LITIGATION

     A consolidated  amended complaint has been filed as putative derivative and
class actions against the Manager, OFS and the Distributor, as well as 51 of the
Oppenheimer funds (as "Nominal  Defendants")  including the Fund, 30 present and
former  Directors  or Trustees  and 8 present and former  officers of the funds.
This  complaint,  initially  filed in the U.S.  District  Court for the Southern
District  of New York on  January  10,  2005  and  amended  on  March  4,  2005,
consolidates  into a single  action and amends six  individual  previously-filed
putative  derivative and class action  complaints.  Like those prior complaints,
the complaint  alleges that the Manager charged  excessive fees for distribution
and other  costs,  improperly  used  assets of the funds in the form of directed
brokerage  commissions  and 12b-1 fees to pay  brokers  to promote  sales of the
funds,  and failed to properly  disclose  the use of assets of the funds to make
those  payments  in  violation  of the  Investment  Company  Act of 1940 and the
Investment  Advisers  Act of  1940.  Also,  like  those  prior  complaints,  the
complaint  further  alleges that by  permitting  and/or  participating  in those
actions, the Directors/Trustees and the Officers breached their fiduciary duties
to  shareholders  of the funds under the  Investment  Company Act of 1940 and at
common law. The complaint seeks  unspecified  compensatory and punitive damages,
rescission of the funds' investment  advisory  agreements,  an accounting of all
fees paid, and an award of attorneys' fees and litigation expenses.


     The defendants believe that the allegations contained in the Complaints are
without  merit  and that they  have  meritorious  defenses  against  the  claims
asserted.  The  defendants  intend to defend these  lawsuits  vigorously  and to
contest any claimed  liability.  The defendants  believe that it is premature to
render any opinion as to the  likelihood of an outcome  unfavorable  to them and
that no estimate  can yet be made with any degree of  certainty as to the amount
or range of any potential loss.