA LIBOR 5.428% 8/7/17 $ 1,362,526
- ------------------------------------------------------------------------------------------------------------------
Three-Month
Deutsche Bank AG 16,700,000 USD BBA LIBOR 5.445 8/8/17 1,275,263
-----------
$ 2,637,789
===========

Index abbreviation is as follows:
BBA LIBOR British Bankers' Association London-Interbank Offered Rate

- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN SWAPS AS OF DECEMBER 31, 2007 ARE AS FOLLOWS:
- ------------------------------------------------------------------------------------------------------------------
SWAP NOTIONAL PAID BY RECEIVED BY TERMINATION
COUNTERPARTY AMOUNT THE FUND THE FUND DATE VALUE
- ------------------------------------------------------------------------------------------------------------------

If negative, the If positive, the Total
absolute value Return of the
of the Lehman Lehman Brothers
Brothers U.S. U.S. CMBS AAA
CMBS AAA 8.5+ Index minus
Barclays Bank plc $ 31,280,000 8.5+ Index 20 basis points 6/1/08 $ 524,934
- ------------------------------------------------------------------------------------------------------------------
Deutsche Bank AG:
If negative, the If positive, the Total
absolute value Return of the
of the Lehman Lehman Brothers
Brothers U.S. U.S. CMBS AAA
CMBS AAA 8.5+ Index minus
19,020,000 8.5+ Index 45 basis points 2/1/08 331,688

If negative, the If positive, the
absolute value Total Return of the
of the Lehman Lehman Brothers
Brothers U.S. U.S. CMBS AAA
CMBS AAA 8.5+ Index plus 60
56,660,000 8.5+ Index basis points 2/1/08 1,037,666

If negative, the If positive, the Total
absolute value Return of the
of the Lehman Lehman Brothers
Brothers U.S. U.S. CMBS AAA
CMBS AAA 8.5+ Index minus
14,960,000 8.5+ Index 20 basis points 5/1/08 264,003

If negative, the If positive, the
absolute value Total Return of the
of the Lehman Lehman Brothers
Brothers U.S. U.S. CMBS AAA
CMBS AAA 8.5+ Index plus 25
5,100,000 8.5+ Index basis points 2/1/08 91,913

If negative, the If positive, the Total
absolute value Return of the
of the Lehman Lehman Brothers
Brothers U.S. U.S. CMBS AAA
CMBS AAA 8.5+ Index plus 55
1,976,000 8.5+ Index basis points 5/1/08 36,106

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

- ------------------------------------------------------------------------------------------------------------------
TOTAL RETURN SWAPS: Continued
- ------------------------------------------------------------------------------------------------------------------
SWAP NOTIONAL PAID BY THE RECEIVED BY THE TERMINATION
COUNTERPARTY AMOUNT FUND FUND DATE VALUE
- ------------------------------------------------------------------------------------------------------------------

Lehman Brothers Special Financing, Inc.:
If positive, the
If negative, the Total Return of
absolute value the Lehman
of the Lehman Brothers U.S.
Brothers U.S. CMBS AAA 8.5+
CMBS AAA Index minus 25
$ 11,550,000 8.5+ Index basis points 5/1/08 $ 201,785

If negative, the If positive, the
absolute value Total Return of
of the Lehman the Lehman
Brothers U.S. Brothers U.S.
CMBS AAA CMBS AAA 8.5+
23,460,000 8.5+ Index Index 2/1/08 414,259

If positive, the
If negative, the Total Return of
absolute value the Lehman
of the Lehman Brothers U.S.
Brothers U.S. CMBS AAA 8.5+
CMBS AAA Index minus 40
36,400,000 8.5+ Index basis points 6/1/08 629,233

If positive, the
If negative, the Total Return of
absolute value the Lehman
of the Lehman Brothers U.S.
Brothers U.S. CMBS AAA 8.5+
CMBS AAA Index minus 20
27,300,000 8.5+ Index basis points 5/1/08 479,270

If positive, the
If negative, the Total Return of
absolute value the Lehman
of the Lehman Brothers U.S.
Brothers U.S. CMBS AAA 8.5+
CMBS AAA Index plus 60
20,687,000 8.5+ Index basis points 2/1/08 374,601

If positive, the
If negative, the Total Return of
absolute value the Lehman
of the Lehman Brothers U.S.
Brothers U.S. CMBS AAA 8.5+
CMBS AAA Index plus 55
31,250,000 8.5+ Index basis points 5/1/08 564,705

If positive, the
If negative, the Total Return of
absolute value the Lehman
of the Lehman Brothers U.S.
Brothers U.S. CMBS AAA 8.5+
CMBS AAA Index minus 25
10,540,000 8.5+ Index basis points 3/1/08 184,139

SWAP NOTIONAL PAID BY THE RECEIVED BY THE TERMINATION
COUNTERPARTY AMOUNT FUND FUND DATE VALUE
- ------------------------------------------------------------------------------------------------------------------

Lehman Brothers Special Financing, Inc.: Continued

If negative, If positive, the
the absolute Total Return of
value of the the Lehman
Lehman Brothers U.S.
Brothers U.S. CMBS AAA 8.5+
CMBS AAA Index plus 45
$ 39,950,000 8.5+ Index basis points 5/1/08 $ 718,922
- ------------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital Services, Inc.:

If negative, If positive, the
the absolute Total Return of
value of the the Lehman
Lehman Brothers U.S.
Brothers U.S. CMBS AAA 8.5+
CMBS AAA Index minus 25
5,250,000 8.5+ Index basis points 5/1/08 80,808

If negative, If positive, the
the absolute Total Return of
value of the the Lehman
Lehman Brothers U.S.
Brothers U.S. CMBS AAA 8.5+
CMBS AAA Index minus 40
25,800,000 8.5+ Index basis points 6/1/08 394,491

If negative, If positive, the
the absolute Total Return of
value of the the Lehman
Lehman Brothers U.S.
Brothers U.S. CMBS AAA 8.5+
CMBS AAA Index plus 90
31,280,000 8.5+ Index basis points 6/1/08 505,144

If negative, If positive, the
the absolute Total Return of
value of the the Lehman
Lehman Brothers U.S.
Brothers U.S. CMBS AAA 8.5+
CMBS AAA Index plus 110
2,500,000 8.5+ Index basis points 1/31/08 40,721

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

UBS AG:
If negative, the If positive, the
absolute value Total Return of
of the the Lehman
Lehman Brothers U.S.
Brothers U.S. CMBS AAA 8.5+
CMBS AAA Index minus 20
$ 9,400,000 8.5+ Index basis points 5/1/08 $ 166,171

If negative, the If positive, the
absolute value Total Return of
of the the Lehman
Lehman Brothers U.S.
Brothers U.S. CMBS AAA 8.5+
CMBS AAA Index plus 60
25,538,000 8.5+ Index basis points 2/1/08 469,048
-----------
$ 7,509,607
===========

Index abbreviation is as follows:

CMBS Commercial Mortgage Backed Securities

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

- -----------------------------------------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------------------------------------
Investments, at value--see accompanying statement of investments:
Unaffiliated companies (cost $2,335,260,699) $ 2,348,415,479
Affiliated companies (cost $52,911,646) 52,911,646
----------------

2,401,327,125
- -----------------------------------------------------------------------------------------------------------
Cash 180,942
- -----------------------------------------------------------------------------------------------------------
Swaps, at value (premiums received $3,837,059) 7,926,668
- -----------------------------------------------------------------------------------------------------------
Receivables and other assets:
Interest 13,983,322
Investments sold (including $5,601,225 sold on a when-issued or
delayed delivery basis) 7,541,377
Shares of beneficial interest sold 5,587,459
Futures margins 770,058
Other 37,261
----------------
Total assets 2,437,354,212

- -----------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------
Return of collateral for securities loaned 27,940,297
- -----------------------------------------------------------------------------------------------------------
Swaps, at value (premiums received $1,711,733) 19,504,255
- -----------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Investments purchased (including $229,041,129 purchased on a
when-issued or delayed delivery basis) 229,993,438
Shares of beneficial interest redeemed 1,803,227
Distribution and service plan fees 783,421
Transfer and shareholder servicing agent fees 262,287
Shareholder communications 116,446
Trustees' compensation 14,404
Dividends 654
Other 62,803
----------------
Total liabilities 280,481,232

- -----------------------------------------------------------------------------------------------------------
NET ASSETS $ 2,156,872,980
================

- -----------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- -----------------------------------------------------------------------------------------------------------
Par value of shares of beneficial interest $ 212,039
- -----------------------------------------------------------------------------------------------------------
Additional paid-in capital 2,156,676,533
- -----------------------------------------------------------------------------------------------------------
Accumulated net investment income 8,250,048
- -----------------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments and foreign currency transactions (13,780,882)
- -----------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments 5,515,242
----------------
NET ASSETS $ 2,156,872,980
================

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 $954,824,988
and 93,822,513 shares of beneficial interest outstanding) $ 10.18
Maximum offering price per share (net asset value plus sales charge of 4.75% of
offering price) $ 10.69
- -----------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $99,281,972 and 9,758,770 shares of
beneficial interest outstanding) $ 10.17
- -----------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $194,070,965 and 19,057,152 shares
of beneficial interest outstanding) $ 10.18
- -----------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $84,017,175 and 8,258,697 shares of
beneficial interest outstanding) $ 10.17
- -----------------------------------------------------------------------------------------------------------
Class Y Shares:
Net asset value, redemption price and offering price per share (based on net assets of
$824,677,880 and 81,142,345 shares of beneficial interest outstanding) $ 10.16

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

- -----------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------
Interest $ 95,173,615
- -----------------------------------------------------------------------------------------------------------
Dividends:
Unaffiliated companies 3,834
Affiliated companies 4,729,851
- -----------------------------------------------------------------------------------------------------------
Fee income 485,184
- -----------------------------------------------------------------------------------------------------------
Portfolio lending fees 167,857
- -----------------------------------------------------------------------------------------------------------
Other income 27,062
-------------
Total investment income 100,587,403

- -----------------------------------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------------------------------
Management fees 7,604,231
- -----------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 1,917,656
Class B 1,066,081
Class C 1,720,037
Class N 352,395
- -----------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 1,323,040
Class B 320,995
Class C 339,472
Class N 220,919
Class Y 255,495
- -----------------------------------------------------------------------------------------------------------
Shareholder communications:
Class A 136,113
Class B 50,358
Class C 34,796
Class N 5,887
Class Y 498
- -----------------------------------------------------------------------------------------------------------
Trustees' compensation 33,430
- -----------------------------------------------------------------------------------------------------------
Custodian fees and expenses 10,832
- -----------------------------------------------------------------------------------------------------------
Administration service fees 1,500
- -----------------------------------------------------------------------------------------------------------
Other 93,606
-------------
Total expenses 15,487,341
Less reduction to custodian expenses (1,175)
Less waivers and reimbursements of expenses (346,436)
-------------
Net expenses 15,139,730

- -----------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 85,447,673

STATEMENT OF OPERATIONS Continued
- --------------------------------------------------------------------------------

- -----------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- -----------------------------------------------------------------------------------------------------------
Net realized gain (loss) on:
Investments from unaffiliated companies 798,663
Closing and expiration of futures contracts (2,174,114)
Foreign currency transactions 752
Swap contracts (11,150,233)
-------------
Net realized loss (12,524,932)
- -----------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on:
Investments 12,755,947
Futures contracts (855,488)
Swap contracts (6,256,668)
-------------
Net change in unrealized appreciation 5,643,791

- -----------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 78,566,532
=============

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

YEAR ENDED DECEMBER 31, 2007 2006
- -------------------------------------------------------------------------------------------------------------------------------

OPERATIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 85,447,673 $ 53,623,801
- -------------------------------------------------------------------------------------------------------------------------------
Net realized loss (12,524,932) (1,035,336)
- -------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) 5,643,791 6,048,394
-----------------------------------
Net increase in net assets resulting from operations 78,566,532 58,636,859

- -------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (29,656,191) (27,534,042)
Class B (3,253,244) (4,835,065)
Class C (5,234,319) (5,213,068)
Class N (2,495,333) (2,161,598)
Class Y (25,916,933) (16,289,181)
-----------------------------------
(66,556,020) (56,032,954)

- -------------------------------------------------------------------------------------------------------------------------------
Tax return of capital distribution from net investment income:
Class A (8,456,006) --
Class B (1,158,167) --
Class C (1,868,050) --
Class N (765,637) --
Class Y (6,699,873) --
-----------------------------------
(18,947,733) --

- -------------------------------------------------------------------------------------------------------------------------------
BENEFICIAL INTEREST TRANSACTIONS
- -------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
beneficial interest transactions:
Class A 287,770,231 180,785,033
Class B (16,382,772) (8,537,515)
Class C 45,361,474 40,154,490
Class N 26,067,879 22,271,562
Class Y 391,767,895 261,623,548
-----------------------------------
734,584,707 496,297,118

- -------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -------------------------------------------------------------------------------------------------------------------------------
Total increase 727,647,486 498,901,023
- -------------------------------------------------------------------------------------------------------------------------------
Beginning of period 1,429,225,494 930,324,471
-----------------------------------
End of period (including accumulated net investment income (loss) of
$8,250,048 and $(365,803), respectively) $2,156,872,980 $ 1,429,225,494
===================================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

CLASS A YEAR ENDED DECEMBER 31, 2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 954,825 $ 670,012 $ 488,889 $ 344,205 $ 382,966
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 779,234 $ 566,159 $ 423,182 $ 353,046 $ 382,420
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.89% 4.66% 4.12% 3.63% 3.39%
Total expenses 0.88% 4 0.96% 4 1.06% 1.10% 1.10%
Expenses after waivers, payments and/or
reimbursements and reduction to
custodian expenses 0.87% 0.90% 0.90% 0.93% 1.10%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 89% 5 107% 5 98% 5 94% 5 111%

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

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

3. Annualized for periods less than one full year.

4. Total expenses including indirect expenses from affiliated fund were as
follows:

Year Ended December 31, 2007 0.89%
Year Ended December 31, 2006 0.96%

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CLASS B YEAR ENDED DECEMBER 31, 2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.23 $ 10.23 $ 10.44 $ 10.37 $ 10.13
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .42 1 .40 1 .35 1 .30 1 .27
Net realized and unrealized gain (loss) (.06) .01 (.20) .13 .24
------------------------------------------------------------------
Total from investment operations .36 .41 .15 .43 .51
- --------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.31) (.41) (.36) (.36) (.27)
Tax return of capital distribution (.11) -- -- -- --
------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.42) (.41) (.36) (.36) (.27)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.17 $ 10.23 $ 10.23 $ 10.44 $ 10.37
==================================================================

- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 99,282 $ 116,230 $ 125,069 $ 148,445 $ 197,774
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 106,727 $ 118,240 $ 135,296 $ 167,685 $ 216,853
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.13% 3.92% 3.37% 2.86% 2.61%
Total expenses 1.79% 4 1.86% 4 1.91% 1.91% 1.87%
Expenses after waivers, payments and/or
reimbursements and reduction to
custodian expenses 1.64% 1.65% 1.65% 1.69% 1.87%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 89% 5 107% 5 98% 5 94% 5 111%

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

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

3. Annualized for periods less than one full year.

4. Total expenses including indirect expenses from affiliated fund were as
follows:

Year Ended December 31, 2007 1.80%
Year Ended December 31, 2006 1.86%

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

CLASS C YEAR ENDED DECEMBER 31, 2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.24 $ 10.24 $ 10.45 $ 10.39 $ 10.14
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .42 1 .40 1 .35 1 .30 1 .27
Net realized and unrealized gain (loss) (.06) .01 (.20) .12 .25
------------------------------------------------------------------
Total from investment operations .36 .41 .15 .42 .52
- --------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.31) (.41) (.36) (.36) (.27)
Tax return of capital distribution (.11) -- -- -- --
------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.42) (.41) (.36) (.36) (.27)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.18 $ 10.24 $ 10.24 $ 10.45 $ 10.39
==================================================================

- --------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 3.60% 4.16% 1.49% 4.12% 5.18%
- --------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 194,071 $ 149,440 $ 109,207 $ 84,696 $ 90,583
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 172,144 $ 126,593 $ 94,742 $ 86,020 $ 96,361
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.12% 3.92% 3.37% 2.87% 2.64%
Total expenses 1.66% 4 1.76% 4 1.86% 1.87% 1.84%
Expenses after waivers, payments and/or
reimbursements and reduction to
custodian expenses 1.64% 1.65% 1.65% 1.68% 1.84%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 89% 5 107% 5 98% 5 94% 5 111%

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

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

3. Annualized for periods less than one full year.

4. Total expenses including indirect expenses from affiliated fund were as
follows:

Year Ended December 31, 2007 1.67%
Year Ended December 31, 2006 1.76%

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CLASS N YEAR ENDED DECEMBER 31, 2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.23 $ 10.23 $ 10.44 $ 10.37 $ 10.13
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .47 1 .45 1 .40 1 .35 1 .31
Net realized and unrealized gain (loss) (.06) .01 (.19) .13 .24
------------------------------------------------------------------
Total from investment operations (.36) .46 .21 .48 .55
- --------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.36) (.46) (.42) (.41) (.31)
Tax return of capital distribution (.11) -- -- -- --
------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.47) (.46) (.42) (.41) (.31)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.17 $ 10.23 $ 10.23 $ 10.44 $ 10.37
==================================================================

- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 84,017 $ 58,232 $ 35,836 $ 25,580 $ 17,732
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 70,555 $ 46,672 $ 30,274 $ 21,411 $ 15,338
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 4.62% 4.42% 3.87% 3.38% 3.03%
Total expenses 1.26% 4 1.35% 4 1.47% 1.51% 1.50%
Expenses after waivers, payments and/or
reimbursements and reduction to
custodian expenses 1.14% 1.15% 1.15% 1.20% 1.44%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 89% 5 107% 5 98% 5 94% 5 111%

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

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

3. Annualized for periods less than one full year.

4. Total expenses including indirect expenses from affiliated fund were as
follows:

Year Ended December 31, 2007 1.27%
Year Ended December 31, 2006 1.35%

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

CLASS Y YEAR ENDED DECEMBER 31, 2007 2006 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
- --------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.22 $ 10.22 $ 10.43 $ 10.36 $ 10.12
- --------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income .53 1 .51 1 .45 1 .41 1 .39
Net realized and unrealized gain (loss) (.05) .01 (.19) .13 .24
------------------------------------------------------------------
Total from investment operations .48 .52 .26 .54 .63
- --------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Dividends from net investment income (.43) (.52) (.47) (.47) (.39)
Tax return of capital distribution (.11) -- -- -- --
------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (.54) (.52) (.47) (.47) (.39)
- --------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.16 $ 10.22 $ 10.22 $ 10.43 $ 10.36
==================================================================

- --------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 824,678 $ 435,311 $ 171,323 $ 38,190 $ 43,215
- --------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 617,403 $ 309,558 $ 91,172 $ 45,333 $ 38,398
- --------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income 5.28% 5.03% 4.39% 3.92% 3.80%
Total expenses 0.48% 4 0.55% 4 0.76% 0.64% 0.63%
Expenses after waivers, payments and/or
reimbursements and reduction to
custodian expenses 0.47% 0.55% 0.65% 0.64% 0.63%
- --------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 89% 5 107% 5 98% 5 94% 5 111%

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

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

3. Annualized for periods less than one full year.

4. Total expenses including indirect expenses from affiliated fund were as
follows:

Year Ended December 31, 2007 0.49%
Year Ended December 31, 2006 0.55%

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

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

Oppenheimer Core Bond Fund (the "Fund"), is a separate fund of Oppenheimer
Integrity Funds, an open-end management investment company registered under the
Investment Company Act of 1940, as amended. The Fund's investment objective is
to seek total return by investing mainly in debt instruments. The Fund's
investment adviser is OppenheimerFunds, Inc. (the "Manager").

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

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

- --------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of the New York Stock Exchange (the "Exchange"), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for trading. Securities may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Trustees. Securities traded on a registered U.S.
securities exchange are valued based on the last sale price of the security
traded on that exchange prior to the time when the Fund's assets are valued.
Securities whose principal exchange is NASDAQ(R) are valued based on the closing
price reported by NASDAQ prior to the time when the Fund's assets are valued. In
the absence of a sale, the security is valued at the last sale price on the
prior trading day, if it is within the spread of the closing "bid" and "asked"
prices, and if not, at the closing bid price. Securities traded on foreign
exchanges are valued based on the last sale price on the principal exchange on
which the security is traded, as identified by the portfolio pricing service,
prior to the time when the Fund's assets are valued. In the absence of a sale,
the security is valued at the official closing price on the principal exchange.
Corporate, government and municipal debt instruments having a remaining maturity
in excess of sixty days and all mortgage-backed securities, collateralized
mortgage obligations and other asset-backed securities will be valued at the
mean between the "bid" and "asked" prices. Securities for which market
quotations are not readily available are valued at their fair

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

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

value. Securities whose values have been materially affected by what the Manager
identifies as a significant event occurring before the Fund's assets are valued
but after the close of their respective exchanges will be fair valued. Fair
value is determined in good faith using consistently applied procedures under
the supervision of the Board of Trustees. Shares of a registered investment
company that are not traded on an exchange are valued at the acquired investment
company's net asset value per share. "Money market-type" debt instruments with
remaining maturities of sixty days or less are valued at cost adjusted by the
amortization of discount or premium to maturity (amortized cost), which
approximates market value.

- --------------------------------------------------------------------------------
SECURITIES ON A WHEN-ISSUED OR DELAYED DELIVERY BASIS. The Fund may purchase
securities on a "when-issued" basis, and may purchase or sell securities on a
"delayed delivery" basis. "When-issued" or "delayed delivery" refers to
securities whose terms and indenture are available and for which a market
exists, but which are not available for immediate delivery. Delivery and payment
for securities that have been purchased by the Fund on a when-issued basis
normally takes place within six months and possibly as long as two years or more
after the 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 purchase of securities on a when-issued basis may increase
the volatility of the Fund's net asset value to the extent the Fund executes
such transactions while remaining substantially fully invested. When the Fund
engages in when-issued or delayed delivery transactions, it relies on the buyer
or seller, as the case may be, to complete the transaction. Their failure to do
so may cause the Fund to lose the opportunity to obtain or dispose of the
security at a price and yield it considers advantageous. The Fund maintains
internally designated assets with a market value equal to or greater than the
amount of its purchase commitments. 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 December 31, 2007, the Fund had purchased securities issued on a
when-issued or delayed delivery basis and sold securities issued on a delayed
delivery basis as follows:

WHEN-ISSUED OR DELAYED
DELIVERY BASIS TRANSACTIONS
--------------------------------------------------------------
Purchased securities $229,041,129
Sold securities 5,601,225

The Fund may enter into "forward roll" transactions with respect to
mortgage-related securities. In this type of transaction, the Fund sells a
mortgage-related security to a buyer and simultaneously agrees to repurchase a
similar security (same type, coupon and maturity) at a later date at a set
price. During the period between the sale and the repurchase, the Fund will not
be entitled to receive interest and principal payments on the securities that
have been sold. The Fund records the incremental difference between the forward
purchase and sale of each forward roll as realized gain (loss) on investments or
as fee income in the case of such transactions that have an associated fee in
lieu of a difference in the forward purchase and sale price.

Risks of entering into forward roll transactions include the potential
inability of the counterparty to meet the terms of the agreement; the potential
of the Fund to receive inferior securities at redelivery as compared to the
securities sold to the counterparty; counterparty credit risk. To assure its
future payment of the purchase price, the Fund maintains internally designated
assets with a market value equal to or greater than the payment obligation under
the roll.

- --------------------------------------------------------------------------------
CREDIT RISK. The Fund invests in high-yield, non-investment-grade bonds, which
may be subject to a greater degree of credit risk. Credit risk relates to the
ability of the issuer to meet interest or principal payments or both as they
become due. The Fund may acquire securities in default, and is not obligated to
dispose of securities whose issuers subsequently default. As of December 31,
2007, securities with an aggregate market value of $2, representing less than
0.01% of the Fund's net assets, were in default.

- --------------------------------------------------------------------------------
FOREIGN CURRENCY TRANSLATION. The Fund's accounting records are maintained in
U.S. dollars. The values of securities denominated in foreign currencies and
amounts related to the purchase and sale of foreign securities and foreign
investment income are translated into U.S. dollars as of the close of the
Exchange, normally 4:00 P.M. Eastern time, on each day the Exchange is open for
trading. Foreign exchange rates may be valued primarily using a reliable bank,
dealer or service authorized by the Board of Trustees.

Reported net realized gains and losses from foreign currency transactions
arise from sales of portfolio securities, sales and maturities of short-term
securities, sales of foreign currencies, exchange rate fluctuations between the
trade and settlement dates on securities transactions, and the difference
between the amounts of dividends, interest, and foreign withholding taxes
recorded on the Fund's books and the U.S. dollar equivalent of the amounts
actually received or paid. Net unrealized appreciation and depreciation on the
translation of assets and liabilities denominated in foreign currencies arise
from changes in the values of assets and liabilities, including investments in
securities at fiscal period end, resulting from changes in exchange rates.

The effect of changes in foreign currency exchange rates on investments is
separately identified from the fluctuations arising from changes in market
values of securities held and reported with all other foreign currency gains and
losses in the Fund's Statement of Operations.

- --------------------------------------------------------------------------------
INVESTMENT IN OPPENHEIMER INSTITUTIONAL MONEY MARKET FUND. The Fund is permitted
to invest daily available cash balances in an affiliated money market fund. The
Fund may invest the available cash in Class E shares of Oppenheimer
Institutional Money Market Fund ("IMMF") to seek current income while preserving
liquidity. IMMF is a registered open-end management investment company,
regulated as a money market fund under the Investment Company Act of 1940, as
amended. The Manager is also the investment adviser of IMMF. The Fund's
investment in IMMF is included in the Statement

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

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

of Investments. As a shareholder, the Fund is subject to its proportional share
of IMMF's Class E expenses, including its management fee. The Manager will waive
fees and/or reimburse Fund expenses in an amount equal to the indirect
management fees incurred through the Fund's investment in IMMF.

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

- --------------------------------------------------------------------------------
INVESTMENTS WITH OFF-BALANCE SHEET RISK. The Fund enters into financial
instrument transactions (such as swaps, futures, options and other derivatives)
that may have off-balance sheet market risk. Off-balance sheet market risk
exists when the maximum potential loss on a particular financial instrument is
greater than the value of such financial instrument, as reflected in the Fund's
Statement of Assets and Liabilities.

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

- --------------------------------------------------------------------------------
FEDERAL TAXES. The Fund intends to comply with provisions of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its investment company taxable income, including any net
realized gain on investments not offset by capital loss carryforwards, if any,
to shareholders. Therefore, no federal income or excise tax provision is
required. The Fund files income tax returns in U.S. federal and applicable state
jurisdictions. The statute of limitations on the Fund's tax return filings
remain open for the three preceding fiscal reporting period ends.

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

NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2,3,4 TAX PURPOSES
- -------------------------------------------------------------------------------
$-- $-- $15,524,233 $15,164,722

1. As of December 31, 2007, the Fund had $15,264,151 of net capital loss
carryforwards available to offset future realized capital gains, if any, and
thereby reduce future taxable gain distributions. As of December 31, 2007,
details of the capital loss carryforwards were as follows:

EXPIRING
----------------------
2010 $ 2,007,359
2013 6,003,757
2014 5,185,579
2015 2,067,456
-----------
Total $15,264,151
===========

2. The Fund had $260,082 of straddle losses which were deferred.

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

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

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

Accordingly, the following amounts have been reclassified for December 31, 2007.
Net assets of the Fund were unaffected by the reclassifications.

REDUCTION TO
REDUCTION TO ACCUMULATED
REDUCTION TO ACCUMULATED NET NET REALIZED LOSS
PAID-IN CAPITAL INVESTMENT LOSS ON INVESTMENTS
----------------------------------------------------------------
$18,947,733 $8,671,931 $10,275,802

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

YEAR ENDED YEAR ENDED
DECEMBER 31, 2007 DECEMBER 31, 2006
----------------------------------------------------------------
Distributions paid from:
Ordinary income $66,556,020 $56,032,954
Return of capital 18,947,733 --
-------------------------------
Total $85,503,753 $56,032,954
===============================

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

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

The aggregate cost of securities and other investments and the composition of
unrealized appreciation and depreciation of securities and other investments for
federal income tax purposes as of December 31, 2007 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.

Federal tax cost of securities $ 2,378,522,865
Federal tax cost of other investments (201,557,471)
---------------
Total federal tax cost $ 2,176,965,394
===============

Gross unrealized appreciation $ 46,404,296
Gross unrealized depreciation (31,239,574)
---------------
Net unrealized appreciation $ 15,164,722
===============

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

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

- --------------------------------------------------------------------------------
INVESTMENT INCOME. Dividend income is recorded on the ex-dividend date or upon
ex-dividend notification in the case of certain foreign dividends where the
ex-dividend date may have passed. Non-cash dividends included in dividend
income, if any, are recorded at the fair market value of the securities
received. Interest income is recognized on an accrual basis. Market discount and
premium, which are included in interest income on the Statement of Operations,
are amortized or accreted daily.

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

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

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

- --------------------------------------------------------------------------------
OTHER. The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of increases and
decreases in net assets from operations during the reporting period. Actual
results could differ from those estimates.

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

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

YEAR ENDED DECEMBER 31, 2007 YEAR ENDED DECEMBER 31, 2006
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------

CLASS A
Sold 51,782,681 $ 526,866,898 24,694,647 $ 251,126,785
Dividends and/or
distributions reinvested 3,101,363 31,544,029 2,187,400 22,195,864
Acquisition-Note 11 -- -- 4,211,155 42,659,003
Redeemed (26,558,196) (270,640,696) (13,362,338) (135,196,619)
-------------------------------------------------------------
Net increase 28,325,848 $ 287,770,231 17,730,864 $ 180,785,033
=============================================================

- ------------------------------------------------------------------------------------------
CLASS B
Sold 3,194,204 $ 32,473,051 2,765,817 $ 28,133,557
Dividends and/or
distributions reinvested 375,245 3,817,248 404,022 4,097,199
Acquisition-Note 11 -- -- 481,162 4,874,168
Redeemed (5,176,614) (52,673,071) (4,509,251) (45,642,439)
-------------------------------------------------------------
Net decrease (1,607,165) $ (16,382,772) (858,250) $ (8,537,515)
=============================================================

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

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

YEAR ENDED DECEMBER 31, 2007 YEAR ENDED DECEMBER 31, 2006
SHARES AMOUNT SHARES AMOUNT
- ------------------------------------------------------------------------------------------

CLASS C
Sold 8,354,127 $ 84,954,263 5,956,040 $ 60,599,966
Dividends and/or
distributions reinvested 572,829 5,830,346 429,623 4,363,414
Acquisition-Note 11 -- -- 862,709 8,747,866
Redeemed (4,468,801) (45,423,135) (3,312,539) (33,556,756)
-------------------------------------------------------------
Net increase 4,458,155 $ 45,361,474 3,935,833 $ 40,154,490
=============================================================

- ------------------------------------------------------------------------------------------
CLASS N
Sold 4,388,857 $ 44,595,612 3,137,184 $ 31,843,965
Dividends and/or
distributions reinvested 239,554 2,435,640 171,486 1,739,889
Acquisition-Note 11 -- -- 315,811 3,199,167
Redeemed (2,064,166) (20,963,373) (1,432,560) (14,511,459)
-------------------------------------------------------------
Net increase 2,564,245 $ 26,067,879 2,191,921 $ 22,271,562
=============================================================

- ------------------------------------------------------------------------------------------
CLASS Y
Sold 41,552,519 $ 422,555,881 28,523,591 $ 288,469,512
Dividends and/or
distributions reinvested 3,196,427 32,455,691 1,606,546 16,289,132
Redeemed (6,215,861) (63,243,677) (4,282,356) (43,135,096)
-------------------------------------------------------------
Net increase 38,533,085 $ 391,767,895 25,847,781 $ 261,623,548
=============================================================

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

The aggregate cost of purchases and proceeds from sales of securities, other
than short-term obligations and investments in IMMF, for the year ended December
31, 2007, were as follows:

PURCHASES SALES
- ------------------------------------------------------------------------------------

Investment securities $ 1,269,653,822 $ 862,879,390
U.S. government and government agency obligations 332,499,259 375,908,179
To Be Announced (TBA) mortgage-related securities 2,990,658,315 2,928,450,309

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

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

FEE SCHEDULE
--------------------------------
Up to $1 billion 0.50%
Over $1 billion 0.35

- --------------------------------------------------------------------------------
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 December 31, 2007, the Fund
paid $2,404,615 to OFS for services to the Fund.

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

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

- --------------------------------------------------------------------------------
SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan (the
"Plan") for Class A shares under Rule 12b-1 of the Investment Company Act of
1940. Under the Plan, the Fund reimburses the Distributor for a portion of its
costs incurred for services provided to accounts that hold Class A shares.
Reimbursement is made periodically at an annual rate of up to 0.25% of the
average annual net assets of Class A shares of the Fund. The Distributor
currently uses all of those fees to pay dealers, brokers, banks and other
financial institutions periodically for providing personal service and
maintenance of accounts of their customers that hold Class A shares. Any
unreimbursed expenses the Distributor incurs with respect to Class A shares in
any fiscal year cannot be recovered in subsequent periods. Fees incurred by the
Fund under the Plan are detailed in the Statement of Operations.

- --------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans (the "Plans") for Class B, Class C
and Class N shares under Rule 12b-1 of the Investment Company Act of 1940 to
compensate the Distributor for its services in connection with the distribution
of those shares and servicing accounts. Under the Plans, the Fund pays the
Distributor an annual asset-based sales charge of 0.75% on Class B and Class C
shares and 0.25% on Class N shares. The Distributor also receives a service fee
of 0.25% per year under each plan. If either the Class B, Class C or Class N
plan is terminated by the Fund or by the shareholders of a class, the Board of
Trustees and its independent trustees must determine whether the Distributor
shall be entitled to payment from the Fund of all or a portion of the service
fee and/or asset-based sales charge in respect to shares sold prior to the
effective date of such termination. The Distributor's aggregate uncompensated
expenses under the Plans at December 31, 2007 for Class B, Class C and Class N
shares were $2,132,824, $3,019,679 and $1,215,790, respectively. Fees incurred
by the Fund under the Plans are detailed in the Statement of Operations.

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

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

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

CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
- ---------------------------------------------------------------------------------------------------------------------

December 31, 2007 $ 638,041 $ 35,800 $ 211,021 $ 18,648 $ 2,833
- ---------------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. Effective March 1, 2004, the Manager has
voluntarily undertaken to limit the "Total Expenses" for all classes of shares
so that "Total expenses after waivers, payments and/or reimbursements and
reduction to custodian expenses" as percentages of average daily net assets,
will not exceed the following annual rates: 0.90% for the Class A shares; 1.65%
for the Class B and Class C shares, respectively; 1.15% for the Class N shares
and 0.65% for the Class Y shares. During the year ended December 31, 2007, the
Manager reimbursed the Fund $513, $152,251, $22,409 and $80,946 for Class A,
Class B, Class C and Class N shares, respectively. The Manager may terminate
this voluntary expense limitation arrangement at any time without notice to
shareholders.

OFS has voluntarily agreed to limit transfer and shareholder servicing
agent fees for all classes to 0.35% of average annual net assets per class. This
undertaking may be amended or withdrawn at any time.

The Manager will waive fees and/or reimburse Fund expenses in an amount
equal to the indirect management fees incurred through the Fund's investment in
IMMF. During the year ended December 31, 2007, the Manager waived $90,317 for
IMMF management fees.

- --------------------------------------------------------------------------------
5. FOREIGN CURRENCY EXCHANGE CONTRACTS

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

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

Risks to the Fund include both market and credit risk. Market risk is the
risk that the value of the forward contract will depreciate due to unfavorable
changes in the exchange rates. Credit risk arises from the possibility that the
counterparty will default. If the counterparty defaults, the Fund's loss will
consist of the net amount of contractual payments that the Fund has not yet
received.

As of December 31, 2007, the Fund had no outstanding forward contracts.

- --------------------------------------------------------------------------------
6. FUTURES CONTRACTS

A futures contract is a commitment to buy or sell a specific amount of a
financial instrument at a negotiated price on a stipulated future date. The Fund
may buy and sell futures contracts that relate to broadly based securities
indices (financial futures), debt securities (interest rate futures) and various
commodities (commodity index futures). The Fund may also buy or write put or
call options on these futures contracts.

Futures contracts traded on a commodities or futures exchange will be
valued at the final settlement price or official closing price on the principal
exchange as reported by such principal exchange at its trading session ending
at, or most recently prior to, the time when the Fund's assets are valued.

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

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

Risks of entering into futures contracts (and related options) include the
possibility that there may be an illiquid market where the Fund is unable to
liquidate the contract or enter into an offsetting position and, if used for
hedging purposes, the risk that the price of the contract will correlate
imperfectly with the prices of the Fund's securities.

- --------------------------------------------------------------------------------
7. SWAP CONTRACTS

The Fund may enter into swap contract agreements with a counterparty to exchange
a series of cash flows based on either specified reference rates, or the
occurrence of a credit event, over a specified period. Such contracts may
include interest rate, equity, debt, index, total return, credit and currency
swaps.

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

- --------------------------------------------------------------------------------
7. SWAP CONTRACTS Continued

Swaps are marked to market daily using primarily quotations from pricing
services, counterparties and brokers. Swap contracts are reported on a schedule
following the Statement of Investments. The value of the contracts is separately
disclosed on the Statement of Assets and Liabilities. The unrealized
appreciation (depreciation) related to the change in the valuation of the
notional amount of the swap is combined with the accrued interest due to (owed
by) the Fund at termination or settlement. The net change in this amount during
the period is included on the Statement of Operations. The Fund also records any
periodic payments received from (paid to) the counterparty, including at
termination, under such contracts as realized gain (loss) on the Statement of
Operations.

Risks of entering into swap contracts include credit, market and liquidity
risk. Credit risk arises from the possibility that the counterparty will
default. If the counterparty defaults, the Fund's loss will consist of the net
amount of contractual payments that the Fund has not yet received. Market risk
is the risk that the value of the contract will depreciate due to unfavorable
changes in the reference asset. If there is an illiquid market for the
agreement, the Fund may be unable to close the contract prior to contract
termination.

- --------------------------------------------------------------------------------
CREDIT DEFAULT SWAP CONTRACTS. A credit default swap is a bilateral contract
that enables an investor to buy or sell protection against a defined-issuer
credit event. The Fund may enter into credit default swaps on a single security,
or a basket of securities.

In a credit default swap contract, the purchaser of the contract will pay
a periodic interest fee, similar to an insurance premium, on the notional amount
of the swap contract to the counterparty (the seller of the contract). If there
is a credit event (for example, bankruptcy or a failure to timely pay interest
or principal), the purchaser will exercise the contract and will receive a
payment from the seller of the contract equal to the notional value of the
credit default swap contract less the value of the underlying security. In the
event that the credit default swap is exercised due to a credit event, the
difference between the value of the underlying security and the notional amount
is recorded as realized gain (loss) and is included on the Statement of
Operations.

Risks of credit default swaps include, but are not limited to, the cost of
paying for credit protection if there are no credit events.

- --------------------------------------------------------------------------------
INTEREST RATE SWAP CONTRACTS. An interest rate swap is an agreement between
counterparties to exchange periodic interest payments on the notional amount of
the contract. One cash flow stream will typically be a floating rate payment
based upon a specified index while the other is typically a fixed rate.

Interest rate swap agreements include interest rate risk. There is a risk,
based on movements of interest rates in the future, the payments made by the
Fund under a swap agreement will be greater than the payments it received.

- --------------------------------------------------------------------------------
TOTAL RETURN SWAP CONTRACTS. A total return swap is an agreement between
counterparties to exchange a set of future cash flows on the notional amount of
the contract. One cash flow is typically based on a reference interest rate or
index and the other on

the total return of a reference asset such as a security, a basket of
securities, or an index. The total return includes appreciation or depreciation
on the reference asset, plus any interest or dividend payments.

- --------------------------------------------------------------------------------
8. ILLIQUID SECURITIES

As of December 31, 2007, investments in securities included issues that are
illiquid. Investments may be illiquid because they do not have an active trading
market, making it difficult to value them or dispose of them promptly at an
acceptable price. The Fund will not invest more than 15% of its net assets
(determined at the time of purchase and reviewed periodically) in illiquid
securities. Securities that are illiquid are marked with an applicable footnote
on the Statement of Investments.

- --------------------------------------------------------------------------------
9. SECURITIES LENDING

The Fund lends portfolio securities from time to time in order to earn
additional income in the form of fees or interest on securities received as
collateral or the investment of any cash received as collateral. The loans are
secured by collateral (either securities, letters of credit, or cash) in an
amount not less than 100% of the market value of the loaned securities during
the period of the loan. The market value of the loaned securities is determined
at the close of each business day and any additional required collateral is
delivered to the Fund on the next business day. If the borrower defaults on its
obligation to return the securities loaned because of insolvency or other
reasons, the Fund could experience delays and cost in recovering the securities
loaned or in gaining access to the collateral. The Fund continues to receive the
economic benefit of interest or dividends paid on the securities loaned in the
form of a substitute payment received from the borrower and recognizes the gain
or loss in the fair value of the securities loaned that may occur during the
term of the loan. The Fund has the right under the lending agreement to recover
the securities from the borrower on demand. As of December 31, 2007, the Fund
had on loan securities valued at $30,332,838. Collateral of $30,876,771 was
received for the loans, of which $27,940,297 was received in cash and
subsequently invested in approved instruments. In addition, collateral of
$2,936,474 was also received in the form of securities.

- --------------------------------------------------------------------------------
10. RECENT ACCOUNTING PRONOUNCEMENT

In September 2006, Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 157, FAIR VALUE
MEASUREMENTS. This standard establishes a single authoritative definition of
fair value, sets out a framework for measuring fair value and expands
disclosures about fair value measurements. SFAS No. 157 applies to fair value
measurements already required or permitted by existing standards. SFAS No. 157
is effective for financial statements issued for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. As of December
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.

- --------------------------------------------------------------------------------
11. ACQUISITION OF OPPENHEIMER TOTAL RETURN BOND FUND

On March 23, 2006, the Fund acquired all of the net assets of Oppenheimer Total
Return Bond Fund, pursuant to an Agreement and Plan of Reorganization approved
by the Oppenheimer Total Return Bond Fund shareholders on March 15, 2006. The
Fund issued (at an exchange ratio of 0.964160 for Class A, 0.964242 for Class B,
0.962906 for Class C and 0.964275 for Class N of the Fund to one share of
Oppenheimer Total Return Bond Fund), 4,211,155; 481,162; 862,709 and 315,811
shares of beneficial interest for Class A, Class B, Class C and Class N,
respectively, valued at $42,659,003, $4,874,168, $8,747,866 and $3,199,167 in
exchange for the net assets, resulting in combined Class A net assets of
$549,554,571, Class B net assets of $124,605,847, Class C net assets of
$122,287,022 and Class N net assets of $43,300,947 on March 23, 2006. The net
assets acquired included net unrealized depreciation of $949,524 and an unused
capital loss carryforward of $759,669, potential utilization subject to tax
limitations. The exchange qualified as a tax-free reorganization for federal
income tax purposes.

Appendix A

RATINGS DEFINITIONS

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

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

LONG-TERM RATINGS: BONDS AND PREFERRED STOCK ISSUER RATINGS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

LONG-TERM ISSUE CREDIT RATINGS
Issue credit ratings are based in varying degrees, on the following
considerations:
o Likelihood of payment-capacity and willingness of the obligor to meet
its financial commitment on an obligation in accordance with the terms
of the obligation;
o Nature of and provisions of the obligation; and

o Protection afforded by, and relative position of, the obligation in the
event of bankruptcy, reorganization, or other arrangement under the
laws of bankruptcy and other laws affecting creditors' rights.

The issue ratings definitions are expressed in terms of default risk. As
such, they pertain to senior obligations of an entity. Junior obligations are
typically rated lower than senior obligations, to reflect the lower priority
in bankruptcy, as noted above.

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

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

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

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

BB, B, CCC, CC, and C

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

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

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

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

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

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

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

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

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

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

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

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

N.R. Not rated.

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

Bond Investment Quality Standards

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

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

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

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

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

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

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

NOTES:

A Standard &amp; Poor's note rating reflects the liquidity factors and market
access risks unique to notes. Notes due in three years or less will likely
receive a note rating. Notes maturing beyond three years will most likely
receive a long-term debt rating. The following criteria will be used in
making that assessment:

o Amortization schedule-the larger the final maturity relative to other
maturities, the more likely it will
be treated as a note; and
o Source of payment-the more dependent the issue is on the market for its
refinancing, the more likely
it will be treated as a note.

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

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

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

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

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

Investment Grade:

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

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

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

Speculative Grade:

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

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

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

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

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

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

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

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

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

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

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

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

D: Default. Denotes actual or imminent payment default.

B-1
Appendix B

B-19

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 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.

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 &amp;
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).

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 advisers that have entered
into an agreement with the Distributor providing specifically for the use
of shares of the Fund in particular investment products made available to
their clients. Those clients may be charged a transaction fee by their
dealer, broker, bank or adviser for the purchase or sale of Fund shares.

|_| Investment advisers and financial planners who have entered into an
agreement for this purpose with the Distributor and who charge an advisory,
consulting or other fee for their services and buy shares for their own
accounts or the accounts of their clients. "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 advisers or financial planners (that have entered
into an agreement for this purpose with the Distributor) who buy shares for
their own accounts may also purchase shares without sales charge but only
if their accounts are linked to a master account of their investment
adviser or financial planner on the books and records of the broker, agent
or financial intermediary with which the Distributor has made such special
arrangements. Each of these investors may be charged a fee by the broker,
agent or financial intermediary for purchasing shares.

|_| 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
adviser (the Distributor must be advised of this arrangement) and persons
who are directors or trustees of the company or trust which is the
beneficial owner of such accounts.

|_| 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 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.

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

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

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

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

1. Class A shares issued or purchased in the following transactions are not
subject to sales charges (and no concessions are paid by the Distributor on
such purchases):

|_| 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.

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.

|_| Redemptions of Class B shares held by Retirement Plans whose records are
maintained on a daily valuation basis by Merrill Lynch or an independent
record keeper under a contract with Merrill Lynch.

|_| Redemptions of Class C shares of Oppenheimer U.S. Government Trust from
accounts of clients of financial institutions that have entered into a
special arrangement with the Distributor for this purpose.

|_| Redemptions of Class C shares of an Oppenheimer fund in amounts of $1
million or more requested in writing by a Retirement Plan sponsor and
submitted more than 12 months after the Retirement Plan's first purchase of
Class C shares, if the redemption proceeds are invested to purchase Class N
shares of one or more Oppenheimer funds.

|_| Distributions(8) from Retirement Plans or other employee benefit plans for
any of the following purposes:

1) Following the death or disability (as defined in the Internal
Revenue Code) of the participant or beneficiary. The death or
disability must occur after the participant's account was
established in an Oppenheimer fund.

2) To return excess contributions made to a participant's account.

3) To return contributions made due to a mistake of fact.

4) To make hardship withdrawals, as defined in the plan.(9)

5) To make distributions required under a Qualified Domestic
Relations Order or, in the case of an IRA, a divorce or
separation agreement described in Section 71(b) of the Internal
Revenue Code.

6) To meet the minimum distribution requirements of the Internal
Revenue Code.

7) To make "substantially equal periodic payments" as described in
Section 72(t) of the Internal Revenue Code.

8) For loans to participants or beneficiaries.(10)

9) On account of the participant's separation from service.(11)

10) Participant-directed redemptions to purchase shares of a mutual
fund (other than a fund managed by the Manager or a subsidiary of
the Manager) offered as an investment option in a Retirement Plan
if the plan has made special arrangements with the Distributor.

11) Distributions made on account of a plan termination or
"in-service" distributions, if the redemption proceeds are rolled
over directly to an OppenheimerFunds-sponsored IRA.

12) For distributions from a participant's account under an Automatic
Withdrawal Plan after the participant reaches age 59 1/2, as long
as the aggregate value of the distributions does not exceed 10%
of the account's value, adjusted annually.

13) Redemptions of Class B shares under an Automatic Withdrawal Plan
for an account other than a Retirement Plan, if the aggregate
value of the redeemed shares does not exceed 10% of the account's
value, adjusted annually.

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

|_| Redemptions of Class B shares or Class C shares under an Automatic
Withdrawal Plan from an account other than a Retirement Plan if the
aggregate value of the redeemed shares does not exceed 10% of the account's
value annually.

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

The contingent deferred sales charge is also waived on Class B and Class C
shares sold or issued in the following cases:

|_| Shares sold to the Manager or its affiliates.

|_| Shares sold to registered management investment companies or separate
accounts of insurance companies having an agreement with the Manager or the
Distributor for that purpose.

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

|_| Shares sold to present or former officers, directors, trustees or employees
(and their "immediate families" as defined above in Section I.A.) of the
Fund, the Manager and its affiliates and retirement plans established by
them for their employees.

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

The initial and contingent deferred sales charge rates and waivers for Class A,
Class B and Class C shares described in the Prospectus or Statement of
Additional Information of the Oppenheimer funds are modified as described below

certain persons who were shareholders of the former Quest for Value Funds. To be
eligible, those persons must have been shareholders on November 24, 1995, when
OppenheimerFunds, Inc. became the investment adviser to those former Quest for
Value Funds. Those funds include:

Oppenheimer Rising Dividend 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 Nationalo 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

pursuant to a shareholder shares of an n exchange of fund that
wasOppenheimer Former Quest one of the Funds, or for Value

|_| purchased by suc by exchange oh shareholder another Oppenf shares of that
were acqheimer fund pursuant to tuired any of the Fohe merger of for Value
Funrmer Quest other Oppenheds into that November 24, imer fund on 1995. A.
Reductions or Wa Class A Sales Charges.ivers of

|X| Reduced Class A Charge Rates for CertaInitial Sales Quest for Value Funds
in Former Shareholders. Purchases by Groups an

Associations. The folld sets forth the initialowing table rates for Class A
shar sales charge by members of "Associaes purchased for any purpose other
tions" formed purchase of securitiesthan the in the table apply if . The
rates Association purchased that of the Former Quest foshares of any or
received a proposalr Value Funds such shares from OCC D to purchase prior
to November 24, istributors

1995.
Number of Eligible Emp al Sales Charge as a %
Members loyees or ing Price of Ini
----------------------------------------------------------
- --------------------------------------------------------------------------------
9 or Fewer 2.50% 2.56% 2.00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
At least 10 but not 2.00% 2.04% 1.60%
more than 49
- --------------------------------------------------------------------------------

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

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

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

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

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

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

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

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

o liquidation of a shareholder's account if the aggregate net asset value
of shares held in the account is less than the required minimum
value of such accounts.

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

o liquidation of a shareholder's account if the aggregate net asset value
of shares held in the account is less than the required minimum
account value.
A shareholder's account will be credited with the amount of any
contingent deferred sales charge paid on the redemption of any Class A, Class
B or Class C shares of the Oppenheimer fund described in this section if the
proceeds are invested in the same Class of shares in that fund or another
Oppenheimer fund within 90 days after redemption.

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

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

Oppenheimer U. S. Government Trust,
Oppenheimer Core Bond Fund,
Oppenheimer Value Fund and

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 current Class M shareholders, listed below, who
prior to March 11, 1996 owned shares of the Fund's then-existing Class A and
were permitted to purchase those shares at net asset value without a sales
charge:

|_| the Manager and its affiliates,

|_| present or former officers, directors, trustees and employees (and
their "immediate families" as defined in the Fund's Statement of
Additional Information) of the Fund, the Manager and its affiliates,
and retirement plans established by them or the prior investment
adviser 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 adviser 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 advisers that had entered
into an agreement with the Distributor or the prior distributor of
the Fund specifically providing for the use of Class M shares of the
Fund in specific investment products made available to their
clients, and
|_| dealers, brokers or registered investment advisers that had entered
into an agreement with the Distributor or prior distributor of the
Fund's shares to sell shares to defined contribution employee
retirement plans for which the dealer, broker, or investment adviser
provides administrative services.

Oppenheimer Core Bond Fund

Internet Website:

www.oppenheimerfunds.com

Investment Adviser

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

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

Transfer Agent
OppenheimerFunds Services

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

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

Independent Registered Public Accounting Firm
Deloitte &amp; Touche LLP
555 Seventeenth Street
Denver, Colorado 80202

Counsel to the Funds

Myer, Swanson, Adams &amp; Wolf, P.C.
1350 Lawrence Street, Suite 100
Denver, Colorado 80204

Counsel to the Independent Trustees
Bell, Boyd &amp; Lloyd LLC
70 West Madison Street, Suite 3100
Chicago, Illinois 60602

PX0285.001.0408

(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.

                         OPPENHEIMER INTEGRITY FUNDS

                                  FORM N-1A

                                    PART C

                              OTHER INFORMATION

Item 23. - Exhibits

(a)   (i)   Amended and Restated Declaration of Trust dated October 14, 2002:
Previously filed with Registrant's Post-Effective Amendment No. 43, 12/23/04,
and incorporated herein by reference.

      (ii)  Amendment dated December 23, 2004 to the Amended and Restated
Declaration of Trust: Previously filed with Registrant's Post Effective
Amendment No. 45, 3/11/05, and incorporated herein by reference.

      (iii) Amendment dated January 12, 2006 to the Amended and Restated
Declaration of Trust: Previously filed with Registrant's Post Effective
Amendment No. 46, 4/28/06, and incorporated herein by reference.

(b)   Registrant's By-Laws as amended through October 24, 2000: Previously
filed with Registrants Post-Effective Amendment No. 43, 12/23/04, and
incorporated herein by reference.

(c)   (i) Specimen Class A Share Certificate for Oppenheimer Core Bond Fund:
Previously filed with Registrant's Post-Effective Amendment No. 40, 4/29/02,
and incorporated herein by reference.

      (ii) Specimen Class B Share Certificate for Oppenheimer Core Bond Fund:
Previously filed with Registrant's Post-Effective Amendment No. 40, 4/29/02,
and incorporated herein by reference.

      (iii) Specimen Class C Share Certificate for Oppenheimer Core Bond
Fund: Previously filed with Registrant's Post-Effective Amendment No. 40,
4/29/02, and incorporated herein by reference.

      (iv) Specimen Class N Share Certificate for Oppenheimer Core Bond Fund:
Previously filed with Registrant's Post-Effective Amendment No. 40, 4/29/02,
and incorporated herein by reference.

      (v) Specimen Class Y Share Certificate for Oppenheimer Core Bond Fund:
Previously filed with Registrant's Post-Effective Amendment No. 40, 4/29/02,
and incorporated herein by reference.

(d)   Amended and Restated Investment Advisory Agreement dated March 26, 2006:
Previously filed with Registrant's Post Effective Amendment No. 46, 4/28/06,
and incorporated herein by reference.

(e)   (i) General Distributor's Agreement dated October 13, 1992: Previously
filed with Registrant's Post-Effective Amendment No. 17, 2/26/93, and
incorporated herein by reference.

(ii)  Form of Dealer Agreement of OppenheimerFunds Distributor, Inc.:
Previously filed with Post-Effective Amendment No. 34 to the Registration
Statement of Oppenheimer Main Street Funds, Inc. (Reg. No.33-17850),
(10/23/06), and incorporated herein by reference.


(iii) Form of Broker Agreement of OppenheimerFunds Distributor, Inc.:
Previously filed with Post-Effective Amendment No. 34 to the Registration
Statement of Oppenheimer Main Street Funds, Inc. (Reg. No.33-17850),
(10/23/06), and incorporated herein by reference.


(iv)  Form of Agency Agreement of OppenheimerFunds Distributor, Inc.:
Previously filed with Post-Effective Amendment No. 34 to the Registration
Statement of Oppenheimer Main Street Funds, Inc. (Reg. No.33-17850),
(10/23/06), and incorporated herein by reference.


      (v)     Form of Trust Company Fund/SERV Purchase Agreement of
OppenheimerFunds Distributor, Inc.: Previously filed with Post-Effective
Amendment No. 45 to the Registration Statement of Oppenheimer High Yield Fund
(Reg. No. 2-62076), (10/26/01), and incorporated herein by reference.



      (vi) Form of Trust Company Agency Agreement of OppenheimerFunds
Distributor, Inc.: Previously filed with Post-Effective Amendment No. 34 to
the Registration Statement of Oppenheimer Main Street Funds, Inc. (Reg.
No.33-17850), (10/23/06), and incorporated herein by reference.


(f)   Form of Oppenheimer Funds Compensation Deferral Plan, As Amended and
      Restated
Effective January 1, 2008: Previously filed with Post-Effective Amendment No.
18 to the Registration Statement of Oppenheimer International Bond Fund (Reg.
No. 33-58383), (12/20/07), and incorporated herein by reference.

(g)       Global Custody Agreement dated August 16, 2002: Previously filed
with Post-Effective
Amendment No. 51 to the Registration Statement of Oppenheimer Capital
Appreciation Fund (Reg. No. 2-69719), (10/23/06), and incorporated herein by
reference.

(h)   Not applicable.

(i)   (i) Opinion and Consent of Counsel dated February 11, 1991:
Incorporated herein by reference to Registrant's Rule 24f-2 Notice filed on
2/19/91 and re-filed pursuant to Item 102 of Regulation S-T with Registrant's
Post-Effective Amendment No. 23, 4/28/95, and incorporated herein by
reference.

(j)   Independent Registered Public Accounting Firm's Consent: Filed herewith.

(k)   Not applicable.

(l)   Not applicable.

(m)   (i) Amended and Restated Service Plan and Agreement for Class A shares
dated October 28, 2005: Previously filed with Registrant's Post-Effective
Amendment No. 46, 4/28/06, and incorporated herein by reference.


      (ii) Amended and Restated Distribution and Service Plan and Agreement
for Class B shares dated October 28, 2005: Previously filed with Registrant's
Post-Effective Amendment No. 46, 4/28/06, and incorporated herein by
reference.

      (iii) Amended and Restated Distribution and Service Plan and Agreement
for Class C shares dated October 28, 2005: Previously filed with Registrant's
Post-Effective Amendment No. 46, 4/28/06, and incorporated herein by
reference.

      (iv) Amended and Restated Distribution and Service Plan and Agreement
for Class N shares dated October 28, 2005: Previously filed with Registrant's
Post-Effective Amendment No. 46, 4/28/06, and incorporated herein by
reference.

      (n)          Oppenheimer Funds Multiple Class Plan under Rule 18f-3
updated through 8/29/07: Previously filed with the Initial Registration
Statement of Oppenheimer Portfolio Series Fixed Income Investor Fund (Reg.
No. 333-146105), (9/14/07), and incorporated herein by reference.

(o)    Powers of Attorney for all Trustees/Directors and Principal Officers:
Previously filed with the Initial Registration Statement of Oppenheimer
Portfolio Series Active Allocation Fund (Reg. No. 333-146105), (9/14/07), and
incorporated herein by reference.

(p)     Amended and Restated Code of Ethics of the Oppenheimer Funds dated
August 30, 2007 under Rule 17j-1 of the Investment Company Act of 1940:
Previously filed with the Initial Registration Statement of Oppenheimer
Portfolio Series Fixed Income Investor Fund (Reg. No. 333-146105),
(09/14/07), and incorporated herein by reference.


Item 24. - Persons Controlled by or Under Common Control with the Fund

None.


Item 25. - Indemnification

Reference is made to the provisions of Article Seventh of Registrant's
Amended and Restated Declaration of Trust filed as Exhibit 23(a) to this
Registration Statement, and incorporated herein by reference.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of
Registrant pursuant to the foregoing provisions or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act of 1933 and will be governed
by the final adjudication of such issue.


Item 26. - Business and Other Connections of the Investment Adviser

(a)   OppenheimerFunds, Inc. is the investment adviser of the Registrant; it
and certain subsidiaries and affiliates act in the same capacity to other
investment companies, including without limitation those described in Parts A
and B hereof and listed in Item 26(b) below.

(b)   There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
officer and director of OppenheimerFunds, Inc. is, or at any time during the
past two fiscal years has been, engaged for his/her own account or in the
capacity of director, officer, employee, partner or trustee.

- --------------------------------------------------------------------------------
Name and Current Position
with OppenheimerFunds, Inc. Other Business and Connections  During the Past Two
                            Years
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Timothy L. Abbuhl,          Treasurer   of    Centennial    Asset    Management
Vice President              Corporation;    Vice    President   and   Assistant
                            Treasurer of OppenheimerFunds Distributor, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Patrick Adams               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Robert Agan,                Senior  Vice  President  of  Shareholder  Financial
Senior Vice President       Services,  Inc. and  Shareholders  Services,  Inc.;
                            Vice  President  of  OppenheimerFunds  Distributor,
                            Inc.,  Centennial Asset Management  Corporation and
                            OFI Private Investments Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Carl Algermissen,           Assistant  Secretary of Centennial Asset Management
Vice President & Associate  Corporation.
Counsel
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Michael Amato,              None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Nicole Andersen,            None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Tracey Beck Apostolopoulos, None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Janette Aprilante,          Secretary  (since  December  2001)  of:  Centennial
Vice President & Secretary  Asset  Management   Corporation,   OppenheimerFunds
                            Distributor,  Inc.,  HarbourView  Asset  Management
                            Corporation  (since  June 2003),  Oppenheimer  Real
                            Asset  Management,   Inc.,   Shareholder  Financial
                            Services,   Inc.,   Shareholder   Services,   Inc.,
                            Trinity  Investment  Management  Corporation (since
                            January  2005),  OppenheimerFunds  Legacy  Program,
                            OFI Private  Investments Inc. (since June 2003) and
                            OFI  Institutional  Asset  Management,  Inc. (since
                            June  2003).   Assistant  Secretary  of  OFI  Trust
                            Company (since December 2001).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dmitri Artemiev             Formerly (until January 2007)  Analyst/Developer at
Assistant Vice President    Fidelity Investments.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Hany S. Ayad,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Paul Aynsley,               Formerly   Vice   President   at  Kepler   Equities
Vice President              (December 2006 - February 2008)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
James F. Bailey,            Senior  Vice  President  of  Shareholder  Services,
Senior Vice President       Inc. (since March 2006).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Robert Baker,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John Michael Banta,         None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Michael Barnes,             None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Adam Bass,                  None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kevin Baum,                 None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jeff Baumgartner,           None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Marc Baylin,                Vice   President   of   OFI   Institutional   Asset
Vice President              Management, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Todd Becerra,               None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kathleen Beichert,          Vice  President  of  OppenheimerFunds  Distributor,
Senior Vice President       Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gerald B. Bellamy,          Vice President (Sales Manager of the  International
Vice President              Division) of OFI  Institutional  Asset  Management,
                            Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Erik S. Berg,               None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Emanuele Bergagnine,        Assistant  Vice  President  of  OFI   Institutional
Assistant Vice President    Asset Management, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Robert Bertucci,            None
Assistant Vice President:
Rochester Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Rajeev Bhaman,              Vice   President   of   OFI   Institutional   Asset
Senior Vice President       Management, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Craig Billings,             None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mark Binning,               None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Robert J. Bishop,           Treasurer (since October 2003) of  OppenheimerFunds
Vice President              Distributor,  Inc. and Centennial  Asset Management
                            Corporation;  Assistant  Secretary  of  Oppenheimer
                            Acquisition Corp.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Julie Blanchard,            Formerly     Fund     Accounting     Manager     at
Assistant Vice President    OppenheimerFunds,   Inc.  (April  2006  -  February
                            2008).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Beth Bleimehl,              None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lisa I. Bloomberg,          Assistant   Secretary  of  Oppenheimer  Real  Asset
Vice President & Associate  Management, Inc.
Counsel
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Veronika Boesch,            None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Chad Boll,                  None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Antulio N. Bomfim,          None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Michelle Borre Massick,     None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lori E. Bostrom,            Assistant  Secretary  of  OppenheimerFunds   Legacy
Vice President & Senior     Program.
Counsel
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
David J. Bowers             Formerly  (until  July 2007)  Analyst at  Evergreen
Assistant Vice President    Investments.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John Boydell,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Richard Britton,            Formerly     CTO/Managing     Director     of    IT
Vice President              Infrastructure   at   GMAC   Residential    Funding
                            Corporation (October 2000 - October 2006).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Garrett C. Broadrup,        Formerly  an  Associate  at Davis  Polk &  Wardwell
Vice President & Assistant  (October 2002 - October 2006).
Counsel
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Michael Bromberg,           None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Holly Broussard,            None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Roger Buckley,              Formerly Manager in  Infrastructure  (February 2006
Assistant Vice President    - April  2006) and  Manager in Finance  (May 2006 -
                            February 2008) at OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Stephanie Bullington,       None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Paul Burke,                 None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mark Burns,                 None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JoAnne Butler,              None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Geoffrey Caan,              None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Christine Calandrella,      Formerly  Director of Empower Network (March 2007 -
Assistant Vice President    September  2007);  formerly  HR  Manager  of  Arrow
                            Electronics, Inc. (June 1998 - March 2007).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dale William Campbell,      Formerly    (until   January   2007)   Manager   at
Assistant Vice President    OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Patrick Campbell,           Vice  President  of  OppenheimerFunds  Distributor,
Vice President              Inc.,  Shareholder  Services,  Inc. and Shareholder
                            Financial Services, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Catherine Carroll,          None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Debra Casey,                None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Maria Castro,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lisa Chaffee,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Ronald Chibnik,             None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Patrick Sheng Chu,          None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Brett Clark,                None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jennifer Clark,             Formerly   Manager   at   OppenheimerFunds,    Inc.
Assistant Vice President    (February  2006 - February  2008).  Assistant  Vice
                            President at Shareholder Financial Services,  Inc.,
                            Shareholder   Services,   Inc.,   and  OFI  Private
                            Investments Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
H.C. Digby Clements,        None
Senior Vice President:
Rochester Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thomas Closs,               Formerly (until January 2007)  Development  Manager
Assistant Vice President    at OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
David Cole,                 Formerly  Manager  at  OppenheimerFunds,  Inc  (May
Assistant Vice President    2006 - January 2008).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Eric Compton,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gerald James Concepcion,    None.
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Susan Cornwell,             Senior  Vice  President  of  Shareholder  Financial
Senior Vice President       Services,  Inc.  and  Shareholder  Services,  Inc.;
                            Vice  President  of  OppenheimerFunds  Distributor,
                            Inc.,  Centennial Asset Management  Corporation and
                            OppenheimerFunds Legacy Program.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Cheryl Corrigan,            None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Belinda J. Cosper,          None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Scott Cottier,              None
Vice President:
Rochester Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lauren Coulston,            None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Terry Crady,                Formerly     IT     Development      Manager     at
Assistant Vice President    OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
George Curry,               Vice  President  of  OppenheimerFunds  Distributor,
Vice President              Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Julie C. Cusker,            None
Assistant Vice President:
Rochester Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kevin Dachille,             None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Rushan Dagli,               Vice  President  of OFI Private  Investments  Inc.,
Vice President              Shareholder    Financial    Services,    Inc.   and
                            Shareholder Services, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John Damian,                None
Senior Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jason Davis,                Formerly Manager at OppenheimerFunds, Inc.
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Robert Dawson,              None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John Delano,                None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kendra Delisa,              Formerly    (until   January   2007)   Manager   at
Assistant Vice President    OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Damaris De Los Santos,      Formerly  Senior  Account  Executive  (July  2003 -
Assistant Vice President    February 2008).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Richard Demarco,            None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Craig P. Dinsell,           None
Executive Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Randall C. Dishmon,         None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Rebecca K. Dolan,           None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Steven D. Dombrower,        Senior Vice  President  of OFI Private  Investments
Vice President              Inc.;    Vice    President   of    OppenheimerFunds
                            Distributor, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sara Donahue,               Formerly   (until   November   2006)   Manager   at
Assistant Vice President    OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Alicia Dopico,              Formerly    (until    August   2007)   Manager   at
Assistant Vice President    OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thomas Doyle,               None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Bruce C. Dunbar,            None
Senior Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Brian Dvorak,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Richard Edmiston,           None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A. Taylor Edwards,          None
Vice President & Assistant
Counsel
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Venkat Eleswarapu,          None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Daniel R. Engstrom,         None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
James Robert Erven,         None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
George R. Evans,            None
Senior Vice President &
Director of International
Equities
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Edward N. Everett,          None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kathy Faber,                None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
David Falicia,              Assistant   Secretary   (as  of   July   2004)   of
Assistant Vice President    HarbourView Asset Management Corporation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Rachel Fanopoulos,          Formerly    Manager    (until   August   2007)   at
Assistant Vice President    OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Matthew Farkas,             None
Vice President and
Assistant Counsel
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kristie Feinberg,           Assistant  Treasurer  of  Oppenheimer   Acquisition
Vice President              Corp.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
William Ferguson,           Formerly Senior  Marketing  Manager at ETrade (June
Assistant Vice President    2006 - January 2007) and Senior  Marketing  Manager
                            at Axa Financial (April 2000 - June 2006).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Emmanuel Ferreira,          None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Ronald H. Fielding,         Vice  President  of  OppenheimerFunds  Distributor,
Senior Vice President;      Inc.;  Director  of ICI Mutual  Insurance  Company;
Chairman of the Rochester   Governor  of St.  John's  College;  Chairman of the
Division                    Board  of  Directors  of  International  Museum  of
                            Photography at George Eastman House.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Bradley G. Finkle,          None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Steven Fling,               None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John E. Forrest,            Senior   Vice    President   of    OppenheimerFunds
Senior Vice President       Distributor, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
David Foxhoven,             Assistant   Vice   President  of   OppenheimerFunds
Senior Vice President       Legacy  Program;   Vice  President  of  HarbourView
                            Asset Management Corporation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Colleen M. Franca,          None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Barbara Fraser,             Secretary  of OFI  Trust  Company  (since  December
Vice President & Associate  2007).
Counsel
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dominic Freud,              None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Hazem Gamal,                None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Charles Gapay,              Formerly (as of January  2007) Help Desk Manager at
Assistant Vice President    OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Seth Gelman,                None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Timothy Gerlach,            None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Phillip S. Gillespie,       None
Senior Vice President &
Assistant Secretary
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Alan C. Gilston,            None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jacqueline Girvin-Harkins,  None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jill E. Glazerman,          None
Senior Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kevin Glenn,                Formerly  Tax  Manager  at  OppenheimerFunds,  Inc.
Assistant Vice President    (December 2006 - February 2008).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Benjamin J. Gord,           Vice  President  of  HarbourView  Asset  Management
Vice President              Corporation   and   of  OFI   Institutional   Asset
                            Management, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Raquel Granahan,            Senior Vice  President  of OFI Private  Investments
Senior Vice President       Inc.;    Vice    President   of    OppenheimerFunds
                            Distributor,   Inc.,  and  OppenheimerFunds  Legacy
                            Program.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Robert B. Grill,            None
Senior Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Carol Guttzeit,             None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Marilyn Hall,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kelly Haney,                None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Steve Hauenstein,           None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Robert W. Hawkins,          None
Vice President & Assistant
Counsel
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thomas B. Hayes,            None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Bradley Hebert,             Manager at  OppenheimerFunds,  Inc. (October 2004 -
Assistant Vice President    February 2008).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Heidi Heikenfeld,           None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Annika Helgerson,           None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Daniel Herrmann,            Vice President of OFI Private Investments Inc.
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Benjamin Hetrick,           Manager at AIM  Investments  (May 2001 - May 2006);
Assistant Vice President    Manager  at  OppenheimerFunds,   Inc  (May  2006  -
                            December 2007).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dennis Hess,                None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Joseph Higgins,             Vice   President   of   OFI   Institutional   Asset
Vice President              Management, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dorothy F. Hirshman,        None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Daniel Hoelscher,           None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Eivind Holte,               Formerly Vice  President at U.S. Trust (June 2005 -
Vice President              October 2007)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Brian Hourihan,             Assistant   Secretary  of  Oppenheimer  Real  Asset
Vice President & Associate  Management,   Inc.,  HarbourView  Asset  Management
Counsel                     Corporation,  OFI  Institutional  Asset Management,
                            Inc.  (since  April  2006) and  Trinity  Investment
                            Management Corporation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Edward Hrybenko,            Vice  President  of  OppenheimerFunds  Distributor,
Vice President              Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jason Hubersberger,         None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kevin Andrew Huddleston,    None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Scott T. Huebl,             Assistant   Vice   President  of   OppenheimerFunds
Vice President              Legacy Program.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Douglas Huffman,            None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Margaret Hui,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dana Hunter,                None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John Huttlin,               Senior   Vice    President    (Director    of   the
Vice President              International  Division)  (since  January  2004) of
                            OFI Institutional Asset Management,  Inc.; Director
                            (since     June    2003)    of     OppenheimerFunds
                            International Distributor Limited.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
James G. Hyland,            None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kelly Bridget Ireland,      None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kathleen T. Ives,           Vice   President   and   Assistant   Secretary   of
Vice President, Senior      OppenheimerFunds  Distributor, Inc. and Shareholder
Counsel & Assistant         Services,  Inc.;  Assistant Secretary of Centennial
Secretary                   Asset  Management   Corporation,   OppenheimerFunds
                            Legacy Program and Shareholder  Financial Services,
                            Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
William Jaume,              Senior  Vice   President   of   HarbourView   Asset
Vice President              Management  Corporation and OFI Institutional Asset
                            Management, Inc.; Director of OFI Trust Company.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Frank V. Jennings,          None
Senior Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John Jennings,              None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jin Jo,                     Formerly  Audit  Manager  at  Deloitte & Touche LLP
Assistant Vice President    (as of August 2007)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lisa Kadehjian,             None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Charles Kandilis,           None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Amee Kantesaria,            Formerly  Counsel  at  Massachusetts   Mutual  Life
Assistant Vice President    Insurance Company
                            (May 2005-December 2006).
Assistant Counsel
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Rezo Kanovich,              None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thomas W. Keffer,           Senior   Vice    President   of    OppenheimerFunds
Senior Vice President       Distributor, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
James Kennedy,              Formerly  self-employed  (December 2005 - September
Senior Vice President       2006).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Michael Keogh,              Vice  President  of  OppenheimerFunds  Distributor,
Vice President              Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John Kiernan,               None
Vice President & Marketing
Compliance Manager
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Michael Kim,                None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Audrey Kiszla,              Formerly Vice  President at First Horizon  Merchant
Vice President              Services (December 2005- May 2006).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lisa Klassen,               Vice  President  of OFI Private  Investments  Inc.,
Vice President              Shareholder    Financial    Services,    Inc.   and
                            Shareholder  Financial  Services,  Inc.;  Assistant
                            Vice President of  OppenheimerFunds  Legacy Program
                            and OppenheimerFunds Distributor, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Richard Knott,              President   and   Director   of    OppenheimerFunds
Executive Vice President    Distributor,  Inc.; Executive Vice President of OFI
                            Private Investments Inc.;  Executive Vice President
                            &   Director   of   Centennial   Asset   Management
                            Corporation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Daniel Kohn,                None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Martin S. Korn,             None
Senior Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Tatyana Kosheleva,          Formerly (as of April 2007) Finance  Manager at IBM
Assistant Vice President    Corp.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Brian Kramer,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
S. Arthur Krause,           Formerly Product Manager of OppenheimerFunds,  Inc.
Assistant Vice President    (as of January 2007).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Alexander Kurinets,         None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gloria LaFond,              None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lisa Lamentino,             None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Tracey Lange,               Vice  President  of  OppenheimerFunds  Distributor,
Vice President              Inc. and OFI Private Investments Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jeffrey P. Lagarce,         President of OFI  Institutional  Asset  Management,
Senior Vice President       Inc. as of January 2005.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John Latino,                None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gayle Leavitt,              None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Christopher M. Leavy,       Senior Vice  President  of OFI Private  Investments
Senior Vice President       Inc., OFI  Institutional  Asset  Management,  Inc.,
                            and Trinity Investment Management Corporation
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Randy Legg,                 None
Vice President & Associate
Counsel
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Laura Leitzinger,           Senior  Vice  President  of  Shareholder  Services,
Senior Vice President       Inc. and Shareholder Financial Services, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Justin Leverenz,            None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Michael S. Levine,          None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Brian Levitt,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gang Li,                    None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shanquan Li,                None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Julie A. Libby,             Senior Vice President and Chief  Operating  Officer
Senior Vice President       of OFI Private Investments Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Daniel Lifshey,             None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mitchell J. Lindauer,       None
Vice President & Assistant
General Counsel
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Bill Linden,                None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Malissa B. Lischin,         Assistant   Vice   President  of   OppenheimerFunds
Vice President              Distributor, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Justin Livengood,           None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Christina Loftus,           None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
David P. Lolli,             None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Ian Loughlin,               Formerly     Financial    Analysis    Manager    at
Assistant Vice President    OppenheimerFunds,   Inc.   (June  2005  -  February
                            2008).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Daniel G. Loughran          None
Senior Vice President:
Rochester Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Patricia Lovett,            Vice President of Shareholder  Financial  Services,
Senior Vice President       Inc.  and  Senior  Vice  President  of  Shareholder
                            Services, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Misha Lozovik,              None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dongyan Ma,                 None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Steve Macchia,              None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Matthew Maley,              Formerly  Operations  Manager at Bear Stearns (June
Assistant Vice President    2005 - February 2008).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Daniel Martin,              None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jerry Mandzij,              None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Angelo G. Manioudakis,      Senior  Vice   President   of   HarbourView   Asset
Senior Vice President       Management  Corporation  and of  OFI  Institutional
                            Asset   Management,   Inc.;   Vice   President   of
                            Oppenheimer Real Asset Management, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Carolyn Maxson,             None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
William T. Mazzafro,        None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Trudi McCanna,              None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Neil McCarthy,              None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Elizabeth McCormack,        Vice   President   and   Assistant   Secretary   of
Vice President              HarbourView Asset Management Corporation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John McCullough,            Formerly   Relationship    Management   and   Sales
Vice President              Representative  at John Hancock Funds (April 2004 -
                            April 2006).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Joseph McDonnell,           None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Joseph McGovern,            None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Charles L. McKenzie,        Chairman of the Board,  Director,  Chief  Executive
Senior Vice President       Officer  and   President  of  OFI  Trust   Company;
                            Chairman,    Chief   Executive    Officer,    Chief
                            Investment    Officer    and    Director   of   OFI
                            Institutional   Asset   Management,   Inc.;   Chief
                            Executive  Officer,   President,   Senior  Managing
                            Director   and   Director  of   HarbourView   Asset
                            Management  Corporation;  Chairman,  President  and
                            Director   of   Trinity    Investment    Management
                            Corporation and Vice President of Oppenheimer  Real
                            Asset Management, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
William McNamara,           None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mary McNamee,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Michael Medev,              None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lucienne Mercogliano,       None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jay Mewhirter,              None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Andrew J. Mika,             None
Senior Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jan Miller,                 None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Scott Miller,               Formerly    Assistant   Vice   President   at   AXA
Vice President              Distributors, LLC (July 2005 - February 2008).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Rejeev Mohammed,            None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Nikolaos D. Monoyios,       Senior Vice  President of OFI  Institutional  Asset
Senior Vice President       Management, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sarah Morrison,             Formerly   (as  of   January   2007)   Manager   at
Assistant Vice President    OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jill Mulcahy,               None
Vice President:
Rochester Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John V. Murphy,             President and  Management  Director of  Oppenheimer
Chairman, Chief             Acquisition   Corp.;   President  and  Director  of
Executive Officer &         Oppenheimer Real Asset Management,  Inc.;  Chairman
Director                    and  Director of  Shareholder  Services,  Inc.  and
                            Shareholder  Financial Services,  Inc.; Director of
                            OppenheimerFunds     Distributor,     Inc.,     OFI
                            Institutional   Asset  Management,   Inc.,  Trinity
                            Investment  Management  Corporation,  Tremont Group
                            Holdings,   Inc.,   HarbourView   Asset  Management
                            Corporation  and  OFI  Private   Investments  Inc.;
                            Executive  Vice President of  Massachusetts  Mutual
                            Life   Insurance    Company;    Director   of   DLB
                            Acquisition   Corporation;    a   member   of   the
                            Investment Company Institute's Board of Governors.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Meaghan Murphy,             None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Suzanne Murphy,             Vice President of OFI Private Investments Inc.
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thomas J. Murray,           None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Christine Nasta,            Vice  President  of  OppenheimerFunds  Distributor,
Vice President              Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Paul Newman,                None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Richard Nichols,            None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
William Norman,             None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
James B. O'Connell,         None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Matthew O'Donnell,          None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lisa Ogren,                 Formerly Manager at OppenheimerFunds, Inc.
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Tony Oh,                    None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John J. Okray,              None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kristina Olson,             None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lerae A. Palumbo,           None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kathleen Patton,            Assistant Vice  President of Shareholder  Services,
Assistant Vice President    Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
David P. Pellegrino,        None
Senior Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Allison C. Pells,           None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Robert H. Pemble,           None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lori L. Penna,              None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Brian Petersen,             Assistant  Treasurer  of  OppenheimerFunds   Legacy
Vice President              Program.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Marmeline Petion-Midy,      None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
David Pfeffer,              Treasurer of Oppenheimer  Acquisition Corp.; Senior
Senior Vice President &     Vice  President  of  HarbourView  Asset  Management
Chief Financial Officer     Corporation since February 2004.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
James F. Phillips,          None
Senior Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gary Pilc,                  None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John Piper,                 Assistant Vice  President of Shareholder  Services,
Assistant Vice President    Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jeaneen Pisarra,            None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Nicolas Pisciotti,          None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Christine Polak,            None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sergei Polevikov,           None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jeffrey Portnoy,            None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
David Preuss,               None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Ellen Puckett,              None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jodi Pullman,               Formerly Product Manager at OppenheimerFunds,  Inc.
Assistant Vice President    (January  2007 -  February  2008);  Senior  Project
                            Manager at  OppenheimerFunds,  Inc.  (March  2006 -
                            January 2007).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Paul Quarles,               None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Michael E. Quinn,           None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Julie S. Radtke,            None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Timothy Raeke,              Formerly  (as of July 2007) Vice  President  at MFS
Assistant Vice President    Investment Management.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Norma J. Rapini,            None
Assistant Vice President:
Rochester Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Corry E. Read,              None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Marc Reinganum,             None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jill Reiter,                None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jason Reuter,               Formerly   Manager   at   OppenheimerFunds,    Inc.
Assistant Vice President    (February 2006 - February 2008).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Eric Rhodes,                None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Eric Richter,               Vice  President  of  HarbourView  Asset  Management
Vice President              Corporation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Claire Ring,                None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Grace Roberts,              None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
David Robertson,            Senior   Vice    President   of    OppenheimerFunds
Senior Vice President       Distributor,   Inc.;   President  and  Director  of
                            Centennial Asset Management Corporation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Robert Robis,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Antoinette Rodriguez,       None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lucille Rodriguez,          None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Stacey Roode,               None
Senior Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jeffrey S. Rosen,           None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Stacy Roth,                 None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Richard Royce,              None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Adrienne Ruffle,            Assistant  Secretary  of  OppenheimerFunds   Legacy
Vice President & Assistant  Program.
Counsel
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kim Russomanno,             None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gerald Rutledge,            None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Julie Anne Ryan,            None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Timothy Ryan,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Matthew Torpey,             None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Rohit Sah,                  None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gary Salerno,               Formerly   (as  of  May  2007)   Separate   Account
Assistant Vice President    Business Liaison at OppenheimerFunds, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Valerie Sanders,            None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kurt Savallo,               Formerly     Senior     Business     Analyst     at
Assistant Vice President    OppenheimerFunds, Inc.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Rudi W. Schadt,             None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mary Beth Schellhorn,       Formerly  Human   Resources   Generalist  at  Misys
Assistant Vice President    Banking Systems (November 2000 - June 2006).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Ellen P. Schoenfeld,        None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kathleen Schmitz,           Assistant    Secretary   of    HarbourView    Asset
Assistant Vice President    Management  Corporation.  Formerly Fund  Accounting
                            Manager at OppenheimerFunds,  Inc. (November 2004 -
                            February 2008).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Patrick Schneider,          Formerly  Human  Resources  Manager at ADT Security
Assistant Vice President    Services (December 2001 - July 2006).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Scott A. Schwegel,          None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Allan P. Sedmak,            None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jennifer L. Sexton,         Senior Vice  President  of OFI Private  Investments
Vice President              Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Asutosh Shah,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kamal Shah,                 None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Navin Sharma,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Tammy Sheffer,              None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mary Dugan Sheridan,        None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Nicholas Sherwood,          Formerly   Manager   at   OppenheimerFunds,    Inc.
Assistant Vice President    (February 2006 - February 2008).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
David C. Sitgreaves,        None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Michael Skatrud,            Formerly (as of March 2007)  Corporate Bond Analyst
Assistant Vice President    at Putnam Investments.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Enrique H. Smith,           None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kevin Smith,                None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Paul Snogren                None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Louis Sortino,              None
Vice President:
Rochester Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Keith J. Spencer,           None
Senior Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Marco Antonio Spinar,       None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Brett Stein,                Formerly  Vice  President  of  Client  Services  at
Vice President              XAware, Inc. (October 2002 - August 2006).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Richard A. Stein,           None
Vice President:
Rochester Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Arthur P. Steinmetz,        Senior  Vice   President   of   HarbourView   Asset
Senior Vice President       Management  Corporation;   Vice  President  of  OFI
                            Institutional Asset Management, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jennifer Stevens,           None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Benjamin Stewart,           None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Peter Strzalkowski,         Vice  President of  HarbourView  Asset  Management,
Vice President              Inc. Formerly (as of August 2007)  Founder/Managing
                            Partner at Vector Capital Management.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John P. Stoma,              Senior   Vice    President   of    OppenheimerFunds
Senior Vice President       Distributor, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Amy Sullivan,               None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Carole Sumption,            Formerly  Vice  President at Policy  Studies,  Inc.
Vice President              (July 2003 - April 2007).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Michael Sussman,            Vice  President  of  OppenheimerFunds  Distributor,
Vice President              Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thomas Swaney,              Vice  President  of  HarbourView  Asset  Management
Vice President              Corporation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Brian C. Szilagyi,          None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Martin Telles,              Senior   Vice    President   of    OppenheimerFunds
Senior Vice President       Distributor, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Charles Toomey,             None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Vincent Toner,              None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Melinda Trujillo,           Formerly  Senior  Manager at CoBank,  ACB  (January
Vice President              2004 - April 2006).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Leonid Tsvayg,              None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Keith Tucker,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Cameron Ullyatt,            None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Angela Uttaro,              None
Assistant Vice President:
Rochester Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mark S. Vandehey,           Vice  President  and Chief  Compliance  Officer  of
Senior Vice President &     OppenheimerFunds   Distributor,   Inc.,  Centennial
Chief Compliance Officer    Asset   Management   Corporation   and  Shareholder
                            Services,   Inc.;  Chief   Compliance   Officer  of
                            HarbourView  Asset  Management  Corporation,   Real
                            Asset  Management,   Inc.,   Shareholder  Financial
                            Services,   Inc.,  Trinity  Investment   Management
                            Corporation,  OppenheimerFunds  Legacy Program, OFI
                            Private  Investments Inc. and OFI Trust Company and
                            OFI Institutional Asset Management, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Maureen Van Norstrand,      None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Nancy Vann,                 None
Vice President & Associate
Counsel
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Rene Vecka,                 None
Assistant Vice President:
Rochester Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Vincent Vermette,           Assistant   Vice   President  of   OppenheimerFunds
Vice President              Distributor, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Elaine Villas-Obusan,       None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Ryan Virag,                 None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jake Vogelaar,              None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Phillip F. Vottiero,        None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mark Wachter,               Formerly Manager at  OppenheimerFunds,  Inc. (March
Vice President              2005 - February 2008).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lisa Walsh,                 None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Darren Walsh,               President  and  Director of  Shareholder  Financial
Executive Vice President    Services,   Inc.  and  Shareholder  Services,  Inc.
                            Formerly  General Manager and Senior Vice President
                            of Comverse (December 2005 - September 2006).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Richard Walsh,              Vice President of OFI Private Investments.
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Deborah Weaver,             None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jerry A. Webman,            Senior  Vice   President   of   HarbourView   Asset
Senior Vice President       Management Corporation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Christopher D. Weiler,      None
Vice President:
Rochester Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Barry D. Weiss,             Vice  President  of  HarbourView  Asset  Management
Vice President              Corporation  and  of  Centennial  Asset  Management
                            Corporation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Melissa Lynn Weiss,         None
Vice President & Senior
Counsel
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Christine Wells,            None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Joseph J. Welsh,            Vice  President  of  HarbourView  Asset  Management
Vice President              Corporation.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Catherine M. White,         Assistant   Vice   President  of   OppenheimerFunds
Assistant Vice President    Distributor,  Inc.;  member of the American Society
                            of Pension Actuaries (ASPA) since 1995.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Troy Willis,                None
Assistant Vice President,
Rochester Division
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mitchell Williams,          None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Julie Wimer,                None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Donna M. Winn,              President,  Chief  Executive  Officer & Director of
Senior Vice President       OFI Private  Investments Inc.; Director & President
                            of  OppenheimerFunds  Legacy  Program;  Senior Vice
                            President of OppenheimerFunds Distributor, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Brian W. Wixted,            Treasurer   of   HarbourView    Asset    Management
Senior Vice President &     Corporation;  OppenheimerFunds  International Ltd.,
Treasurer                   Oppenheimer    Real   Asset    Management,    Inc.,
                            Shareholder Services,  Inc.,  Shareholder Financial
                            Services,  Inc., OFI Private  Investments Inc., OFI
                            Institutional      Asset     Management,      Inc.,
                            OppenheimerFunds  plc and  OppenheimerFunds  Legacy
                            Program;  Treasurer and Chief Financial  Officer of
                            OFI   Trust   Company;   Assistant   Treasurer   of
                            Oppenheimer Acquisition Corp.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Carol E. Wolf,              Senior  Vice   President   of   HarbourView   Asset
Senior Vice President       Management  Corporation  and  of  Centennial  Asset
                            Management  Corporation;   Vice  President  of  OFI
                            Institutional Asset Management,  Inc; serves on the
                            Board of the Colorado Ballet.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Meredith Wolff,             Vice  President  of  OppenheimerFunds  Distributor,
Vice President              Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Oliver Wolff,               None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kurt Wolfgruber,            Director  of  OppenheimerFunds  Distributor,  Inc.,
President, Chief            Director   of   Tremont   Group   Holdings,   Inc.,
Investment Officer &        HarbourView  Asset  Management  Corporation and OFI
Director                    Institutional  Asset  Management,  Inc. (since June
                            2003).    Management    Director   of   Oppenheimer
                            Acquisition Corp. (since December 2005).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Caleb C. Wong,              None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Edward C. Yoensky,          None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Geoff Youell,               None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lucy Zachman,               None
Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Robert G. Zack,             General  Counsel  of  Centennial  Asset  Management
Executive Vice President &  Corporation;   General   Counsel  and  Director  of
General Counsel             OppenheimerFunds  Distributor,  Inc.;  Senior  Vice
                            President and General Counsel of HarbourView  Asset
                            Management  Corporation and OFI Institutional Asset
                            Management,  Inc.;  Senior Vice President,  General
                            Counsel  and  Director  of  Shareholder   Financial
                            Services,  Inc.,  Shareholder  Services,  Inc., OFI
                            Private    Investments    Inc.;    Executive   Vice
                            President,  General  Counsel  and  Director  of OFI
                            Trust Company;  Director and Assistant Secretary of
                            OppenheimerFunds    International   Limited;   Vice
                            President,   Secretary   and  General   Counsel  of
                            Oppenheimer   Acquisition   Corp.;   Director   and
                            Assistant     Secretary     of     OppenheimerFunds
                            International  Distributor Limited;  Vice President
                            of OppenheimerFunds  Legacy Program; Vice President
                            and Director of  Oppenheimer  Partnership  Holdings
                            Inc.;   Director   of   OFI   Institutional   Asset
                            Management, Ltd.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Anna Zatulovskaya,          None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mark D. Zavanelli,          Vice   President   of   OFI   Institutional   Asset
Vice President              Management, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Alex Zhou,                  None
Assistant Vice President
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Ronald Zibelli, Jr.         Formerly  Managing  Director  and Small Cap  Growth
Vice President              Team Leader at Merrill Lynch.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Arthur J. Zimmer,           Senior  Vice   President   of   HarbourView   Asset
Senior Vice President       Management Corporation.
- --------------------------------------------------------------------------------


The Oppenheimer Funds include the following:
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Limited Term New York Municipal Fund (a series of Rochester Portfolio Series)
OFI Tremont Core Strategies Hedge Fund
OFI Tremont Market Neutral Hedge Fund
Oppenheimer Absolute Return Fund
Oppenheimer AMT-Free Municipals
Oppenheimer AMT-Free New York Municipals
Oppenheimer Balanced Fund
Oppenheimer Baring China Fund
Oppenheimer Baring Japan Fund
Oppenheimer Baring SMA International Fund
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Capital Income Fund
Oppenheimer Cash Reserves
Oppenheimer Champion Income Fund
Oppenheimer Commodity Strategy Total Return Fund
Oppenheimer Convertible Securities Fund (a series of Bond Fund Series)
Oppenheimer Core Bond Fund (a series of Oppenheimer Integrity Funds)
Oppenheimer Developing Markets Fund
Oppenheimer Discovery Fund
Oppenheimer Dividend Growth Fund
Oppenheimer Emerging Growth Fund
Oppenheimer Equity Fund, Inc.
Oppenheimer Equity Income Fund, Inc.
Oppenheimer Global Fund
Oppenheimer Global Opportunities Fund
Oppenheimer Global Value Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer International Bond Fund
Oppenheimer Institutional Money Market Fund
Oppenheimer International Diversified Fund
Oppenheimer International Growth Fund
Oppenheimer International Small Company Fund
Oppenheimer International Value Fund (a series of Oppenheimer International
   Value Trust)
Oppenheimer Limited Term California Municipal Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Limited Term Municipal Fund (a series of Oppenheimer Municipal
   Fund)
Oppenheimer Main Street Fund (a series of Oppenheimer Main Street Funds, Inc.)
Oppenheimer Main Street Opportunity Fund
Oppenheimer Main Street Small Cap Fund
Oppenheimer Master Loan Fund, LLC
Oppenheimer Master International Value Fund, LLC
Oppenheimer MidCap Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-State Municipal Trust (3 series):
   Oppenheimer New Jersey Municipal Fund
   Oppenheimer Pennsylvania Municipal Fund
   Oppenheimer Rochester National Municipals
Oppenheimer Portfolio Series (4 series)
Active Allocation Fund
Equity Investor Fund
Conservative Investor Fund
   Moderate Investor Fund
Oppenheimer Portfolio Series Fixed Income Active Allocation Fund
Oppenheimer Principal Protected Main Street Fund (a series of Oppenheimer
Principal
      Protected Trust)
Oppenheimer Principal Protected Main Street Fund II (a series of Oppenheimer
Principal
      Protected Trust II)
Oppenheimer Principal Protected Main Street Fund III (a series of Oppenheimer
Principal
      Protected Trust III)
Oppenheimer Quest For Value Funds (3 series)
   Oppenheimer Quest Balanced Fund
   Oppenheimer Quest Opportunity Value Fund
   Oppenheimer Small- & Mid-Cap Value Fund
Oppenheimer Quest International Value Fund, Inc.
Oppenheimer Real Estate Fund
Oppenheimer Rising Dividends Fund, Inc.
Oppenheimer Rochester Arizona Municipal Fund
Oppenheimer Rochester Maryland Municipal Fund
Oppenheimer Rochester Massachusetts Municipal Fund
Oppenheimer Rochester Michigan Municipal Fund
Oppenheimer Rochester Minnesota Municipal Fund
Oppenheimer Rochester North Carolina Municipal Fund
Oppenheimer Rochester Ohio Municipal Fund
Oppenheimer Rochester Virginia Municipal Fund
Oppenheimer Select Value Fund
Oppenheimer Senior Floating Rate Fund
Oppenheimer Series Fund, Inc. (1 series):
Oppenheimer Value Fund
Oppenheimer SMA Core Bond Fund
Oppenheimer SMA International Bond Fund
Oppenheimer Strategic Income Fund
Oppenheimer Transition 2010 Fund
Oppenheimer Transition 2015 Fund
Oppenheimer Transition 2020 Fund
Oppenheimer Transition 2025 Fund
Oppenheimer Transition 2030 Fund
Oppenheimer Transition 2040 Fund
Oppenheimer Transition 2050 Fund
Oppenheimer Tremont Market Neutral Fund, LLC
Oppenheimer Tremont Opportunity Fund, LLC
Oppenheimer U.S. Government Trust
Oppenheimer Variable Account Funds (11 series):
   Oppenheimer Balanced Fund/VA
   Oppenheimer Capital Appreciation Fund/VA
   Oppenheimer Core Bond Fund/VA
   Oppenheimer Global Securities Fund/VA
   Oppenheimer High Income Fund/VA
   Oppenheimer Main Street Fund/VA
   Oppenheimer Main Street Small Cap Fund/VA
   Oppenheimer MidCap Fund/VA
   Oppenheimer Money Fund/VA
   Oppenheimer Strategic Bond Fund/VA
   Oppenheimer Value Fund/VA
Panorama Series Fund, Inc. (4 series):
   Government Securities Portfolio
   Growth Portfolio
   Oppenheimer International Growth Fund/VA
   Total Return Portfolio
Rochester Fund Municipals

The address of the  Oppenheimer  funds  listed  above,  Shareholder  Financial
Services,  Inc.,  Shareholder  Services,  Inc.,   OppenheimerFunds   Services,
Centennial Asset Management  Corporation,  and OppenheimerFunds Legacy Program
is 6803 South Tucson Way, Centennial, Colorado 80112-3924.
The address of OppenheimerFunds,  Inc.,  OppenheimerFunds  Distributor,  Inc.,
HarbourView Asset Management  Corporation,  Oppenheimer Acquisition Corp., OFI
Private   Investments   Inc.,  OFI  Institutional   Asset   Management,   Inc.
Oppenheimer  Real Asset  Management,  Inc. and OFI Trust  Company is Two World
Financial  Center,  225  Liberty  Street,  11th  Floor,  New  York,  New  York
10281-1008.
The address of Tremont  Group  Holdings,  Inc. is 555 Theodore  Fremd  Avenue,
Suite 206-C, Rye, New York 10580.
The address of  OppenheimerFunds  International Ltd. is 70 Sir John Rogerson's
Quay, Dublin 2, Ireland.
The address of Trinity Investment  Management  Corporation is 301 North Spring
Street, Bellefonte, Pennsylvania 16823.
The address of OppenheimerFunds International Distributor Limited is Suite
1601, Central Tower, 28 Queen's Road Central, Hong Kong.


Item 27. Principal Underwriter

(a)   OppenheimerFunds Distributor, Inc. is the Distributor of the
Registrant's shares. It is also the Distributor of each of the other
registered open-end investment companies for which OppenheimerFunds, Inc. is
the investment adviser, as described in Part A and Part B of this
Registration Statement and listed in Item 26(b) above (except Panorama Series
Fund, Inc.) and for MassMutual Institutional Funds.

(b)   The directors and officers of the Registrant's principal underwriter
are:

- ----------------------------------------------------------------------------------
Name & Principal                 Position & Office        Position and Office
Business Address                 with Underwriter         with Registrant
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Timothy Abbhul(1)                Vice President and       None
                                 Treasurer
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Robert Agan(1)                   Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Anthony Allocco(2)               Assistant Vice President None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Janette Aprilante(2)             Secretary                None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Tracey Apostolopoulos(1)         Assistant Vice President None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
James Barker                     Vice President           None
1723 W. Nelson Street
Chicago, IL 60657
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Kathleen Beichert(1)             Senior Vice President    None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Rocco Benedetto(2)               Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Thomas Beringer                  Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Rick Bettridge                   Vice President           None
11504 Flowering Plum Lane
Highland,  UT  84003
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
David A. Borrelli                Vice President           None
105 Black Calla Ct.
San Ramon, CA 94583
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Jeffrey R. Botwinick             Vice President           None
4431 Twin Pines Drive
Manlius, NY 13104
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Sarah Bourgraf(1)                Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Bryan Bracchi                    Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Michelle Brennan(2)              Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Joshua Broad(2)                  Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Kevin E. Brosmith                Senior Vice President    None
5 Deer Path
South Natlick, MA 01760
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Jeffrey W. Bryan                 Vice President           None
1048 Malaga Avenue
Coral Gables, FL 33134
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Ross Burkstaller                 Vice President           None
211 Tulane Drive SE
Albuquerque, NM 87106
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Patrick Campbell(1)              Assistant Vice President None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Robert Caruso                    Vice President           None
15 Deforest Road
Wilton, CT 06897
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Donelle Chisolm(2)               Assistant Vice President None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Andrew Chonofsky                 Vice President           None
109 Wade Avenue, Apt. 365
Raleigh, NC 27605
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Angelanto Ciaglia(2)             Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Melissa Clayton(2)               Assistant Vice President None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Craig Colby(2)                   Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Rodney Constable(1)              Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Susan Cornwell(1)                Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Neev Crane                       Vice President           None
1530 Beacon Street, Apt. #1403
Brookline, MA 02446
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Michael Daley                    Vice President           None
40W387 Oliver Wendell Holmes St
St. Charles, IL 60175
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Fredrick Davis                   Vice President           None
14431 SE 61st Street
Bellevue, WA 98006
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
John Davis(2)                    Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Stephen J. Demetrovits(2)        Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Steven Dombrower                 Vice President           None
13 Greenbrush Court
Greenlawn, NY 11740
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
George P. Dougherty              Vice President           None
328 Regency Drive
North Wales, PA 19454
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Beth Arthur Du Toit(1)           Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Kent M. Elwell                   Vice President           None
35 Crown Terrace
Yardley, PA 19067
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Gregg A. Everett                 Vice President           None
4328 Auston Way
Palm Harbor, FL 34685-4017
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
George R. Fahey                  Senior Vice President    None
9511 Silent Hills Lane
Lone Tree, CO 80124
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Eric C. Fallon                   Vice President           None
10 Worth Circle
Newton, MA 02458
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
James Fereday                    Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Joseph Fernandez                 Vice President           None
1717 Richbourg Park Drive
Brentwood, TN 37027
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Mark J. Ferro                    Senior Vice President    None
104 Beach 221st Street
Breezy Point, NY 11697
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Ronald H. Fielding(3)            Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Eric P. Fishel                   Vice President           None
725 Boston Post Rd., #12
Sudbury, MA 01776
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Patrick W. Flynn                 Senior Vice President    None
14083 East Fair Avenue
Englewood, CO 80111
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
John E. Forrest(2)               Senior Vice President    None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
John ("J") Fortuna(2)            Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Jayme D. Fowler                  Vice President           None
3818 Cedar Springs Road,
#101-349
Dallas, TX 75219
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
William Friebel                  Vice President           None
2919 St. Albans Forest Circle
Glencoe, MO 63038
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Alyson Frost(2)                  Assistant Vice President None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Richard Fuerman(2)               Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Charlotte Gardner(1)             Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Lucio Giliberti                  Vice President           None
6 Cyndi Court
Flemington, NJ 08822
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Michael Gottesman                Vice President           None
255 Westchester Way
Birmingham, MI 48009
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Raquel Granahan(4)               Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Ralph Grant                      Senior Vice President    None
10 Boathouse Close
Mt. Pleasant, SC 29464
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Kahle Greenfield(2)              Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Robert Grill(2)                  Senior Vice President    None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Eric Grossjung                   Vice President           None
4002 N. 194th Street
Elkhorn, NE 68022
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Michael D. Guman                 Vice President           None
3913 Pleasant Avenue
Allentown, PA 18103
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
James E. Gunter                  Vice President           None
603 Withers Circle
Wilmington, DE 19810
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Garrett Harbron                  Vice President           None
8895 Hillsboro Road
Valles Mines, MO 63087
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Kevin J. Healy(2)                Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Kenneth Henry(2)                 Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Wendy G. Hetson(2)               Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Jennifer Hoelscher(1)            Assistant Vice President None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
William E. Hortz(2)              Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Edward Hrybenko(2)               Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Amy Huber(1)                     Assistant Vice President None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Brian F. Husch                   Vice President           None
37 Hollow Road
Stonybrook, NY 11790
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Patrick Hyland(2)                Assistant Vice President None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Keith Hylind(2)                  Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Kathleen T. Ives(1)              Vice President &         Assistant Secretary
                                 Assistant Secretary
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Shonda Rae Jaquez(2)             Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Eric K. Johnson                  Vice President           None
8588 Colonial Drive
Lone Tree, CO 80124
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Elyse Jurman                     Vice President           None
5486 NW 42 Ave
Boca Raton, FL 33496
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Matthew Kasa                     Vice President           None
4250 Park Newport #302
Newport Beach, CA 92660
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Thomas Keffer(2)                 Senior Vice President    None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Michael Keogh(2)                 Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Brian Kiley(2)                   Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Lisa Klassen(1)                  Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Richard Klein                    Senior Vice President    None
4820 Fremont Avenue South
Minneapolis, MN 55419
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Richard Knott(1)                 President and Director   None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Brent A. Krantz                  Senior Vice President    None
61500 Tam McArthur Loop
Bend, OR 97702
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Eric Kristenson(2)               Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
David T. Kuzia                   Vice President           None
10258 S. Dowling Way
Highlands Ranch, CO 80126
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Tracey Lange(2)                  Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Jesse Levitt(2)                  Assistant Vice President None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Julie Libby(2)                   Senior Vice President    None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Eric J. Liberman                 Vice President           None
27 Tappan Ave., Unit West
Sleepy Hollow, NY 10591
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Malissa Lischin(2)               Assistant Vice President None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Christina Loftus(2)              Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Thomas Loncar                    Vice President           None
1401 North Taft Street, Apt. 726
Arlington, VA 22201
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Peter Maddox(2)                  Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Michael Malik                    Vice President           None
546 Idylberry Road
San Rafael, CA 94903
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Steven C. Manns                  Vice President           None
1627 N. Hermitage Avenue
Chicago, IL 60622
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Todd A. Marion                   Vice President           None
24 Midland Avenue
Cold Spring Harbor, NY 11724
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
LuAnn Mascia(2)                  Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Michael McDonald                 Vice President           None
11749 S Cormorant Circle
Parker, CO 80134
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
John C. McDonough                Senior Vice President    None
533 Valley Road
New Canaan, CT 06840
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Kent C. McGowan                  Vice President           None
9510 190th Place SW
Edmonds, WA 98020
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Brian F. Medina                  Vice President           None
3009 Irving Street
Denver, CO 80211
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
William Meerman                  Vice President           None
4939 Stonehaven Drive
Columbus, OH 43220
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Saul Mendoza                     Vice President           None
503 Vincinda Crest Way
Tampa FL 33619
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Mark Mezzanotte                  Vice President           None
16 Cullen Way
Exeter, NH 03833
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Matthew L. Michaelson            Vice President           None
1250 W. Grace, #3R
Chicago, IL 60613
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Noah Miller(1)                   Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Clint Modler(1)                  Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Robert Moser                     Vice President           None
9650 East Aspen Hill Circle
Lone Tree, CO 80124
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
David W. Mountford               Vice President           None
7820 Banyan Terrace
Tamarac, FL 33321
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Gzim Muja                        Vice President           None
269 S. Beverly Dr. #807
Beverly Hills, CA 90212
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Matthew Mulcahy(2)               Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Wendy Jean Murray                Vice President           None
32 Carolin Road
Upper Montclair, NJ 07043
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
John S. Napier                   Vice President           None
17 Hillcrest Ave.
Darien, CT 06820
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Christina Nasta(2)               Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Kevin P. Neznek(2)               Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Christopher Nicholson(2)         Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Bradford G. Norford              Vice President           None
5095 Lahinch Ct.
Westerville, OH 43082
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Alan Panzer                      Vice President           None
6755 Ridge Mill Lane
Atlanta, GA 30328
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Maria Paster(2)                  Assistant Vice           None
                                 President
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Donald Pawluk(2)                 Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Brian C. Perkes                  Vice President           None
6 Lawton Ct.
Frisco, TX 75034
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Wayne Perry                      Vice President           None
3900 Fairfax Drive Apt 813
Arlington, VA 22203
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Charles K. Pettit(2)             Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Aaron Pisani(1)                  Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Rachel Powers                    Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Nicole Pretzel                   Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Minnie Ra                        Vice President           None
100 Dolores Street, #203
Carmel, CA 93923
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Dusting Raring                   Vice President           None
27 Blakemore Drive
Ladera Ranch, CA 92797
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Michael A. Raso                  Vice President           None
3 Vine Place
Larchmont, NY 10538
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Richard E. Rath                  Vice President           None
46 Mt. Vernon Ave.
Alexandria, VA 22301
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Ramsey Rayan(2)                  Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
William J. Raynor(5)             Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Corry Read(2)                    Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Ruxandra Risko(2)                Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
David R. Robertson(2)            Senior Vice President    None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Ian M. Roche                     Vice President           None
7070 Bramshill Circle
Bainbridge, OH 44023
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Michael Rock                     Vice President           None
9016 Stourbridge Drive
Huntersville, NC 28078
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Thomas Sabow                     Vice President           None
6617 Southcrest Drive
Edina, MN 55435
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
John Saunders                    Vice President           None
2251 Chantilly Ave.
Winter Park, FL 32789
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Thomas Schmitt                   Vice President           None
40 Rockcrest Rd
Manhasset, NY 11030
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
William Schories                 Vice President           None
3 Hill Street
Hazlet, NJ 07730
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Jennifer Sexton(2)               Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Eric Sharp                       Vice President           None
862 McNeill Circle
Woodland, CA 95695
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Debbie A. Simon                  Vice President           None
55 E. Erie St., #4404
Chicago, IL 60611
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Bryant Smith                     Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Christopher M. Spencer           Vice President           None
2353 W 118th Terrace
Leawood, KS 66211
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
John A. Spensley                 Vice President           None
375 Mallard Court
Carmel, IN 46032
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Michael Staples                  Vice President           None
4255 Jefferson St Apt 328
Kansas City, MO 64111
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Alfred St. John(2)               Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Bryan Stein                      Vice President           None
8 Longwood Rd.
Voorhees, NJ 08043
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
John Stoma(2)                    Senior Vice President    None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Wayne Strauss(3)                 Assistant Vice President None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Brian C. Summe                   Vice President           None
2479 Legends Way
Crestview Hills, KY 41017
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Michael Sussman(2)               Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
George T. Sweeney                Senior Vice President    None
5 Smokehouse Lane
Hummelstown, PA 17036
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
James Taylor(2)                  Assistant Vice President None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Martin Telles(2)                 Senior Vice President    None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Paul Temple(2)                   Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Troy Testa                       Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
David G. Thomas                  Vice President           None
16628 Elk Run Court
Leesburg, VA 20176
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Mark S. Vandehey(1)              Vice President and       Vice President and
                                 Chief Compliance Officer Chief Compliance
                                                          Officer
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Vincent Vermete(2)               Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Kenneth Lediard Ward             Vice President           None
1400 Cottonwood Valley Circle N.
Irving, TX 75038
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Teresa Ward(1)                   Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Janeanne Weickum(1)              Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Michael J. Weigner               Vice President           None
4905 W. San Nicholas Street
Tampa, FL 33629
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Donn Weise                       Vice President           None
3249 Earlmar Drive
Los Angeles, CA 90064
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Chris G. Werner                  Vice President           None
98 Crown Point Place
Castle Rock, CO 80108
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Catherine White(2)               Assistant Vice President None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Ryan Wilde(1)                    Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Julie Wimer(2)                   Assistant Vice President None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Donna Winn(2)                    Senior Vice President    None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Peter Winters                    Vice President           None
911 N. Organce Ave, Pat. 514
Orlando, FL 32801
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Patrick Wisneski(1)              Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Kurt Wolfgruber(2)               Director                 None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Meredith Wolff(2)                Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Michelle Wood(2)                 Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Cary Patrick Wozniak             Vice President           None
18808 Bravata Court
San Diego, CA 92128
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
John Charles Young               Vice President           None
3914 Southwestern
Houston, TX 77005
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Jill Zachman(2)                  Vice President           None
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Robert G. Zack(2)                General Counsel &        Vice President &
                                 Director                 Secretary
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
Steven Zito(1)                   Vice President           None
- ----------------------------------------------------------------------------------

(1)6803 South Tucson Way, Centennial, CO 80112-3924
(2)Two World Financial  Center,  225 Liberty Street,  11th Floor, New York, NY
10281-1008
(3)350 Linden Oaks, Rochester, NY 14623
(4)555 Theodore Fremd Avenue, Rye, NY 10580
(5)Independence Wharf, 470 Atlantic Avenue, 11th Floor, Boston, MA 02210


(c)   Not applicable.

Item 28. Location of Accounts and Records

The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940
and rules promulgated thereunder are in the possession of OppenheimerFunds,
Inc. at its offices at 6803 South Tucson Way, Centennial, Colorado 80112-3924.

Item 29. Management Services

Not applicable

Item 30. Undertakings

Not applicable.






                                  SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York on
the 29th day of April, 2008.

                        Oppenheimer Core Bond Fund


                     By:  John V. Murphy*
                         John V. Murphy, President
                         Principal Executive Officer and Trustee


Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities on
the dates indicated:

Signatures                    Title                         Date


William L. Armstrong*                                       Chairman of the
April 29, 2008
William L. Armstrong          Board of Trustees


John V. Murphy*               President, Principal          April 29, 2008
John V. Murphy                Executive Officer and Trustee


Brian W. Wixted*              Treasurer, Principal          April 29, 2008
Brian W. Wixted               Financial & Accounting Officer


George C. Bowen*              Trustee                       April 29, 2008
George C. Bowen


Edward L. Cameron*            Trustee                       April 29, 2008
Edward L. Cameron


Jon S. Fossel*                Trustee                       April 29, 2008
Jon S. Fossel


Sam Freedman*                 Trustee                       April 29, 2008
Sam Freedman


Beverly L. Hamilton*          Trustee                       April 29, 2008
Beverly L. Hamilton


Robert J. Malone*             Trustee                       April 29, 2008
Robert J. Malone


F. William Marshall, Jr.*                    Trustee         April 29, 2008
F. William Marshall, Jr.


*By:  /s/ Mitchell J. Lindauer
      Mitchell J. Lindauer, Attorney-in-Fact






                         OPPENHEIMER INTEGRITY FUNDS

                       Post-Effective Amendment No. 48

                      Registration Statement No. 2-76547

                                EXHIBIT INDEX


Exhibit No.       Description

23(j)             Independent Registered Public Accounting Firm's Consent

EX-99.J 2 consent.htm INDEPENDENT AUDITORS' CONSENT OPPENHEIMER CORE BOND FUND

           CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Post-Effective Amendment No. 48 to Registration
Statement No. 2-76547 on Form N-1A of our report dated February 13, 2008,
relating to the financial statements and financial highlights of Oppenheimer
Core Bond Fund, appearing in the Annual Report on Form N-CSR of Oppenheimer
Integrity Funds for the year ended December 31, 2007, and to the references
to us under the headings "Independent Registered Public Accounting Firm" in
the Statement of Additional Information and "Financial Highlights" in the
Prospectus, which are part of such Registration Statement.

/s/ DELOITTE & TOUCHE LLP

Denver, Colorado
April 28, 2008

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