UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-09845 OPPENHEIMER EMERGING TECHNOLOGIES FUND (Exact name of registrant as specified in charter) 6803 SOUTH TUCSON WAY, CENTENNIAL, COLORADO 80112-3924 (Address of principal executive offices) (Zip code) Robert G. Zack, Esq. OppenheimerFunds, Inc. TWO WORLD FINANCIAL CENTER, NEW YORK, NEW YORK 10281-1008 (Name and address of agent for service) Registrant's telephone number, including area code: (303) 768-3200 Date of fiscal year end: OCTOBER Date of reporting period: APRIL 30, 2006 ITEM 1. REPORTS TO STOCKHOLDERS. TOP HOLDINGS AND ALLOCATIONS - -------------------------------------------------------------------------------- TOP TEN COMMON STOCK INDUSTRIES - -------------------------------------------------------------------------------- Semiconductors & Semiconductor Equipment 20.5% - -------------------------------------------------------------------------------- Software 17.9 - -------------------------------------------------------------------------------- Communications Equipment 13.9 - -------------------------------------------------------------------------------- Internet Software & Services 12.7 - -------------------------------------------------------------------------------- Computers & Peripherals 9.3 - -------------------------------------------------------------------------------- Electronic Equipment & Instruments 5.5 - -------------------------------------------------------------------------------- Diversified Telecommunication Services 3.6 - -------------------------------------------------------------------------------- Health Care Equipment & Supplies 3.4 - -------------------------------------------------------------------------------- Wireless Telecommunication Services 3.0 - -------------------------------------------------------------------------------- IT Services 2.6 Portfolio holdings and allocations are subject to change. Percentages are as of April 30, 2006, and are based on net assets. TOP TEN COMMON STOCK HOLDINGS - -------------------------------------------------------------------------------- Network Appliance, Inc. 3.3% - -------------------------------------------------------------------------------- Cisco Systems, Inc. 3.2 - -------------------------------------------------------------------------------- CDW Corp. 2.7 - -------------------------------------------------------------------------------- Corning, Inc. 2.6 - -------------------------------------------------------------------------------- QUALCOMM, Inc. 2.5 - -------------------------------------------------------------------------------- Google, Inc., Cl. A 2.5 - -------------------------------------------------------------------------------- Akamai Technologies, Inc. 2.3 - -------------------------------------------------------------------------------- Autodesk, Inc. 2.3 - -------------------------------------------------------------------------------- American Tower Corp. 2.2 - -------------------------------------------------------------------------------- Brightpoint, Inc. 2.1 Portfolio holdings and allocations are subject to change. Percentages are as of April 30, 2006, and are based on net assets. For up-to-date Top 10 Fund Holdings, please visit www.oppenheimerfunds.com. 9 | OPPENHEIMER EMERGING TECHNOLOGIES FUND TOP HOLDINGS AND ALLOCATIONS - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECTOR ALLOCATION [THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.] Information Technology 82.9% Semiconductors & Semiconductor Equipment 20.6 Software 18.0 Communications Equipment 14.0 Internet Software & Services 12.8 Computers & Peripherals 9.4 Electronic Equipment & Instruments 5.5 IT Services 2.6 Telecommunication Services 6.6 Consumer Discretionary 3.6 Health Care 3.4 Industrials 3.0 Financials 0.5 Portfolio holdings and allocations are subject to change. Percentages are as of April 30, 2006, and are based on the total market value of common stocks. - -------------------------------------------------------------------------------- 10 | OPPENHEIMER EMERGING TECHNOLOGIES FUND NOTES - -------------------------------------------------------------------------------- Total returns include changes in share price and reinvestment of dividends and capital gains distributions in a hypothetical investment for the periods shown. Cumulative total returns are not annualized. The Fund's total returns shown do not reflect the deduction of income taxes on an individual's investment. Taxes may reduce your actual investment returns on income or gains paid by the Fund or any gains you may realize if you sell your shares. INVESTORS SHOULD CONSIDER THE FUND'S INVESTMENT OBJECTIVES, RISKS, AND OTHER CHARGES AND EXPENSES CAREFULLY BEFORE INVESTING. THE FUND'S PROSPECTUS CONTAINS THIS AND OTHER INFORMATION ABOUT THE FUND, AND MAY BE OBTAINED BY ASKING YOUR FINANCIAL ADVISOR, CALLING US AT 1.800.525.7048 OR VISITING OUR WEBSITE AT WWW.OPPENHEIMERFUNDS.COM. READ THE PROSPECTUS CAREFULLY BEFORE INVESTING. The Fund's investment strategy and focus can change over time. The mention of specific fund holdings does not constitute a recommendation by OppenheimerFunds, Inc. CLASS A shares of the Fund were first publicly offered on 4/25/00. Unless otherwise noted, Class A returns include the current maximum initial sales charge of 5.75%. CLASS B shares of the Fund were first publicly offered on 4/25/00. Unless otherwise noted, Class B returns include the applicable contingent deferred sales charge of 5% (1-year) and 2% (5-year). Because Class B shares convert to Class A shares 72 months after purchase, the "since inception" return for Class B uses Class A performance for the period after conversion. Class B shares are subject to an annual 0.75% asset-based sales charge. CLASS C shares of the Fund were first publicly offered on 4/25/00. Unless otherwise noted, Class C returns include the contingent deferred sales charge of 1% for the 1-year period. Class C shares are subject to an annual 0.75% asset-based sales charge. CLASS N shares of the Fund were first publicly offered on 3/1/01. Class N shares are offered only through retirement plans. Unless otherwise noted, Class N returns include the contingent deferred sales charge of 1% for the 1-year period. Class N shares are subject to an annual 0.25% asset-based sales charge. CLASS Y shares of the Fund were first publicly offered on 4/25/00. Class Y shares are offered only to certain institutional investors under special agreement with the Distributor. An explanation of the calculation of performance is in the Fund's Statement of Additional Information. 11 | OPPENHEIMER EMERGING TECHNOLOGIES FUND FUND EXPENSES - -------------------------------------------------------------------------------- FUND EXPENSES. As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, which may include sales charges (loads) on purchase payments, contingent deferred sales charges on redemptions; and redemption fees, if any; and (2) ongoing costs, including management fees; distribution and service fees; and other Fund expenses. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The examples are based on an investment of $1,000.00 invested at the beginning of the period and held for the entire 6-month period ended April 30, 2006. ACTUAL EXPENSES. The "actual" lines of the table provide information about actual account values and actual expenses. You may use the information on this line for the class of shares you hold, together with the amount you invested, to estimate the expense that you paid over the period. Simply divide your account value by $1,000.00 (for example, an $8,600.00 account value divided by $1,000.00 = 8.60), then multiply the result by the number in the "actual" line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES. The "hypothetical" lines of the table provide information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio for each class of shares, and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example for the class of shares you hold with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as front-end or contingent deferred sales charges (loads), redemption fees, or a $12.00 fee imposed annually on accounts valued at less than $500.00 (subject to exceptions 12 | OPPENHEIMER EMERGING TECHNOLOGIES FUND described in the Statement of Additional Information). Therefore, the "hypothetical" lines of the table are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- BEGINNING ENDING EXPENSES ACCOUNT ACCOUNT PAID DURING VALUE VALUE 6 MONTHS ENDED (11/1/05) (4/30/06) APRIL 30, 2006 - -------------------------------------------------------------------------------- Class A Actual $1,000.00 $1,173.90 $ 8.55 - -------------------------------------------------------------------------------- Class A Hypothetical 1,000.00 1,016.96 7.93 - -------------------------------------------------------------------------------- Class B Actual 1,000.00 1,172.90 12.89 - -------------------------------------------------------------------------------- Class B Hypothetical 1,000.00 1,012.99 11.95 - -------------------------------------------------------------------------------- Class C Actual 1,000.00 1,168.50 12.59 - -------------------------------------------------------------------------------- Class C Hypothetical 1,000.00 1,013.24 11.70 - -------------------------------------------------------------------------------- Class N Actual 1,000.00 1,172.20 9.52 - -------------------------------------------------------------------------------- Class N Hypothetical 1,000.00 1,016.07 8.84 - -------------------------------------------------------------------------------- Class Y Actual 1,000.00 1,176.10 5.90 - -------------------------------------------------------------------------------- Class Y Hypothetical 1,000.00 1,019.39 5.47 Hypothetical assumes 5% annual return before expenses. Expenses are equal to the Fund's annualized expense ratio for that class, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Those annualized expense ratios based on the 6-month period ended April 30, 2006 are as follows: CLASS EXPENSE RATIOS - --------------------------- Class A 1.58% - --------------------------- Class B 2.38 - --------------------------- Class C 2.33 - --------------------------- Class N 1.76 - --------------------------- Class Y 1.09 The expense ratios reflect voluntary waivers or reimbursements of expenses by the Fund's Manager and Transfer Agent that can be terminated at any time, without advance notice. The "Financial Highlights" tables in the Fund's financial statements, included in this report, also show the gross expense ratios, without such waivers or reimbursements. - -------------------------------------------------------------------------------- 13 | OPPENHEIMER EMERGING TECHNOLOGIES FUND STATEMENT OF INVESTMENTS April 30, 2006 / Unaudited - -------------------------------------------------------------------------------- VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- COMMON STOCKS--99.4% - -------------------------------------------------------------------------------- CONSUMER DISCRETIONARY--3.6% - -------------------------------------------------------------------------------- HOTELS, RESTAURANTS & LEISURE--0.6% Ctrip.com International Ltd., ADR 22,670 $ 1,020,041 - -------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL--2.0% eBay, Inc. 1 40,100 1,379,841 - -------------------------------------------------------------------------------- VistaPrint Ltd. 1 54,900 1,755,702 ------------- 3,135,543 - -------------------------------------------------------------------------------- MEDIA--1.0% Focus Media Holding Ltd., ADR 1 25,300 1,527,867 - -------------------------------------------------------------------------------- FINANCIALS--0.4% - -------------------------------------------------------------------------------- CAPITAL MARKETS--0.4% Harris & Harris Group, Inc. 55,250 714,383 - -------------------------------------------------------------------------------- HEALTH CARE--3.4% - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES--3.4% FoxHollow Technologies, Inc. 1 30,000 934,500 - -------------------------------------------------------------------------------- Intuitive Surgical, Inc. 1 13,000 1,651,000 - -------------------------------------------------------------------------------- Syneron Medical Ltd. 1 49,890 1,290,654 - -------------------------------------------------------------------------------- Varian Medical Systems, Inc. 1 28,400 1,487,592 ------------- 5,363,746 - -------------------------------------------------------------------------------- INDUSTRIALS--3.0% - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES--0.9% Kenexa Corp. 1 40,400 1,342,492 - -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT--2.1% Energy Conversion Devices, Inc. 1 51,780 2,589,518 - -------------------------------------------------------------------------------- Energy Conversion Devices, Inc. 1 15,000 750,150 ------------- 3,339,668 - -------------------------------------------------------------------------------- INFORMATION TECHNOLOGY--82.4% - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT--13.9% Cisco Systems, Inc. 1 237,820 4,982,329 - -------------------------------------------------------------------------------- Comverse Technology, Inc. 1 52,700 1,193,655 VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT Continued Corning, Inc. 1 148,370 $ 4,099,463 - -------------------------------------------------------------------------------- F5 Networks, Inc. 1 22,910 1,341,610 - -------------------------------------------------------------------------------- Foundry Networks, Inc. 1 94,600 1,344,266 - -------------------------------------------------------------------------------- Ixia 1 81,100 916,430 - -------------------------------------------------------------------------------- Juniper Networks, Inc. 1 76,300 1,410,024 - -------------------------------------------------------------------------------- QUALCOMM, Inc. 76,770 3,941,372 - -------------------------------------------------------------------------------- Redback Networks, Inc. 1 124,460 2,787,904 ------------- 22,017,053 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS--9.3% Apple Computer, Inc. 1 20,800 1,464,112 - -------------------------------------------------------------------------------- Dell, Inc. 1 120,280 3,151,336 - -------------------------------------------------------------------------------- EMC Corp. 1 243,400 3,288,334 - -------------------------------------------------------------------------------- Network Appliance, Inc. 1 139,450 5,169,412 - -------------------------------------------------------------------------------- Rackable Systems, Inc. 1 32,700 1,680,453 ------------- 14,753,647 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS--5.5% Brightpoint, Inc. 1 98,490 3,297,445 - -------------------------------------------------------------------------------- CDW Corp. 70,800 4,214,016 - -------------------------------------------------------------------------------- Multi-Fineline Electronix, Inc. 1 20,000 1,165,600 ------------ 8,677,061 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES--12.7% Akamai Technologies, Inc. 1 106,460 3,586,637 - -------------------------------------------------------------------------------- Equinix, Inc. 1 21,200 1,397,080 - -------------------------------------------------------------------------------- Google, Inc., Cl. A 1 9,360 3,911,918 - -------------------------------------------------------------------------------- j2 Global Communications, Inc. 1 45,650 2,240,959 - -------------------------------------------------------------------------------- Openwave Systems, Inc. 1 62,180 1,157,170 - -------------------------------------------------------------------------------- VeriSign, Inc. 1 133,800 3,146,976 14 | OPPENHEIMER EMERGING TECHNOLOGIES FUND VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES Continued WebEx Communications, Inc. 1 48,800 $ 1,725,080 - -------------------------------------------------------------------------------- Yahoo!, Inc. 1 90,290 2,959,706 ------------- 20,125,526 - -------------------------------------------------------------------------------- IT SERVICES--2.6% Aquantive, Inc. 1 63,340 1,587,300 - -------------------------------------------------------------------------------- Cognizant Technology Solutions Corp. 1 39,660 2,522,773 ------------- 4,110,073 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT--20.5% Atheros Communications, Inc. 1 52,100 1,322,819 - -------------------------------------------------------------------------------- ATMI, Inc. 1 39,800 1,130,320 - -------------------------------------------------------------------------------- Broadcom Corp., Cl. A 1 77,280 3,176,981 - -------------------------------------------------------------------------------- Diodes, Inc. 1 45,650 1,859,781 - -------------------------------------------------------------------------------- FormFactor, Inc. 1 26,500 1,104,785 - -------------------------------------------------------------------------------- Hittite Microwave Corp. 1 41,790 1,626,049 - -------------------------------------------------------------------------------- International Rectifier Corp. 1 70,700 3,195,640 - -------------------------------------------------------------------------------- Linear Technology Corp. 75,560 2,682,380 - -------------------------------------------------------------------------------- Marvell Technology Group Ltd. 1 40,570 2,316,141 - -------------------------------------------------------------------------------- Maxim Integrated Products, Inc. 69,470 2,449,512 - -------------------------------------------------------------------------------- Microchip Technology, Inc. 57,200 2,131,272 - -------------------------------------------------------------------------------- Microsemi Corp. 1 53,560 1,463,259 - -------------------------------------------------------------------------------- Netlogic Microsystems, Inc. 1 29,600 1,191,992 - -------------------------------------------------------------------------------- SiRF Technology Holdings, Inc. 1 70,700 2,414,405 - -------------------------------------------------------------------------------- Supertex, Inc. 1 35,300 1,363,286 - -------------------------------------------------------------------------------- Trident Microsystems, Inc. 1 113,620 3,022,292 ------------- 32,450,914 VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- SOFTWARE--17.9% Adobe Systems, Inc. 1 82,370 $ 3,228,904 - -------------------------------------------------------------------------------- Altiris, Inc. 1 54,300 1,162,020 - -------------------------------------------------------------------------------- Amdocs Ltd. 1 22,000 818,400 - -------------------------------------------------------------------------------- Autodesk, Inc. 1 85,010 3,573,820 - -------------------------------------------------------------------------------- Cognos, Inc. 1 40,170 1,497,136 - -------------------------------------------------------------------------------- Concur Technologies, Inc. 1 71,900 1,120,921 - -------------------------------------------------------------------------------- Electronic Arts, Inc. 1 43,090 2,447,512 - -------------------------------------------------------------------------------- Hyperion Solutions Corp. 1 53,260 1,630,821 - -------------------------------------------------------------------------------- Informatica Corp. 1 107,440 1,651,353 - -------------------------------------------------------------------------------- McAfee, Inc. 1 117,680 3,070,271 - -------------------------------------------------------------------------------- MICROS Systems, Inc. 1 43,150 1,803,670 - -------------------------------------------------------------------------------- Microsoft Corp. 113,820 2,748,753 - -------------------------------------------------------------------------------- Nuance Communications, Inc. 1 67,500 866,025 - -------------------------------------------------------------------------------- Ultimate Software Group, Inc. (The) 1 102,720 2,626,550 ------------- 28,246,156 - -------------------------------------------------------------------------------- TELECOMMUNICATION SERVICES--6.6% - -------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES--3.6% American Tower Corp. 1 102,632 3,503,856 - -------------------------------------------------------------------------------- NeuStar, Inc., Cl. A 1 64,150 2,251,665 ------------- 5,755,521 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES--3.0% NII Holdings, Inc. 1 27,600 1,653,240 - -------------------------------------------------------------------------------- SBA Communications Corp. 1 120,290 3,021,686 ------------- 4,674,926 ------------- Total Common Stocks (Cost $122,628,981) 157,254,617 15 | OPPENHEIMER EMERGING TECHNOLOGIES FUND STATEMENT OF INVESTMENTS Unaudited / Continued - -------------------------------------------------------------------------------- VALUE SHARES SEE NOTE 1 - -------------------------------------------------------------------------------- PREFERRED STOCKS--0.0% - -------------------------------------------------------------------------------- Blaze Network Products, Inc., 8% Cv., Series D 1,2,3 (Cost $1,067,750) 166,836 $ 376 PRINCIPAL AMOUNT - -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS--1.8% - -------------------------------------------------------------------------------- Undivided interest of 0.31% in joint repurchase agreement (Principal Amount/Value $912,364,000, with a maturity value of $912,721,343) with UBS Warburg LLC, 4.70%, dated 4/28/06, to be repurchased at $2,812,101 on 5/1/06, collateralized by Federal National Mortgage Assn., 5%, 3/1/34, with a value of $933,734,744 (Cost $2,811,000) $ 2,811,000 2,811,000 VALUE SEE NOTE 1 - -------------------------------------------------------------------------------- TOTAL INVESTMENTS, AT VALUE (COST $126,507,731) 101.2% $160,065,993 - -------------------------------------------------------------------------------- LIABILITIES IN EXCESS OF OTHER ASSETS (1.2) (1,943,900) --------------------------- NET ASSETS 100.0% $158,122,093 =========================== FOOTNOTES TO STATEMENT OF INVESTMENTS 1. Non-income producing security. 2. Illiquid or restricted security. The aggregate value of illiquid or restricted securities as of April 30, 2006 was $376, which represents less than 0.005% of the Fund's net assets, all of which is considered restricted. See Note 5 of accompanying Notes. 3. Represents ownership of at least 5% of the voting securities of the issuer, and is or was an affiliate, as defined in the Investment Company Act of 1940, at or during the period ended April 30, 2006. Transactions during the period in which the issuer was an affiliate are as follows: SHARES GROSS GROSS SHARES OCTOBER 31, 2005 ADDITIONS REDUCTIONS APRIL 30, 2006 - ----------------------------------------------------------------------------------------------------------------- Blaze Network Products, Inc., 8% Cv., Series D 166,836 -- -- 166,836 MicroPhotonix Integration Corp., Cv., Series C 316,691 -- 316,691 -- VALUE DIVIDEND REALIZED SEE NOTE 1 INCOME LOSS - ----------------------------------------------------------------------------------------------------------------- Blaze Network Products, Inc., 8% Cv., Series D $ 376 $ -- $ -- MicroPhotonix Integration Corp., Cv., Series C -- -- 1,999,999 --------------------------------------- $ 376 $ -- $ 1,999,999 ======================================== SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 16 | OPPENHEIMER EMERGING TECHNOLOGIES FUND STATEMENT OF ASSETS AND LIABILITIES Unaudited - -------------------------------------------------------------------------------- April 30, 2006 - ----------------------------------------------------------------------------------------------- ASSETS - ----------------------------------------------------------------------------------------------- Investments, at value--see accompanying statement of investments: Unaffiliated companies (cost $125,439,981) $ 160,065,617 Affiliated companies (cost $1,067,750) 376 --------------- 160,065,993 - ----------------------------------------------------------------------------------------------- Cash 126,030 - ----------------------------------------------------------------------------------------------- Receivables and other assets: Shares of beneficial interest sold 211,279 Interest and dividends 12,435 Investments sold 9,563 Other 11,017 --------------- Total assets 160,436,317 - ----------------------------------------------------------------------------------------------- LIABILITIES - ----------------------------------------------------------------------------------------------- Payables and other liabilities: Investments purchased 1,890,228 Shares of beneficial interest redeemed 198,080 Shareholder communications 83,526 Transfer and shareholder servicing agent fees 45,211 Trustees' compensation 37,887 Distribution and service plan fees 31,477 Other 27,815 --------------- Total liabilities 2,314,224 - ----------------------------------------------------------------------------------------------- NET ASSETS $ 158,122,093 =============== - ----------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS - ----------------------------------------------------------------------------------------------- Par value of shares of beneficial interest $ 49,719 - ----------------------------------------------------------------------------------------------- Additional paid-in capital 600,143,553 - ----------------------------------------------------------------------------------------------- Accumulated net investment loss (1,319,679) - ----------------------------------------------------------------------------------------------- Accumulated net realized loss on investments (474,309,762) - ----------------------------------------------------------------------------------------------- Net unrealized appreciation on investments 33,558,262 --------------- NET ASSETS $ 158,122,093 =============== 17 | OPPENHEIMER EMERGING TECHNOLOGIES FUND STATEMENT OF ASSETS AND LIABILITIES Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE - -------------------------------------------------------------------------------------------------------------- Class A Shares: Net asset value and redemption price per share (based on net assets of $78,643,418 and 24,303,671 shares of beneficial interest outstanding) $3.24 Maximum offering price per share (net asset value plus sales charge of 5.75% of offering price) $3.44 - -------------------------------------------------------------------------------------------------------------- Class B Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $53,342,122 and 17,123,119 shares of beneficial interest outstanding) $3.12 - -------------------------------------------------------------------------------------------------------------- Class C Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $19,270,969 and 6,178,032 shares of beneficial interest outstanding) $3.12 - -------------------------------------------------------------------------------------------------------------- Class N Shares: Net asset value, redemption price (excludes applicable contingent deferred sales charge) and offering price per share (based on net assets of $4,401,689 and 1,375,994 shares of beneficial interest outstanding) $3.20 - -------------------------------------------------------------------------------------------------------------- Class Y Shares: Net asset value, redemption price and offering price per share (based on net assets of $2,463,895 and 737,895 shares of beneficial interest outstanding) $3.34 SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 18 | OPPENHEIMER EMERGING TECHNOLOGIES FUND STATEMENT OF OPERATIONS Unaudited - -------------------------------------------------------------------------------- For the Six Months Ended April 30, 2006 - ----------------------------------------------------------------------------------------------- INVESTMENT INCOME - ----------------------------------------------------------------------------------------------- Dividends $ 108,562 - ----------------------------------------------------------------------------------------------- Interest 98,033 --------------- Total investment income 206,595 - ----------------------------------------------------------------------------------------------- EXPENSES - ----------------------------------------------------------------------------------------------- Management fees 684,710 - ----------------------------------------------------------------------------------------------- Distribution and service plan fees: Class A 89,703 Class B 260,425 Class C 94,343 Class N 10,515 - ----------------------------------------------------------------------------------------------- Transfer and shareholder servicing agent fees: Class A 274,484 Class B 221,165 Class C 63,213 Class N 12,247 Class Y 2,467 - ----------------------------------------------------------------------------------------------- Shareholder communications: Class A 42,793 Class B 36,961 Class C 9,389 Class N 814 - ----------------------------------------------------------------------------------------------- Other 15,863 --------------- Total expenses 1,819,092 Less waivers and reimbursements of expenses (337,706) --------------- Net expenses 1,481,386 - ----------------------------------------------------------------------------------------------- NET INVESTMENT LOSS (1,274,791) - ----------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - ----------------------------------------------------------------------------------------------- Net realized gain (loss) on: Investments: Unaffiliated companies 2,055,100 Affiliated companies (1,999,999) --------------- Net realized gain 55,101 - ----------------------------------------------------------------------------------------------- Net change in unrealized appreciation on investments 25,076,732 - ----------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 23,857,042 =============== SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 19 | OPPENHEIMER EMERGING TECHNOLOGIES FUND STATEMENTS OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- SIX MONTHS YEAR ENDED ENDED APRIL 30, 2006 OCTOBER 31, (UNAUDITED) 2005 - ---------------------------------------------------------------------------------------------------------------- OPERATIONS - ---------------------------------------------------------------------------------------------------------------- Net investment loss $ (1,274,791) $ (2,491,316) - ---------------------------------------------------------------------------------------------------------------- Net realized gain (loss) 55,101 (4,357,066) - ---------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation 25,076,732 11,049,349 ----------------------------------- Net increase in net assets resulting from operations 23,857,042 4,200,967 - ---------------------------------------------------------------------------------------------------------------- DIVIDENDS AND/OR DISTRIBUTIONS TO SHAREHOLDERS - ---------------------------------------------------------------------------------------------------------------- Dividends from net investment income: Class A -- (218,101) Class B -- -- Class C -- -- Class N -- (8,925) Class Y -- (12,465) - ---------------------------------------------------------------------------------------------------------------- Dividends in excess of net investment income: Class A -- (343,030) Class B -- -- Class C -- -- Class N -- (14,038) Class Y -- (19,605) - ---------------------------------------------------------------------------------------------------------------- BENEFICIAL INTEREST TRANSACTIONS - ---------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from beneficial interest transactions: Class A (1,883,712) (12,102,611) Class B (3,727,136) (8,787,393) Class C (1,320,589) (5,594,723) Class N 82,092 39,946 Class Y 270,836 (448,094) - ---------------------------------------------------------------------------------------------------------------- NET ASSETS - ---------------------------------------------------------------------------------------------------------------- Total increase (decrease) 17,278,533 (23,308,072) - ---------------------------------------------------------------------------------------------------------------- Beginning of period 140,843,560 164,151,632 ----------------------------------- End of period (including accumulated net investment loss of $1,319,679 and $44,888, respectively) $ 158,122,093 $ 140,843,560 =================================== SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 20 | OPPENHEIMER EMERGING TECHNOLOGIES FUND FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- SIX MONTHS YEAR ENDED ENDED APRIL 30, 2006 OCT. 31, CLASS A (UNAUDITED) 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 2.76 $ 2.69 $ 3.14 $ 1.82 $ 3.51 $ 11.24 - ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment loss (.02) 1 (.03) 1,2 (.04) 1 (.04) (.04) (.01) Net realized and unrealized gain (loss) .50 .12 (.41) 1.36 (1.65) (7.71) -------------------------------------------------------------------------------- Total from investment operations .48 .09 (.45) 1.32 (1.69) (7.72) - ------------------------------------------------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income -- (.01) -- -- -- (.01) Dividends in excess of net investment income -- (.01) -- -- -- -- -------------------------------------------------------------------------------- Total dividends and/or distributions to shareholders -- (.02) -- -- -- (.01) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 3.24 $ 2.76 $ 2.69 $ 3.14 $ 1.82 $ 3.51 ================================================================================ - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE 3 17.39% 3.30% (14.33)% 72.53% (48.15)% (68.74)% - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 78,643 $ 68,724 $ 79,083 $ 93,886 $ 44,150 $ 91,220 - ------------------------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $ 75,423 $ 74,268 $ 89,415 $ 62,832 $ 68,695 $ 158,376 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios to average net assets: 4 Net investment loss (1.31)% (1.25)% 2 (1.55)% (1.51)% (1.61)% (0.23)% Total expenses 2.01% 2.14% 2.11% 2.70% 3.11% 2.08% Expenses after payments and waivers and reduction to custodian expenses 1.58% 1.66% 1.69% 1.71% 2.10% 2.04% - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 44% 147% 157% 219% 159% 85% 1. Per share amounts calculated based on the average shares outstanding during the period. 2. Net investment loss per share and the net investment loss ratio include $.01 and 0.25%, respectively, resulting from Microsoft Corp. dividends including a special dividend in November 2004. 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. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 21 | OPPENHEIMER EMERGING TECHNOLOGIES FUND FINANCIAL HIGHLIGHTS Continued - -------------------------------------------------------------------------------- SIX MONTHS YEAR ENDED ENDED APRIL 30, 2006 OCT. 31, CLASS B (UNAUDITED) 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 2.66 $ 2.60 $ 3.06 $ 1.79 $ 3.48 $ 11.20 - ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment loss (.03) 1 (.05) 1,2 (.07) 1 (.04) (.07) (.06) Net realized and unrealized gain (loss) .49 .11 (.39) 1.31 (1.62) (7.66) -------------------------------------------------------------------------------- Total from investment operations .46 .06 (.46) 1.27 (1.69) (7.72) - ------------------------------------------------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income -- -- -- -- -- -- Dividends in excess of net investment income -- -- -- -- -- -- -------------------------------------------------------------------------------- Total dividends and/or distributions to shareholders -- -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 3.12 $ 2.66 $ 2.60 $ 3.06 $ 1.79 $ 3.48 ================================================================================ - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE 3 17.29% 2.31% (15.03)% 70.95% (48.56)% (68.93)% - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 53,342 $ 48,955 $ 56,513 $ 69,789 $ 36,813 $ 75,336 - ------------------------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $ 52,614 $ 52,959 $ 63,321 $ 48,920 $ 58,029 $ 128,540 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios to average net assets: 4 Net investment loss (2.11)% (2.06)% 2 (2.34)% (2.23)% (2.40)% (0.99)% Total expenses 2.91% 3.12% 3.14% 3.82% 3.95% 2.84% Expenses after payments and waivers and reduction to custodian expenses 2.38% 2.46% 2.48% 2.42% 2.94% 2.80% - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 44% 147% 157% 219% 159% 85% 1. Per share amounts calculated based on the average shares outstanding during the period. 2. Net investment loss per share and the net investment loss ratio include $.01 and 0.25%, respectively, resulting from Microsoft Corp. dividends including a special dividend in November 2004. 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. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 22 | OPPENHEIMER EMERGING TECHNOLOGIES FUND SIX MONTHS YEAR ENDED ENDED APRIL 30, 2006 OCT. 31, CLASS C (UNAUDITED) 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 2.67 $ 2.60 $ 3.06 $ 1.79 $ 3.48 $ 11.20 - ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment loss (.03) 1 (.05) 1,2 (.06) 1 (.04) (.05) (.05) Net realized and unrealized gain (loss) .48 .12 (.40) 1.31 (1.64) (7.67) -------------------------------------------------------------------------------- Total from investment operations .45 .07 (.46) 1.27 (1.69) (7.72) - ------------------------------------------------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income -- -- -- -- -- -- Dividends in excess of net investment income -- -- -- -- -- -- -------------------------------------------------------------------------------- Total dividends and/or distributions to shareholders -- -- -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 3.12 $ 2.67 $ 2.60 $ 3.06 $ 1.79 $ 3.48 ================================================================================ - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE 3 16.85% 2.69% (15.03)% 70.95% (48.56)% (68.93)% - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 19,271 $ 17,646 $ 22,777 $ 26,112 $ 14,143 $ 23,121 - ------------------------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $ 19,051 $ 20,550 $ 25,126 $ 17,266 $ 17,800 $ 38,049 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios to average net assets: 4 Net investment loss (2.05)% (1.98)% 2 (2.28)% (2.29)% (2.36)% (1.00)% Total expenses 2.69% 2.77% 2.77% 3.40% 3.84% 2.84% Expenses after payments and waivers and reduction to custodian expenses 2.33% 2.40% 2.43% 2.48% 2.83% 2.80% - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 44% 147% 157% 219% 159% 85% 1. Per share amounts calculated based on the average shares outstanding during the period. 2. Net investment loss per share and the net investment loss ratio include $.01 and 0.25%, respectively, resulting from Microsoft Corp. dividends including a special dividend in November 2004. 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. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 23 | OPPENHEIMER EMERGING TECHNOLOGIES FUND FINANCIAL HIGHLIGHTS Continued - -------------------------------------------------------------------------------- SIX MONTHS YEAR ENDED ENDED APRIL 30, 2006 OCT. 31, CLASS N (UNAUDITED) 2005 2004 2003 2002 2001 1 - ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 2.73 $ 2.66 $ 3.12 $ 1.81 $ 3.50 $ 6.59 - ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment loss (.02) 2 (.04) 2,3 (.05) 2 (.05) (.04) (.03) Net realized and unrealized gain (loss) .49 .13 (.41) 1.36 (1.65) (3.06) -------------------------------------------------------------------------------- Total from investment operations .47 .09 (.46) 1.31 (1.69) (3.09) - ------------------------------------------------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income -- (.01) -- -- -- -- Dividends in excess of net investment income -- (.01) -- -- -- -- -------------------------------------------------------------------------------- Total dividends and/or distributions to shareholders -- (.02) -- -- -- -- - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 3.20 $ 2.73 $ 2.66 $ 3.12 $ 1.81 $ 3.50 ================================================================================ - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE 4 17.22% 3.27% (14.74)% 72.38% (48.29)% (46.89)% - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 4,402 $ 3,659 $ 3,528 $ 4,445 $ 1,582 $ 1,450 - ------------------------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $ 4,257 $ 3,588 $ 3,548 $ 2,698 $ 1,547 $ 1,287 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios to average net assets: 5 Net investment loss (1.49)% (1.44)% 3 (1.74)% (1.89)% (1.80)% (1.24)% Total expenses 2.04% 2.19% 2.18% 2.30% 3.05% 2.61% Expenses after payments and waivers and reduction to custodian expenses 1.76% 1.82% 1.88% 2.10% 2.04% 2.57% - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 44% 147% 157% 219% 159% 85% 1. For the period from March 1, 2001 (commencement of operations) to October 31, 2001. 2. Per share amounts calculated based on the average shares outstanding during the period. 3. Net investment loss per share and the net investment loss ratio include $.01 and 0.25%, respectively, resulting from Microsoft Corp. dividends including a special dividend in November 2004. 4. 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. 5. Annualized for periods of less than one full year. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 24 | OPPENHEIMER EMERGING TECHNOLOGIES FUND SIX MONTHS YEAR ENDED ENDED APRIL 30, 2006 OCT. 31, CLASS Y (UNAUDITED) 2005 2004 2003 2002 2001 - ----------------------------------------------------------------------------------------------------------------------------------- PER SHARE OPERATING DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of period $ 2.84 $ 2.77 $ 3.21 $ 1.85 $ 3.55 $ 11.26 - ------------------------------------------------------------------------------------------------------------------------------------ Income (loss) from investment operations: Net investment income (loss) (.01) 1 (.02) 1,2 (.03) 1 (.04) (.03) -- 3 Net realized and unrealized gain (loss) .51 .13 (.41) 1.40 (1.67) (7.69) -------------------------------------------------------------------------------- Total from investment operations .50 .11 (.44) 1.36 (1.70) (7.69) - ------------------------------------------------------------------------------------------------------------------------------------ Dividends and/or distributions to shareholders: Dividends from net investment income -- (.01) -- -- -- (.02) Dividends in excess of net investment income -- (.03) -- -- -- -- -------------------------------------------------------------------------------- Total dividends and/or distributions to shareholders -- (.04) -- -- -- (.02) - ------------------------------------------------------------------------------------------------------------------------------------ Net asset value, end of period $ 3.34 $ 2.84 $ 2.77 $ 3.21 $ 1.85 $ 3.55 ================================================================================ - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RETURN, AT NET ASSET VALUE 4 17.61% 3.94% (13.71)% 73.51% (47.89)% (68.40)% - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------------------------------------ Net assets, end of period (in thousands) $ 2,464 $ 1,860 $ 2,251 $ 2,480 $ 887 $ 1,236 - ------------------------------------------------------------------------------------------------------------------------------------ Average net assets (in thousands) $ 2,168 $ 2,106 $ 2,593 $ 1,492 $ 1,057 $ 331 - ------------------------------------------------------------------------------------------------------------------------------------ Ratios to average net assets: 5 Net investment loss (0.82)% (0.56)% 2 (0.86)% (1.05)% (1.03)% (0.08)% Total expenses 1.15% 0.97% 1.00% 1.26% 1.57% 1.33% Expenses after payments and waivers and reduction to custodian expenses 1.09% 0.97% 1.00% 1.26% 1.53% 1.23% - ------------------------------------------------------------------------------------------------------------------------------------ Portfolio turnover rate 44% 147% 157% 219% 159% 85% 1. Per share amounts calculated based on the average shares outstanding during the period. 2. Net investment loss per share and the net investment loss ratio include $.01 and 0.25%, respectively, resulting from Microsoft Corp. dividends including a special dividend in November 2004. 3. Less than $0.005 per share. 4. 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. 5. Annualized for periods of less than one full year. SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS. 25 | OPPENHEIMER EMERGING TECHNOLOGIES FUND NOTES TO FINANCIAL STATEMENTS Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Oppenheimer Emerging Technologies Fund (the Fund) is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Fund's investment objective is to seek long-term capital appreciation. The Fund's investment advisor is OppenheimerFunds, Inc. (the Manager). The Fund offers Class A, Class B, Class C, Class N and Class Y shares. Class A shares are sold at their offering price, which is normally net asset value plus a front-end sales charge. Class B, Class C and Class N shares are sold without a front-end sales charge but may be subject to a contingent deferred sales charge (CDSC). Class N shares are sold only through retirement plans. Retirement plans that offer Class N shares may impose charges on those accounts. Class Y shares are sold to certain institutional investors without either a front-end sales charge or a CDSC, however, the institutional investor may impose charges on those accounts. All classes of shares have identical rights and voting privileges with respect to the Fund in general and exclusive voting rights on matters that affect that class alone. Earnings, net assets and net asset value per share may differ due to each class having its own expenses, such as transfer and shareholder servicing agent fees and shareholder communications, directly attributable to that class. Class A, B, C and N have separate distribution and/or service plans. No such plan has been adopted for Class Y shares. Class B shares will automatically convert to Class A shares six years after the date of purchase. The Fund assesses a 2% fee on the proceeds of fund shares that are redeemed (either by selling or exchanging to another Oppenheimer fund) within 30 days of their purchase. The fee, which is retained by the Fund, is accounted for as an addition to paid-in capital. 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 Trustees. 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 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 26 | OPPENHEIMER EMERGING TECHNOLOGIES FUND 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 Trustees. Short-term "money market type" debt securities with remaining maturities of sixty days or less are valued at amortized cost (which approximates market value). - -------------------------------------------------------------------------------- JOINT REPURCHASE AGREEMENTS. Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the Fund, along with other affiliated funds advised by the Manager, may transfer uninvested cash balances into joint trading accounts on a daily basis. These balances are invested in one or more repurchase agreements. Securities pledged as collateral for repurchase agreements are held by a custodian bank until the agreements mature. Each agreement requires that the market value of the collateral be sufficient to cover payments of interest and principal. In the event of default by the other party to the agreement, retention of the collateral may be subject to legal proceedings. - -------------------------------------------------------------------------------- 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. 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. As of April 30, 2006, the Fund had available for federal income tax purposes an estimated capital loss carryforward of $473,331,235 expiring by 2014. This estimated capital loss carryforward represents carryforward as of the end of the last fiscal year, increased for losses deferred under tax accounting rules to the current fiscal year and is increased 27 | Oppenheimer Emerging Technologies Fund NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Continued or decreased by capital losses or gains realized in the first six months of the current fiscal year. As of April 30, 2006, it is estimated that the Fund will utilize $55,101 of capital loss carryforward to offset realized capital gains. During the year ended October 31, 2005, the Fund did not utilize any capital loss carryforward to offset capital gains realized in that fiscal year. As of October 31, 2005, the Fund had available for federal income tax purposes unused capital loss carryforwards as follows: EXPIRING ----------------------------- 2009 $ 268,287,393 2010 197,770,478 2012 556,912 2013 6,771,553 ------------- Total $ 473,386,336 ============= - -------------------------------------------------------------------------------- TRUSTEES' COMPENSATION. The Fund has adopted an unfunded retirement plan for the Fund's independent trustees. Benefits are based on years of service and fees paid to each trustee during the years of service. During the six months ended April 30, 2006, the Fund's projected benefit obligations were decreased by $4,074 and payments of $3,156 were made to retired trustees, resulting in an accumulated liability of $30,652 as of April 30, 2006. The Board of Trustees has adopted a deferred compensation plan for independent trustees that enables trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. For purposes of determining the amount owed to the Trustee under the plan, deferred amounts are treated as though equal dollar amounts had been invested in shares of the Fund or in other Oppenheimer funds selected by the Trustee. The Fund purchases shares of the funds selected for deferral by the Trustee in amounts equal to his or her deemed investment, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of "Other" within the asset section of the Statement of Assets and Liabilities. Deferral of trustees' fees under the plan will not affect the net assets of the Fund, and will not materially affect the Fund's assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance to the 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. 28 | OPPENHEIMER EMERGING TECHNOLOGIES FUND - -------------------------------------------------------------------------------- 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. At April 30, 2006, the Fund had $1,420 of such earnings on cash balances available to offset future custodian fees or interest expenses incurred during the next fiscal year. - -------------------------------------------------------------------------------- SECURITY TRANSACTIONS. Security transactions are recorded on the trade date. Realized gains and losses on securities sold are determined on the basis of identified cost. - -------------------------------------------------------------------------------- INDEMNIFICATIONS. The Fund's organizational documents provide current and former trustees and officers with a limited indemnification against liabilities arising in connection with the performance of their duties to the Fund. In the normal course of business, the Fund may also enter into contracts that provide general indemnifications. The Fund's maximum exposure under these arrangements is unknown as this would be dependent on future claims that may be made against the Fund. The risk of material loss from such claims is considered remote. - -------------------------------------------------------------------------------- OTHER. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST The Fund has authorized an unlimited number of $0.001 par value shares of beneficial interest of each class. Transactions in shares of beneficial interest were as follows: SIX MONTHS ENDED APRIL 30, 2006 YEAR ENDED OCTOBER 31, 2005 SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------------- CLASS A Sold 3,214,385 $ 9,909,596 5,282,514 $ 14,315,161 Dividends and/or distributions reinvested -- -- 191,595 544,130 Redeemed (3,846,773) (11,793,308) 1 (9,938,737) (26,961,902) 2 --------------------------------------------------------------- Net decrease (632,388) $ (1,883,712) (4,464,628) $ (12,102,611) =============================================================== 29 | OPPENHEIMER EMERGING TECHNOLOGIES FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2. SHARES OF BENEFICIAL INTEREST Continued SIX MONTHS ENDED APRIL 30, 2006 YEAR ENDED OCTOBER 31, 2005 SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------------- CLASS B Sold 1,138,307 $ 3,376,656 2,908,410 $ 7,653,535 Dividends and/or distributions reinvested -- -- -- -- Redeemed (2,393,369) (7,103,792) 1 (6,238,335) (16,440,928) 2 --------------------------------------------------------------- Net decrease (1,255,062) $ (3,727,136) (3,329,925) $ (8,787,393) =============================================================== - ----------------------------------------------------------------------------------------------------- CLASS C Sold 911,371 $ 2,698,211 1,232,366 $ 3,247,538 Dividends and/or distributions reinvested -- -- -- -- Redeemed (1,350,779) (4,018,800) 1 (3,361,027) (8,842,261) 2 --------------------------------------------------------------- Net decrease (439,408) $ (1,320,589) (2,128,661) $ (5,594,723) =============================================================== - ----------------------------------------------------------------------------------------------------- CLASS N Sold 318,155 $ 954,752 484,495 $ 1,295,239 Dividends and/or distributions reinvested -- -- 7,933 22,290 Redeemed (283,873) (872,660) 1 (474,961) (1,277,583) 2 --------------------------------------------------------------- Net increase 34,282 $ 82,092 17,467 $ 39,946 =============================================================== - ----------------------------------------------------------------------------------------------------- CLASS Y Sold 170,604 $ 547,190 263,642 $ 726,917 Dividends and/or distributions reinvested -- -- 11,057 32,066 Redeemed (88,104) (276,354) 1 (432,120) (1,207,077) 2 --------------------------------------------------------------- Net increase (decrease) 82,500 $ 270,836 (157,421) $ (448,094) =============================================================== 1. Net of redemption fees of $352, $246, $89, $20 and $10 for Class A, Class B, Class C, Class N and Class Y, respectively. 2. Net of redemption fees of $2,136, $1,523, $591, $103 and $61 for Class A, Class B, Class C, Class N and Class Y, respectively. - -------------------------------------------------------------------------------- 3. PURCHASES AND SALES OF SECURITIES The aggregate cost of purchases and proceeds from sales of securities, other than short-term obligations, for the six months ended April 30, 2006, were as follows: PURCHASES SALES -------------------------------------------------- Investment securities $65,795,161 $70,646,185 30 | OPPENHEIMER EMERGING TECHNOLOGIES FUND - -------------------------------------------------------------------------------- 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 average annual rate as shown in the following table: FEE SCHEDULE ------------------------------------------ Up to $200 million of net assets 0.90% Next $200 million of net assets 0.85 Next $200 million of net assets 0.80 Over $600 million of net assets 0.75 - -------------------------------------------------------------------------------- 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, 2006, the Fund paid $267,329 to OFS for services to the Fund. Additionally, Class Y shares are subject to minimum fees of $10,000 per annum for assets of $10 million or more. The Class Y shares are subject to the minimum fees in the event that the per account fee does not equal or exceed the applicable minimum fees. OFS may voluntarily waive the minimum fees. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLAN (12b-1) FEES. Under its General Distributor's Agreement with the Fund, OppenheimerFunds Distributor, Inc. (the Distributor) acts as the Fund's principal underwriter in the continuous public offering of the Fund's classes of shares. ..------------------------------------------------------------------------------- SERVICE PLAN FOR CLASS A SHARES. The Fund has adopted a Service Plan for Class A shares. It reimburses the Distributor for a portion of its costs incurred for services provided to accounts that hold Class A shares. Reimbursement is made periodically at an annual rate of up to 0.25% of the average annual net assets of Class A shares of the Fund. The Distributor currently uses all of those fees to pay dealers, brokers, banks and other financial institutions periodically for providing personal services and maintenance of accounts of their customers that hold Class A shares. Any unreimbursed expenses the Distributor incurs with respect to Class A shares in any fiscal year cannot be recovered in subsequent periods. Fees incurred by the Fund under the plan are detailed in the Statement of Operations. - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE PLANS FOR CLASS B, CLASS C AND CLASS N SHARES. The Fund has adopted Distribution and Service Plans for Class B, Class C and Class N shares to compensate the Distributor for its services in connection with the distribution of those shares and servicing accounts. Under the plans, the Fund pays the Distributor an annual asset-based sales charge of 0.75% on Class B and Class C shares and 0.25% on Class N shares. The Distributor also receives a service fee of 0.25% per year under each plan. If either the Class B, Class C or Class N plan is terminated by the Fund or by the shareholders of a class, the Board of Trustees and its independent trustees must determine whether the Distributor shall be entitled to payment from the Fund of all or a portion of the service fee and/or asset-based sales charge in respect to shares sold prior to the effective date of such termination. The Distributor's aggregate uncompensated expenses under the plan 31 | OPPENHEIMER EMERGING TECHNOLOGIES FUND NOTES TO FINANCIAL STATEMENTS Unaudited / Continued - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 4. FEES AND OTHER TRANSACTIONS WITH AFFILIATES Continued at April 30, 2006 for Class B, Class C and Class N shares were $10,069,121, $1,075,674 and $90,861, 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 SIX MONTHS RETAINED BY RETAINED BY RETAINED BY RETAINED BY RETAINED BY ENDED DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR DISTRIBUTOR - -------------------------------------------------------------------------------------------------------------- April 30, 2006 $45,971 $614 $68,459 $1,397 $142 - -------------------------------------------------------------------------------- WAIVERS AND REIMBURSEMENTS OF EXPENSES. Effective January 1, 2006, the Manager voluntarily agreed to reduce its advisory fee rate during the year ending December 31, 2006. For any calendar quarter that the Fund's trailing 12-month total return performance is in the fifth quintile of the Fund's Lipper peer group, measured at the end of the prior calendar quarter, the advisory fee will be reduced by 0.10% of the Fund's average daily net assets. For any calendar quarter that the Fund's trailing 12-month total return performance is in the fourth quintile of the Fund's Lipper peer group, measured at the end of the prior calendar quarter, the advisory fee will be reduced by 0.05% of the Fund's average daily net assets. However, if at the end of the prior calendar quarter the Fund's trailing total return performance has improved to the third or higher quintile of the Fund's Lipper peer group, the advisory fee reduction will be terminated. During the six months ended April 30, 2006, the Manager voluntarily waived management fees in the amount of $38,249. The advisory fee reduction is a voluntary undertaking and may be terminated by the Manager at any time. Effective April 1, 2006, the advisory fee reduction was terminated by the Manager. 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, 2006, OFS waived $140,713, $124,532, $29,395, $4,765 and $52 for Class A, Class B, Class C, Class N and Class Y shares, respectively. This undertaking may be amended or withdrawn at any time. - -------------------------------------------------------------------------------- 5. ILLIQUID OR RESTRICTED SECURITIES As of April 30, 2006, investments in securities included issues that are illiquid or restricted. Restricted securities are purchased in private placement transactions, are not registered under the Securities Act of 1933, may have contractual restrictions on resale, and are 32 | OPPENHEIMER EMERGING TECHNOLOGIES FUND valued under methods approved by the Board of Trustees as reflecting fair value. A security may also be considered illiquid if it lacks a readily available market or if its valuation has not changed for a certain period of time. The Fund will not invest more than 15% of its net assets (determined at the time of purchase and reviewed periodically) in illiquid or restricted securities. Certain restricted securities, eligible for resale to qualified institutional investors, are not subject to that limitation. Securities that are illiquid or restricted are marked with the applicable footnote on the Statement of Investments. Information concerning restricted securities is as follows: ACQUISITION VALUATION AS OF UNREALIZED SECURITY DATE COST APRIL 30, 2006 DEPRECIATION - -------------------------------------------------------------------------------------------------------- Blaze Network Products, Inc., 8% Cv., Series D 10/17/00 $ 1,067,750 $ 376 $ 1,067,374 - -------------------------------------------------------------------------------- 6. 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 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. However, 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. 33 | OPPENHEIMER EMERGING TECHNOLOGIES FUND PORTFOLIO PROXY VOTING POLICIES AND PROCEDURES; UPDATES TO STATEMENTS OF INVESTMENTS Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The Fund has adopted Portfolio Proxy Voting Policies and Procedures under which the Fund votes proxies relating to securities ("portfolio proxies") held by the Fund. A description of the Fund's Portfolio Proxy Voting Policies and Procedures is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048, (ii) on the Fund's website at www.oppenheimerfunds.com, and (iii) on the SEC's website at www.sec.gov. In addition, 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 voting record is available (i) without charge, upon request, by calling the Fund toll-free at 1.800.525.7048, and (ii) in the Form N-PX filing on the SEC's website at www.sec.gov. The Fund files its complete schedule of portfolio holdings with the SEC for the first quarter and the third quarter of each fiscal year on Form N-Q. The Fund's Form N-Q filings are available on the SEC's website at http://www.sec.gov. Those forms may 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 1-800-SEC-0330. 34 | OPPENHEIMER EMERGING TECHNOLOGIES FUND BOARD APPROVAL OF THE FUND'S INVESTMENT ADVISORY AGREEMENT Unaudited - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Each year, the Board of Trustees (the "Board"), including a majority of the independent Trustees, is required to determine whether to renew the Fund's investment advisory agreement (the "Agreement"). The Investment Company Act of 1940, as amended, requires that the Board request and evaluate, and that the Manager provide, such information as may be reasonably necessary to evaluate the terms of the Agreement. The Board employs an independent consultant to prepare a report that provides information, including comparative information that the Board requests for that purpose. In addition, the Board receives information throughout the year regarding Fund services, fees, expenses and performance. The Manager and the independent consultant provided information to the Board on the following factors: (i) the nature, quality and extent of the Manager's services, (ii) the investment performance of the Fund and the Manager, (iii) the fees and expenses of the Fund, including comparative expense information, (iv) the profitability of the Manager and its affiliates, including an analysis of the cost of providing services by the Manager and its affiliates, (v) the extent to which economies of scale are realized as the Fund grows and whether fee levels reflect these economies of scale for Fund investors and (vi) other benefits to the Manager from its relationship with the Fund. The Board was aware that there are alternatives to retaining the Manager. NATURE AND EXTENT OF SERVICES. The Board considered information on the nature and extent of the services provided to the Fund and information regarding the Manager's key personnel that provide such services. The Manager's duties include providing the Fund with the services of the portfolio managers and the Manager's investment team, who provide research, analysis and other advisory services in regard to the Fund's investments; securities trading services; oversight of third party service providers; monitoring compliance with applicable Fund policies and procedures and adherence to the Fund's investment restrictions. The Manager is responsible for providing certain administrative services to the Fund as well. Those services include providing, and supervising the activities of, all administrative and clerical personnel that are necessary in order to provide effective corporate administration for the Fund; compiling and maintaining records with respect to the Fund's operations; preparing and filing reports required by the Securities and Exchange Commission; preparing periodic reports regarding the operations of the Fund for its shareholders; preparing proxy materials for shareholder meetings; and preparing the registration statements required by Federal and state securities laws for the sale of the Fund's shares. The Manager also provides the Fund with office space, facilities and equipment. QUALITY OF SERVICES. The Board also considered the quality of the services provided and the quality of the Manager's resources that are available to the Fund. The Board took account of the facts that the Manager has had over forty years of experience as an investment adviser and that its assets under management rank it among the top mutual fund managers in the United States. The Board evaluated the Manager's administrative, 35 | OPPENHEIMER EMERGING TECHNOLOGIES FUND BOARD APPROVAL OF THE FUND'S INVESTMENT ADVISORY AGREEMENT Unaudited / Continued - -------------------------------------------------------------------------------- accounting, legal and compliance services, and information the Board has received regarding the experience and professional qualifications of the Manager's personnel and the size and functions of its staff. In its evaluation of the quality of the portfolio management services provided, the Board considered the experience of David Poiesz, Laura Granger, Alan Gilston, Scott Phillips, Emmy Adwers, and Brian Neigut and the Manager's Growth investment team and analysts. The Board members also considered their experiences with the Manager and its officers and other personnel through their service as directors or trustees of the Fund and other funds advised by the Manager. The Board considered information regarding the quality of services provided by affiliates of the Manager, which it also reviews at other times during the year in connection with the renewal of the Fund's service agreements. In light of the foregoing, the Board concluded that the Fund benefits from the services provided under the Agreement as a result of the Manager's experience, reputation, personnel, operations, and resources. Investment Performance of the Manager and the Fund. During the year, the Manager provided information on the investment performance of the Fund and the Manager at each Board meeting, including comparative performance information. The Board also reviewed information, prepared by the Manager and by the independent consultant, comparing the Fund's historical performance to relevant market indices and to the performance of other science & technology funds advised by other investment advisers. The Board noted that the Fund's one-year, three-year and five-year performance were below its peer group average. MANAGEMENT FEES AND EXPENSES. The Board reviewed the fees paid to the Manager and its affiliates and the other expenses borne by the Fund. The Board also evaluated the comparability of the fees charged and the services provided to the Fund to those of other clients or accounts advised by the Manager. The independent consultant provided comparative data in regard to the fees and expenses of the Fund, other science & technology funds and other funds with comparable asset levels and distribution features. The Board noted that the Fund's contractual and actual management fees and total expenses were higher than its peer group median and, although its contractual management fees were lower than its peer group average, its actual management fees and total expenses were higher than its peer group average. Based on this evaluation of the Fund's fees and expenses, the Board requested, and the Manager agreed to voluntarily reduce the advisory fee rate for any quarter during the calendar year ending December 31, 2006, by 0.10% of the Fund's average daily net assets if the Fund's trailing one-year total return performance, measured at the end of the prior calendar quarter, was in the fifth quintile of the Fund's Lipper peer group and 0.05% of the Fund's average daily net assets if the Fund's trailing one-year total return performance, measured at the end of the prior calendar quarter, was in the fourth quintile of the Fund's Lipper peer group. However, if the 36 | OPPENHEIMER EMERGING TECHNOLOGIES FUND Fund's total return performance at the end of a subsequent calendar quarter has improved to the third or higher quintile of Fund's Lipper peer group, the advisory fee reduction will be terminated for the remainder of the calendar year. The advisory fee reduction is a voluntary undertaking and may be terminated by the Manager at any time. ECONOMIES OF SCALE. The Board reviewed the extent to which the Manager may realize economies of scale in managing and supporting the Fund, to what extent those economies of scale benefit the Fund shareholders and the current level of Fund assets in relation to the Fund's breakpoint schedule for its management fees. The Board also noted the Fund's breakpoints, which are intended to share economies of scale that may exist as the Fund grows with its shareholders. PROFITS AND OTHER BENEFITS TO THE MANAGER. The Board considered information regarding the Manager's costs in serving as the Fund's investment adviser, including the costs associated with the personnel and systems necessary to manage the Fund, and information regarding the Manager's profitability from its relationship with the Fund. The Board considered that the Manager must be able to pay and retain experienced professional personnel at competitive rates to provide services to the Fund and that maintaining the financial viability of the Manager is important in order for the Manager to continue to provide significant services to the Fund and its shareholders. In addition to considering the profits realized by the Manager, the Board considered information regarding the direct and indirect benefits the Manager receives as a result of its relationship with the Fund, including compensation paid to the Manager's affiliates for services provided and research provided to the Manager in connection with permissible brokerage arrangements (soft dollar arrangements). CONCLUSIONS. These factors were also considered by the independent Trustees meeting separately from the full Board, assisted by experienced counsel to the Fund and the independent Trustees. Fund counsel is independent of the Manager within the meaning and intent of the Securities and Exchange Commission Rules. Based on its review of the information it received and its evaluations described above, the Board, including a majority of the independent Trustees, concluded that the nature, extent and quality of the services provided to the Fund by the Manager are a benefit to the Fund and in the best interest of the Fund's shareholders and that the amount and structure of the compensation received by the Manager and its affiliates, including the voluntary advisory fee reduction agreed to by the Manager, are reasonable in relation to the services provided. Accordingly, the Board elected to continue the Agreement for another year. In arriving at this decision, the Board did not single out any factor or factors as being more important than others, but considered all of the factors together. The Board judged the terms and conditions of the Agreement, including the management fee, in light of all of the surrounding circumstances. 37 | OPPENHEIMER EMERGING TECHNOLOGIES FUND ITEM 2. CODE OF ETHICS. Not applicable to semiannual reports. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable to semiannual reports. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable to semiannual reports. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. Not applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. THE FUND'S GOVERNANCE COMMITTEE PROVISIONS WITH RESPECT TO NOMINATIONS OF DIRECTORS/TRUSTEES TO THE RESPECTIVE BOARDS 1. The Fund's Governance Committee (the "Committee") will evaluate potential Board candidates to assess their qualifications. The Committee shall have the authority, upon approval of the Board, to retain an executive search firm to assist in this effort. The Committee may consider recommendations by business and personal contacts of current Board members and by executive search firms which the Committee may engage from time to time and may also consider shareholder recommendations. The Committee may consider the advice and recommendation of the Funds' investment manager and its affiliates in making the selection. 2. The Committee shall screen candidates for Board membership. The Committee has not established specific qualifications that it believes must be met by a trustee nominee. In evaluating trustee nominees, the 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 of 1940; and whether the individual would be deemed an "audit committee financial expert" within the meaning of applicable SEC rules. The Committee also considers whether the individual's background, skills, and experience will complement the background, skills, and experience of other nominees and will contribute to the Board. There are no differences in the manner in which the Committee evaluates nominees for trustees based on whether the nominee is recommended by a shareholder. 3. The Committee may consider nominations from shareholders for the Board at such times as the Committee meets to consider new nominees for the Board. The Committee shall have the sole discretion to determine the candidates to present to the Board and, in such cases where required, to shareholders. Recommendations for trustee nominees should, at a minimum, be accompanied by the following: o the name, address, and business, educational, and/or other pertinent background of the person being recommended; o a statement concerning whether the person is an "interested person" as defined in the Investment Company Act of 1940; o any other information that the Funds would be required to include in a proxy statement concerning the person if he or she was nominated; and o 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. The recommendation also can include any additional information which the person submitting it believes would assist the Committee in evaluating the recommendation. 4. Shareholders should note that a person who owns securities issued by Massachusetts Mutual Life Insurance Company (the parent company of the Funds' investment adviser) would be deemed an "interested person" under the Investment Company Act of 1940. In addition, certain other relationships with Massachusetts Mutual Life Insurance Company or its subsidiaries, with registered broker-dealers, or with the Funds' outside legal counsel may cause a person to be deemed an "interested person." 5. Before the Committee decides to nominate an individual as a trustee, Committee members and other directors customarily interview the individual in person. In addition, the individual customarily is asked to complete a detailed questionnaire which is designed to elicit information which must be disclosed under SEC and stock exchange rules and to determine whether the individual is subject to any statutory disqualification from serving as a trustee of a registered investment company. ITEM 11. CONTROLS AND PROCEDURES. Based on their evaluation of the registrant's disclosure controls and procedures (as defined in rule 30a-3(c) under the Investment Company Act of 1940 (17 CFR 270.30a-3(c)) as of April 30, 2006, the registrant's principal executive officer and principal financial officer found the registrant's disclosure controls and procedures to provide reasonable assurances that information required to be disclosed by the registrant in the reports that it files under the Securities Exchange Act of 1934 (a) is accumulated and communicated to registrant's management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, and (b) is recorded, processed, summarized and reported, within the time periods specified in the rules and forms adopted by the U.S. Securities and Exchange Commission. There have been no changes in the registrant's internal controls over financial reporting that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a) (1) Not applicable to semiannual reports. (2) Exhibits attached hereto. (3) Not applicable. (b) Exhibit attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Oppenheimer Emerging Technologies Fund By: /s/ JOHN V. MURPHY ------------------------------ John V. Murphy Principal Executive Officer Date: June 15, 2006 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ JOHN V. MURPHY ------------------------------ John V. Murphy Principal Executive Officer Date: June 15, 2006 By: /s/ BRIAN W. WIXTED ------------------------------ Brian W. Wixted Principal Financial Officer Date: June 15, 2006