equity income fund, inc. 497 August 2, 2007

497 1 equityinc497.htm equity income fund, inc. 497 August 2, 2007

Oppenheimer
Equity Income Fund, Inc. *
Prospectus dated August 1, 2007

Oppenheimer Equity Income
------------------------------------------- Fund, Inc. is a mutual fund
that seeks total return. It
invests mainly in common
stocks, and other equity
securities believed to be
undervalued in the
marketplace.
------------------------------

This prospectus contains
important information about the
Fund's objective, and its
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.

* Prior to August 1, 2007, the Fund's name was "Oppenheimer Quest Capital
Value Fund, Inc. SM"

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[logo] OppenheimerFunds
The Right Way to Invest

CONTENTS

ABOUT THE FUND

3 The Fund's Investment Objective and Principal Investment Strategies

3 Main Risks of Investing in the Fund

5 The Fund's Past Performance

8 Fees and Expenses of the Fund

10 About the Fund's Investments

14 How the Fund is Managed

15 ABOUT YOUR ACCOUNT

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

28 Special Investor Services
AccountLink
PhoneLink
OppenheimerFunds Internet Website
Retirement Plans

30 How to Sell Shares
By Mail
By Telephone

33 How to Exchange Shares

37 Shareholder Account Rules and Policies

39 Dividends, Capital Gains and Taxes

40 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.

WHAT DOES THE FUND MAINLY INVEST IN? The Fund invests mainly in common
stocks of U.S. issuers that the portfolio manager believes are undervalued in
the marketplace. The Fund may invest in other equity securities, such as
preferred stocks, warrants and debt securities convertible into common stocks.
The Fund may invest in equity securities issued by companies of different
capitalization ranges, but will typically focus on larger capitalization stocks.
These investments are more fully explained in "About the Fund's Investments,"
below.

HOW DOES THE PORTFOLIO MANAGER DECIDE WHAT SECURITIES TO BUY OR SELL? In
selecting securities for the Fund, the portfolio manager mainly relies on a
value-oriented investing style for equity securities. Value investing focuses on
companies that may be currently out of favor in the market, or on opportunities
in cyclical industries. The portfolio manager looks for stocks trading at lower
prices relative to the market and what is believed to be their real worth. Value
investors hope to realize appreciation as other investors recognize the
security's intrinsic value and the stock prices rises as a result.

The portfolio manager generally uses a fundamental approach to analyzing
issuers (for example, price/earnings ratios and current balance sheet
information), to select the stocks he thinks are undervalued. While this process
and the factors used may change over time and its implementation may vary in
particular cases, the portfolio manager typically searches for:

o stocks that have high current income and are believed to have substantial
earnings possibilities

o stocks with low price/earnings ratios relative to other securities

o stocks with a low price relative to the underlying value of the issuer's
assets, earnings, cash flow or other factors

WHO IS THE FUND DESIGNED FOR? The Fund is designed for investors seeking
total investment return from capital appreciation and income over the long term.
Those investors should be willing to assume the risks of short-term share price
fluctuations that are typical for a fund emphasizing investments in equity
securities. Since the Fund's income level will fluctuate, it is not designed for
investors needing an assured level of current income. Because of its focus on
long-term growth, the Fund may be appropriate for a portion of a retirement plan
investment. 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 in stocks
and bonds are subject to changes in their value from a number of factors,
described below. There is also the risk that poor security selection by
OppenheimerFunds, Inc. (the "Manager") will cause the Fund to underperform other
funds having a similar objective. As an example, the portfolio manager's "value"
approach to investing could result in fewer Fund investments in stocks that
become highly valued by the marketplace during times of rapid market advances.
This could cause the Fund to underperform other funds that seek total return but
that employ a growth or non-value approach to investing.

DIVIDEND RISK. There is no guarantee that the issuers of the stocks held by
the Fund will declare dividends in the future or that if declared, it will
either remain at current levels or increase over time. The Fund's performance
during a broad market advance could suffer because dividend paying stocks may
not experience the same capital appreciation as non-dividend paying stocks.

RISKS OF INVESTING IN STOCKS. Stocks fluctuate in price, and their
short-term volatility at times may be great. Because the Fund currently focuses
on investments in equity securities, the value of the Fund's portfolio will be
affected by changes in the stock markets. The Fund's net asset values per share
will fluctuate as the values of the Fund's portfolio securities change. A
variety of factors can affect the price of a particular stock and the prices of
individual stocks do not all move in the same direction uniformly or at the same
time. Different stock markets may behave differently from each other.

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 does not limit its investments to issuers in a particular
market capitalization range or ranges, but will typically focus on larger
capitalization stocks. The stock prices of large-cap issuers tend to be less
volatile than the prices of mid-cap and small-cap companies in the short term,
but these companies may not afford the same growth opportunities as mid-cap and
small-cap companies.

RISKS OF FOREIGN INVESTING. The Fund can buy securities of companies in
developed and underdeveloped countries. While the Fund has no limits on the
amounts it can invest in foreign securities, currently it does not intend to
invest more than 25% of its net assets in securities of issuers in any single
foreign country or more than 5% of its net assets in companies or government
issuers in emerging market countries.

While foreign securities may offer special investment opportunities, there
are also special risks. 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. 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, 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 stocks to fall and could
therefore depress the Fund's share price.

Additionally, if a fund invests a significant amount of its assets in
foreign securities, it might expose the fund to "time-zone arbitrage" attempts
by investors seeking to take advantage of the differences in value of foreign
securities that might result from events that occur after the close of the
foreign securities market on which a foreign security is traded and before the
close of The New York Stock Exchange 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 Fund's Board of Directors
believe to be their fair value may help deter those activities.

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 its prices per share. Particular
investments and investment strategies have risks. The Fund is also subject to
the risk that the stocks the Manager selects will underperform the stock market,
the relevant indices or other funds with similar investment objectives and
strategies. 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. There is no assurance that the Fund will achieve its investment
objective.

In the short term, the stock markets can be volatile, and the price of the
Fund's shares can go up and down substantially. In the OppenheimerFunds
spectrum, the Fund is generally more conservative than aggressive growth stock
funds, but has greater risks than funds that invest in both stocks and bonds or
in investment-grade debt securities.

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

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.

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

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, compared
to those of a broad-based market index. The after-tax returns for the other
classes of shares will vary.

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

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.

Returns including periods prior to 3/3/97 have been adjusted to reflect
expenses in effect as of that date, because the Fund's Class A shares were
previously "capital" shares of the Fund that bore no expenses while the Fund was
a closed-end investment company.

For the period from 1/1/06 through 12/31/06, the cumulative return before
taxes for Class A shares was 13.56%.

During the period shown in the bar chart, the highest return (not
annualized) before taxes for a calendar quarter was 19.34% (4th Qtr `98) and the
lowest return (not annualized) before taxes for a calendar quarter was -14.38%
(3rd Qtr `01).

-------------------------------------------------------------------------------------
Average Annual Total Returns 10 Years
for the periods ended (or life of
December 31, 2006 1 Year 5 Years class, if less)
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Class A Shares (inception
2/13/87) 7.03% 8.40% 9.52%
Return Before Taxes 5.37% 7.35% 6.54%
Return After Taxes on
Distributions 5.61% 6.98% 6.72%
Return After Taxes on
Distributions and Sale of
Fund Shares
-------------------------------------------------------------------------------------
Class B Shares (inception 7.58% 8.47% 10.03%
3/3/97)
-------------------------------------------------------------------------------------
Class C Shares (inception 11.56% 8.77% 9.65%
3/3/97)
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
Class N Shares (inception 12.05% 9.29% 7.94%
3/1/01)
-------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------
S&P 500 Index (reflects no 15.78% 6.18%
deduction for fees, expenses
or taxes) 8.42%
7.82%(1)
4.10%(2)
-------------------------------------------------------------------------------------
(1)From 02/28/97.
(2)From 02/28/01.

The Fund commenced operations on 2/13/87 as a closed-end investment company
with two classes of shares, income shares and capital shares. Capital shares
were entitled to all gains and losses but bore no expenses. Income shares bore
all of the Fund's operating expenses. The Fund redeemed its income shares and
converted to an open-end fund on 3/3/97. The capital shares were designated as
Class A shares, which bear their allocable share of Fund expenses.

The Fund's average annual total returns in the table include the applicable
sales charges: for Class A, the current maximum initial sales charge of 5.75%;
for Class B, the contingent deferred sales charges of 5% (1-year) and 2%
(5-year); and for Class C and Class N, the 1% contingent deferred sales charge
for the 1-year period. 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. Returns for Class A reflect the historical performance of the
Fund's previous capital shares as adjusted for the fees and expenses of Class A
in effect on 3/3/97 (without giving effect to any fee waivers). Returns for
periods from 3/3/97 to 2/28/99 are net of the Manager's waiver of certain fees
and the Distributor's waiver of certain distribution fees.

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 the S&P
500 Index, an unmanaged index of equity securities. The index performance
includes reinvestment of income but does not reflect transaction costs, fees,
expenses or taxes. The Fund's investments vary from those in the index.

Fees and Expenses of the Fund

The 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 October 31, 2006,
except as otherwise noted.

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

------------------------------------------------------------------------
Annual Fund Operating Expenses(5) (deducted from Fund assets):
(% of average daily net assets)
------------------------------------------------------------------------
------------------------------------------------------------------------
Class A Class B Class C Class N
Shares Shares Shares Shares
------------------------------------------------------------------------
------------------------------------------------------------------------
Management Fees 0.70% 0.70% 0.70% 0.70%
------------------------------------------------------------------------
------------------------------------------------------------------------
Distribution and/or 0.23% 1.00% 1.00% 0.50%
Service (12b-1) Fees
------------------------------------------------------------------------
------------------------------------------------------------------------
Other Expenses 0.22% 0.35% 0.33% 0.56%
------------------------------------------------------------------------
------------------------------------------------------------------------
Total Annual Operating 1.15% 2.05% 2.03% 1.76%
Expenses
------------------------------------------------------------------------

Effective August 1, 2007, the Fund's management fee schedule was revised as
described below in `How the Fund is Managed - The Manager - Advisory Fees".
"Management Fees" in the table above assume that the revised management fee
schedule was in effect for the Fund's entire fiscal year ended October 31, 2006.
During the fiscal year ended October 31, 2006 the actual Management fee rate was
0.84% of average annual net assets for each class of shares. Expenses may vary
in future years. 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. That
undertaking may be amended or withdrawn at any time. After the waiver, the
"Other Expenses" and "Total Annual Operating Expenses" as percentages of daily
net assets would have been 0.39% and 1.59% for Class N, assuming that the
revised management fee schedule was in effect for the Fund's fiscal year ended
October 31, 2006.

The Fund also receives certain credits from the Fund's custodian that,
during the fiscal year, reduced its custodial expenses for all share classes.
After these credits, the "Other Expenses" and "Total Annual Operating Expenses"
as percentages of average daily net assets would have been 0.21% and 1.14% for
Class A, assuming that the revised management fee schedule was in effect for the
Fund's fiscal year ended October 31, 2006. The expenses of the other share
classes were not affected by either the waiver or the credits.

Effective January 1, 2003, the Board voluntarily reduced the Class A
asset-based sales charge to zero, resulting in a 12b-1 fee of up to 0.25% on
Class A shares. The Board of Directors can set the rate of the asset-based sales
charge on Class A shares up to 0.25% of average annual net assets.

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. * 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.

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 first year after purchase. The contingent
deferred sales charge gradually declines from 5% to 1% in years one through six
and is eliminated after that.

3. 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.

5. The Fund's Annual Fund Operating Expenses have been restated to reflect
the fees and expenses that the Fund would have incurred if the Fund's current
management fee schedule had been in effect during that fiscal year.

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:

--------------------------------------------------------------------------------
If shares are redeemed: 1 Year 3 Years 5 Years 10 Years
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class A Shares $686 $921 $1,175 $1,900
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class B Shares $710 $949 $1,314 $1,952 *
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class C Shares $308 $643 $1,104 $2,382
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class N Shares $280 $559 $962 $2,091
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
If shares are not 1 Year 3 Years 5 Years 10 Years redeemed:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class A Shares $686 $921 $1,175 $1,900
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class B Shares $210 $649 $1,114 $1,952 *
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class C Shares $208 $643 $1,104 $2,382
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class N Shares $180 $559 $962 $2,091
--------------------------------------------------------------------------------
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.

* 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 Fund's 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 stock of any one company 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 total assets in investments in any one industry,
or group of related industries.

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

Stock Investments. The Fund invests mainly in common stocks and other
equity securities issued by domestic or foreign companies to seek total return.
The high dividend stocks that the Fund invests in may not experience high
earnings growth or capital appreciation. There can be no assurance that they
will continue to pay high dividends or to pay dividends at all. While the Fund
can invest in securities of issuers of small, medium or large market
capitalization, the Manager currently focuses investments on large-size
companies.

Although the Fund does not concentrate on issuers in any industry, at
times, the Fund may increase the relative emphasis of its investments in the
securities of issuers in a particular industry, or of a particular
capitalization or a range of capitalizations, depending on the Manager's
judgment about market and economic conditions. Stocks of issuers in a particular
industry may be affected by changes in economic conditions, government
regulations, availability of basic resources or other events that affect that
industry more than others. To the extent that the Fund increases the relative
emphasis of its investments in a particular industry, its share prices will
fluctuate in response to events affecting that industry.

Foreign Investing. The Fund can buy foreign securities that are listed on a
domestic or foreign stock exchange, traded in domestic or foreign
over-the-counter markets, or represented by American Depository Receipts or
other similar receipts. The Fund may invest to a limited degree in emerging
markets, which have greater risks than developed countries, such as less
developed trading markets and possibly less liquidity, unstable governments and
economies, and greater risks of nationalization and restrictions on foreign
ownership, making these investments more volatile than other foreign
investments. The risks could cause the prices of foreign stocks to fall and
could therefore depress the Fund's share prices. The Fund will hold foreign
currency only in connection with buying and selling foreign securities.

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

Recent Significant Changes. Prior to August 1, 2007, the Fund was named
"Oppenheimer Quest Capital Value Fund, Inc." and its investment objective was to
seek capital appreciation. The Fund was sub-advised by Oppenheimer Capital LLC
(which is not affiliated with the Manager). Under the prior investment advisory
agreement (the "Prior Advisory Agreement"), the Fund paid a higher effective
advisory fee to the Manager. The performance information, financial information,
and expense information in the shareholder report and the portfolio holdings,
shown in the Fund's prospectus, SAI and shareholder reports, reflect the Fund's
operations under its prior investment objective and management arrangements.

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

Debt Securities. The Fund can also invest in debt securities, such as U.S.
government securities and domestic and foreign corporate and government bonds
and debentures. Short-term debt securities can be selected for liquidity pending
the purchase of other investments or to have cash to pay for redemptions of Fund
shares.

The debt securities the Fund buys may be rated by nationally recognized
rating organizations or they may be unrated securities assigned an equivalent
credit rating by the Manager. The Fund's investments in debt securities,
including convertible debt securities, can be above or below investment grade in
credit quality. The Fund is not required to sell a security if its rating falls
after the Fund buys it. However, the Manager will monitor those investments to
determine whether the Fund should continue to hold them. Rating definitions of
national rating agencies are described in Appendix A to the Statement of
Additional Information.

Other Equity Securities. While the Fund emphasizes investments in common
stocks, it can also buy preferred stocks, warrants and securities convertible
into common stock. Convertible securities can be considered to be "equity
equivalents" because of the conversion feature and in that case their credit
rating has less impact on the Manager's investment decision than in the case of
other debt securities.

Money Market Instruments. For liquidity purposes, the Fund can also invest
in "money market instruments." These include U.S. government securities and
high-quality corporate debt securities having a remaining maturity of one year
or less. They also include commercial paper, other short-term corporate debt
obligations, certificates of deposit, bankers' acceptances and repurchase
agreements.

Investing in Small, Unseasoned Companies. The Fund can invest without limit
in securities of small, unseasoned companies. These are companies that have been
in continuous operation for less than three years, counting the operations of
any predecessors. These securities may have limited liquidity, which means that
the Fund could have difficulty selling them at an acceptable price when it wants
to. The prices of these securities may be very volatile, especially in the short
term.

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 10% of its net assets in illiquid or restricted securities.
The Board can increase that limit to 15%. Certain restricted securities that are
eligible for resale to qualified institutional purchasers may not be subject to
that limit. The Manager monitors holdings of illiquid securities on an ongoing
basis to determine whether to sell any holdings to maintain adequate liquidity.

Hedging. The Fund can buy and sell certain kinds of futures contracts,
forward contracts, and put and call options. These are all referred to as
"hedging instruments." In the broadest sense, hedging instruments the Fund might
use may be considered "derivative investments." In general terms, a derivative
investment is an investment contract whose value depends on (or is derived from)
the value of an underlying asset, interest rate or index. The Fund does not
currently use hedging extensively or for speculative purposes. It has limits on
its use of hedging instruments and is not required to use them in seeking its
investment objective.

Some of these strategies would hedge the Fund's portfolio against price
fluctuations. Other hedging strategies, such as buying futures and call options,
would tend to increase the Fund's exposure to the securities market.

Hedging involves risk. If the portfolio manager used a hedging instrument
at the wrong time or judged market conditions incorrectly, the hedge might be
unsuccessful and the strategy could reduce the Fund's returns. The Fund may also
experience losses if the prices of its hedging instruments were not correlated
with its other investments or if it could not close out a position because of an
illiquid market.

Portfolio Turnover. A change in the securities held by the Fund is known as
"portfolio turnover." The Fund does not expect to engage in active and frequent
trading to try to achieve its objective. Portfolio turnover increases brokerage
costs the Fund pays. Increased portfolio turnover creates higher brokerage and
transaction costs for the Fund (and may reduce performance). 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 prior fiscal years.

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 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.

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 has entered into a Securities
Lending Agreement with JP Morgan Chase. Under that agreement portfolio
securities of the Fund may be loaned to brokers, dealers and other financial
institutions. The Securities Lending Agreement provides that loans must be
adequately collateralized and may be made only in conformity with the Fund's
Securities Lending Guidelines, adopted by the Fund's Board of Directors. The
value of the securities loaned may not exceed 25% of the value of the Fund's net
assets.

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 under Form N-Q, which are filed with the Securities and Exchange
Commission (the "SEC") no later than 60 days after the close of the first and
third fiscal quarters. These required filings are publicly available at the SEC.
Therefore, portfolio holdings of the Fund are made publicly available no later
than 60 days after the close of each of the Fund's fiscal quarters.

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

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 Directors, 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 $250 billion in assets as of June 30, 2007, 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.
Effective August 1, 2007 the advisory fee rate is: 0.70% of the first $400
million of average annual net assets of the Fund, 0.68% of the next $400
million, 0.65% of the next $400 million, 0.60% of the next $400 million, 0.55%
of the next $400 million, and 0.50% of average annual net assets in excess of $2
billion. The Fund's advisory fee for the period ended October 31, 2006, based on
the Fund's former advisory fee schedule, was 0.84% of average annual net assets.
A discussion regarding the basis for the Board of Directors' approval of the
Fund's investment advisory contract is available in the Fund's Semi-Annual
Report for the six-month period ended April 30, 2007. Portfolio Manager. The
Fund's portfolio is managed by Michael Levine who is primarily responsible for
the day-to-day management of the Fund's investments. Mr. Levine has been a
portfolio manager and a Vice President of the Fund since July 16, 2007 and a
portfolio manager and Vice President of the Manager since June 1998. He is a
portfolio manager and officer of another portfolio in the OppenheimerFunds
complex. The Statement of Additional Information provides additional information
about the portfolio manager's compensation, other accounts he manages and his
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 or 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.

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 New York Stock Exchange (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 Directors believes accurately
reflects the fair value. Because some foreign securities trade in markets and on
exchanges that operate on weekends and U.S. holidays, the values of some of the
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 believes 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 four
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.

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 shares, such as the Class B, Class C and Class N
asset-based sales charge described below and in the Statement of Additional
Information.

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:

-------------------------------------------------------------------------------
Amount of Purchase Front-End Front-End Concession As
Sales
Sales Charge As a
Charge As a Percentage of
Percentage of Net a
Offering Amount Percentage of
Price Invested Offering Price
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
$25,000 or more but less than 5.50% 5.82% 4.75%
$50,000
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
$50,000 or more but less than 4.75% 4.99% 4.00%
$100,000
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
$100,000 or more but less than 3.75% 3.90% 3.00%
$250,000
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
$250,000 or more but less than 2.50% 2.56% 2.00%
$500,000
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
$500,000 or more but less than $1 2.00% 2.04% 1.60%
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 B 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 when purchasing
shares or the Transfer Agent 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 any Class A, Class B or Class C
shares of the Fund or other Oppenheimer funds that you or your spouse currently
own, or are currently purchasing, to the value of your Class A share purchase.
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 and 403(b) 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). 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.

To count shares of eligible Oppenheimer funds held in accounts at other
intermediaries under this Right of Accumulation, you may be requested to provide
the Distributor or your current intermediary with a copy of all account
statements showing your current holdings of the Fund or other eligible
Oppenheimer funds, including statements for accounts held by you and your spouse
or in retirement plans or trust or custodial accounts for minor children as
described above. The Distributor or intermediary through which you are buying
shares will calculate the value of your eligible Oppenheimer fund shares, based
on the current offering price, to determine which Class A sales charge rate you
qualify for on your current purchase.

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 over a 13-month
period. The total amount of your intended purchases of Class A, Class B and
Class C shares will determine the reduced sales charge rate that will apply to
your Class A share purchases of the Fund during that period. Purchases made up
to 90 days before the date that you submit a Letter of Intent will be included
in that determination. Your Class N shares, and any 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. Submitting a
Letter of Intent does not obligate you to purchase the specified amount of
shares. You may also be able to apply the Right of Accumulation to these
purchases.

If you do not complete 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.

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 in writing 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.

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 B 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 retirement plans that have
$1 million or more in plan assets. There is also no contingent deferred sales
charge on any group retirement plan shares purchased after March 1, 2007.

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%.

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.

DISTRIBUTION AND SERVICE (12b-1) PLANS.

Distribution and 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 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, or by telephone. 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.

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

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

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

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

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

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

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

HOW CONTINGENT DEFERRED SALES CHARGES AFFECT REDEMPTIONS. If you 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 B 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 B to
the Statement of Additional Information.

To determine whether a contingent deferred sales charge applies to a
redemption, the\ Fund redeems shares in the following order:

1. shares acquired by reinvestment of dividends and capital gains distributions,
2. shares held for the holding period that applies to the class, and
3. shares held the longest during the holding period.

Contingent deferred sales charges are not charged when you exchange shares
of the Fund for shares of other Oppenheimer funds. However, if you exchange them
within the applicable contingent deferred sales charge holding period, the
holding period will carry over to the fund whose shares you acquire. Similarly,
if 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 When you establish an account, you must hold the shares you buy for at
least seven days before you can exchange them. After your account is open for
seven days, you can exchange shares on any regular business day, subject to the
limitations described below.

o You must meet the minimum purchase requirements for the selected fund.

o Generally, exchanges may be made only between identically registered
accounts, unless all account owners send written exchange instructions with a
signature guarantee.

o Before exchanging into a fund, you must obtain its prospectus and should
read it carefully.

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

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

A contingent deferred sales charge (CDSC) is not charged when you exchange
shares of the Fund for shares of another Oppenheimer fund. However, if you
exchange your shares during the applicable CDSC holding period, the holding
period will carry over to the fund shares that you acquire. Similarly, if you
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 Directors 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 Directors 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 $500 for reasons other than the fact that the
market value of shares has dropped. In some cases, involuntary redemptions may
be made to repay the Distributor for losses from the cancellation of share
purchase orders.

Shares may be "redeemed in kind" under unusual circumstances (such as a
lack of liquidity in the Fund's portfolio to meet redemptions). This means that
the redemption proceeds will be paid with liquid securities from the Fund's
portfolio. If the Fund redeems your shares in kind, you may bear transaction
costs and will bear market risks until such time as such securities are
converted into cash.

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 currently intends to declare and pay dividends
separately for each class of shares from net investment income on an annual
basis. The Fund anticipates that, effective March 31, 2008, it will begin
declaring and paying dividends on a quarterly basis. Dividends and distributions
paid to Class A shares will generally be higher than dividends for Class B,
Class C and Class N shares, which normally have higher expenses than Class A
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 OppenheimerFunds account you have established.

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

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
ex-dividend date, 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 dividend or 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 adviser
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, other than the information for the six-month
period ended April 30, 2007, has been audited by KPMG 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. The Fund's financial statements
for the six-month period ended April 30, 2007, are unaudited and included in the
Fund's Statement of Additional Information. In management's opinion, the
information for the six-months ended April 30, 2007, reflects all adjustments
necessary to a fair statement of the results of the interim period presented.

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

SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2007 OCT. 31,
CLASS A (UNAUDITED) 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 29.15 $ 27.34 $ 26.89 $ 23.71 $ 19.07 $ 20.91
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .07 1 .09 1 (.05) 1 (.10) (.09) (.13)
Net realized and unrealized gain (loss) 1.92 4.61 2.58 3.45 4.73 (1.25)
-----------------------------------------------------------------------------
Total from investment operations 1.99 4.70 2.53 3.35 4.64 (1.38)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income (.03) -- -- -- -- --
Distributions from net realized gain (2.13) (2.89) (2.08) (.17) -- (.46)
-----------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (2.16) (2.89) (2.08) (.17) -- (.46)
-----------------------------------------------------------------------------------------------------------------------------------

Net asset value, end of period $ 28.98 $ 29.15 $ 27.34 $ 26.89 $ 23.71 $ 19.07
=============================================================================

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 7.18% 18.43% 9.80% 14.22% 24.33% (6.90)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 368,133 $ 382,512 $ 339,703 $ 252,661 $ 193,955 $ 150,161
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 368,313 $ 369,074 $ 309,617 $ 225,711 $ 165,906 $ 164,479
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) 0.47% 0.32% (0.19)% (0.37)% (0.43)% (0.61)%
Total expenses 1.31% 1.29% 1.34% 1.40% 1.56% 1.71%
Expenses after payments, waivers
and/or reimbursements and reduction
to custodian expenses 1.31% 1.28% 1.34% 1.40% 1.56% 1.71%
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 41% 56% 89% 61% 74% 75%

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

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

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

SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2007 OCT. 31,
CLASS B (UNAUDITED) 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 26.27 $ 25.11 $ 25.07 $ 22.31 $ 18.09 $ 19.99
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.05) 1 (.14) 1 (.28) 1 (.29) (.22) (.19)
Net realized and unrealized gain (loss) 1.73 4.19 2.40 3.22 4.44 (1.25)
----------------------------------------------------------------------------
Total from investment operations 1.68 4.05 2.12 2.93 4.22 (1.44)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- -- -- -- -- --
Distributions from net realized gain (2.13) (2.89) (2.08) (.17) -- (.46)
----------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (2.13) (2.89) (2.08) (.17) -- (.46)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 25.82 $ 26.27 $ 25.11 $ 25.07 $ 22.31 $ 18.09
============================================================================

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 6.74% 17.37% 8.81% 13.22% 23.33% (7.53)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 74,788 $76,583 $ 74,004 $ 64,069 $ 55,449 $ 42,010
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 76,104 $76,606 $ 73,417 $ 60,460 $ 46,785 $ 42,900
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.41)% (0.58)% (1.10)% (1.26)% (1.23)% (1.30)%
Total expenses 2.18% 2.19% 2.25% 2.30% 2.43% 2.41%
Expenses after payments, waivers
and/or reimbursements and reduction
to custodian expenses 2.18% 2.19% 2.25% 2.30% 2.36% 2.41%
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 41% 56% 89% 61% 74% 75%

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

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

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

SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2007 OCT. 31,
CLASS C (UNAUDITED) 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 26.31 $ 25.14 $ 25.10 $ 22.34 $ 18.11 $ 20.01
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.05) 1 (.14) 1 (.27) 1 (.29) (.14) (.13)
Net realized and unrealized gain (loss) 1.73 4.20 2.39 3.22 4.37 (1.31)
----------------------------------------------------------------------------
Total from investment operations 1.68 4.06 2.12 2.93 4.23 (1.44)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- -- -- -- -- --
Distributions from net realized gain (2.13) (2.89) (2.08) (.17) -- (.46)
----------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (2.13) (2.89) (2.08) (.17) -- (.46)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 25.86 $ 26.31 $ 25.14 $ 25.10 $ 22.34 $ 18.11
============================================================================

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 6.72% 17.39% 8.80% 13.20% 23.36% (7.52)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 57,241 $ 54,971 $ 46,560 $ 34,414 $ 30,510 $ 16,979
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 56,056 $ 51,822 $ 42,635 $ 32,051 $ 20,901 $ 15,323
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.39)% (0.57)% (1.09)% (1.26)% (1.24)% (1.30)%
Total expenses 2.16% 2.17% 2.24% 2.31% 2.43% 2.41%
Expenses after payments, waivers
and/or reimbursements and reduction
to custodian expenses 2.16% 2.17% 2.24% 2.31% 2.36% 2.41%
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 41% 56% 89% 61% 74% 75%

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

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

SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2007 OCT. 31,
CLASS N (UNAUDITED) 2006 2005 2004 2003 2002
-----------------------------------------------------------------------------------------------------------------------------------

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 28.52 $ 26.91 $ 26.61 $ 23.56 $ 19.00 $ 20.88
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) -- 1,2 (.03) 1 (.16) 1 (.19) (.15) (.17)
Net realized and unrealized gain (loss) 1.89 4.53 2.54 3.41 4.71 (1.25)
------------------------------------------------------------------------------
Total from investment operations 1.89 4.50 2.38 3.22 4.56 (1.42)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- -- -- -- -- --
Distributions from net realized gain (2.13) (2.89) (2.08) (.17) -- (.46)
------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (2.13) (2.89) (2.08) (.17) -- (.46)
-----------------------------------------------------------------------------------------------------------------------------------

Net asset value, end of period $ 28.28 $ 28.52 $ 26.91 $ 26.61 $ 23.56 $ 19.00
==============================================================================

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 6.95% 17.93% 9.31% 13.75% 24.00% (7.10)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 19,253 $ 19,013 $ 16,451 $ 10,554 $ 6,408 $ 2,983
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 19,467 $ 17,985 $ 13,849 $ 8,724 $ 4,218 $ 1,475
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss 0.02% (0.12)% (0.61)% (0.78)% (0.75)% (0.88)%
Total expenses 1.97% 1.90% 2.08% 2.20% 1.97% 1.87%
Expenses after payments, waivers
and/or reimbursements and reduction
to custodian expenses 1.74% 1.72% 1.76% 1.81% 1.87% 1.87%
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 41% 56% 89% 61% 74% 75%

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

2. Less than $0.005 per share.

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

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

INFORMATION AND SERVICES

For More Information on Oppenheimer Equity Income Fund, Inc.

The following additional information about the Fund is available without charge upon
request:

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

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

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

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

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

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

The Fund's SEC File No.: 811-04797 The Fund's shares are distributed by:
PR0835.001.0807 [logo] OppenheimerFunds Distributor, Inc.
Printed on recycled paper

Appendix to Prospectus of
Oppenheimer Equity Income Fund, Inc.

Graphic Material included in the prospectus of Oppenheimer Equity Income
Fund, Inc., (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 the past 10 calendar years, without deducting sales charges or taxes. Set
forth below are the relevant data points that will appear on the bar chart.

Calendar Annual
Year Total
Ended Return
12/31/97 14.84%
12/31/98 20.15%
12/31/99 5.83%
12/31/00 14.97%
12/31/01 -1.20%
12/31/02 -14.71%
12/31/03 28.63%
12/31/04 16.68%
12/31/05 9.25%
12/31/06 13.56%

Oppenheimer
Equity Income Fund, Inc.*
6803 South Tucson Way, Centennial, Colorado 80112
1.800. CALL OPP (225.5677)

Statement of Additional Information dated August 1, 2007

This Statement of Additional Information is not a Prospectus. This document
contains additional information about the Fund and supplements information in
the Prospectus dated August 1, 2007. It should be read together with the
Prospectus, which may be obtained by writing to the Fund's Transfer Agent,
OppenheimerFunds Services, at P.O. Box 5270, Denver, Colorado 80217, 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........................... 9
Other Investment Restrictions........................................ 24
Disclosure of Portfolio Holdings..................................... 25
How the Fund is Managed ................................................. 29
Organization and History............................................. 29
Board of Directors and Audit Committees.............................. 31
Directors and Officers of the Fund................................... 32
The Manager.......................................................... 41
Brokerage Policies of the Fund........................................... 46
Distribution and Service Plans........................................... 48
Payments to Fund Intermediaries.......................................... 53
Performance of the Fund.................................................. 57

About Your Account
How To Buy Shares........................................................ 62
How To Sell Shares....................................................... 72
How To Exchange Shares................................................... 77
Dividends, Capital Gains and Taxes....................................... 81
Additional Information About the Fund.................................... 89

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

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

* Prior to August 1, 2007, the Fund's name was "Oppenheimer Quest Capital
Value Fund, Inc."

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
might use to try to achieve its objective.

The Fund's Investment Policies. The composition of the Fund's portfolio and
the techniques and strategies that the Fund's Manager, 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 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 corporate issuers, 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 securities, when evaluating the
securities of issuers in a particular country, the Manager may also consider
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 and other factors.

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

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

Using value investing requires research as to the issuer's underlying
financial condition and prospects. Some of the measures used to identify
these securities include, among others:

o Price/Earnings ratio, which is the stock's price divided by its
earnings per share. A stock having a price/earnings ratio lower than
its historical range, or the market as a whole or that of similar
companies, may offer attractive investment opportunities.
o Price/book value ratio, which is the stock price divided by the book
value of the company per share, which measures the company's stock
price in relation to its asset value.
o Dividend Yield is measured by dividing the annual dividend by the stock
price per share.
o Valuation of Assets, which compares the stock price to the value of the
company's underlying assets, including their projected value in the
marketplace and liquidation value.
o 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. Preferred stock also generally
has a preference over common stock on the distribution of a corporation's
assets in the event of liquidation of the corporation. 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.

o 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. The Fund will not invest
more than 5% of its net assets in warrants. That limit does not apply to
warrants that have been acquired in units or attached to other securities.

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

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

While some convertible securities are a form of debt security, in many
cases their conversion feature (allowing conversion into equity securities)
may cause them to be regarded by the Manager more as "equity equivalents."
As a result, the credit rating assigned to the security has less impact on
the Manager's investment decision with respect to convertible securities than
in the case of non-convertible fixed income securities. Convertible
securities are subject to the credit risks and interest rate risks described
below. To determine whether convertible securities should be regarded as
"equity equivalents," the Manager may consider 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| Investments in Debt Securities. The Fund can invest in a variety of
domestic and foreign debt securities including bonds, notes, debentures and
other debt securities, including U.S. government securities. It can also
invest in short-term debt securities primarily for liquidity or defensive
purposes. Because the Fund currently emphasizes investments in equity
securities, such as stocks, it is not anticipated that more than 25% of the
Fund's total assets will be invested in debt securities under normal market
conditions.

Foreign debt securities are subject to the risks of foreign investing
described below. In general, domestic and foreign debt securities are also
subject to credit risk and interest rate risk.

o Credit Risk. Credit risk relates to the ability of the issuer of a debt
security to meet interest and principal payment obligations as they become
due. 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 creditworthiness. The Fund's debt investments can
include investment grade and below investment-grade bonds (commonly referred
to as "junk bonds"). Investment-grade bonds are bonds rated at least "Baa" by
Moody's Investors Service, Inc. ("Moody's"), at least "BBB" by Standard &
Poor's Rating Service ("Standard & Poor's") or Fitch, Inc., or that have
comparable ratings by another nationally recognized statistical rating
organization. If the 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. The debt security ratings
definitions of the principal ratings organizations are included in Appendix A
to this SAI.

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 fixed-income investments, and a
decline in general interest rates will tend to increase their value. In
addition, debt securities with longer maturities, which tend to have higher
yields, are subject to potentially greater fluctuations in value from changes
in interest rates than obligations with shorter maturities.

Fluctuations in the market value of the Fund's portfolio securities
after the Fund buys them normally do not affect the interest income payable
on those securities (unless the security's interest is payable on a variable
rate pegged to particular 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 U.S. Government Securities. These are securities issued or guaranteed
by the U.S. Treasury or other government agencies or federally-chartered
corporate entities referred to as "instrumentalities." Obligations of U.S.
government agencies or instrumentalities (including mortgage-backed
securities) may or may not be guaranteed or supported by the "full faith and
credit" of the United States. "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. Some are obligations backed by the
right of the issuer to borrow from the U.S. Treasury; others, by
discretionary authority of the U.S. government to purchase the agencies'
obligations; while others are supported only by the credit of the
instrumentality.

All U.S. Treasury obligations are backed by the full faith and credit
of the United States. If the securities are not backed by the full faith and
credit of the United States, the owner of the securities must look
principally to the agency issuing the obligation for repayment and might not
be able to assert a claim against the United States in the event that the
agency or instrumentality does not meet its commitment. The Fund will invest
in securities of U.S. government agencies and instrumentalities only when the
Manager is satisfied that the credit risk with respect to such agency or
instrumentality is minimal.

o Special Risks of Lower-Grade Securities. While it is not currently
anticipated that the Fund will invest more than 25% of its total assets in
lower-grade debt securities, the Fund can invest a portion of its assets in
these securities. Because lower-grade securities tend to offer higher yields
than investment-grade securities, the Fund could invest in lower-grade
securities if the Manager is trying to achieve greater income. In some cases,
the appreciation possibilities of lower-grade securities might be a reason
they are selected for the Fund's portfolio.

"Lower-grade" debt securities are those rated below "investment grade,"
which means they have a rating lower than "Baa" by Moody's or lower than
"BBB" by Standard & Poor's or Fitch, Inc., or similar ratings by other
nationally recognized rating organizations. If they are unrated, and are
determined by the Manager to be of comparable quality to debt securities
rated below investment grade, they are included in determining the percentage
of the Fund's assets that can be invested in lower-grade securities. The Fund
can invest in securities rated as low as "C" or "D."

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

However, the Fund's limitations on these investments may reduce some of
the risks to the Fund, as will the Fund's policy of diversifying its
investments. Additionally, to the extent they can be converted into stock,
convertible securities may be less subject to some of these risks than
non-convertible high yield bonds, since stock may be more liquid and less
affected by some of these risk factors.

While securities rated "Baa" by Moody's or "BBB" by Standard & Poor's
or Fitch, Inc. are investment grade and are not regarded as junk bonds, those
securities may be subject to special risks, and have some speculative
characteristics.

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

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. Time deposits, other than overnight
deposits, may be subject to withdrawal penalties and, if so, they are deemed
"illiquid" investments.

The Fund can purchase bank obligations that are fully insured by the
Federal Deposit Insurance Corporation. The FDIC insures the deposits of
member banks up to $100,000 per account. Insured bank obligations may have a
limited market and a particular investment of this type may be deemed
"illiquid" unless the Board of Directors of the Fund determines that a
readily-available market exists for that particular obligation, or unless the
obligation is payable at principal amount plus accrued interest on demand or
within seven days after demand.

o Commercial Paper. The Fund can invest in commercial paper if it is
rated within the top two rating categories of Standard & Poor's and Moody's.
If the paper is not rated, it may be purchased if issued by a company having
a credit rating of at least "AA" by Standard & Poor's or "Aa" by Moody's.

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, unless they have a demand feature permitting them to be
put back to the issuer within seven days. The Fund does not intend that its
investments in variable amount master demand notes will exceed 5% of its
total assets.

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

Securities of foreign issuers that are represented by American
Depository Receipts, European Depository Receipts or Global Depository
Receipts, or that are listed on a U.S. securities exchange or traded in the
U.S. over-the-counter markets, are considered "foreign securities" for the
purpose of the Fund's investment allocations. That is because they are
subject to many of the special considerations and risks, discussed below,
that apply to foreign securities traded and held abroad.

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.

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

o Foreign Debt Obligations. The debt obligations of foreign governments
and their agencies and instrumentalities may or may not be supported by the
full faith and credit of the foreign government. The Fund may 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.

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

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 growth 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.

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

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") and under its own non-fundamental policies, the
Fund may also invest in foreign mutual funds which are also deemed PFICs
(since nearly all of the income of a mutual fund is generally passive
income). Investing in these types of PFICs may allow exposure to varying
countries because some foreign countries limit, or prohibit, all direct
foreign investment in the securities of companies domiciled therein.

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

|X| 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% annually. The Fund's portfolio turnover
rate will fluctuate from year to year, but the Fund does not expect to have a
portfolio turnover rate of 100% or more. Increased portfolio turnover creates
higher brokerage and transaction costs for the Fund, which may reduce its
overall performance. Additionally, the realization of capital gains from
selling portfolio securities may result in distributions of taxable long-term
capital gains to shareholders, since the Fund will normally distribute all of
its capital gains realized each year to avoid excise taxes under the Internal
Revenue Code.

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| Investing in Small-Cap and Mid-Cap stocks. Although the Fund will
typically focus in large capitalization stocks, it may also invest in stocks
of small- or medium-size companies ("small-cap" or "mid-cap" stocks).
Small-cap companies are often newer companies that may have limited product
lines or markets for their products, limited access to financial resources
and less depth in management skill than larger, more established companies.
It may take a substantial period of time before the Fund realizes a gain on
an investment in a small-cap company, if it realizes any gain at all.

Mid-cap stocks tend to be more sensitive to changes in an issuer's
earnings expectations than the stocks of larger companies. While small- and
mid-cap stocks may offer greater opportunities for long-term capital
appreciation than the stocks of larger, more established companies, they also
involve greater risk of loss and price fluctuation. Since small- and mid-cap
companies typically reinvest a high proportion of earnings in their own
businesses, they may lack the dividend-yield that could help cushion their
total return in a declining market. Many small- and mid-cap stocks are traded
in over-the-counter markets and tend to have lower trading volumes than large
capitalization securities. Therefore, they may be less liquid than stocks of
larger exchange-traded issuers and the Fund could have greater difficulty
selling a security at an acceptable price, especially in periods of market
volatility.

|X| Investing in Small, Unseasoned Companies. The Fund may invest in
securities of small, unseasoned companies. These are companies that have been
in operation for less than three years, including the operations of any
predecessors. Securities of these companies may be subject to volatility in
their prices. They may have a limited trading market, which may adversely
affect the Fund's ability to dispose of them and can reduce the price the
Fund might be able to obtain for them. Other investors that own a security
issued by a small, unseasoned issuer for which there is limited liquidity
might trade the security when the Fund is attempting to dispose of its
holdings of that security. In that case the Fund might receive a lower price
for its holdings than might otherwise be obtained. These are speculative
securities and can increase the Fund's overall portfolio risks.

|X| Investment in Other Investment Companies. The Fund can also invest in
the securities of other investment companies, which can include open-end
funds, closed-end funds and unit investment trusts, subject to the limits set
forth in the Investment Company Act that apply to those types of investments.
For example, the Fund can invest in Exchange-Traded Funds, which are
typically open-end funds or unit investment trusts, listed on a stock
exchange. The Fund might do so as a way of gaining exposure to the segments
of the equity or fixed-income markets represented by the Exchange-Traded
Fund's 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 in an investment
company, the Fund would be subject to its ratable share of that investment
company's expenses, including its advisory and administration expenses. At
the same time, the Fund would bear its own management fees and other
expenses. The Fund does not anticipate investing a substantial amount of its
net assets in shares of other investment companies.

|X| "When-Issued" and "Delayed-Delivery" Transactions. The Fund can invest
in securities on a "when-issued" basis and can purchase or sell securities on
a "delayed-delivery" or "forward commitment" 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. The Fund limits its when-issued commitments to not more
than 15% of its net assets.

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, the Fund makes no payment to the issuer and no
interest accrues to the Fund from the investment until it receives the
security as 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 will engage in when-issued transactions to secure what the Manager
considers to be an advantageous price and yield at the time of entering into
the obligation. When the 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 for its portfolio 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.

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 Fund's investment manager,
OppenheimerFunds, Inc. (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. 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.

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

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

o Reverse Repurchase Agreements. The Fund can use reverse repurchase
agreements and would normally do so as a cash management tool. These
agreements create leverage, a speculative investment technique. The Fund does
not currently use reverse repurchase agreements, but may do so in the future.
When the Fund enters into a reverse repurchase agreement, it segregates on
its books an amount of cash or U.S. government securities equal in value to
the purchase price of the securities it has committed to buy, plus accrued
interest, until the payment is made to the seller. Before the Fund enters
into a reverse repurchase agreement, the Manager evaluates the
creditworthiness of the seller, typically a bank or broker-dealer. Reverse
repurchase agreements are considered to be a form of borrowing by the Fund
and are subject to the Fund's limitations on borrowing.

These agreements are subject to certain risks. The market value of the
securities retained in lieu of sale by the Fund may decline more or
appreciate more than the securities the Fund has sold but is obligated to
repurchase. If the buyer of the securities under the agreement files for
bankruptcy or becomes insolvent, there may be delays in the Fund's use of the
proceeds.

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

The Fund may also acquire restricted securities through private
placements. Those securities have contractual restrictions on their public
resale. Those restrictions 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.

Borrowing and Leverage. The Fund may not borrow money, except to the
extent permitted under the Investment Company Act, the rules or regulations
thereunder or any exemption therefrom that is applicable to the Fund, as such
statute, rules or regulations may be amended or interpreted from time to
time. Borrowing may entail "leverage," and may be a speculative investment
strategy. Any borrowing will be made only from banks and, pursuant to the
requirements of the Investment Company Act, will be made only to the extent
that the value of the Fund's assets, less its liabilities other than
borrowings, is equal to at least 300% of all borrowings including the
proposed borrowing. If the value of the Fund's assets, when computed in that
manner, should fail to meet the 300% asset coverage requirement, the Fund is
required within three days to reduce its bank debt to the extent necessary to
meet that coverage requirement. To do so, the Fund may have to sell a portion
of its investments at a time when it would otherwise not want to sell the
securities. Interest on money the Fund borrows is an expense the Fund would
not otherwise incur, so that during periods of substantial borrowings, its
expenses may increase more than the expenses of funds that do not borrow. The
use of leverage also may make the Fund's share prices more sensitive to
interest rate changes.

o Hedging. Although the Fund can use hedging instruments, it is not
obligated to use them in seeking its objective. It does not currently
contemplate using them to any significant degree. The Fund may use hedging 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. To do so, the Fund could:
o sell futures contracts,
o buy puts on such futures or on securities, or
o write covered calls on securities or futures.

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 such futures or on securities.

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 stock indices (these are referred to as "stock index futures"),
(2) foreign currencies (these are referred to as "forward contracts"), (3) an
individual stock ("single stock futures") and (4) commodities (these are
referred to as "commodity futures").

A broadly-based stock index is used as the basis for trading stock
index futures. These indices may in some cases be based on stocks of issuers
in a particular industry or group of industries. A stock index assigns
relative values to the common stocks included in the index and its value
fluctuates in response to the changes in value of the underlying stocks. A
stock index cannot be purchased or sold directly. These contracts obligate
the seller to deliver, and the purchaser to take, cash to settle the futures
transactions. 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.

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

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

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

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

o Put and Call Options. The Fund can buy and sell certain kinds of put
options ("puts") and call options ("calls"). The Fund can buy and sell
exchange-traded and over-the-counter put and call options, including options
on broadly-based stock indices, securities, foreign currencies and stock
index futures.

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. For
options on securities, that means the Fund must own the security subject to
the call while the call is outstanding. For stock index options, that means
the call must be covered by identifying liquid assets to enable the Fund to
satisfy its obligations if the call is exercised. Up to 25% of the Fund's
total assets may be subject to calls the Fund writes.

When the Fund writes a call on a security, it receives cash (a
premium). For calls on securities, 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 a call on a stock index 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.

Settlement of puts and calls on broadly-based stock indices is in cash.
Gain or loss on options on stock indices depends on changes in the index in
question (and thus on price movements in the stock market generally).

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. The OCC will release the securities on the expiration of the
option or when the Fund enters into a closing transaction.

If 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"). If 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 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 escrowed assets in escrow 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 an
equivalent dollar amount of liquid assets on the Fund's books. The Fund will
identify additional liquid assets if the value of the identified assets drops
below 100% of the current value of the future. Because of the requirement to
identify liquid assets, 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 stock indices,
foreign currencies or stock index futures. If the Fund writes a put, the put
must be covered by identified liquid assets on the Fund's books. The Fund
will not write puts if, as a result, more than 25% of the Fund's net assets
would have to be identified to cover such put options.

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 settle the transaction in cash with the buyer of
the put at the exercise price, even if the value of the underlying 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 settle in cash at the exercise price. That price will
usually exceed the market value of the investment at that time.

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 settle the transaction in cash at
the exercise price. The Fund has no control over when it may be required to
settle the transaction, 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. 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 Puts and Calls. The Fund can buy calls on securities it
intends to purchase and puts on securities that it owns. The Fund may
purchase calls 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. Buying a call on a security or future gives
the Fund 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.

In the case of a purchase of a call on a stock index, if the Fund
exercises the call during the call period, a seller of a corresponding call
on the same index will pay the Fund an amount of cash to settle the call if
the closing level of the stock index upon which the call is based is greater
than the exercise price of the call. That cash payment is equal to the
difference between the closing price of the call and the exercise price of
the call times a specified multiple (the "multiplier") which determines the
total dollar value for each point of difference.

When the Fund buys a put, it pays a premium. It has the right during
the put period to require a seller of a corresponding put, upon the Fund's
exercise of its put, to buy the underlying security (in the case of puts on
securities or futures) or in the case of puts on stock indices, to deliver
cash to the Fund to settle the put if the closing level of the stock index
upon which the put is based is less than the exercise price of the put. That
cash payment is determined by the multiplier, in the same manner as described
above as to calls.

Buying a put on a security or future enables the Fund to sell the
underlying investment to a seller of a corresponding put on the same
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 put on a stock index, the put protects the
Fund to the extent that the index moves in a similar pattern to the
securities the Fund holds. The Fund can resell the put. The resale price of
the put will vary inversely with 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
the expiration date. In the event of a decline in price of the underlying
investment, the Fund could exercise or sell the put at a profit to attempt to
offset some or all of its loss on its portfolio securities.

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

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

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

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

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 may affect its costs.

The Fund's option activities could affect its portfolio turnover rate
and brokerage commissions. The exercise of calls written by the Fund could
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 may 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 limits its exposure in
foreign currency exchange contracts in a particular foreign currency to the
amount of its assets denominated in that currency or a closely-correlated
currency. The 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 may 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 may suffer a substantial decline against a
foreign currency, it might 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
on the Fund's books liquid assets having a value equal to the aggregate
amount of the Fund's commitment under forward contracts. The Fund will not
enter into forward contracts or maintain a net exposure to such contracts if
the consummation of the contracts would obligate the Fund to deliver an
amount of foreign currency in excess of the value of the Fund's portfolio
securities or other assets denominated in that currency or another currency
that is the subject of the hedge. However, to avoid excess transactions and
transaction costs, the Fund may maintain a net exposure to forward contracts
in excess of the value of the Fund's portfolio securities or other assets
denominated in foreign currencies if the excess amount is "covered" by liquid
securities denominated in any currency. The cover must be at least equal at
all times to the amount of that excess.

As one alternative, the Fund may purchase a call option permitting the
Fund to purchase the amount of foreign currency being hedged by a forward
sale contract at a price no higher than the forward contract price. As
another alternative, the Fund may purchase a put option permitting the Fund
to sell the amount of foreign currency subject to a forward purchase contract
at a price as high or higher than the forward contact price.

The precise matching of the amounts under forward contracts and the
value of the securities involved generally will not be possible because the
future value of securities denominated in foreign currencies will change as a
consequence of market movements between the date the forward contract is
entered into and the date it is sold. In some cases the Manager may 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 Regulatory Aspects of Hedging Instruments. The Commodities Futures
Trading Commission (the "CFTC") has eliminated limitations on futures trading
by certain regulated entities including registered investment companies and
consequently registered investment companies may engage in unlimited futures
transactions and options thereon provided that the Fund claims an exclusion
from regulation as a commodity pool operator. The 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 Manager. The exchanges also
impose position limits on futures transactions. An exchange may order the
liquidation of positions found to be in violation of those limits and may
impose certain other sanctions.

Under SEC staff interpretations regarding applicable provisions of the
Investment Company Act, when the Fund purchases a future, it must segregate
cash or readily marketable short-term debt instruments in an amount equal to
the purchase price of the future, less the margin deposit applicable to it.
The account must be a segregated account or accounts held by the Fund's
custodian bank.

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| Temporary Defensive and Interim Investments. When market, economic or
political conditions are unstable, or the Manager believes it is otherwise
appropriate to reduce holdings in stocks, the Fund can invest in a variety of
debt securities for defensive purposes. The Fund can also purchase these
securities for liquidity purposes to meet cash needs due to the redemption of
Fund shares, or to hold while waiting to reinvest cash received from the sale
of other portfolio securities. The Fund's temporary defensive investments can
include the following short-term (maturing in one year or less)
dollar-denominated debt obligations:
o obligations issued or guaranteed by the U. S. government or its
instrumentalities or agencies,
o commercial paper (short-term, unsecured promissory notes) rated within
the top two rating categories rating category by an established
rating organization,
o debt obligations of domestic or foreign corporate issuers rated "Baa"
or higher by Moody's or "BBB" or higher by Standard & Poor's,
o certificates of deposit and bankers' acceptances and other bank
obligations, and
o repurchase agreements.

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

Other Investment Restrictions

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

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

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

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

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

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

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

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

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

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

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.

|X| Does the Fund Have Any Restrictions That Are Not Fundamental? The Fund
has other investment restrictions that are not fundamental policies, which
means that they can be changed by the Board of Directors without shareholder
approval.

o The Fund cannot purchase oil, gas or other mineral leases, rights,
royalty contracts or exploration or development programs. However, the Fund
can invest in securities of companies that invest in or sponsor such programs.

o The Fund cannot purchase securities on margin (except for short-term
loans that are necessary for the clearance of transactions) or make short
sales of securities.

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.

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

o Public Disclosure. The Fund's portfolio holdings are made publicly
available no later than 60 days after the close of each of the
Fund's fiscal quarters in its semi-annual and annual reports to
shareholders, and in 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
their 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, National
Association of Securities Dealers ("NASD"), state securities
regulators, and/or foreign securities authorities, including
without limitation requests for information in inspections or for
position reporting purposes),
o To potential sub-advisers of portfolios (pursuant to confidentiality
agreements),
o To consultants for retirement plans for plan sponsors/discussions at
due diligence meetings (pursuant to confidentiality agreements),
o Investment bankers in connection with merger discussions (pursuant to
confidentiality agreements).

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

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

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

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

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

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

How the Fund is Managed

Organization and History. The Fund is an open-end, diversified management
investment company organized as a Maryland corporation in 1986. The Fund
commenced its operations on February 13, 1987 as a closed-end investment
company with a "dual-purpose" structure. The Fund originally had two
objectives: (1) long-term capital appreciation and preservation of capital,
and (2) current income and long-term growth of income. The Fund originally
had common stock, denominated as "capital shares," and preferred stock,
denominated as "income shares."

Under the Fund's original dual-purpose structure, the capital shares
were entitled to all of the Fund's gains and losses on its assets, and no
Fund expenses were allocated to those shares. The income shares were entitled
to all of the Fund's income and bore all of the Fund's operating expenses.
The income shares were redeemed on January 31, 1997, and the Fund's
dual-purpose structure was terminated.

On March 3, 1997, the Fund was converted to an open-end management
investment company with a single investment objective of capital
appreciation. The outstanding capital shares of the Fund were re-denominated
as Class A shares of common stock, which bear their allocable share of Fund
expenses.

Prior to August 1, 2007, the Fund was named "Oppenheimer Quest Capital
Value Fund, Inc." and its investment objective was to seek capital
appreciation. The Fund was sub-advised by Oppenheimer Capital LLC (which is
not affiliated with the Manager). The performance information, financial
information, and expense information in the shareholder report and the
portfolio holdings, shown in this SAI and in the Fund's shareholder reports,
may not be indicative of the Fund's operations for the current period.

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

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

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

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

|X| Meetings of Shareholders. Although the Fund is not required by Maryland
law to hold annual meetings, it 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. The shareholders have the right to call
a meeting to remove a Director or to take certain other action described in
the Articles of Incorporation or under Maryland law.

The Fund will hold a meeting when the Directors call a meeting or upon
proper request of shareholders. If the Fund receives a written request of the
record holders of at least 25% of the outstanding shares eligible to be voted
at a meeting to call a meeting for a specified purpose (which might include
the removal of a Director), the Directors will call a meeting of shareholders
for that specified purpose. The Fund has undertaken that it will then either
give the applicants access to the Fund's shareholder list or mail the
applicants' communication to all other shareholders at the applicants'
expense.

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

The Board of Directors has an Audit Committee comprised solely of
Directors who are not "interested persons" under the Investment Company Act
(the "Independent Directors"). The members of the Audit Committee are David
K. Downes (Chairman), John Cannon, Thomas W. Courtney, Robert G. Galli, Lacy
B. Herrmann and Brian Wruble. The Audit Committee held 7 meetings during the
Fund's fiscal year ended October 31, 2006. The Audit Committee furnishes the
Board with recommendations regarding the selection of the Fund's independent
registered public accounting firm (also referred to as the "independent
Auditors"). Other main functions of the Audit Committee outlined in the Audit
Committee Charter, include, but are not limited to: (i) reviewing the scope
and results of financial statement audits and the audit fees charged;
(ii) reviewing reports from the Fund's independent registered public
accounting firm regarding the Fund's internal accounting procedures and
controls; (iii) reviewing reports from the Manager's Internal Audit
Department; (iv) maintaining a separate line of communication between the
Fund's independent Auditors and the Independent Directors; (v) reviewing the
independence of the Fund's independent Auditors; and (vi) pre-approving the
provision of any audit or non-audit services by the Fund's independent
Auditors, including tax services, that are not prohibited by the
Sarbanes-Oxley Act, to the Fund, the Manager and certain affiliates of the
Manager.

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

To date, the Audit Committee has been able to identify from its own
resources an ample number of qualified candidates. Nonetheless, shareholders
may submit names of individuals, accompanied by complete and properly
supported resumes, for the Audit Committee's consideration by mailing such
information to the Audit Committee. Shareholders wishing to submit a nominee
for election to the Board may do so by mailing their submission to the
offices of OppenheimerFunds, Inc., Two World Financial Center, 225 Liberty
Street, 11th Floor, New York, NY 10281-1008, to the attention of the Board of
Directors of Oppenheimer Equity Income Fund, Inc., c/o the Secretary of the
Fund. Submissions should, at a minimum, be accompanied by the following: (1)
the name, address, and business, educational, and/or other pertinent
background of the person being recommended; (2) a statement concerning
whether the person is an "interested person" as defined in the Investment
Company Act; (3) any other information that the Fund would be required to
include in a proxy statement concerning the person if he or she was
nominated; and (4) the name and address of the person submitting the
recommendation and, if that person is a shareholder, the period for which
that person held Fund shares. Shareholders should note that a person who owns
securities issued by Massachusetts Mutual Life Insurance Company
("MassMutual") (the parent company of the Manager) would be deemed an
"interested person" under the Investment Company Act. In addition, certain
other relationships with MassMutual or its subsidiaries, with registered
broker-dealers, or with the Funds' outside legal counsel may cause a person
to be deemed an "interested person."

Although candidates are expected to provide a mix of attributes,
experience, perspective and skills necessary to effectively advance the
interests of shareholders, the Audit Committee has not established specific
qualifications that must be met by a trustee nominee. In evaluating trustee
nominees, the Audit Committee considers, among other things, an individual's
background, skills, and experience; whether the individual is an "interested
person" as defined in the Investment Company Act; and whether the individual
would be deemed an "audit committee financial expert" within the meaning of
applicable SEC rules. The Audit Committee also considers whether the
individual's background, skills, and experience will complement the
background, skills, and experience of other nominees. The Audit Committee
may, upon Board approval, retain an executive search firm or use the services
of legal, financial, or other external counsel to assist in screening
potential candidates.

There are no differences in the manner in which the Audit Committee
evaluates nominees for trustees based on whether the nominee is recommended
by a shareholder.

Directors and Officers of the Fund. Except for Mr. Murphy, each of the
Directors is an "Independent Director" under the Investment Company Act. All
of the Directors are also directors or trustees of the following Oppenheimer
funds (referred to as "Board III Funds"):

Bond Fund Series
Oppenheimer MidCap Fund
Oppenheimer Equity Income Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest International Value Fund, Inc.
Oppenheimer Rising Dividends Fund, Inc.
Rochester Fund Municipals
Rochester Portfolio Series

In addition to being a Board member of each of the Board III Funds,
Messrs. Galli and Wruble are also directors or trustees of 55 other
portfolios in the OppenheimerFunds complex.

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

Messrs. Gillespie, Murphy, Petersen, Levine, 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 III Funds. As of July 30,
2007 the Directors and officers of the Fund, as a group, owned of record or
beneficially less than 1% of any class of shares of the Fund. The foregoing
statement does not reflect ownership of shares held of record by an employee
benefit plan for employees of the Manager, other than the shares beneficially
owned under that plan by the officers of the Fund listed above. In addition,
none of the Independent Directors (nor any of their immediate family members)
owns securities of either the Manager, or the Distributor of the Board III
Funds or of any entity directly or indirectly controlling, controlled by or
under common control with the Manager or the Distributor.

Biographical Information. The Directors 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
Director's beneficial share ownership in the Fund and in all of the
registered investment companies that the Director oversees in the Oppenheimer
family of funds ("Supervised Funds"). The address of each Director in the
chart below is 6803 S. Tucson Way, Centennial, Colorado 80112-3924. Each
Director serves for an indefinite term, or until his or her resignation,
retirement, death or removal.

-------------------------------------------------------------------------------------------
Independent Directors
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Name, Position(s) Principal Occupation(s) During the Dollar Range Aggregate Dollar
Past 5 Years; Other of Shares Range of Shares
Held with the Trusteeships/Directorships Held; Beneficially Beneficially
Fund, Length of Number of Portfolios in the Fund Owned in the Owned in
Service, Age Complex Currently Overseen Fund Supervised Funds
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
As of December 31, 2006
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Thomas W. Courtney, Principal of Courtney Associates, None $10,001-$50,000
Chairman of the Inc. (venture capital firm) (since
Board of Directors 1982); General Partner of Trivest
since 2001, Venture Fund (private venture capital
Director since 1996 fund); President of Investment
Age: 73 Counseling Federated Investors, Inc.
(1973-1982); Trustee of the following
open-end investment companies: Cash
Assets Trust (1984), Premier VIT
(formerly PIMCO Advisors VIT), Tax
Free Trust of Arizona (since 1984)
and four funds for the Hawaiian Tax
Free Trust. Oversees 11 portfolios in
the OppenheimerFunds complex.
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
David K. Downes, President, Chief Executive Officer None $10,001-$50,000
Director since 2005 and Board Member of CRAFund Advisors,
Age: 67 Inc. (investment management company)
(since January 2004); President of
The Community Reinvestment Act
Qualified Investment Fund (investment
management company) (since January
2004); Independent Chairman of the
Board of Trustees of Quaker
Investment Trust (registered
investment company) (since January
2004); Director of Internet Capital
Group (information technology
company) (since October 2003); Chief
Operating Officer and Chief Financial
Officer of Lincoln National
Investment Companies, Inc.
(subsidiary of Lincoln National
Corporation, a publicly traded
company) and Delaware Investments
U.S., Inc. (investment management
subsidiary of Lincoln National
Corporation) (1993-2003); President,
Chief Executive Officer and Trustee
of Delaware Investment Family of
Funds (1993-2003); President and
Board Member of Lincoln National
Convertible Securities Funds, Inc.
and the Lincoln National Income
Funds, TDC (1993-2003); Chairman and
Chief Executive Officer of Retirement
Financial Services, Inc. (registered
transfer agent and investment adviser
and subsidiary of Delaware
Investments U.S., Inc.) (1995-2003);
President and Chief Executive Officer
of Delaware Service Company, Inc.
(1995-2003); Chief Administrative
Officer, Chief Financial Officer,
Vice Chairman and Director of
Equitable Capital Management
Corporation (investment subsidiary of
Equitable Life Assurance Society)
(1985-1992); Corporate Controller of
Merrill Lynch & Company (financial
services holding company)
(1977-1985); held the following
positions at the Colonial Penn Group,
Inc. (insurance company): Corporate
Budget Director (1974-1977),
Assistant Treasurer (1972-1974) and
Director of Corporate Taxes
(1969-1972); held the following
positions at Price Waterhouse &
Company (financial services firm):
Tax Manager (1967-1969), Tax Senior
(1965-1967) and Staff Accountant
(1963-1965); United States Marine
Corps (1957-1959). Oversees 10
portfolios in the OppenheimerFunds
complex.
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Robert G. Galli, A director or trustee of other None Over $100,000
Director since 1998 Oppenheimer funds. Oversees 65
Age: 73 portfolios in the OppenheimerFunds
complex.
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Lacy B. Herrmann, Founder and Chairman Emeritus of None $10,001-$50,000
Director since 1996 Aquila Group of Funds (open-end
Age: 77 investment company) (since December
2004); Chairman of Aquila Management
Corporation and Aquila Investment
Management LLC (since August 1984);
Chief Executive Officer and President
of Aquila Management Corporation
(August 1984-December 1994); Vice
President, Director and Secretary of
Aquila Distributors, Inc.
(distributor of Aquila Management
Corporation); Treasurer of Aquila
Distributors, Inc.; President and
Director of STCM Management Company,
Inc. (sponsor and adviser to CCMT);
Chairman, President and Director of
InCap Management Corporation (until
2004); Director of OCC Cash Reserves,
Inc. (open-end investment company)
(June 2003-December 2004); Trustee of
Premier VIT (formerly PIMCO Advisers
VIT) (investment company) (since
1994); Trustee of OCC Accumulation
Trust (open-end investment company)
(until December 2004); Trustee
Emeritus of Brown University (since
June 1983). Oversees 11 portfolios in
the OppenheimerFunds complex.
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Brian F. Wruble, General Partner of Odyssey Partners, None Over $100,000
Director since 2001 L.P. (hedge fund) (since September
Age: 64 1995); Director of Special Value
Opportunities Fund, LLC (registered
investment company) (since September
2004); Member of Zurich Financial
Investment Advisory Board (insurance)
(since October 2004); Board of
Governing Trustees of The Jackson
Laboratory (non-profit) (since August
1990); Trustee of the Institute for
Advanced Study (non-profit
educational institute) (since May
1992); Special Limited Partner of
Odyssey Investment Partners, LLC
(private equity investment) (January
1999-September 2004); Trustee of
Research Foundation of AIMR
(investment research, non-profit)
(2000-2002); Governor, Jerome Levy
Economics Institute of Bard College
(economics research) (August
1990-September 2001); Director of Ray
& Berendtson, Inc. (executive search
firm) (May 2000-April 2002). Oversees
65 portfolios in the OppenheimerFunds
complex.

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

* In addition to serving as Director of all of the Board III Funds,
Messrs. Galli and Wruble also serve as directors or trustees of 55 other
Oppenheimer funds that are not Board III Funds.

Mr. Murphy is an "Interested Director" 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, New York, New York
10281-1008. Mr. Murphy serves as a Director for an indefinite term, or until
his resignation, retirement, death or removal and as an officer for an
indefinite term, or until his resignation, retirement, death or removal.

-------------------------------------------------------------------------------------------
Interested Director and Officer
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
Name, Position(s) Principal Occupation(s) During the Past 5 Dollar Aggregate
Dollar Range
Range of Of Shares
Shares Beneficially
Held with Fund, Years; Other Trusteeships/Directorships Beneficially Owned in
Length of Held; Number of Portfolios in the Fund Owned in Supervised
Service, Age Complex Currently Overseen the Fund Funds
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
As of December 31, 2006
-------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------
John V. Murphy, Chairman, Chief Executive Officer and None Over $100,000
Director since Director (since June 2001) and President of
2005 and the Manager (September 2000-March 2007);
President and President and director or trustee of other
Principal Oppenheimer funds; President and Director
Executive Officer of Oppenheimer Acquisition Corp. ("OAC")
since 2001 (the Manager's parent holding company) and
Age: 57 of Oppenheimer Partnership Holdings, Inc.
(holding company subsidiary of the Manager)
(since July 2001); Director of
OppenheimerFunds Distributor, Inc.
(subsidiary of the Manager) (since November
2001); Chairman and Director of Shareholder
Services, Inc. and of Shareholder Financial
Services, Inc. (transfer agent subsidiaries
of the Manager) (since July 2001);
President and Director of OppenheimerFunds
Legacy Program (charitable trust program
established by the Manager) (since July
2001); Director of the following investment
advisory subsidiaries of the Manager: OFI
Institutional Asset Management, Inc.,
Centennial Asset Management Corporation,
Trinity Investment Management Corporation
and Tremont Capital Management, Inc. (since
November 2001), HarbourView Asset
Management Corporation and OFI Private
Investments, Inc. (since July 2001);
President (since November 1, 2001) and
Director (since July 2001) of Oppenheimer
Real Asset Management, Inc.; Executive Vice
President of Massachusetts Mutual Life
Insurance Company (OAC's parent company)
(since February 1997); Director of DLB
Acquisition Corporation (holding company
parent of Babson Capital Management LLC)
(since June 1995); Member of the Investment
Company Institute's Board of Governors
(since October 3, 2003); Chief Operating
Officer of the Manager (September 2000-June
2001); President and Trustee of MML Series
Investment Fund and MassMutual Select Funds
(open-end investment companies) (November
1999-November 2001); Director of C.M. Life
Insurance Company (September 1999-August
2000); President, Chief Executive Officer
and Director of MML Bay State Life
Insurance Company (September 1999-August
2000); Director of Emerald Isle Bancorp and
Hibernia Savings Bank (wholly-owned
subsidiary of Emerald Isle Bancorp) (June
1989-June 1998). Oversees 102 portfolios in
the OppenheimerFunds complex.
-------------------------------------------------------------------------------------------

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

------------------------------------------------------------------------------------------
Other Officers of the Fund
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Name, Position(s) Held Principal Occupation(s) During Past 5 Years
with Fund, Length of
Service, Age
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Mark S. Vandehey, Senior Vice President and Chief Compliance Officer of the
Vice President and Manager (since March 2004); Chief Compliance Officer of the
Chief Compliance Manager, OppenheimerFunds Distributor, Inc., Centennial Asset
Officer since 2004 Management and Shareholder Services, Inc. (Since March 2004);
Age: 56 Vice President of OppenheimerFunds Distributor, Inc., Centennial
Asset Management Corporation and Shareholder Services, Inc.
(since June 1983-February 2004). Former Vice President and
Director of Internal Audit of the Manager (1997-February 2004).
An officer of 102 portfolios in the OppenheimerFunds complex.
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Brian W. Wixted, Senior Vice President and Treasurer of the Manager (since March
Treasurer and 1999); Treasurer of the following: HarbourView Asset Management
Principal Financial & Corporation, Shareholder Financial Services, Inc., Shareholder
Accounting Officer Services, Inc., Oppenheimer Real Asset Management Corporation,
since 1999 and Oppenheimer Partnership Holdings, Inc. (since March 1999),
Age: 47 OFI Private Investments, Inc. (since March 2000),
OppenheimerFunds International Ltd. (since May 2000),
OppenheimerFunds plc (since May 2000), OFI Institutional Asset
Management, Inc. (since November 2000), and OppenheimerFunds
Legacy Program (charitable trust program established by the
Manager) (since June 2003); Treasurer and Chief Financial
Officer of OFI Trust Company (trust company subsidiary of the
Manager) (since May 2000); Assistant Treasurer of the following:
OAC (since March 1999),Centennial Asset Management Corporation
(March 1999-October 2003) and OppenheimerFunds Legacy Program
(April 2000-June 2003); Principal and Chief Operating Officer of
Bankers Trust Company-Mutual Fund Services Division (March
1995-March 1999). An officer of 102 portfolios in the
OppenheimerFunds complex.
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Brian Petersen, Vice President of the Manager (since February 2007); Assistant
Assistant Treasurer Vice President of the Manager (August 2002-February 2007);
since 2004 Manager/Financial Product Accounting of the Manager (November
Age: 36 1998-July 2002). An officer of 102 portfolios in the
OppenheimerFunds complex.
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Michael S. Levine, Vice President of the Manager since June 1998; an officer of 2
Vice President and portfolios in the OppenheimerFunds complex. Formerly Assistant
Portfolio Manager Vice President and Portfolio Manager of the Manager (April 1996
since July 16, 2007 - June 1998).
Age: 40

------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Brian C. Szilagyi, Assistant Vice President of the Manager (since July 2004);
Assistant Treasurer Director of Financial Reporting and Compliance of First Data
since 2005 Corporation (April 2003-July 2004); Manager of Compliance of
Age: 37 Berger Financial Group LLC (May 2001-March 2003); Director of
Mutual Fund Operations at American Data Services, Inc.
(September 2000-May 2001). An officer of 102 portfolios in the
OppenheimerFunds complex.
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Robert G. Zack, Executive Vice President (since January 2004) and General
Secretary since 2001 Counsel (since March 2002) of the Manager; General Counsel and
Age: 58 Director of the Distributor (since December 2001); General
Counsel of Centennial Asset Management Corporation (since
December 2001); Senior Vice President and General Counsel of
HarbourView Asset Management Corporation (since December 2001);
Secretary and General Counsel of OAC (since November 2001);
Assistant Secretary (since September 1997) and Director (since
November 2001) of OppenheimerFunds International Ltd. and
OppenheimerFunds plc; Vice President and Director of Oppenheimer
Partnership Holdings, Inc. (since December 2002); Director of
Oppenheimer Real Asset Management, Inc. (since November 2001);
Senior Vice President, General Counsel and Director of
Shareholder Financial Services, Inc. and Shareholder Services,
Inc. (since December 2001); Senior Vice President, General
Counsel and Director of OFI Private Investments, Inc. and OFI
Trust Company (since November 2001); Vice President of
OppenheimerFunds Legacy Program (since June 2003); Senior Vice
President and General Counsel of OFI Institutional Asset
Management, Inc. (since November 2001); Director of
OppenheimerFunds (Asia) Limited (since December 2003); Senior
Vice President (May 1985-December 2003), Acting General Counsel
(November 2001-February 2002) and Associate General Counsel (May
1981-October 2001) of the Manager; Assistant Secretary of the
following: Shareholder Services, Inc. (May 1985-November 2001),
Shareholder Financial Services, Inc. (November 1989-November
2001), and OppenheimerFunds International Ltd. (September
1997-November 2001). An officer of 102 portfolios in the
OppenheimerFunds complex.
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Kathleen T. Ives, Vice President (since June 1998) and Senior Counsel and
Assistant Secretary Assistant Secretary (since October 2003) of the Manager; Vice
since 2001 President (since 1999) and Assistant Secretary (since October
Age: 41 2003) of the Distributor; Assistant Secretary of Centennial
Asset Management Corporation (since October 2003); Vice
President and Assistant Secretary of Shareholder Services, Inc.
(since 1999); Assistant Secretary of OppenheimerFunds Legacy
Program and Shareholder Financial Services, Inc. (since December
2001); Assistant Counsel of the Manager (August 1994-October
2003). An officer of 102 portfolios in the OppenheimerFunds
complex.
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Lisa I. Bloomberg, Vice President and Associate Counsel of the Manager (since May
Assistant Secretary 2004); First Vice President (April 2001-April 2004), Associate
since 2004 General Counsel (December 2000-April 2004), Corporate Vice
Age: 39 President (May 1999-April 2001) and Assistant General Counsel
(May 1999-December 2000) of UBS Financial Services Inc.
(formerly, PaineWebber Incorporated). An officer of 102
portfolios in the OppenheimerFunds complex.
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Phillip S. Gillespie, Senior Vice President and Deputy General Counsel of the Manager
Assistant Secretary (since September 2004); Mr. Gillespie held the following
since 2004 positions at Merrill Lynch Investment Management: First Vice
Age: 43 President (2001-September 2004); Director (2000-September 2004)
and Vice President (1998-2000). An officer of 102 portfolios in
the OppenheimerFunds complex.
------------------------------------------------------------------------------------------

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

----------------------------------------------------------------------------------------
Aggregate Retirement Benefits Total
Estimated Compensation
Director Name and Annual From the
Other Fund Benefits Fund and
Position(s) Compensation From Accrued as Part of Upon Fund
(as applicable) the Fund(1) Fund Expenses Retirement(2Complex (3)
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Fiscal year ended 10/31/06 Year ended
December 31,
2006
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Thomas W. Courtney $2,980 $6,951 $100,284 $160,500
Chairman of the
Board and Audit
Committee Member
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Paul Y. Clinton(5)
Audit Committee $1,085 $3,568 $85,662 $34,125
Chairman
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
David K. Downes(7) $2,316 $1,308 $4,391 $146,668
Audit Committee
Member
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Robert G. Galli $2,462 $5,923 $107,096((6)$264,812((7))
Audit Committee
Member
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Lacy B. Herrmann $2,445 $1,572 $88,150 $135,500
Audit Committee
Member
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
Brian F. Wruble
Audit Committee $2,526 $3,292 $45,544((8))$241,260((9))
Member
----------------------------------------------------------------------------------------
1. "Aggregate Compensation From the Fund" includes fees and deferred
compensation, if any, for a Trustee.
2. "Estimated Annual Benefits Upon Retirement" is based on a straight life
payment plan election with the assumption that a Trustee will retire at
the age of 75 and is eligible (after 7 years of service) to receive
retirement plan benefits as described below under "Retirement Plan for
Trustees." Actual benefits upon retirement may vary based on retirement
age, years of service and benefit payment elections of the Trustee.
3. "Total Compensation From the Fund and Fund Complex" includes fees,
deferred compensation (if any) and accrued retirement benefits (if any).
4. Mr. Clinton retired from the Board III funds effective March 31, 2006.
5. Mr. Downes was appointed as Trustee of the Board III Funds on December
16, 2005.
6. Includes $57,285 estimated benefits to be paid to Mr. Galli for serving
as a director or trustee of 55 other Oppenheimer funds that are not Board
III Funds.
7. Includes $129,312 for serving as a director or trustee of 55 other
Oppenheimer funds (at December 31, 2006) that are not Board III Funds.
8. Includes $4,355 estimated benefits to be paid to Mr. Wruble for serving
as a director or trustee of 49 other Oppenheimer funds that are not Board
III Funds.
9. Includes $105,760 for serving as a director or trustee of 55 other
Oppenheimer funds (at December 31, 2006) that are not Board III Funds.
10. Mr. Cannon is only a Board Member of certain Board III Funds.

|X| Retirement Plan for Directors. The Fund has adopted a retirement plan
that provides for payments to retired Independent Directors. Payments are up
to 80% of the average compensation paid during a Director's five years of
service in which the highest compensation was received. A Director must serve
as director or trustee for any of the Board III Funds for at least seven
years to be eligible for retirement plan benefits and must serve for at least
15 years to be eligible for the maximum benefit. The amount of retirement
benefits a Director will receive depends on the amount of the Director's
compensation, including future compensation and the length of his or her
service on the Board.

|X| Deferral Compensation Plan for Directors. The Board of Directors has
adopted a Compensation Deferral Plan for Independent Directors 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 Director is periodically adjusted as though an equivalent
amount had been invested in shares of one or more Oppenheimer funds selected
by the Director. The amount paid to the Director under the plan will be
determined based upon the amount of compensation deferred and the performance
of the selected funds.

Deferral of Directors' 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 Director or to pay any
particular level of compensation to any Director. Pursuant to an Order issued
by the SEC the Fund may invest in the funds selected by the Director under
the plan without shareholder approval for the limited purpose of determining
the value of the Director's deferred compensation account.

|X| Major Shareholders. As of July 30, 2007, the only persons or entities
who owned of record or were known by the Fund to own beneficially 5% or more
of any class of the Fund's outstanding shares were:

Fidelity Investments, Institutional Operations Co. Inc., Certain
Employee Benefit Plans, 100 Magellan Way #KW1C, Covington, KY
41015-1987, which owned 902,395.815 Class A shares (7.10% of the Class
A shares then outstanding).

Merrill Lynch, Pierce, Fenner & Smith for the sole benefit of its
customers, Attn. Fund Admin., 4800 Deer Lake Dr. E. Floor 3,
Jacksonville, FL 32246-6484, which owned 146,774.849 Class C shares
(6.72% of the Class C shares then outstanding).

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

|X| Code of Ethics. The Fund, the Manager and the Distributor have a Code
of Ethics. It is designed to detect and prevent improper personal trading by
certain employees, including portfolio managers, that would compete with or
take advantage of the Fund's portfolio transactions. Covered persons include
persons with knowledge of the investments and investment intentions of the
Fund and other funds advised by the Manager. The Code of Ethics

does permit personnel subject to the Code to invest in securities, including
securities that may be purchased or held by the Fund, subject to a number of
restrictions and controls. Compliance with the Code of Ethics is carefully
monitored and enforced by the Manager.

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

|X| Portfolio Proxy Voting. The Fund has adopted Portfolio Proxy Voting
Policies and Procedures, 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.

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

The investment advisory agreement between the Fund and the Manager
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 investment advisory agreement lists examples of
expenses paid by the Fund. The major categories relate to calculation of the
Fund's net asset values per share, interest, taxes, brokerage commissions,
fees to certain Directors, 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. Those rates are contained in
an investment advisory agreement that took effect August 1, 2007, which
contained a lower overall effective advisory fee than the prior agreement.
The management fees paid by the Fund to the Manager under the prior advisory
fee during its last three fiscal years were:

---------------------------------------------------------------
Fiscal Year ended 10/31: Management Fees Paid to
OppenheimerFunds, Inc.
---------------------------------------------------------------
---------------------------------------------------------------
2004 $2,941,882
---------------------------------------------------------------
---------------------------------------------------------------
2005 $3,743,238
---------------------------------------------------------------
---------------------------------------------------------------
2006 $4,322,669
---------------------------------------------------------------
1. The Manager, not the Fund, previously paid the
Sub-Adviser an annual sub-advisory fee. For fiscal years
ended 2004, 2005 and 2006 this sub-advisory fee was
$1,154,356, $1,403,415 and $1,581,320, respectively

The investment advisory agreement states that in the absence of willful
misfeasance, bad faith, gross negligence in the performance of its duties or
reckless disregard of its obligations and duties under the investment
advisory agreement, the Manager is not liable for any loss resulting from a
good faith error or omission on its part with respect to any of its duties
under the agreement.

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.

Prior Sub-Advisory Agreement. Prior to August 1, 2007, the Manager retained
Oppenheimer Capital LLC as the Fund's sub-adviser, pursuant to a Sub-Advisory
Agreement between the Manager and Oppenheimer Capital that was terminated on
that date. Prior to January 1, 2005, OpCap Advisors ("OpCap"), a
wholly-owned subsidiary of Oppenheimer Capital LLC, served as the Fund's
sub-adviser, and prior to February 28, 1997, OpCap Advisors (which was then
named Quest for Value Advisors) served as the Fund's investment adviser.
Oppenheimer Capital and OpCap are not affiliated with the Manager.

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

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

Registered Other Pooled
Investment Investment Other
Companies Vehicles Accounts(2)
------------------------------------------------------------------------
------------------------------------------------------------------------
2 None none
Accounts Managed
------------------------------------------------------------------------
------------------------------------------------------------------------
3,483.5
Total Assets Managed(1)

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

As indicated above, the Portfolio Manager also manages other funds and
accounts. Potentially, at times, those responsibilities could conflict with
the interests of the Fund. That may occur whether the investment objectives
and strategies of the other funds and accounts 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 policies and procedures and Code of Ethics recognize the Manager's
fiduciary obligations to treat all of its clients, including the Fund, fairly
and equitably, and are designed to preclude the Portfolio Manager from
favoring one client over another. It is possible, of course, that those
compliance policies and procedures and the Code of Ethics may not always be
adequate to do so. At different times, the Fund's Portfolio Manager may
manage other funds or accounts with investment objectives and strategies
similar to those of the Fund, or he may manage funds or accounts with
different investment objectives and strategies.

Compensation of the Portfolio Manager. The Fund's Portfolio Manager is
employed and compensated by the Manager, not the Fund. Under the Manager's
compensation program for its portfolio managers and portfolio analysts, their
compensation is based primarily on the investment performance results of the
funds or accounts they manage, rather than on the financial success of the
Manager. This is intended to align the portfolio managers and analysts interests
with the success of the funds and accounts and their shareholders. The Manager's
compensation structure is designed to attract and retain highly qualified
investment management professionals and to reward individual and team
contributions toward creating shareholder value. As of June 30, 2007, the
Portfolio Manager's compensation consisted of three elements: a base salary, an
annual discretionary bonus and eligibility to participate in long-term awards of
options and appreciation rights in regard to the common stock of the Manager's
holding company parent. Senior portfolio managers may also be eligible to
participate in the Manager's deferred compensation plan.

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

Ownership of Fund Shares. As of June 30, 2007, the Portfolio Manager
beneficially owned no shares of the Fund.

Brokerage Policies of the Fund

Brokerage Provisions of the Investment Advisory Agreement. One of the duties
of the Manager under the investment advisory agreement is to arrange the
portfolio transactions for the Fund. The Fund's 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 Directors.

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. The Manager allocates brokerage for the Fund subject to
the provisions of the Fund's advisory agreement and other applicable rules
and procedures described below.

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

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

Most debt obligations are purchased by the Fund 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.
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 or its affiliates purchase the same security on the same day the
transactions are generally executed as received, although a fund or advisory
account that does not direct trades to a specific broker (these are called
"free trades") usually will have its order executed first. Orders placed by
accounts that direct trades to a specific broker will generally be executed
after the free trades. All orders placed on behalf of the Fund are considered
free trades. However, having an order placed first in the market does not
necessarily guarantee the most favorable price. Purchases are combined where
possible for the purpose of negotiating brokerage commissions. In some cases
that practice might have a detrimental effect on the price or volume of the
security in a particular transaction for the Fund.

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 Directors 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, or the Distributor from entering into agreement 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 Fund's 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 Directors
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
Directors 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 October 31, 2004, 2005 and 2006, the Fund
paid the total brokerage commissions indicated in the chart below. During the
fiscal year ended October 31, 2006, the Fund paid $491,051 in commissions to
firms that provide brokerage and research services to the Fund with respect
to $481,204,534 of aggregate portfolio transactions. All such transactions
were on a "best execution" basis, as described above. The provision of
research services was not necessarily a factor in the placement of all such
transactions.

---------------------------------------------------------------------
Fiscal Year Ended Total Brokerage Commissions Paid by the
10/31: Fund(1)
---------------------------------------------------------------------
---------------------------------------------------------------------
2004 $439,937
---------------------------------------------------------------------
---------------------------------------------------------------------
2005 $794,276
---------------------------------------------------------------------
---------------------------------------------------------------------
2006 $527,737
---------------------------------------------------------------------
1. 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
10/31: Class A Shares Distributor(1)
-------------------------------------------
-------------------------------------------
2004 $703,510 $204,395
-------------------------------------------
-------------------------------------------
2005 $1,314,474 $346,285
-------------------------------------------
-------------------------------------------
2006 $840,552 $240,266
-------------------------------------------
1. Includes amounts retained by a broker-dealer that is an affiliate or a
parent of the Distributor.

-----------------------------------------------------------------------------
Fiscal Concessions on Concessions on Concessions on Concessions on
Year Class A Shares Class B Shares Class C Shares Class N Shares
Ended Advanced by Advanced by Advanced by Advanced by
10/31: Distributor(1) Distributor(1) Distributor(1) Distributor(1)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2004 $17,382 $295,355 $74,562 $30,053
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2005 $43,004 $424,315 $128,017 $31,899
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
2006 $18,920 $270,936 $66,755 $11,156
-----------------------------------------------------------------------------
1. The Distributor advances concession payments to financial
intermediaries for certain sales of Class A shares and for sales of
Class B, Class C and Class N shares from its own resources at the time
of sale.

------------------------------------------------------------------------------
Fiscal Class A Class B Class C Class N
Contingent Contingent Contingent
Year Deferred Sales Deferred Sales Contingent Deferred Sales
Ended Charges Charges Deferred Sales Charges
10/31: Retained by Retained by Charges Retained Retained by
Distributor Distributor by Distributor Distributor
------------------------------------------------------------------------------
------------------------------------------------------------------------------
2004 $1,323 $101,232 $9,922 $4,636
------------------------------------------------------------------------------
------------------------------------------------------------------------------
2005 $2,564 $125,289 $8,178 $18,483
------------------------------------------------------------------------------
------------------------------------------------------------------------------
2006 $7,369 $124,391 $18,111 $4,783
------------------------------------------------------------------------------

Distribution and Service Plans. The Fund has adopted Distribution and Service
Plans for Class A, 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 Directors, including a
majority of the Independent Directors(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 Directors and its
Independent Directors 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 Directors 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 Directors and the Independent Directors 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 Directors 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 Directors.

Each plan states that while it is in effect, the selection and
nomination of those Directors of the Fund who are not "interested persons" of
the Fund is committed to the discretion of the Independent Directors. 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 Directors.

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 Directors.

|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 October 31, 2006 payments under the Class A
distribution and service plan totaled $862,463, of which $14,332 was service
fee payments retained by the Distributor in connection with the grandfathered
retirement accounts, described above, and included $32,152 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 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.

--------------------------------------------------------------------------------
Distribution and Service Fees Paid to the Distributor for the Fiscal Year
Ended 10/31/06
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
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 $765,315 $558,795(1) $625,348 0.82%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class C Plan $517,710 $98,857(2) $584,895 1.06%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Class N Plan $89,847 $90,130(3) $249,221 1.31%
--------------------------------------------------------------------------------
1. Includes $8,406 paid to an affiliate of the Distributor's parent
company.
2. Includes $13,305 paid to an affiliate of the Distributor's parent
company.
3. Includes $4,844 paid to an affiliate of the Distributor's parent company

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

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 Class B, Class C or Class N plan is terminated by the Fund, the
Board of Directors may allow the Fund to continue payments of the asset-based
sales charge to the Distributor for distributing shares before the plan was
terminated.

Payments to Fund Intermediaries

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

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

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

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

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

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

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

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

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

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

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

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

Advantage Capital Corp./Financial Advest, Inc.
Services Corp.
Aegon USA Aetna Retirement Services, Inc.
A.G. Edwards & Sons, Inc. AIG Life
Allianz Life Insurance Company Allmerica Financial Life Insurance
and Annuity Co.
Allstate Financial Advisors American Enterprise Life Insurance
American General Securities, Inc. American General Annuity
Ameriprise Financial Services, Inc. American Portfolio Financial
Services, Inc.
Ameritas Life Insurance Corporation Annuity Investors Life
Associated Securities AXA Advisors
Banc One Securities Corp. BNY Investment Center, Inc.
Cadaret Grant & Co. Inc. Charles Schwab - Great West Life
Chase Investment Services Corp. CitiCorp Investment Services, Inc.
Citigroup Global Markets, Inc. (SSB) CitiStreet
Citizens Bank of Rhode Island CJM Planning Corp.
Columbus Life Insurance Company Commonwealth Financial Network
CUNA Brokerage Services, Inc. CUSO Financial Services, L.P.
Federal Kemper Life Assurance Company Financial Network (ING)
First Global Capital GE Financial Assurance - GE Life &
Annuity
Glenbrook Life and Annuity Co. Hartford
HD Vest HSBC Brokerage (USA) Inc.
ING Financial Advisers ING Financial Partners
Jefferson Pilot Life Insurance Company Jefferson Pilot Securities Corp.
John Hancock Life Insurance Co. Kemper Investors Life Insurance Co.
Legend Equities Corp. Legg Mason
Lincoln Benefit Life Lincoln Financial
Lincoln Investment Planning, Inc. Lincoln National Life
Linsco Private Ledger MassMutual Financial Group and
affiliates
McDonald Investments, Inc. Merrill Lynch & Co. and affiliates
MetLife and affiliates Minnesota Life Insurance Company
Mony Life Insurance Co. Morgan Stanley Dean Witter, Inc.
Multi-Financial (ING) Mutual Service Corporation
National Planning Holdings, Inc. Nationwide and affiliates
NFP New York Life Securities, Inc.
Park Avenue Securities LLC PFS Investments, Inc.
Prime Capital Services, Inc. Primevest Financial Services, Inc.
(ING)
Protective Life Insurance Co. Prudential Investment Management
Services LLC
Raymond James & Associates Raymond James Financial Services
RBC Dain Rauscher Inc. Royal Alliance
Securities America Inc. Security Benefit Life Insurance Co.
Sentra Securities Signator Investments
Sun Life Assurance Company of Canada SunAmerica Securities, Inc.
SunTrust Securities Thrivent
Travelers Life & Annuity Co., Inc. UBS Financial Services Inc.
Union Central Life Insurance Company United Planners
Valic Financial Advisors, Inc. Wachovia Securities LLC
Walnut Street Securities (Met Life Waterstone Financial Group
Network)
Wells Fargo Investments, LLC

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

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

Performance of the Fund

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

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

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

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

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

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

In calculating total returns for Class A shares, the current maximum
sales charge of 5.75% (as a percentage of the offering price) is deducted
from the initial investment ("P" in the formula below) (unless the return is
shown without sales charge, as described below). Unless otherwise noted,
Class A shares total returns reflect the historical performance of the Class
A shares of the Fund (formerly Capital shares; see the section entitled
"Organization and History") as adjusted for the fees and expenses of Class A
shares in effect as of 3/3/97 (without giving effect to any fee waivers).
Class A shares are subject to a maximum annual 0.25% asset-based sales charge
currently. The asset-based sales charge is subject to a voluntary waiver of a
portion or all of the charge as described in the Prospectus, and the Board of
Directors has set the rate at zero. 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.

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

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

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

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

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

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

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

ERV - P = Total Return
-----------
P
o Total Returns at Net Asset Value. From time to time the Fund may also
quote a cumulative or an average annual total return "at net asset value"
(without deducting sales charges) for Class A, Class B, Class C or Class N
shares. Each is based on the difference in net asset value per share at the
beginning and the end of the period for a hypothetical investment in that
class of shares (without considering front-end or contingent deferred sales
charges) and takes into consideration the reinvestment of dividends and
capital gains distributions.

---------------------------------------------------------------------------------
The Fund's Total Returns for the Periods Ended 10/31/2006
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class of Cumulative Total Average Annual Total Returns
Returns (10
years or
Shares life-of-class)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
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 147.81% 162.92% 11.62% 18.43% 10.13% 11.45% 9.50% 10.15%
A(1)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class 148.45% 148.45% 12.37% 17.37% 10.25% 10.52% 9.88% 9.88%
B(2)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class 140.34% 140.34% 16.39% 17.39% 10.53% 10.53% 9.50% 9.50%
C(3)
---------------------------------------------------------------------------------
---------------------------------------------------------------------------------
Class 51.70% 51.70% 16.93% 17.93% 11.05% 11.05% 7.63% 7.63%
N(4)
---------------------------------------------------------------------------------
1. Inception of Class A: 2/13/87.
2. Inception of Class B: 3/3/97.
3. Inception of Class C: 3/3/97.
4. Inception of Class N: 3/1/01.

-----------------------------------------------------------------------------
Average Annual Total Returns for Class A(1) Shares (After Sales Charge)
For the Periods Ended 10/31/2006
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
1-Year 5-Years 10-Years
(or life of (or life of
class if less) class if less)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
After Taxes on Distributions 9.88% 9.32% 6.44%
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
After Taxes on 9.37% 8.55% 6.60%
Distributions and
Redemption of Fund Shares
-----------------------------------------------------------------------------
1. Inception of Class A: 2/13/87

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

LifeCycle Funds Oppenheimer SMA Core Bond Fund
Oppenheimer Transition 2010 Fund Oppenheimer SMA International Bond Fund
Oppenheimer Baring SMA International
Oppenheimer Transition 2015 Fund 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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

|X| Availability of Class N Shares. In addition to the description of
the types of retirement plans which may purchase Class N shares contained in
the Prospectus, Class N shares also are offered to the following:
o to all rollover IRAs (including SEP IRAs and SIMPLE IRAs),
o to all rollover contributions made to Individual 401(k) plans,
Profit-Sharing Plans and Money Purchase Pension Plans,
o to all direct rollovers from OppenheimerFunds-sponsored Pinnacle and
Ascender retirement plans,
o to all trustee-to-trustee IRA transfers,
o to all 90-24 type 403(b) transfers,
o to Group Retirement Plans (as defined in Appendix 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 advisers that are
identified in a special agreement between the broker-dealer or
financial adviser 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, Directors' 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 Directors, custodian expenses, share
issuance costs, organization and start-up costs, interest, taxes and
brokerage commissions, and non-recurring expenses, such as litigation costs.

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

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

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

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

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

Determination of Net Asset 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.

|X| Securities Valuation. The Fund's Board of Directors 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 Directors, 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
Directors 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 Directors 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 Directors. 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 Directors 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.

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

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

Payments "In Kind". The Prospectus states that payment for shares tendered
for redemption is ordinarily made in cash. However, under certain
circumstances, the Board of Directors 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 Directors has the right to cause
the involuntary redemption of the shares held in any account if the aggregate
net asset value of those shares is less than $500 or such lesser amount as
the Board may fix. The Board will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of such shares has
fallen below the stated minimum solely as a result of market fluctuations. If
the Board exercises this right, it may also fix the requirements for any
notice to be given to the shareholders in question (not less than 30 days).
The Board may alternatively set requirements for the shareholder to increase
the investment, or set other terms and conditions so that the shares would
not be involuntarily redeemed.

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

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

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

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

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

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

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

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

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

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

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

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

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 International Value Fund Oppenheimer Rochester National
Municipals
Oppenheimer Limited Term California Oppenheimer Rochester North Carolina
Municipal Fund Municipal Fund
Oppenheimer Limited Term Municipal Fund Oppenheimer Rochester Ohio Municipal
Fund
Oppenheimer Money Market Fund, Inc. Oppenheimer Rochester Virginia
Municipal Fund
Oppenheimer New Jersey Municipal Fund Oppenheimer Senior Floating Rate Fund
Oppenheimer Principal Protected Main Rochester Fund Municipals
Street Fund II
Oppenheimer Pennsylvania Municipal Fund

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

o 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. They may
not be acquired by exchange of shares of any class of any other
Oppenheimer funds except Class A shares of Oppenheimer Money Market
Fund, Inc. or Oppenheimer Cash Reserves acquired by exchange of Class M
shares.
o Class A shares of Oppenheimer funds may be exchanged at net asset value
for shares of certain money market funds offered by the Distributor.
Shares of any money market fund purchased without a sales charge may be
exchanged for shares of Oppenheimer funds offered with a sales charge
upon payment of the sales charge.
o Shares of the Fund acquired by reinvestment of dividends or
distributions from any of the other Oppenheimer funds or from any unit
investment trust for which reinvestment arrangements have been made
with the Distributor may be exchanged at net asset value for shares of
the same class of any of the other Oppenheimer funds into which you may
exchange shares.
o Shares of Oppenheimer Principal Protected Main Street Fund may be
exchanged at net asset value for shares of the same class of any of the
other Oppenheimer funds into which you may exchange shares. However,
shareholders are not permitted to exchange shares of other Oppenheimer
funds for shares of Oppenheimer Principal Protected Main Street Fund
until after the expiration of the warranty period (8/5/2010).
o Shares of Oppenheimer Principal Protected Main Street Fund II may be
exchanged at net asset value for shares of the same class of any of the
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 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- & Mid-Cap Value Fund may be
acquired only by shareholders who currently own shares of that Fund.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

When you exchange some or all of your shares from one fund to another,
any special account 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 does not have a 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 the
Fund will vary depending on market conditions and the composition of the
Fund's portfolio. The Fund intends to distribute substantially all of its net
investment income, if any. The Fund will also distribute all net realized
capital gains, if any, and from time to time, a Fund may declare a special
distribution at or about the end of the calendar year in order to comply with
Federal tax requirements.

Dividends are calculated in the same manner, at the same time, and on
the same day for each class of shares. However, dividends on Class B, Class C
and Class N shares are expected to be lower than dividends on Class A shares.
That is because of the effect of the asset-based sales charge on Class B,
Class C and Class N shares. Those dividends will also differ in amount as a
consequence of any difference in the net asset values of the different
classes of shares. Dividends are taxable to shareholders, as discussed below,
whether they are reinvested in shares of the Fund or received in cash.

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

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

The tax discussion in the Prospectus and this 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 (the "IRC") described below. Potential purchasers of shares of the Fund
are urged to consult their tax advisers with reference to their own
particular tax circumstances as well as the consequences of federal, state
and local tax rules affecting an investment in the Fund.

Qualification as a Regulated Investment Company. The Fund has
elected to be taxed as a regulated investment company ("RIC") under
Subchapter M of the IRC. As long as the Fund continues to qualify as a RIC,
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 federal
income tax).

The IRC contains a number of complex tests relating to qualification as
a RIC that the Fund might not meet during a particular year. If it does not
qualify as a RIC, the Fund would be treated for tax purposes as an ordinary
corporation and would receive no tax deduction for payments made to
shareholders and distributions to shareholders from the Fund's earnings and
profits would be taxable as ordinary dividend income, eligible for the
maximum 15% tax rate for non-corporate shareholders (for taxable years
beginning on or before December 31, 2010) and the dividends-received
deduction for corporate shareholders.

To qualify as a RIC, the Fund must distribute at least 90% of its
investment company taxable income (in brief, its net investment income and
its capital gain net income) for the taxable year. 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 investment income and capital gain net income for the taxable year and
will therefore count toward satisfaction of this requirement. The Fund must
also satisfy certain other requirements of the IRC, some of which are
described below.

To qualify as a RIC, the Fund must derive at least 90% of its gross
income from dividends, interest, certain payments with respect to securities
loans, gains from the sale or other disposition of stock or securities or
foreign currencies (to the extent such currency gains are directly related to
the RIC's principal business of investing in stock or securities), certain
other income (including, but not limited to, gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies, and net income derived from interests in
certain "qualified publicly traded partnerships."

In addition to satisfying the requirements described above, in order to
qualify as a RIC, the Fund must satisfy an asset diversification test. Under
that test, at the close of each fiscal 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 the securities of other issuers. As
to each of those "other issuers," the Fund must not have invested more than
5% of the value of the Fund's total assets in securities of any such issuer
and the Fund must not hold more than 10% of the outstanding voting securities
of any 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 or the 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.

Excise Tax on Regulated Investment Companies. Under the IRC, if the
Fund does not distribute 98% of its taxable investment income earned from
January 1 through December 31 each year and 98% of its capital gain net
income realized in the period from November 1 of the prior year through
October 31 of the current year, (plus certain undistributed amounts from the
previous years) it must pay a non-deductible excise tax on the amounts not
distributed. It is presently anticipated that the Fund will meet those
requirements. To meet those requirements, in certain circumstances the Fund
might be required to liquidate portfolio investments to make sufficient
distributions to avoid excise tax liability. The Board and the Manager might
determine in a particular year, however, 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. In
such event, a Fund will be liable for the tax on the amount by which it does
not meet the foregoing distribution requirements, which may reduce the amount
of income or capital gains available for distribution to shareholders.

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

For corporate shareholders, special provisions of the IRC govern the
eligibility of the Fund's dividends for the dividends-received deduction.
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.

For regular dividends paid to non-corporate shareholders, special rules
also apply with respect to taxable years beginning on or before December 31,
2010. Such dividends may be subject to tax at the reduced rates generally
applicable to long-term capital gains for individuals (currently at a maximum
rate of 15%), provided that the individual receiving the dividend satisfies
certain holding period and other requirements. Dividends subject to these
special rules are not actually treated as capital gains, however, and thus
are not included in the computation of an individual's net capital gain and
generally cannot be used to offset capital losses. The long-term capital
gains rates will apply to: (i) 100% of the regular dividends paid by the Fund
to an individual in a particular taxable year if 95% or more of the Fund's
gross income (ignoring gains attributable to the sale of stocks and
securities except to the extent net short-term capital gain from such sales
exceeds net long-term capital loss from such sales) in that taxable year is
attributable to qualified dividend income received by the Fund; or (ii) the
portion of the regular dividends paid by the Fund to an individual in a
particular taxable year that is attributable to qualified dividend income
received by the Fund in that taxable year if such qualified dividend income
accounts for less than 95% of the Fund's gross income (ignoring gains
attributable to the sale of stocks and securities except to the extent net
short-term capital gain from such sales exceeds net long-term capital loss
from such sales) for that taxable year.

For this purpose, "qualified dividend income" generally means income
from dividends received by the Fund from U.S. corporations and qualified
foreign corporations, provided that the Fund satisfies certain holding period
requirements in respect of the stock of such corporations and has not hedged
its position in the stock in certain ways. However, qualified dividend income
does not include any dividends received from tax-exempt corporations. Also,
dividends received by the Fund from a real estate investment trust or another
RIC generally are qualified dividend income only to the extent the dividend
distributions are made out of qualified dividend income received by such real
estate investment trust or other RIC. In the case of securities lending
transactions, payments in lieu of dividends are not qualified dividend
income. If a shareholder elects to treat Fund dividends as investment income
for purposes of the limitation on the deductibility of investment interest,
such dividends would not be a qualified dividend income.

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 the Fund may receive 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 that 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.

If the Fund were to invest in a PFIC and elect to treat the PFIC as a
"qualified electing fund" under the Code, in lieu of the foregoing
requirements, the Fund might be required to include in income each year a
portion of the ordinary earnings and net capital gains of the qualified
electing fund, even if not distributed to the Fund, and such amounts would be
subject to the 90% and excise tax distribution requirements described above.
In order to make this election, the Fund would be required to obtain certain
annual information from the PFICs in which it invests, which may be difficult
or impossible to obtain.

Alternatively, the Fund may make a mark-to-market election that will
result in the Fund being treated as if it had sold and repurchased its PFIC
stock at the end of each year. In such case, the Fund would report any such
gains as ordinary income and would deduct any such losses as ordinary losses
to the extent of previously recognized gains. The election must be made
separately for each PFIC owned by the Fund and, once made, would be effective
for all subsequent taxable years, unless revoked with the consent of the U.S.
Internal Revenue Service (the "IRS"). By making the election, the Fund could
potentially ameliorate the adverse tax consequences with respect to its
ownership of shares in a PFIC, but in any particular year may be required to
recognize income in excess of the distributions it receives from PFICs and
its proceeds from dispositions of PFIC stock. The Fund may have to distribute
this "phantom" income and gain to satisfy the 90% distribution requirement
and to avoid imposition of the 4% excise tax.

So long as the Fund qualifies as a RIC, if certain distribution
requirements are satisfied and more than 50% of the value of the Fund's total
assets at the close of any taxable year consists of stocks or securities of
foreign corporations, the Fund may elect for U.S. federal income tax purposes
to treat any foreign income taxes paid by it as paid by its shareholders. The
Fund may qualify for and make this election in some, but not necessarily all,
of its taxable years. If the Fund makes the election, the amount of foreign
income taxes paid by the Fund would be included in the income of its
shareholders and each shareholder would be entitled (subject to certain
limitations) to credit the amount included in his income against such
shareholder's U.S. tax due, if any, or to deduct such amount from such
shareholder's U.S. taxable income, if any. Shortly after any year for which
it makes such an election, the Fund will report to its shareholders the
amount per share of such foreign tax that must be included in each
shareholder's gross income and the amount which will be available for
deduction or credit. In general, a shareholder may elect each year whether to
claim deductions or credits for foreign taxes. However, no deductions for
foreign taxes may be claimed by a non-corporate shareholder who does not
itemize deductions. If a shareholder elects to credit foreign taxes, the
amount of credit that may be claimed in any year may not exceed the same
proportion of the U.S. tax against which such credit is taken which the
shareholder's taxable income from foreign sources bears to his entire taxable
income. This limitation may be applied separately to certain categories of
income and the related foreign taxes. However, this limitation will not apply
to an individual if, for the taxable year, the entire amount of such
individual's gross income from sources outside of the United States consists
of qualified passive income, the amount of creditable foreign taxes accrued
or paid by the individual does not exceed $300 ($600 in the case of a joint
return) and the individual elects to be exempt from the limitation. As a
general rule, if the Fund has made the appropriate election, a shareholder
may treat as foreign source income the portion of any dividend paid by the
Fund which represents income derived from sources within foreign countries.
Capital gains realized by the Fund on the sale of foreign securities and
other foreign currency gains of the Fund will be considered to be U.S.-source
income and, therefore, the portion of the tax credit passed through to
shareholders that is attributable to such gains or distributions might not be
usable by other shareholders without other foreign source income.

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

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

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

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. Any capital loss arising from the redemption of
shares held for six months or less, however, 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 IRC apply in this
case to determine the holding period of shares and there are limits on the
deductibility of capital losses in any year.

If a shareholder recognizes a loss with respect to the Fund's shares of
$2 million or more for an individual shareholder or $10 million or more for a
corporate shareholder, the shareholder must file with the IRS a disclosure
statement on Form 8886. Direct shareholders of portfolio securities are in
many cases exempted from this reporting requirement, but under current
guidance, shareholders of a RIC are not exempted. The fact that a loss is
reportable under these regulations does not affect the legal determination of
whether the taxpayer's treatment of the loss is proper. Shareholders should
consult their tax advisers to determine the applicability of these
regulations in light of their individual circumstances.

Foreign Shareholders. Under U.S. tax law, taxation of a shareholder who is a
foreign person (including, 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 United States 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.

For taxable years beginning before January 1, 2008, properly designated
dividends are generally exempt from U.S. federal withholding tax on
non-resident aliens when they (i) are paid in respect of the Fund's
"qualified net interest income" (generally, the Fund's U.S. source interest
income, other than certain contingent interest and interest from obligations
of a corporation or partnership in which the Fund is at least a 10%
shareholder, reduced by expenses that are allocable to such income) or (ii)
are paid in respect of the Fund's "qualified short-term capital gains"
(generally, the excess of the Fund's net short-term capital gain over the
Fund's long-term capital loss for such taxable year). However, depending on
its circumstances, the Fund may designate all, some or none of its
potentially eligible dividends as such qualified net interest income or as
qualified short-term capital gains, and/or treat such dividends, in whole or
in part, as ineligible for this exemption from non resident alien
withholding. In order to qualify for this exemption from withholding, a
non-U.S. shareholder will need to comply with applicable certification
requirements relating to its non-U.S. status (including, in general,
furnishing an IRS Form W-8BEN or substitute Form). In the case of shares held
through an intermediary, the intermediary may withhold even if the Fund
designates the payment as qualified net interest income or qualified
short-term capital gain. Non-U.S. shareholders should contact their
intermediaries with respect to the application of these rules to their
accounts.

Special rules apply to foreign persons who receive distributions from
the Fund that are attributable to gain from "U.S. real property interests"
("USRPIs"). The Code defines USRPIs to include direct holdings of U.S. real
property and any interest (other than an interest solely as a creditor) in
"U.S. real property holding corporations." The Code defines a U.S. real
property holding corporation as any corporation whose USRPIs make up more than
50% of the fair market value of its USRPIs, its interests in real property
located outside the United States, plus any other assets it uses in a trade or
business. In general, the distribution of gains from USRPIs to foreign
shareholders is subject to U.S. federal income tax withholding at a rate of
35% and obligates such foreign shareholder to file a U.S. tax return. To the
extent a distribution to a foreign shareholder is attributable to gains from
the sale or exchange of USRPIs recognized by a Real Estate Investment Trust
("REIT") or (until December 31, 2007) a RIC, the Code treats that gain as the
distribution of gain from a USRPI to a foreign shareholder which would be
subject to U.S. withholding tax of 35% and would result in U.S. tax filing
obligations for the foreign shareholder.

A foreign shareholder, however, achieves a different result with
respect to the gains from the sale of USRPIs if the REIT or RIC is less than
50% owned by foreign persons at all times during the testing period, or if
such gain is realized from the sale of any class of stock in a REIT that is
regularly traded on an established U.S. securities market and the REIT
shareholder owned less than 5% of such class of stock at all times during the
1-year period ending on the date of the distribution. In such event, the
gains are treated as dividends paid to a non-U.S. shareholder.

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

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

Additional Information About the Fund

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

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

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

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

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

VALUE
SHARES SEE NOTE 1
--------------------------------------------------------------------------------
COMMON STOCKS--99.8%
--------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--13.2%
--------------------------------------------------------------------------------
HOTELS, RESTAURANTS & LEISURE--1.0%
Cheesecake Factory, Inc. (The) 1 179,300 $ 4,948,680
--------------------------------------------------------------------------------
HOUSEHOLD DURABLES--2.6%
Centex Corp. 300,100 13,435,477
--------------------------------------------------------------------------------
MEDIA--5.7%
Lamar Advertising Co., Cl. A 120,300 7,258,902
--------------------------------------------------------------------------------
Omnicom Group, Inc. 108,221 11,331,821
--------------------------------------------------------------------------------
WPP Group plc, Sponsored ADR 146,600 10,886,516
----------------
29,477,239

--------------------------------------------------------------------------------
SPECIALTY RETAIL--3.9%
Chico's FAS, Inc. 1 202,400 5,335,264
--------------------------------------------------------------------------------
TJX Cos., Inc. (The) 544,100 15,174,949
----------------
20,510,213

--------------------------------------------------------------------------------
CONSUMER STAPLES--1.0%
--------------------------------------------------------------------------------
FOOD PRODUCTS--1.0%
Smithfield Foods, Inc. 1 168,000 5,135,760
--------------------------------------------------------------------------------
ENERGY--10.0%
--------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--4.2%
FMC Technologies, Inc. 1 185,100 13,119,888
--------------------------------------------------------------------------------
Grant Prideco, Inc. 1 51,500 2,654,310
--------------------------------------------------------------------------------
National Oilwell Varco, Inc. 1 70,200 5,956,470
----------------
21,730,668

--------------------------------------------------------------------------------
OIL & GAS--5.8%
ConocoPhillips 209,400 14,521,890
--------------------------------------------------------------------------------
Hess Corp. 162,200 9,204,850
--------------------------------------------------------------------------------
Range Resources Corp. 174,800 6,388,940
----------------
30,115,680

--------------------------------------------------------------------------------
FINANCIALS--24.7%
--------------------------------------------------------------------------------
CAPITAL MARKETS--3.1%
Bank of New York Co., Inc. (The) 281,200 11,382,976

VALUE
SHARES SEE NOTE 1
--------------------------------------------------------------------------------
CAPITAL MARKETS Continued
Merrill Lynch & Co., Inc. 54,300 $ 4,899,489
----------------
16,282,465

--------------------------------------------------------------------------------
COMMERCIAL BANKS--2.9%
Prosperity Bancshares, Inc. 77,500 2,688,475
--------------------------------------------------------------------------------
Zions Bancorp 154,000 12,597,200
----------------
15,285,675

--------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--8.6%
Citigroup, Inc. 396,300 21,249,606
--------------------------------------------------------------------------------
JPMorgan Chase & Co. 453,300 23,616,930
----------------
44,866,536

--------------------------------------------------------------------------------
INSURANCE--7.9%
Everest Re Group Ltd. 121,000 12,177,440
--------------------------------------------------------------------------------
Hartford Financial Services Group, Inc. (The) 114,500 11,587,400
--------------------------------------------------------------------------------
OneBeacon Insurance Group Ltd. 196,100 4,775,035
--------------------------------------------------------------------------------
RenaissanceRe Holdings Ltd. 134,100 7,261,515
--------------------------------------------------------------------------------
StanCorp Financial Group, Inc. 104,000 4,950,400
----------------
40,751,790

--------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS--2.2%
AMB Property Corp. 90,700 5,524,537
--------------------------------------------------------------------------------
CBL & Associates Properties, Inc. 125,600 5,708,520
----------------
11,233,057

--------------------------------------------------------------------------------
HEALTH CARE--12.7%
--------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--1.1%
Beckman Coulter, Inc. 87,700 5,508,437
--------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--4.4%
DaVita, Inc. 1 96,500 5,269,865
--------------------------------------------------------------------------------
Health Net, Inc. 1 188,500 10,190,310
--------------------------------------------------------------------------------
WellPoint, Inc. 1 93,300 7,367,901
----------------
22,828,076

STATEMENT OF INVESTMENTS Unaudited / Continued
--------------------------------------------------------------------------------

VALUE
SHARES SEE NOTE 1
--------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES--2.1%
Invitrogen Corp. 1 165,400 $ 10,828,738
--------------------------------------------------------------------------------
PHARMACEUTICALS--5.1%
Abbott Laboratories 211,900 11,997,778
--------------------------------------------------------------------------------
Roche Holding AG 76,900 14,529,977
----------------
26,527,755

--------------------------------------------------------------------------------
INDUSTRIALS--13.8%
--------------------------------------------------------------------------------
AEROSPACE & DEFENSE--7.7%
Boeing Co. 113,700 10,574,100
--------------------------------------------------------------------------------
DRS Technologies, Inc. 144,600 7,274,826
--------------------------------------------------------------------------------
Goodrich Corp. 123,400 7,014,056
--------------------------------------------------------------------------------
L-3 Communications Holdings, Inc. 170,400 15,324,072
----------------
40,187,054

--------------------------------------------------------------------------------
AIR FREIGHT & LOGISTICS--1.0%
UTi Worldwide, Inc. 223,000 5,233,810
--------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--1.1%
ChoicePoint, Inc. 1 146,800 5,573,996
--------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--1.4%
General Electric Co. 196,800 7,254,048
--------------------------------------------------------------------------------
MACHINERY--2.6%
Joy Global, Inc. 157,000 7,948,910
--------------------------------------------------------------------------------
Oshkosh Truck Corp. 98,400 5,504,496
----------------
13,453,406

--------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--13.4%
--------------------------------------------------------------------------------
COMPUTERS & PERIPHERALS--2.0%
EMC Corp. 1 705,000 10,701,900
--------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--5.3%
Amphenol Corp., Cl. A 209,400 7,352,034
--------------------------------------------------------------------------------
CDW Corp. 83,100 5,984,031
--------------------------------------------------------------------------------
Jabil Circuit, Inc. 602,100 14,028,930
----------------
27,364,995

VALUE
SHARES SEE NOTE 1
--------------------------------------------------------------------------------
IT SERVICES--1.2%
CACI International, Inc., Cl. A 1 139,400 $ 6,374,762
--------------------------------------------------------------------------------
OFFICE ELECTRONICS--2.2%
Zebra Technologies Corp., Cl. A 1 284,200 11,308,318
--------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--2.7%
KLA-Tencor Corp. 160,800 8,932,440
--------------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Co. Ltd., ADR 486,544 5,128,174
----------------
14,060,614

--------------------------------------------------------------------------------
MATERIALS--1.4%
--------------------------------------------------------------------------------
CHEMICALS--1.4%
Cytec Industries, Inc. 135,300 7,427,970
--------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--4.2%
--------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.0%
Windstream Corp. 375,602 5,491,301
--------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--3.2%
Alltel Corp. 72,700 4,557,563
--------------------------------------------------------------------------------
NII Holdings, Inc. 1 39,000 2,993,250
--------------------------------------------------------------------------------
Sprint Nextel Corp. 445,000 8,913,350
----------------
16,464,163

--------------------------------------------------------------------------------
UTILITIES--5.4%
--------------------------------------------------------------------------------
ELECTRIC UTILITIES--3.5%
Duke Energy Corp. 629,300 12,913,236
--------------------------------------------------------------------------------
Southern Co. 142,300 5,377,517
----------------
18,290,753

--------------------------------------------------------------------------------
ENERGY TRADERS--1.0%
Constellation Energy Group, Inc. 57,500 5,124,400
--------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--0.9%
SCANA Corp. 111,000 4,831,830
----------------
Total Common Stocks
(Cost $447,450,966) 518,609,566

PRINCIPAL VALUE
AMOUNT SEE NOTE 1
--------------------------------------------------------------------------------
SHORT-TERM NOTES--0.3%
--------------------------------------------------------------------------------
Federal Home Loan Bank, 5.06%, 5/1/07
(Cost $1,400,000) $ 1,400,000 $ 1,400,000

--------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE (COST $448,850,966) 100.1% 520,009,566
--------------------------------------------------------------------------------
LIABILITIES IN EXCESS OF OTHER ASSETS (0.1) (594,850)
-------------------------------
NET ASSETS 100.0% $ 519,414,716
===============================

FOOTNOTE TO STATEMENT OF INVESTMENTS

1. Non-income producing security.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

STATEMENT OF ASSETS AND LIABILITIES Unaudited
--------------------------------------------------------------------------------

April 30, 2007
-----------------------------------------------------------------------------------------------------------
ASSETS
-----------------------------------------------------------------------------------------------------------
Investments, at value (cost $448,850,966)--see accompanying statement of investments $ 520,009,566
-----------------------------------------------------------------------------------------------------------
Cash 154,889
-----------------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of capital stock sold 607,585
Interest and dividends 214,733
Other 62,009
--------------
Total assets 521,048,782

-----------------------------------------------------------------------------------------------------------
LIABILITIES
-----------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of capital stock redeemed 1,286,652
Distribution and service plan fees 105,080
Transfer and shareholder servicing agent fees 90,330
Directors' compensation 71,918
Shareholder communications 64,926
Other 15,160
--------------
Total liabilities 1,634,066

-----------------------------------------------------------------------------------------------------------
NET ASSETS $ 519,414,716
==============

-----------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
-----------------------------------------------------------------------------------------------------------
Par value of shares of capital stock $ 1,849
-----------------------------------------------------------------------------------------------------------
Additional paid-in capital 416,189,040
-----------------------------------------------------------------------------------------------------------
Accumulated net investment income 517,940
-----------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 31,544,710
-----------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies 71,161,177
--------------
NET ASSETS $ 519,414,716
==============

-----------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
-----------------------------------------------------------------------------------------------
Class A Shares:
Net asset value and redemption price per share (based on net assets
of $368,132,488 and 12,702,330 shares of capital stock outstanding) $ 28.98
Maximum offering price per share (net asset value plus sales charge of 5.75% of
offering price) $ 30.75
-----------------------------------------------------------------------------------------------

Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $74,788,286 and
2,896,828 shares of capital stock outstanding) $ 25.82
-----------------------------------------------------------------------------------------------

Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $57,240,703 and
2,213,061 shares of capital stock outstanding) $ 25.86
-----------------------------------------------------------------------------------------------

Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales
charge) and offering price per share (based on net assets of $19,253,239 and
680,749 shares of capital stock outstanding) $ 28.28

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

STATEMENT OF OPERATIONS Unaudited
--------------------------------------------------------------------------------

For the Six Months Ended April 30, 2007
----------------------------------------------------------------------------------------
INVESTMENT INCOME
----------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $31,957) $ 4,252,294
----------------------------------------------------------------------------------------
Interest 312,659
-------------
Total investment income 4,564,953

----------------------------------------------------------------------------------------
EXPENSES
----------------------------------------------------------------------------------------
Management fees 2,162,141
----------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 446,842
Class B 377,102
Class C 277,746
Class N 48,254
----------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 310,724
Class B 102,069
Class C 72,062
Class N 56,278
----------------------------------------------------------------------------------------
Shareholder communications:
Class A 45,325
Class B 17,424
Class C 9,269
Class N 1,539
----------------------------------------------------------------------------------------
Directors' compensation 15,542
----------------------------------------------------------------------------------------
Custodian fees and expenses 3,489
----------------------------------------------------------------------------------------
Administration service fees 750
----------------------------------------------------------------------------------------
Other 56,124
-------------
Total expenses 4,002,680
Less reduction to custodian expenses (1,559)
Less waivers and reimbursements of expenses (22,009)
-------------
Net expenses 3,979,112

----------------------------------------------------------------------------------------
NET INVESTMENT INCOME 585,841

----------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
----------------------------------------------------------------------------------------
Net realized gain on:
Investments 31,728,119
Foreign currency transactions 10,028
-------------
Net realized gain 31,738,147
----------------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments 2,883,564
Translation of assets and liabilities denominated in foreign currencies 370,461
-------------
Net change in unrealized appreciation 3,254,025

----------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 35,578,013
=============

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

SIX MONTHS YEAR
ENDED ENDED
APRIL 30, 2007 OCTOBER 31,
(UNAUDITED) 2006
------------------------------------------------------------------------------------------------------------------
OPERATIONS
------------------------------------------------------------------------------------------------------------------
Net investment income $ 585,841 $ 428,999
------------------------------------------------------------------------------------------------------------------
Net realized gain 31,738,147 45,675,662
------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 3,254,025 37,078,653
-------------------------------
Net increase in net assets resulting from operations 35,578,013 83,183,314

------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS
------------------------------------------------------------------------------------------------------------------
Dividends from net investment income:
Class A (455,828) --
Class B -- --
Class C -- --
Class N -- --
-------------------------------
(455,828) --
------------------------------------------------------------------------------------------------------------------
Distributions from net realized gain:
Class A (27,989,675) (35,134,229)
Class B (6,129,518) (8,357,741)
Class C (4,420,960) (5,324,375)
Class N (1,429,839) (1,754,083)
-------------------------------
(39,969,992) (50,570,428)

------------------------------------------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS
------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from capital stock transactions:
Class A (11,586,997) 18,026,045
Class B (611,877) (1,297,118)
Class C 3,026,679 5,624,017
Class N 356,117 1,395,263
-------------------------------
(8,816,078) 23,748,207

------------------------------------------------------------------------------------------------------------------
NET ASSETS
------------------------------------------------------------------------------------------------------------------
Total increase (decrease) (13,663,885) 56,361,093
------------------------------------------------------------------------------------------------------------------
Beginning of period 533,078,601 476,717,508
-------------------------------
End of period (including accumulated net investment income of $517,940 and
$387,927, respectively) $ 519,414,716 $ 533,078,601
===============================

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

Net asset value, end of period $ 28.98 $ 29.15 $ 27.34 $ 26.89 $ 23.71 $ 19.07
=============================================================================

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

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 26.27 $ 25.11 $ 25.07 $ 22.31 $ 18.09 $ 19.99
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.05) 1 (.14) 1 (.28) 1 (.29) (.22) (.19)
Net realized and unrealized gain (loss) 1.73 4.19 2.40 3.22 4.44 (1.25)
----------------------------------------------------------------------------
Total from investment operations 1.68 4.05 2.12 2.93 4.22 (1.44)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- -- -- -- -- --
Distributions from net realized gain (2.13) (2.89) (2.08) (.17) -- (.46)
----------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (2.13) (2.89) (2.08) (.17) -- (.46)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 25.82 $ 26.27 $ 25.11 $ 25.07 $ 22.31 $ 18.09
============================================================================

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 6.74% 17.37% 8.81% 13.22% 23.33% (7.53)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 74,788 $76,583 $ 74,004 $ 64,069 $ 55,449 $ 42,010
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 76,104 $76,606 $ 73,417 $ 60,460 $ 46,785 $ 42,900
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.41)% (0.58)% (1.10)% (1.26)% (1.23)% (1.30)%
Total expenses 2.18% 2.19% 2.25% 2.30% 2.43% 2.41%
Expenses after payments, waivers
and/or reimbursements and reduction
to custodian expenses 2.18% 2.19% 2.25% 2.30% 2.36% 2.41%
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 41% 56% 89% 61% 74% 75%

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

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 26.31 $ 25.14 $ 25.10 $ 22.34 $ 18.11 $ 20.01
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.05) 1 (.14) 1 (.27) 1 (.29) (.14) (.13)
Net realized and unrealized gain (loss) 1.73 4.20 2.39 3.22 4.37 (1.31)
----------------------------------------------------------------------------
Total from investment operations 1.68 4.06 2.12 2.93 4.23 (1.44)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- -- -- -- -- --
Distributions from net realized gain (2.13) (2.89) (2.08) (.17) -- (.46)
----------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (2.13) (2.89) (2.08) (.17) -- (.46)
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 25.86 $ 26.31 $ 25.14 $ 25.10 $ 22.34 $ 18.11
============================================================================

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 6.72% 17.39% 8.80% 13.20% 23.36% (7.52)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 57,241 $ 54,971 $ 46,560 $ 34,414 $ 30,510 $ 16,979
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 56,056 $ 51,822 $ 42,635 $ 32,051 $ 20,901 $ 15,323
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.39)% (0.57)% (1.09)% (1.26)% (1.24)% (1.30)%
Total expenses 2.16% 2.17% 2.24% 2.31% 2.43% 2.41%
Expenses after payments, waivers
and/or reimbursements and reduction
to custodian expenses 2.16% 2.17% 2.24% 2.31% 2.36% 2.41%
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 41% 56% 89% 61% 74% 75%

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

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

PER SHARE OPERATING DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 28.52 $ 26.91 $ 26.61 $ 23.56 $ 19.00 $ 20.88
-----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) -- 1,2 (.03) 1 (.16) 1 (.19) (.15) (.17)
Net realized and unrealized gain (loss) 1.89 4.53 2.54 3.41 4.71 (1.25)
------------------------------------------------------------------------------
Total from investment operations 1.89 4.50 2.38 3.22 4.56 (1.42)
-----------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions
to shareholders:
Dividends from net investment income -- -- -- -- -- --
Distributions from net realized gain (2.13) (2.89) (2.08) (.17) -- (.46)
------------------------------------------------------------------------------
Total dividends and/or distributions
to shareholders (2.13) (2.89) (2.08) (.17) -- (.46)
-----------------------------------------------------------------------------------------------------------------------------------

Net asset value, end of period $ 28.28 $ 28.52 $ 26.91 $ 26.61 $ 23.56 $ 19.00
==============================================================================

-----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 3 6.95% 17.93% 9.31% 13.75% 24.00% (7.10)%
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 19,253 $ 19,013 $ 16,451 $ 10,554 $ 6,408 $ 2,983
-----------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 19,467 $ 17,985 $ 13,849 $ 8,724 $ 4,218 $ 1,475
-----------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 4
Net investment loss 0.02% (0.12)% (0.61)% (0.78)% (0.75)% (0.88)%
Total expenses 1.97% 1.90% 2.08% 2.20% 1.97% 1.87%
Expenses after payments, waivers
and/or reimbursements and reduction
to custodian expenses 1.74% 1.72% 1.76% 1.81% 1.87% 1.87%
-----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 41% 56% 89% 61% 74% 75%

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

2. Less than $0.005 per share.

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

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

Oppenheimer Quest Capital Value Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Fund's investment objective is to seek capital appreciation. The
Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Manager
has entered into a subadvisory agreement with Oppenheimer Capital LLC.

The Fund offers Class A, Class B, Class C and Class N shares. Class A
shares are sold at their offering price, which is normally net asset value plus
a front-end sales charge. Class B, Class C and Class N shares are sold without a
front-end sales charge but may be subject to a contingent deferred sales charge
(CDSC). Class N shares are sold only through retirement plans. Retirement plans
that offer Class N shares may impose charges on those accounts. All classes of
shares have identical rights and voting privileges with respect to the Fund in
general and exclusive voting rights on matters that affect that class alone.
Earnings, net assets and net asset value per share may differ due to each class
having its own expenses, such as transfer and shareholder servicing agent fees
and shareholder communications, directly attributable to that class. Class A, B,
C and N have separate distribution and/or service plans. Class B shares will
automatically convert to Class A shares six years after the date of purchase.

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

--------------------------------------------------------------------------------
SECURITIES VALUATION. The Fund calculates the net asset value of its shares as
of the close of the New York Stock Exchange (the "Exchange"), normally 4:00 P.M.
Eastern time, on each day the Exchange is open for business. Securities may be
valued primarily using dealer-supplied valuations or a portfolio pricing service
authorized by the Board of Directors. Securities listed or traded on National
Stock Exchanges or other domestic exchanges are valued based on the last sale
price of the security traded on that exchange prior to the time when the Fund's
assets are valued. Securities traded on NASDAQ(R) are valued based on the
closing price provided by NASDAQ prior to the time when the Fund's assets are
valued. In the absence of a sale, the security is valued at the last sale price
on the prior trading day, if it is within the spread of the closing "bid" and
"asked" prices, and if not, at the closing bid price. 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
will be valued at the mean between the "bid" and "asked" prices. Futures
contracts traded on a commodities or futures exchange will be valued at the
final settlement price or official closing price on the principal exchange as
reported by such principal exchange at its trading session ending at, or most
recently prior to, the time when the Fund's assets are valued. Options are
valued daily based upon the last sale price on the principal exchange on which
the option is traded. Securities (including restricted securities) for which
market quotations are not readily available are valued at their fair value.
Foreign and domestic securities whose values have been materially affected by
what the Manager identifies as a significant event occurring before the Fund's
assets are valued but after 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 Directors. Investments in
open-end registered investment companies (including affiliated funds) are valued
at that fund's net asset value. Short-term "money market type" debt securities
with remaining maturities of sixty days or less are valued at amortized cost
(which approximates market value).

--------------------------------------------------------------------------------
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 New
York Stock Exchange (the "Exchange"), normally 4:00 P.M. Eastern time, on each
day the Exchange is open for business. Foreign exchange rates may be valued
primarily using dealer supplied valuations or a portfolio pricing service
authorized by the Board of Directors.

Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized 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 foreign exchange gains and losses 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.

--------------------------------------------------------------------------------
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.

NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
--------------------------------------------------------------------------------

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

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.

--------------------------------------------------------------------------------
DIRECTORS' COMPENSATION. The Fund has adopted an unfunded retirement plan for
the Fund's independent directors. Benefits are based on years of service and
fees paid to each director during the years of service. During the six months
ended April 30, 2007, the Fund's projected benefit obligations were increased by
$9,212 and payments of $2,203 were made to retired directors, resulting in an
accumulated liability of $65,947 as of April 30, 2007.

The Board of Directors has adopted a compensation deferral plan for
independent directors that enables directors 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 Director 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 Director. The
Fund purchases shares of the funds selected for deferral by the Director 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 directors' fees under the plan will not affect the net assets of the
Fund, and will not materially affect the Fund's assets, liabilities or net
investment income per share. Amounts will be deferred until distributed in
accordance to the compensation deferral plan.

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

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

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

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

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

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

--------------------------------------------------------------------------------
2. SHARES OF CAPITAL STOCK

The Fund has authorized one billion shares of $0.0001 par value capital stock in
aggregate to be apportioned among each class of shares. Transactions in shares
of capital stock were as follows:

SIX MONTHS ENDED APRIL 30, 2007 YEAR ENDED OCTOBER 31, 2006
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------

CLASS A
Sold 1,259,482 $ 35,826,455 3,428,582 $ 94,959,032
Dividends and/or
distributions reinvested 936,594 25,924,915 1,216,605 31,765,567
Redeemed (2,617,267) (73,338,367) (3,947,226) (108,698,554)
------------------------------------------------------------
Net increase (decrease) (421,191) $ (11,586,997) 697,961 $ 18,026,045
============================================================

NOTES TO FINANCIAL STATEMENTS Unaudited / Continued
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
2. SHARES OF CAPITAL STOCK Continued

SIX MONTHS ENDED APRIL 30, 2007 YEAR ENDED OCTOBER 31, 2006
SHARES AMOUNT SHARES AMOUNT
-----------------------------------------------------------------------------------------------

CLASS B
Sold 246,810 $ 6,272,563 662,085 $ 16,582,767
Dividends and/or
distributions reinvested 236,422 5,849,087 332,565 7,888,450
Redeemed (501,744) (12,733,527) (1,026,360) (25,768,335)
----------------------------------------------------------
Net decrease (18,512) $ (611,877) (31,710) $ (1,297,118)
==========================================================

-----------------------------------------------------------------------------------------------
CLASS C
Sold 245,506 $ 6,259,489 534,433 $ 13,374,856
Dividends and/or
distributions reinvested 159,042 3,941,061 203,472 4,832,457
Redeemed (281,061) (7,173,871) (500,237) (12,583,296)
----------------------------------------------------------
Net increase 123,487 $ 3,026,679 237,668 $ 5,624,017
==========================================================

-----------------------------------------------------------------------------------------------
CLASS N
Sold 89,286 $ 2,470,720 185,780 $ 5,032,410
Dividends and/or
distributions reinvested 50,259 1,360,013 64,913 1,664,380
Redeemed (125,461) (3,474,616) (195,260) (5,301,527)
----------------------------------------------------------
Net increase 14,084 $ 356,117 55,433 $ 1,395,263
==========================================================

--------------------------------------------------------------------------------
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 six months ended
April 30, 2007, were as follows:

PURCHASES SALES
--------------------------------------------------------------
Investment securities $ 209,135,338 $ 251,987,609

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

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

FEE SCHEDULE
---------------------------------
Up to $400 million 0.85%
Next $400 million 0.80
Next $400 million 0.75
Next $400 million 0.65
Next $400 million 0.60
Over $2.0 billion 0.50

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

--------------------------------------------------------------------------------
SUB-ADVISOR FEES. The Manager retains Oppenheimer Capital LLC (the
"Sub-Advisor") to provide the day-to-day portfolio management of the Fund. Under
the Sub-Advisory Agreement, the Manager pays the Sub-Advisor an annual fee in
monthly installments, based on the average daily net assets of the Fund. The fee
paid to the Sub-Advisor under the Sub-Advisory agreement is paid by the Manager,
not by the Fund. The fee is calculated as a percentage of the fee the Fund pays
the Manager. The rate is 40% of the advisory fee collected by the Manager based
on the net assets of the Fund as of February 28, 1997, and remaining 120 days
later, plus 30% of the fee collected by the Manager on assets in excess of that
amount. In each case the fee is calculated after any waivers of the Manager's
fee from the Fund. For the six months ended April 30, 2007, the Manager paid
$802,499 to the Sub-Advisor for its services to the Fund.

--------------------------------------------------------------------------------
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 six months ended April 30, 2007, the Fund paid
$523,190 to OFS for services to the Fund.

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

--------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a
Distribution and Service Plan for Class A shares. Under the plan, the Fund pays
a service fee to the Distributor of up to 0.25% of the average annual net assets
of Class A shares. The Distributor currently uses all of those fees to pay
dealers, brokers, banks and other financial institutions periodically for
providing personal services and maintenance of accounts of their customers that
hold Class A shares. Under the plan, the Fund may also pay an asset-based sales
charge to the Distributor. Beginning January 1, 2003, the Board of Directors set
the annual asset-based sales charge rate at zero. Fees incurred by the Fund
under the plan are detailed in the Statement of Operations.

--------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% on Class B and
Class C shares and 0.25% on Class N shares. The Distributor also receives a
service fee of 0.25% per year under each plan. If either the Class B, Class C or
Class N plan is terminated by the Fund or by the shareholders of a class, the
Board of Directors and its independent directors must determine whether the
Distributor shall be entitled to payment from the Fund of all or a portion of
the service fee and/or asset-based sales charge in respect to shares sold prior
to the effective date of such termination. The Distributor determines its
uncompensated expenses under the plan at calendar quarter ends. The
Distributor's aggregate uncompensated expenses under the plan at March 31, 2007
for Class B, Class C and Class N shares were $443,337, $639,223 and $264,852,
respectively. Fees incurred by the Fund under the plans are detailed in the
Statement of Operations.

NOTES TO FINANCIAL STATEMENTS Unaudited / 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
SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
----------------------------------------------------------------------------------------------
April 30, 2007 $ 118,580 $ 87 $ 55,616 $ 1,873 $ 260

--------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees for all classes to 0.35% of
average annual net assets per class. During the six months ended April 30, 2007,
OFS waived $22,009 for Class N shares. This undertaking may be amended or
withdrawn at any time.

--------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS

A foreign currency contract is a commitment to purchase or sell a foreign
currency at a future date, at a negotiated rate. The Fund may enter into foreign
currency contracts to settle specific purchases or sales of securities
denominated in a foreign currency and for protection from adverse exchange rate
fluctuation. Risks to the Fund include the potential inability of the
counterparty to meet the terms of the contract.

The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation or
depreciation are determined using prevailing foreign currency exchange rates.
Unrealized appreciation and depreciation on foreign currency contracts are
reported in the Statement of Assets and Liabilities as a receivable or payable
and in the Statement of Operations with the change in unrealized appreciation or
depreciation.

The Fund may realize a gain or loss upon the closing or settlement of the
foreign transaction. Contracts closed or settled with the same broker are
recorded as net realized gains or losses. Such realized gains and losses are
reported with all other foreign currency gains and losses in the Statement of
Operations.

As of April 30, 2007, the Fund had no outstanding foreign currency
contracts.

--------------------------------------------------------------------------------
6. RECENT ACCOUNTING PRONOUNCEMENTS

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

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

--------------------------------------------------------------------------------
7. SPECIAL MEETING OF SHAREHOLDERS

A special meeting of shareholders has been called for June 29, 2007, at which
shareholders who owned shares of the Fund on April 10, 2007 will be entitled to
vote on a proposal to change the Fund's investment objective from "The Fund
seeks capital appreciation" to "The Fund seeks total return." The proposed new
investment objective is part of a series of changes by which the Fund would
pursue an equity income investment strategy with dividends being an important
investment criterion. In addition, if shareholders approve the proposed change
to the Fund's investment objective, the Fund's advisory fee schedule would be
revised, resulting in a lower advisory fee rate paid by the Fund, the name of
the Fund would change to "Oppenheimer Equity Income Fund, Inc.", and the Manager
would assume responsibility for the management of the Fund's portfolio and,
consequently, Oppenheimer Capital LLC would be discharged as the Fund's
sub-advisor.

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

--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
OPPENHEIMER QUEST CAPITAL VALUE FUND, INC.:

We have audited the accompanying statement of assets and liabilities of
Oppenheimer Quest Capital Value Fund, Inc., including the statement of
investments, as of October 31, 2006, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the
years in the two-year period then ended, and the financial highlights for each
of the years in the five-year 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.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of October 31, 2006, by correspondence with
the custodian. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Oppenheimer Quest Capital Value Fund, Inc. as of October 31, 2006, the results
of its operations for the year then ended, the changes in its net assets for
each of the years in the two-year period then ended, and the financial
highlights for each of the years in the five-year period then ended, in
conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP
KPMG LLP

Denver, Colorado
December 12, 2006

STATEMENT OF INVESTMENTS October 31, 2006
--------------------------------------------------------------------------------

VALUE
SHARES SEE NOTE 1
--------------------------------------------------------------------------------
COMMON STOCKS--97.8%
--------------------------------------------------------------------------------
CONSUMER DISCRETIONARY--16.7%
--------------------------------------------------------------------------------
AUTO COMPONENTS--0.8%
Gentex Corp. 291,521 $ 4,638,099
--------------------------------------------------------------------------------
HOUSEHOLD DURABLES--2.2%
Centex Corp. 221,300 11,573,990
--------------------------------------------------------------------------------
MEDIA--5.9%
Lamar Advertising Co.,
Cl. A 1 126,800 7,313,824
--------------------------------------------------------------------------------
Omnicom Group, Inc. 140,421 14,245,710
--------------------------------------------------------------------------------
WPP Group plc,
Sponsored ADR 154,600 9,894,400
---------------
31,453,934

--------------------------------------------------------------------------------
MULTILINE RETAIL--1.2%
Federated Department
Stores, Inc. 144,200 6,331,822
--------------------------------------------------------------------------------
SPECIALTY RETAIL--4.9%
Claire's Stores, Inc. 332,100 9,415,035
--------------------------------------------------------------------------------
TJX Cos., Inc. (The) 573,500 16,602,825
---------------
26,017,860

--------------------------------------------------------------------------------
TEXTILES, APPAREL & LUXURY GOODS--1.7%
K-Swiss, Inc., Cl. A 258,000 9,112,560
--------------------------------------------------------------------------------
ENERGY--3.7%
--------------------------------------------------------------------------------
ENERGY EQUIPMENT & SERVICES--0.9%
National Oilwell
Varco, Inc. 1 74,000 4,469,600
--------------------------------------------------------------------------------
OIL & GAS--2.8%
ConocoPhillips 86,200 5,192,688
--------------------------------------------------------------------------------
Range Resources Corp. 158,400 4,300,560
--------------------------------------------------------------------------------
XTO Energy, Inc. 120,500 5,622,530
---------------
15,115,778

--------------------------------------------------------------------------------
FINANCIALS--31.7%
--------------------------------------------------------------------------------
CAPITAL MARKETS--2.7%
Merrill Lynch & Co.,
Inc. 165,600 14,476,752
--------------------------------------------------------------------------------
COMMERCIAL BANKS--5.6%
M&T Bank Corp. 45,300 5,517,993

VALUE
SHARES SEE NOTE 1
--------------------------------------------------------------------------------
COMMERCIAL BANKS Continued
Prosperity Bancshares,
Inc. 81,700 $ 2,834,173
--------------------------------------------------------------------------------
TCF Financial Corp. 188,600 4,909,258
--------------------------------------------------------------------------------
Zions Bancorp 208,000 16,723,200
---------------
29,984,624

--------------------------------------------------------------------------------
DIVERSIFIED FINANCIAL SERVICES--9.9%
CIT Group, Inc. 177,700 9,249,285
--------------------------------------------------------------------------------
Citigroup, Inc. 417,700 20,951,832
--------------------------------------------------------------------------------
JPMorgan
Chase & Co. 477,700 22,662,088
---------------
52,863,205

--------------------------------------------------------------------------------
INSURANCE--11.3%
Conseco, Inc. 1 300,300 6,108,102
--------------------------------------------------------------------------------
Everest Re Group Ltd. 127,600 12,655,368
--------------------------------------------------------------------------------
Hartford Financial
Services Group, Inc.
(The) 93,300 8,132,961
--------------------------------------------------------------------------------
MBIA, Inc. 82,900 5,141,458
--------------------------------------------------------------------------------
Partnerre Holdings
Ltd. 110,200 7,705,184
--------------------------------------------------------------------------------
Reinsurance Group
of America, Inc. 221,700 12,503,880
--------------------------------------------------------------------------------
StanCorp Financial
Group, Inc. 172,200 7,867,818
---------------
60,114,771

--------------------------------------------------------------------------------
THRIFTS & MORTGAGE FINANCE--2.2%
MGIC Investment
Corp. 197,000 11,575,720
--------------------------------------------------------------------------------
HEALTH CARE--13.1%
--------------------------------------------------------------------------------
HEALTH CARE EQUIPMENT & SUPPLIES--1.7%
Beckman Coulter, Inc. 154,700 8,906,079
--------------------------------------------------------------------------------
HEALTH CARE PROVIDERS & SERVICES--3.6%
Laboratory Corp. of
America Holdings 1 243,100 16,649,919
--------------------------------------------------------------------------------
Omnicare, Inc. 69,300 2,625,084
---------------
19,275,003

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

VALUE
SHARES SEE NOTE 1
--------------------------------------------------------------------------------
LIFE SCIENCES TOOLS & SERVICES--4.5%
Invitrogen Corp. 1 174,300 $ 10,111,143
--------------------------------------------------------------------------------
Thermo Electron
Corp. 1 330,200 14,155,674
---------------
24,266,817

--------------------------------------------------------------------------------
PHARMACEUTICALS--3.3%
Pfizer, Inc. 220,000 5,863,000
--------------------------------------------------------------------------------
Roche Holdings AG 66,000 11,549,536
---------------
17,412,536

--------------------------------------------------------------------------------
INDUSTRIALS--9.9%
--------------------------------------------------------------------------------
AEROSPACE & DEFENSE--5.5%
DRS Technologies, Inc. 152,400 6,739,128
--------------------------------------------------------------------------------
Goodrich Corp. 130,100 5,736,109
--------------------------------------------------------------------------------
L-3 Communications
Holdings, Inc. 211,500 17,029,980
---------------
29,505,217

--------------------------------------------------------------------------------
COMMERCIAL SERVICES & SUPPLIES--1.1%
ChoicePoint, Inc. 1 154,800 5,633,172
--------------------------------------------------------------------------------
INDUSTRIAL CONGLOMERATES--1.4%
General Electric Co. 207,400 7,281,814
--------------------------------------------------------------------------------
MACHINERY--1.9%
Actuant Corp., Cl. A 108,000 5,544,720
--------------------------------------------------------------------------------
Oshkosh Truck Corp. 103,700 4,688,277
---------------
10,232,997

--------------------------------------------------------------------------------
INFORMATION TECHNOLOGY--12.5%
--------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT--2.2%
Motorola, Inc. 502,700 11,592,262
--------------------------------------------------------------------------------
ELECTRONIC EQUIPMENT & INSTRUMENTS--5.1%
Amphenol Corp., Cl. A 110,300 7,489,370
--------------------------------------------------------------------------------
CDW Corp. 135,400 8,891,718
--------------------------------------------------------------------------------
Jabil Circuit, Inc. 381,800 10,961,478
---------------
27,342,566

--------------------------------------------------------------------------------
OFFICE ELECTRONICS--2.1%
Zebra Technologies
Corp., Cl. A 1 299,600 11,166,092
--------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--3.1%
KLA-Tencor Corp. 169,500 8,334,315

VALUE
SHARES SEE NOTE 1
--------------------------------------------------------------------------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT Continued
Taiwan Semiconductor
Manufacturing Co.
Ltd., ADR 880,744 $ 8,543,217
---------------
16,877,532

--------------------------------------------------------------------------------
MATERIALS--1.4%
--------------------------------------------------------------------------------
CONTAINERS & PACKAGING--1.4%
Smurfit-Stone
Container Corp. 1 683,200 7,282,912
--------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES--1.8%
--------------------------------------------------------------------------------
DIVERSIFIED TELECOMMUNICATION SERVICES--1.0%
Windstream Corp. 395,802 5,430,403
--------------------------------------------------------------------------------
WIRELESS TELECOMMUNICATION SERVICES--0.8%
Alltel Corp. 76,700 4,088,877
--------------------------------------------------------------------------------
UTILITIES--7.0%
--------------------------------------------------------------------------------
MULTI-UTILITIES & UNREGULATED POWER--7.0%
Dominion Resources,
Inc. 145,000 11,743,550
--------------------------------------------------------------------------------
Duke Energy Corp. 663,300 20,986,812
--------------------------------------------------------------------------------
SCANA Corp. 117,000 4,675,321
---------------
37,405,683
---------------
Total Common Stocks
(Cost $453,522,617) 521,428,677

PRINCIPAL
AMOUNT
--------------------------------------------------------------------------------
SHORT-TERM NOTES--2.2%
--------------------------------------------------------------------------------
Federal Home Loan
Bank, 4.98%, 11/1/06
(Cost $11,854,000) $ 11,854,000 11,854,000

--------------------------------------------------------------------------------
TOTAL INVESTMENTS, AT VALUE
(COST $465,376,617) 100.0% 533,282,677
--------------------------------------------------------------------------------
LIABILITIES IN EXCESS
OF OTHER ASSETS 0.0 (204,076)
-------------------------------
NET ASSETS 100.0% $ 533,078,601
===============================

FOOTNOTE TO STATEMENT OF INVESTMENTS

1. Non-income producing security.

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

-------------------------------------------------------------------------------------------------------
ASSETS
-------------------------------------------------------------------------------------------------------
Investments, at value (cost $465,376,617)--see accompanying statement of investments $ 533,282,677
-------------------------------------------------------------------------------------------------------
Cash 70,245
-------------------------------------------------------------------------------------------------------
Receivables and other assets:
Shares of capital stock sold 771,883
Interest and dividends 185,876
Other 28,210
---------------
Total assets 534,338,891

-------------------------------------------------------------------------------------------------------
LIABILITIES
-------------------------------------------------------------------------------------------------------
Payables and other liabilities:
Shares of capital stock redeemed 924,816
Distribution and service plan fees 110,718
Transfer and shareholder servicing agent fees 94,396
Directors' compensation 62,920
Shareholder communications 46,411
Other 21,029
---------------
Total liabilities 1,260,290

-------------------------------------------------------------------------------------------------------
NET ASSETS $ 533,078,601
===============

-------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
-------------------------------------------------------------------------------------------------------
Par value of shares of capital stock $ 1,880
-------------------------------------------------------------------------------------------------------
Additional paid-in capital 425,005,087
-------------------------------------------------------------------------------------------------------
Accumulated net investment income 387,927
-------------------------------------------------------------------------------------------------------
Accumulated net realized gain on investments and foreign currency transactions 39,776,555
-------------------------------------------------------------------------------------------------------
Net unrealized appreciation on investments and translation of assets and liabilities
denominated in foreign currencies 67,907,152
---------------
NET ASSETS $ 533,078,601
===============

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 $382,512,571 and
13,123,521 shares of capital stock outstanding) $29.15
Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $30.93
-------------------------------------------------------------------------------------------------------------
Class B Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $76,582,576 and 2,915,340 shares
of capital stock outstanding) $26.27
-------------------------------------------------------------------------------------------------------------
Class C Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $54,970,804 and 2,089,574 shares of
capital stock outstanding) $26.31
-------------------------------------------------------------------------------------------------------------
Class N Shares:
Net asset value, redemption price (excludes applicable contingent deferred sales charge)
and offering price per share (based on net assets of $19,012,650 and 666,665 shares of
capital stock outstanding) $28.52

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

-------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
-------------------------------------------------------------------------------------------------------
Dividends (net of foreign withholding taxes of $84,644) $ 7,477,751
-------------------------------------------------------------------------------------------------------
Interest 789,931
-------------------------------------------------------------------------------------------------------
Portfolio lending fees 323
-------------------------------------------------------------------------------------------------------
Other income 12,011
---------------
Total investment income 8,280,016

-------------------------------------------------------------------------------------------------------
EXPENSES
-------------------------------------------------------------------------------------------------------
Management fees 4,322,669
-------------------------------------------------------------------------------------------------------
Distribution and service plan fees:
Class A 862,463
Class B 765,315
Class C 517,710
Class N 89,847
-------------------------------------------------------------------------------------------------------
Transfer and shareholder servicing agent fees:
Class A 605,017
Class B 221,794
Class C 145,855
Class N 93,824
-------------------------------------------------------------------------------------------------------
Shareholder communications:
Class A 72,508
Class B 22,499
Class C 12,961
Class N 1,969
-------------------------------------------------------------------------------------------------------
Directors' compensation 33,205
-------------------------------------------------------------------------------------------------------
Custodian fees and expenses 5,566
-------------------------------------------------------------------------------------------------------
Administration service fees 1,500
-------------------------------------------------------------------------------------------------------
Other 114,832
---------------
Total expenses 7,889,534
Less reduction to custodian expenses (5,566)
Less waivers and reimbursements of expenses (32,951)
---------------
Net expenses 7,851,017

-------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 428,999

STATEMENT OF OPERATIONS Continued
--------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN
-------------------------------------------------------------------------------------------------------
Net realized gain on:
Investments $ 45,672,731
Foreign currency transactions 2,931
---------------
Net realized gain 45,675,662
-------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation on:
Investments 36,971,342
Translation of assets and liabilities denominated in foreign currencies 107,311
---------------
Net change in unrealized appreciation 37,078,653

-------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 83,183,314
===============

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

YEAR ENDED OCTOBER 31, 2006 2005
------------------------------------------------------------------------------------------------------------------
OPERATIONS
------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ 428,999 $ (1,948,392)
------------------------------------------------------------------------------------------------------------------
Net realized gain 45,675,662 58,633,132
------------------------------------------------------------------------------------------------------------------
Net change in unrealized appreciation 37,078,653 (21,273,522)
------------------------------
Net increase in net assets resulting from operations 83,183,314 35,411,218

------------------------------------------------------------------------------------------------------------------
CAPITAL STOCK TRANSACTIONS
------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from capital stock transactions:
Class A 18,026,045 81,732,028
Class B (1,297,118) 9,594,810
Class C 5,624,017 11,963,644
Class N 1,395,263 5,726,757

------------------------------------------------------------------------------------------------------------------
NET ASSETS
------------------------------------------------------------------------------------------------------------------
Total increase 56,361,093 115,018,493
------------------------------------------------------------------------------------------------------------------
Beginning of period 476,717,508 361,699,015
------------------------------
End of period (including accumulated net investment income (loss)
of $387,927 and $(44,003), respectively) $ 533,078,601 $476,717,508
==============================
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

CLASS A YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 27.34 $ 26.89 $ 23.71 $ 19.07 $ 20.91
---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss) .09 1 (.05) 1 (.10) (.09) (.13)
Net realized and unrealized gain (loss) 4.61 2.58 3.45 4.73 (1.25)
-----------------------------------------------------------------------------
Total from investment operations 4.70 2.53 3.35 4.64 (1.38)
---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain (2.89) (2.08) (.17) -- (.46)
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 29.15 $ 27.34 $ 26.89 $ 23.71 $ 19.07
=============================================================================

---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 18.43% 9.80% 14.22% 24.33% (6.90)%
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 382,512 $ 339,703 $ 252,661 $ 193,955 $ 150,161
---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 369,074 $ 309,617 $ 225,711 $ 165,906 $ 164,479
---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment income (loss) 0.32% (0.19)% (0.37)% (0.43)% (0.61)%
Total expenses 1.29% 1.34% 1.40% 1.56% 1.71%
Expenses after payments and waivers
and reduction to custodian expenses 1.28% 1.34% 1.40% 1.56% 1.71%
---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 56% 89% 61% 74% 75%

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

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

CLASS B YEAR ENDED OCTOBER 31, 2006 2005 2004 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
PER SHARE OPERATING DATA
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 25.11 $ 25.07 $ 22.31 $ 18.09 $ 19.99
---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.14) 1 (.28) 1 (.29) (.22) (.19)
Net realized and unrealized gain (loss) 4.19 2.40 3.22 4.44 (1.25)
-----------------------------------------------------------------------------
Total from investment operations 4.05 2.12 2.93 4.22 (1.44)
---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain (2.89) (2.08) (.17) -- (.46)
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 26.27 $ 25.11 $ 25.07 $ 22.31 18.09
=============================================================================

---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 17.37% 8.81% 13.22% 23.33% (7.53)%
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 76,583 $ 74,004 $ 64,069 $ 55,449 $ 42,010
---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 76,606 $ 73,417 $ 60,460 $ 46,785 $ 42,900
---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.58)% (1.10)% (1.26)% (1.23)% (1.30)%
Total expenses 2.19% 2.25% 2.30% 2.43% 2.41%
Expenses after payments and waivers
and reduction to custodian expenses 2.19% 2.25% 2.30% 2.36% 2.41%
---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 56% 89% 61% 74% 75%

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

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

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

PER SHARE OPERATING DATA
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 25.14 $ 25.10 $ 22.34 $ 18.11 $ 20.01
---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.14) 1 (.27) 1 (.29) (.14) (.13)
Net realized and unrealized gain (loss) 4.20 2.39 3.22 4.37 (1.31)
-----------------------------------------------------------------------------
Total from investment operations 4.06 2.12 2.93 4.23 (1.44)
---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain (2.89) (2.08) (.17) -- (.46)
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 26.31 $ 25.14 $ 25.10 $ 22.34 $ 18.11
=============================================================================

---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 17.39% 8.80% 13.20% 23.36% (7.52)%
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 54,971 $ 46,560 $ 34,414 $ 30,510 $ 16,979
---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 51,822 $ 42,635 $ 32,051 $ 20,901 $ 15,323
---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.57)% (1.09)% (1.26)% (1.24)% (1.30)%
Total expenses 2.17% 2.24% 2.31% 2.43% 2.41%
Expenses after payments and waivers
and reduction to custodian expenses 2.17% 2.24% 2.31% 2.36% 2.41%
---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 56% 89% 61% 74% 75%

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

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

PER SHARE OPERATING DATA
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 26.91 $ 26.61 $ 23.56 $ 19.00 $ 20.88
---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment loss (.03) 1 (.16) 1 (.19) (.15) (.17)
Net realized and unrealized gain (loss) 4.53 2.54 3.41 4.71 (1.25)
-----------------------------------------------------------------------------
Total from investment operations 4.50 2.38 3.22 4.56 (1.42)
---------------------------------------------------------------------------------------------------------------------------------
Dividends and/or distributions to shareholders:
Distributions from net realized gain (2.89) (2.08) (.17) -- (.46)
---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 28.52 $ 26.91 $ 26.61 $ 23.56 $ 19.00
=============================================================================

---------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN, AT NET ASSET VALUE 2 17.93% 9.31% 13.75% 24.00% (7.10)%
---------------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $ 19,013 $ 16,451 $ 10,554 $ 6,408 $ 2,983
---------------------------------------------------------------------------------------------------------------------------------
Average net assets (in thousands) $ 17,985 $ 13,849 $ 8,724 $ 4,218 $ 1,475
---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets: 3
Net investment loss (0.12)% (0.61)% (0.78)% (0.75)% (0.88)%
Total expenses 1.90% 2.08% 2.20% 1.97% 1.87%
Expenses after payments and waivers
and reduction to custodian expenses 1.72% 1.76% 1.81% 1.87% 1.87%
---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 56% 89% 61% 74% 75%

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

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

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

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

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

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

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

Reported net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales and maturities of short-term securities, sales of
foreign currencies, currency gains or losses realized between the trade and
settlement dates on securities transactions, and the difference between the
amounts of dividends, interest, and foreign withholding taxes recor-ded on the
Fund's books and the U.S. dollar equivalent of the amounts actually received or
paid. Net unrealized foreign exchange gains and losses arise from changes in the
values of assets and liabilities, including investments in securities at fiscal
period end, resulting from changes in exchange rates.

--------------------------------------------------------------------------------
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. Oper-ating expenses directly attributable to a
specific class are charged against the operations of that class.

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.

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

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

NET UNREALIZED
APPRECIATION
BASED ON COST OF
SECURITIES AND
UNDISTRIBUTED UNDISTRIBUTED ACCUMULATED OTHER INVESTMENTS
NET INVESTMENT LONG-TERM LOSS FOR FEDERAL INCOME
INCOME GAIN CARRYFORWARD 1,2 TAX PURPOSES
------------------------------------------------------------------------
$13,044,241 $27,185,677 $-- $67,907,152

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

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

INCREASE TO REDUCTION TO
ACCUMULATED ACCUMULATED NET
INCREASE TO NET INVESTMENT REALIZED GAIN
PAID-IN CAPITAL INCOME ON INVESTMENTS 3
------------------------------------------------------------
$5,688,356 $2,931 $5,691,287

3. $5,688,356, including $4,227,865 of long-term capital gain, was distributed
in connection with Fund share redemptions.

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

YEAR ENDED YEAR ENDED
OCT. 31, 2006 OCT. 31, 2005
------------------------------------------------------------
Distributions paid from:
Ordinary income $ 1,473,065 $ 7,524,389
Long-term capital gain 49,097,363 21,885,575
-------------------------------
Total $ 50,570,428 $ 29,409,964
===============================

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 October 31, 2006 are noted below. The primary
difference between book and tax appreciation or depreciation of securities and
other investments, if applicable, is attributable to the tax deferral of losses
or tax realization of financial statement unrealized gain or loss.

Federal tax cost of securities $ 465,376,617
==============
Gross unrealized appreciation $ 79,933,681
Gross unrealized depreciation (12,026,529)
--------------
Net unrealized appreciation $ 67,907,152
==============

--------------------------------------------------------------------------------
DIRECTORS' COMPENSATION. The Fund has adopted an unfunded retirement plan for
the Fund's independent directors. Benefits are based on years of service and
fees paid to each director during the years of service. During the year ended
October 31, 2006, the Fund's projected benefit obligations were increased by
$25,417 and payments of $5,029 were made to retired directors, resulting in an
accumulated liability of $58,938 as of October 31, 2006.

The Board of Directors has adopted a deferred compensation plan for
independent directors that enables directors 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 Director 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 Director. The
Fund purchases shares of the funds selected for deferral by the Director 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 directors' fees under the plan will not affect the net assets of the
Fund, and will not materially affect the Fund's assets, liabilities or net
investment income per share. Amounts will be deferred until distributed in
accordance to the Plan.

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

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

Fund during the period. Such interest expense and other custodian fees may be
paid with these earnings.

--------------------------------------------------------------------------------
INDEMNIFICATIONS. The Fund's organizational documents provide current and former
directors 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.

--------------------------------------------------------------------------------
2. SHARES OF CAPITAL STOCK

The Fund has authorized one billion shares of $0.0001 par value capital stock in
aggregate to be apportioned among each class of shares. Transactions in shares
of capital stock were as follows:

YEAR ENDED OCTOBER 31, 2006 YEAR ENDED OCTOBER 31, 2005
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------
CLASS A
Sold 3,428,582 $ 94,959,032 5,126,318 $139,073,180
Dividends and/or
distributions reinvested 1,216,605 31,765,567 685,289 17,830,853
Redeemed (3,947,226) (108,698,554) (2,781,682) (75,172,005)
------------------------------------------------------------
Net increase 697,961 $ 18,026,045 3,029,925 $ 81,732,028
============================================================

------------------------------------------------------------------------------------------
CLASS B
Sold 662,085 $ 16,582,767 1,048,244 $ 26,362,973
Dividends and/or
distributions reinvested 332,565 7,888,450 211,813 5,102,574
Redeemed (1,026,360) (25,768,335) (868,351) (21,870,737)
------------------------------------------------------------
Net increase (decrease) (31,710) $ (1,297,118) 391,706 $ 9,594,810
============================================================

YEAR ENDED OCTOBER 31, 2006 YEAR ENDED OCTOBER 31, 2005
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------------------------------
CLASS C
Sold 534,433 $ 13,374,856 752,642 $ 18,936,146
Dividends and/or
distributions reinvested 203,472 4,832,457 110,036 2,654,047
Redeemed (500,237) (12,583,296) (381,897) (9,626,549)
------------------------------------------------------------
Net increase 237,668 $ 5,624,017 480,781 $ 11,963,644
============================================================

------------------------------------------------------------------------------------------
CLASS N
Sold 185,780 $ 5,032,410 306,714 $ 8,253,911
Dividends and/or
distributions reinvested 64,913 1,664,380 32,272 829,719
Redeemed (195,260) (5,301,527) (124,402) (3,356,873)
------------------------------------------------------------
Net increase 55,433 $ 1,395,263 214,584 $ 5,726,757
============================================================

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

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

PURCHASES SALES
------------------------------------------------------------
Investment securities $277,791,975 $286,626,453

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

FEE SCHEDULE
--------------------------------------------
Up to $400 million 0.85%
Next $400 million 0.80
Next $400 million 0.75
Next $400 million 0.65
Next $400 million 0.60
Over $2.0 billion 0.50

--------------------------------------------------------------------------------
SUB-ADVISOR FEES. The Manager retains Oppenheimer Capital LLC (the
"Sub-Advisor") to provide the day-to-day portfolio management of the Fund. Under
the Sub-Advisory Agreement, the Manager pays the Sub-Advisor an annual fee in
monthly installments, based on the average daily net assets of the Fund. The fee
paid to the Sub-Advisor under the Sub-Advisory agreement is paid by the Manager,
not by the Fund. The fee is calculated as a percentage of the fee the Fund pays
the Manager. The rate is 40% of the advisory fee collected by the Manager based
on the net assets of the Fund as of February 28, 1997, and remaining 120 days
later, plus 30% of the fee collected by the Manager on assets in excess of that
amount. In each case the fee is calculated after any waivers of the Manager's
fee from the Fund. For the year ended October 31, 2006, the Manager paid
$1,581,320 to the Sub-Advisor for its services to the Fund.

--------------------------------------------------------------------------------
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 October 31, 2006, the Fund paid
$1,029,879 to OFS for services to the Fund.

--------------------------------------------------------------------------------
DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund
has adopted Distribution and Service Plans for Class B, Class C and Class N
shares to compensate the Distributor for its services in connection with the
distribution of those shares and servicing accounts. Under the plans, the Fund
pays the Distributor an annual asset-based sales charge of 0.75% on Class B and
Class C shares and 0.25% on Class N shares. The Distributor also receives a
service fee of up to 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 Directors and its independent directors must determine
whether the Distributor shall be entitled to payment from the Fund of all or a
portion of the service fee and/or asset-based sales charge in respect to shares
sold prior to the effective date of such termination. The Distributor determines
its uncompensated expenses under the plan at calendar quarter ends. The
Distributor's aggregate uncompensated expenses under the plan at September 30,
2006 for Class B, Class C and Class N shares were $625,348, $584,895 and
$249,221, respectively. Fees incurred by the Fund under the plans are detailed
in the Statement of Operations.

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

CLASS A CLASS B CLASS C CLASS N
CLASS A CONTINGENT CONTINGENT CONTINGENT CONTINGENT
FRONT-END DEFERRED DEFERRED DEFERRED DEFERRED
SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES SALES CHARGES
RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY
YEAR ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR
------------------------------------------------------------------------------------------------------

October 31, 2006 $240,266 $7,369 $124,391 $18,111 $4,783

--------------------------------------------------------------------------------
WAIVERS AND REIMBURSEMENTS OF EXPENSES. OFS has voluntarily agreed to limit
transfer and shareholder servicing agent fees for all classes to 0.35% of
average annual net assets per class. During the year ended October 31, 2006, OFS
waived $32,951 for Class N shares. This undertaking may be amended or withdrawn
at any time.

--------------------------------------------------------------------------------
5. FOREIGN CURRENCY CONTRACTS

As of October 31, 2006, the Fund had no outstanding foreign currency
contracts.

--------------------------------------------------------------------------------
6. SECURITIES LENDING

The Fund lends portfolio securities from time to time in order to earn
additional income. In return, the Fund receives collateral in the form of
securities, letters of credit or cash, against the loaned securities and
maintains collateral 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 business each day. If the Fund is
undercollateralized at the close of business due to an increase in market value
of securities on loan, additional collateral is requested from the borrowing
counterparty and is delivered to the Fund on the next business day. Cash
collateral may be invested in approved investments and the Fund bears the risk
of any loss in value of these investments. The Fund retains a portion of the
interest earned from the collateral. 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. As of Ocotber 31, 2006, the Fund
had no securities on loan.

--------------------------------------------------------------------------------
7. RECENT ACCOUNTING PRONOUNCEMENTS

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

In September 2006, the Financial Accounting Standards Board 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 October
31, 2006, 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.

--------------------------------------------------------------------------------
8. LITIGATION

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

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

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

Appendix A

RATINGS DEFINITIONS

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

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

LONG-TERM RATINGS: BONDS AND PREFERRED STOCK ISSUER RATINGS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

N.R. Not rated.

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

Bond Investment Quality Standards

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

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

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

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

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

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

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

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

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

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

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

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

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

Investment Grade:

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

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

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

Speculative Grade:

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

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

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

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

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

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

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

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

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

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

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

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

D: Default. Denotes actual or imminent payment default.

Appendix B

OppenheimerFunds Special Sales Charge Arrangements and Waivers

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

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

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

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

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

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

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

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

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

Class A shares purchased by the following investors are not subject to any
Class A sales charges (and no concessions are paid by the Distributor on such
purchases):
The Manager or its affiliates.
Present or former officers, directors, trustees and employees (and
their "immediate families") of the Fund, the Manager and its
affiliates, and retirement plans established by them for their
employees. The term "immediate family" refers to one's spouse,
children, grandchildren, grandparents, parents, parents-in-law,
brothers and sisters, sons- and daughters-in-law, a sibling's
spouse, a spouse's siblings, aunts, uncles, nieces and nephews;
relatives by virtue of a remarriage (step-children, step-parents,
etc.) are included.
Registered management investment companies, or separate accounts of
insurance companies having an agreement with the Manager or the
Distributor for that purpose.
Dealers or brokers that have a sales agreement with the Distributor, if
they purchase shares for their own accounts or for retirement plans
for their employees.
Employees and registered representatives (and their spouses) of dealers
or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and
which are identified as such to the Distributor) or with the
Distributor. The purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children).
Dealers, brokers, banks or registered investment 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 October 1, 2005, taxable accounts established with the
proceeds of Required Minimum Distributions from Retirement Plans.

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

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

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

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

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

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

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

A. Waivers for Redemptions in Certain Cases.

The Class B, Class C and Class N contingent deferred sales charges will be
waived for redemptions of shares in the following cases:
Shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," in the applicable Prospectus.
Redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder. The death or
disability must have occurred after the account was established, and
for disability you must provide evidence of a determination of
disability by the Social Security Administration.
The contingent deferred sales charges are generally not waived
following the death or disability of a grantor or trustee for a
trust account. The contingent deferred sales charges will only be
waived in the limited case of the death of the trustee of a grantor
trust or revocable living trust for which the trustee is also the
sole beneficiary. The death or disability must have

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

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

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

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

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

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

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

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

A. Reductions or Waivers of Class A Sales Charges.

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

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

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

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

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

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

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

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

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

Waivers for Redemptions of Shares Purchased Prior to March 6, 1995. In
the following cases, the contingent deferred sales charge will be waived for
redemptions of Class A, Class B or Class C shares of an Oppenheimer fund. The
shares must have been acquired by the merger of a Former Quest for

Value Fund into the fund or by exchange from an Oppenheimer fund that was a
Former Quest for Value Fund or into which such fund merged. Those shares must
have been purchased prior to March 6, 1995 in connection with:
o withdrawals under an automatic withdrawal plan holding only either
Class B or Class C shares if the annual withdrawal does not
exceed 10% of the initial value of the account value, adjusted
annually, and
o liquidation of a shareholder's account if the aggregate net asset value
of shares held in the account is less than the required minimum
value of such accounts.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Oppenheimer Convertible Securities Fund (referred to as the "Fund" in this
section) may sell Class M shares at net asset value without any initial sales
charge to the classes of investors listed below who, prior to March 11, 1996,
owned shares of the Fund's then-existing Class A and were permitted to
purchase those shares at net asset value without sales charge:
the Manager and its affiliates,
present or former officers, directors, trustees and employees (and
their "immediate families" as defined in the Fund's Statement of
Additional Information) of the Fund, the Manager and its affiliates,
and retirement plans established by them or the prior investment
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.

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

Oppenheimer Equity Income Fund, Inc.

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
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109-3661

Independent Registered Public Accounting Firm
KPMG LLP
707 Seventeenth Street
Denver, Colorado 80202

Legal Counsel
Mayer, Brown, Rowe & Maw LLP
1675 Broadway
New York, New York 10019
1234

PX835.001.0807